<PAGE> 1
As filed with the Securities and Exchange Commission
On June __, 1995
Registration No.
-----------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIFTH THIRD BANCORP
(Exact name of registrant as specified in its charter)
Ohio 31-0854434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6711
(Primary Standard Industrial Classification Code Number)
Fifth Third Center, Cincinnati, Ohio 45263
(513) 579-5300
(Address, including Zip Code, and telephone number, including area code,
of registrant's principal executive offices)
S. Richard Arnold, Esq.
Dinsmore & Shohl
1900 Chemed Center, 255 East Fifth Street
Cincinnati, Ohio 45202
(513) 977-8200
(Name, address, including Zip Code and telephone
number, including area code, of agent for service)
Copies to:
Paul L. Reynolds, Esq. Judith E. McCaffrey, Esq.
Vice President and General Counsel McCaffrey & Raimi, P.A.
The Fifth Third Bank 4501 Tamiami Trail North
Fifth Third Center Suite 202
511 Walnut Street Naples, Florida 33940
Cincinnati, Ohio 45263
Approximate date of commencement of proposed sale of the securities to
the public:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount of
of Securities to be Registered(1) Offering Price Per Aggregate Offering Registration Fee
Registered Unit(2) Price(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no 188,000 shs. $22.77 $4,279,830 $1,475.80
par value
</TABLE>
(1) Represents the maximum number of shares of Registrant's Common Stock
issuable to shareholders of Bank of Naples, assuming that the Applicable Market
Value Per Share of the Registrant's Common Stock (as defined in the Merger
Agreement described herein) is $44.25.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) of the General Rules and Regulations under the
Securities Act of 1933. Price per share is based on an aggregate book value of
the Bank of Naples Common Stock of $9.93 per share. There is no public trading
market for shares of Bank of Naples Common Stock.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE> 3
FIFTH THIRD BANCORP
Cross Reference Sheet Required by Item 501(b) of Regulation S-K
CAPTION - CAPTION IN PROSPECTUS
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and Outside Front Cover
Page of Prospectus - Facing Page; Notice of Special Meeting
2. Inside Front and Outside Back Cover Pages of Prospectus -
Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information - Summary of the Proxy Statement and Prospectus;
General Information; Comparative Per Share Data
4. Terms of the Transaction - Summary of the Proxy Statement and
Prospectus; Terms and Conditions of the Proposed Merger;
Description of Capital Stock
5. Pro Forma Financial Information - Not Applicable
6. Material Contracts with the Company Being Acquired - Not
Applicable
7. Additional Information Required for Reoffering by Persons and
Parties Deemed to be Underwriters - Not Applicable
8. Interests of Named Experts and Counsel - Legal Matters
9. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities - Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants - Fifth Third
Bancorp; Selected Historical Financial Data of Fifth Third;
Description of Capital Stock
11. Incorporation of Certain Information by Reference -
Incorporation of Certain Documents by Reference; Available
Information; Description of Capital Stock
12. Information with Respect to S-2 or S-3 Registrants - Not
Applicable
13. Incorporation of Certain Information by Reference - Not
Applicable
14. Information With Respect to Registrants Other Than S-2 or S-3
Registrants - Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies - Not Applicable
16. Information with Respect to S-2 or S-3 Companies - Not
Applicable
<PAGE> 4
17. Information with Respect to Companies Other Than S-2 or S-3
Companies - Bank of Naples: Selected Historical Financial Data
of Bank of Naples; Available Information
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations Are to Be
Solicited - Summary of the Proxy Statement and Prospectus;
Terms and Conditions of the Proposed Merger; General
Information; Incorporation of Certain Documents by Reference
19. Information if Proxies, Consents or Authorizations Are Not To
Be Solicited or in an Exchange Offer - Not Applicable
<PAGE> 5
BANK OF NAPLES
4949 TAMIAMI TRAIL NORTH
NAPLES, FLORIDA 33940
July __, 1995
Dear Shareholder:
On behalf of the Board of Directors, we cordially invite you to attend the
special meeting of shareholders (the "Special Meeting") of Bank of Naples (the
"Bank"), which will be held at 4:30 p.m., Eastern Daylight Time, on Thursday,
August 10, 1995, at the main office of the Bank at 4949 Tamiami Trail North,
Naples, Florida 33940.
At the Special Meeting, shareholders will be asked to approve the Affiliation
Agreement dated as of April 4, 1995 and amendments thereto, between Fifth Third
Bancorp ("Fifth Third") and the Bank (the "Affiliation Agreement"), and the
related Agreement of Merger dated April 4, 1995 (as amended and restated),
between Fifth Third Trust Co. & Savings Bank, F.S.B., Naples, Florida, a
wholly-owned savings bank subsidiary of Fifth Third, and the Bank and agreed to
by Fifth Third (the "Merger Agreement"). Pursuant to the Affiliation Agreement
and the Merger Agreement, the Bank will merge with Fifth Third Trust Co. &
Savings Bank, F.S.B. (the "Merger"). At the time the Merger becomes effective
("Effective Time"), each issued and outstanding share of common stock, $7 par
value per share, of the Bank (the "Bank Common Stock") shall be converted by
virtue of the Merger into .41174 of a share of Fifth Third Common Stock ("Fifth
Third Common Stock") (the "Exchange Ratio"), subject to adjustment depending
upon the "Applicable Market Value Per Share of Fifth Third Common Stock." The
"Applicable Market Value Per Share of Fifth Third Common Stock" shall be the
average of the per share closing prices of Fifth Third Common Stock as reported
on the NASDAQ National Market System for the twenty trading days ending on the
fifth trading day prior to the Effective Time. If the Applicable Market Value
Per Share of Fifth Third Common Stock is not less than $46.875 or not more than
$57.375, then there shall be no adjustment to the Exchange Ratio. If the
Applicable Market Value Per Share of Fifth Third Common Stock exceeds $57.375,
then the Exchange Ratio shall be adjusted such that each issued and outstanding
share of Bank Common Stock shall be converted into the right to receive a
fraction (expressed in decimal figures carried out to five (5) places) of a
share of Fifth Third Common Stock determined by dividing $23.625 by the
Applicable Market Value Per Share of Fifth Third Common Stock. Similarly, if
the Applicable Market Value Per Share of Fifth Third Common Stock is less than
$46.875, then the Exchange Ratio shall be adjusted such that each issued and
outstanding share of Bank Common Stock shall be converted into the right to
receive a fraction (expressed in decimal figures carried to five (5) places) of
a share of Fifth Third Common Stock determined by dividing $19.30 by the
Applicable Market Value Per Share of Fifth Third Common Stock. The Exchange
Ratio shall be adjusted so as to give the Bank shareholders the economic
benefit of any stock dividends, distributions or combinations or subdivisions
of Fifth Third Common Stock effected before the Effective Time. The
Affiliation Agreement and the Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time in the following instances,
among others: (i) by the Bank if the Applicable Market Value Per Share of Fifth
Third Common Stock is less than $44.25, and (ii) by Fifth Third if the
Applicable Market Value Per Share of Fifth Third Common Stock is greater than
$59.875. Only whole shares of Fifth Third Common Stock will be issued. Any
shareholder otherwise entitled to receive a fractional share will receive cash
in lieu of such fractional share based on the Applicable Market Value Per Share
of Fifth Third Common Stock. The proposed Merger is discussed in detail in the
accompanying Proxy Statement and Prospectus and the Affiliation Agreement and
the Merger Agreement which are appended thereto as Annex A and Annex B,
respectively. We urge you to read the entire Proxy Statement and Prospectus.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS THAT
YOU VOTE "FOR" THE MERGER. THE AFFILIATION AGREEMENT AND THE MERGER AGREEMENT
MUST BE APPROVED BY BOTH (1) THE AFFIRMATIVE VOTE OF A MAJORITY OF THE ISSUED
AND OUTSTANDING SHARES OF BANK COMMON STOCK ENTITLED TO VOTE AND (2) TWO-THIRDS
(2/3) OF THE SHARES OF BANK COMMON STOCK REPRESENTED IN PERSON OR BY PROXY AT
THE SPECIAL MEETING, SO LONG AS A QUORUM IS PRESENT AT THE SPECIAL MEETING. AN
ABSTENTION OR FAILURE TO VOTE HAS THE SAME EFFECT AS A VOTE AGAINST THE
PROPOSED MERGER. IT IS, THEREFORE, IMPORTANT THAT YOU VOTE ON THE MERGER.
<PAGE> 6
Your vote is very important, regardless of the number of shares you own.
Please sign and return the proxy card in the postage-paid return envelope
provided for your convenience. This will not prevent you from voting in
person, but will assure that your vote is counted if you are unable to attend
the Special Meeting.
Please vote and return your proxy today.
Sincerely,
___________________________________
Robert Guididas
Chairman, President and
Chief Executive Officer
IMPORTANT: If your Bank shares are held in the name of a brokerage firm or
nominee, only they can execute a proxy on your behalf. To assure that your
shares are voted, we urge you to telephone today the individual responsible for
your account at your brokerage firm and obtain instructions on how to direct
him or her to execute a proxy.
If you have any questions, please telephone Robert Guididas, telephone number
(941) 434-7200 or John W. Hoyt, telephone number (941) 597-8989.
<PAGE> 7
BANK OF NAPLES
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 10, 1995
TO THE SHAREHOLDERS OF BANK OF NAPLES:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders ("Special
Meeting") of Bank of Naples ("Bank") will be held on Thursday, August 10, 1995,
at 4:30 p.m., Eastern Daylight Time, at the main office of the Bank at 4949
Tamiami Trail North, Naples, Florida 33940.
A Proxy Statement and Prospectus and Proxy Card for the Special Meeting are
enclosed herewith. The Special Meeting is for the following purposes all of
which are more completely set forth in the accompanying Proxy Statement and
Prospectus:
A. To consider and vote upon a proposal to approve the Affiliation
Agreement dated as of April 4, 1995 and amendments thereto, between Fifth Third
Bancorp ("Fifth Third") and the Bank (the "Affiliation Agreement") and the
related Agreement of Merger dated April 4, 1995 (as amended and restated),
between Fifth Third Trust Co. & Savings Bank, F.S.B., Naples, Florida, a
wholly-owned savings bank subsidiary of Fifth Third, and the Bank and agreed to
by Fifth Third (the "Merger Agreement"). Pursuant to the Affiliation Agreement
and the Merger Agreement, the Bank will merge with Fifth Third Trust Co. &
Savings Bank, F.S.B. (the "Merger"). At the time the Merger becomes effective
("Effective Time"), each issued and outstanding share of common stock, $7 par
value per share, of Bank (the "Bank Common Stock") shall be converted by virtue
of the Merger into .41174 of a share of Fifth Third Common Stock ("Fifth Third
Common Stock") (the "Exchange Ratio"), subject to adjustment depending upon the
"Applicable Market Value Per Share of Fifth Third Common Stock." The
"Applicable Market Value Per Share of Fifth Third Common Stock" shall be the
average of the per share closing prices of Fifth Third Common Stock as reported
on the NASDAQ National Market System for the twenty trading days ending on the
fifth trading day prior to the Effective Time. If the Applicable Market Value
Per Share of Fifth Third Common Stock is not less than $46.875 or not more than
$57.375, then there shall be no adjustment to the Exchange Ratio. If the
Applicable Market Value Per Share of Fifth Third Common Stock exceeds $57.375,
then the Exchange Ratio shall be adjusted such that each issued and outstanding
share of Bank Common Stock shall be converted into the right to receive a
fraction (expressed in decimal figures carried out to five (5) places) of a
share of Fifth Third Common Stock determined by dividing $23.625 by the
Applicable Market Value Per Share of Fifth Third Common Stock. Similarly, if
the Applicable Market Value Per Share of Fifth Third Common Stock is less than
$46.875, then the Exchange Ratio shall be adjusted such that each issued and
outstanding share of Bank Common Stock shall be converted into the right to
receive a fraction (expressed in decimal figures carried to five (5) places) of
a share of Fifth Third Common Stock determined by dividing $19.30 by the
Applicable Market Value Per Share of Fifth Third Common Stock. The Exchange
Ratio shall be adjusted so as to give the Bank shareholders the economic
benefit of any stock dividends, distributions or combinations or subdivisions
of Fifth Third Common Stock effected before the Effective Time. The
Affiliation Agreement and the Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time in the following instances,
among others: (i) by the Bank if the Applicable Market Value Per Share of Fifth
Third Common Stock is less than $44.25, and (ii) by Fifth Third if the
Applicable Market Value Per Share of Fifth Third Common Stock is greater than
$59.875.
B. To adjourn the Special Meeting if necessary to solicit additional
proxies.
C. To transact such other business as may properly come before the
Special Meeting or any adjournments thereof. The Board of Directors is not
aware of any other business to come before the Special Meeting.
Pursuant to the Bylaws of the Bank, the Board of Directors has fixed June 30,
1995 as the record date for the determination of shareholders entitled to
receive notice of, and to vote at, the Special Meeting and any adjournments
thereof. Only holders of record of Bank Common Stock at the close of business
on such date will be entitled to vote at the Special Meeting or any
adjournments thereof. As more completely described in the Proxy Statement and
Prospectus, dissenting shareholders, who comply with applicable laws, are
entitled to receive
<PAGE> 8
payment in cash for the fair market value of their shares in lieu of receiving
Fifth Third Common Stock, provided the Merger is consummated.
THE AFFILIATION AGREEMENT AND MERGER AGREEMENT MUST BE APPROVED BY THE
AFFIRMATIVE VOTE OF BOTH (1) A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF
BANK COMMON STOCK ENTITLED TO VOTE AND (2) TWO-THIRDS (2/3) OF THE BANK SHARES
REPRESENTED AT A MEETING AT WHICH A QUORUM IS PRESENT. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE NUMBER OF SHARES WHICH YOU OWN.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE SPECIAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
THE ATTACHED PROXY STATEMENT AND PROSPECTUS SHOULD BE READ CAREFULLY.
SHAREHOLDERS ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE. ANY PROXY GIVEN BY A SHAREHOLDER MAY BE REVOKED BEFORE
IT IS EXERCISED BY SUBMITTING A LATER DATED PROXY, BY ATTENDING THE SPECIAL
MEETING IN PERSON AND NOTIFYING THE CASHIER OF THE BANK OF THE REVOCATION OR BY
GIVING NOTICE OF REVOCATION TO THE BANK IN A WRITING ADDRESSED TO AND RECEIVED
BY THE CASHIER OF THE BANK BEFORE THE SPECIAL MEETING. IF NO INSTRUCTIONS ARE
INDICATED, BANK SHARES REPRESENTED BY PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED (A) FOR APPROVAL OF THE AFFILIATION AGREEMENT AND THE
MERGER AGREEMENT, (B) FOR ADJOURNMENT OF THE SPECIAL MEETING OF BANK
SHAREHOLDERS IF NECESSARY TO SOLICIT ADDITIONAL PROXIES AND (C) IN THE BOARD OF
DIRECTORS' DISCRETION AS TO ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING, OR ANY ADJOURNMENT THEREOF.
Naples, Florida July ____, 1995
By Order of the Board of Directors
_______________________________________
ROBERT GUIDIDAS
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
July __, 1995
<PAGE> 9
BANK OF NAPLES 188,000 SHARES FIFTH THIRD BANCORP
4949 TAMIAMI TRAIL NORTH FIFTH THIRD BANCORP FIFTH THIRD CENTER
NAPLES, FLORIDA 33940 COMMON STOCK, NO PAR VALUE CINCINNATI, OHIO 45263
(941) 434-7200 (513) 579-5300
PROXY STATEMENT AND PROSPECTUS
This Proxy Statement and Prospectus ("Proxy Statement and Prospectus")
is being furnished to the shareholders of Bank of Naples (the "Bank"), a
Florida-chartered, Federal Reserve member commercial bank, in connection with
the solicitation of proxies by the Board of Directors of the Bank for use at a
special meeting of shareholders to be held at 4:30 p.m., Eastern Daylight Time,
on Thursday, August 10, 1995, at the main office of the Bank at 4949 Tamiami
Trail North, Naples, Florida, and at any adjournment thereof (the "Special
Meeting").
At the Special Meeting, holders of all issued and outstanding shares
of Bank Common Stock, $7 par value per share ("Bank Common Stock"), will be
asked to approve the Affiliation Agreement dated as of April 4, 1995, between
Fifth Third Bancorp ("Fifth Third") and the Bank (the "Affiliation Agreement")
and the related Agreement of Merger dated April 4, 1995, between Fifth Third
Trust Co. & Savings Bank, F.S.B., Naples, Florida, a wholly-owned savings bank
subsidiary of Fifth Third, and the Bank and agreed to by Fifth Third (the
"Merger Agreement"). Pursuant to the Affiliation Agreement and the Merger
Agreement, the Bank will merge with Fifth Third Trust Co. & Savings Bank,
F.S.B. (the "Merger"). At the time the Merger becomes effective ("Effective
Time"), each issued and outstanding share of the Bank Common Stock shall be
converted by virtue of the Merger into .41174 of a share of Fifth Third Common
Stock, no par value per share ("Fifth Third Common Stock") (the "Exchange
Ratio") subject to adjustment depending upon the "Applicable Market Value Per
Share of Fifth Third Common Stock." The "Applicable Market Value Per Share of
Fifth Third Common Stock" shall be the average of the per share closing prices
of Fifth Third Common Stock as reported on the NASDAQ National Market System
for the twenty trading days ending on the fifth trading day prior to the
Effective Time. If the Applicable Market Value Per Share of Fifth Third Common
Stock is not less than $46.875 or not more than $57.375, then there shall be no
adjustment to the Exchange Ratio. If the Applicable Market Value Per Share of
Fifth Third Common Stock exceeds $57.375, then the Exchange Ratio shall be
adjusted such that each issued and outstanding share of the Bank Common Stock
shall be converted into the right to receive a fraction (expressed in decimal
figures carried out to five (5) places) of a share of Fifth Third Common Stock
determined by dividing $23.625 by the Applicable Market Value Per Share of
Fifth Third Common Stock. Similarly, if the Applicable Market Value Per Share
of Fifth Third Common Stock is less than $46.875, then the Exchange Ratio shall
be adjusted such that each issued and outstanding share of the Bank Common
Stock shall be converted into the right to receive a fraction (expressed in
decimal figures carried to five (5) places) of a share of Fifth Third Common
Stock determined by dividing $19.30 by the Applicable Market Value Per Share of
Fifth Third Common Stock. The Exchange Ratio shall be adjusted so as to give
the Bank shareholders the economic benefit of any stock dividends,
distributions or combinations or subdivisions of Fifth Third Common Stock
effected before the Effective Time. The Affiliation Agreement and the Merger
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time in the following instances, among others (i) by the Bank if the
Applicable Market Value Per Share of Fifth Third Common Stock is less than
$44.25, and (ii) by Fifth Third if the Applicable Market Value Per Share of
Fifth Third Common Stock is greater than $59.875. No fractional shares will be
issued. Any shareholder otherwise entitled to receive a fractional share will
receive cash in lieu thereof based upon the Applicable Market Value Per Share
of Fifth Third Common Stock, determined as provided above.
The Board of Directors of Bank of Naples has approved the Affiliation
Agreement and the Merger Agreement and determined that their terms are fair to,
and in the best interests of, the Bank and its shareholders, and unanimously
recommends that holders of Bank Common Stock vote in favor of the Affiliation
Agreement and the Merger Agreement.
The shareholders of the Bank also will be asked to vote upon the
adjournment of the Special Meeting if necessary to solicit additional proxies.
-i-
<PAGE> 10
Under the rules and regulations of the Securities and Exchange
Commission (the "Commission"), the solicitation of the Bank's shareholders to
approve the Merger constitutes an offering of Fifth Third Common Stock to be
issued in connection with the Merger. Accordingly, Fifth Third has filed with
the Commission a Registration Statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to such offering. This Proxy Statement and Prospectus does
not contain all of the information set forth in such Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For such information, reference is made to the Registration
Statement and the Exhibits filed as part thereof or incorporated by reference
therein.
This Proxy Statement and Prospectus shall not constitute a prospectus
for public reoffering of the Fifth Third Common Stock issuable pursuant to the
Merger.
THE SECURITIES OF FIFTH THIRD TO BE ISSUED IN THE MERGER HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT AND
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF FIFTH THIRD COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
The date of this Proxy Statement and Prospectus is __________________, 1995.
-ii-
<PAGE> 11
AVAILABLE INFORMATION
THIS PROXY STATEMENT AND PROSPECTUS INCORPORATES DOCUMENTS OF FIFTH
THIRD BY REFERENCE WHICH, WITH THE EXCEPTION OF A 1994 ANNUAL REPORT TO
SHAREHOLDERS FOR FIFTH THIRD, ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
SEE "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." THESE DOCUMENTS
(EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED THEREIN) ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM PAUL L. REYNOLDS, ASSISTANT
SECRETARY, FIFTH THIRD BANCORP, FIFTH THIRD CENTER, CINCINNATI, OHIO 45263
(TELEPHONE NUMBER: (513) 579-5300) WITH RESPECT TO DOCUMENTS CONCERNING FIFTH
THIRD. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD
BE MADE BY _________________, 1995.
No person has been authorized to give any information or to make any
representation in connection with this offering other than those contained in
this Proxy Statement and Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by Fifth Third
or the Bank. This Proxy Statement and Prospectus shall not constitute an offer
to sell or a solicitation of an offer to buy any securities in any jurisdiction
in which it would be unlawful to make such offer or solicitation. Neither the
delivery of this Proxy Statement and Prospectus at any time, nor any offer or
solicitation made hereunder, shall under any circumstances imply that the
information set forth herein or incorporated herein is correct as of any time
subsequent to its date.
Fifth Third is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files, reports, proxy statements and other information
with the Commission. Reports, proxy statements and other information filed by
Fifth Third can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
in New York (7 World Trade Center, 13th Floor, New York, New York 10048) and
Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511).
Fifth Third Common Stock is traded in the over-the-counter market and
quoted on the NASDAQ National Market under the symbol "FITB". Documents filed
by Fifth Third with the Commission also can be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. The Bank Common Stock is not publicly traded and there
is no public trading market for the Bank Common Stock.
All information contained in this Proxy Statement and Prospectus with
respect to the Bank was supplied by the Bank and all information contained or
incorporated in this Proxy Statement and Prospectus with respect to Fifth Third
was supplied by Fifth Third.
Although neither the Bank nor Fifth Third has any knowledge that would
indicate that any statements or information relating to the other party
contained herein is inaccurate or incomplete, neither the Bank nor Fifth Third
can warrant the accuracy or completeness of such statements or information as
they relate to the other party.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
-iii-
<PAGE> 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated into this Proxy
Statement and Prospectus by reference.
(a) Fifth Third's Annual Report on Form 10-K for the year ended December
31, 1994;
(b) Pages 1 and 13-36 of Fifth Third's 1994 Annual Report to Shareholders
(enclosed with this Proxy Statement and Prospectus);
(c) Fifth Third's Proxy Statement dated February 10, 1995; and
(d) Fifth Third's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
In addition, all subsequent documents filed with the Commission by
Fifth Third pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the Effective Time are incorporated herein by reference. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement and Prospectus to the extent that a statement contained
herein (or in any other subsequently filed document which also is deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement and Prospectus.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
-iv-
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -iii-
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -iv-
SUMMARY OF THE PROXY STATEMENT AND PROSPECTUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -vii-
SELECTED HISTORICAL FINANCIAL DATA OF FIFTH THIRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -xiii-
SELECTED HISTORICAL FINANCIAL DATA OF BANK OF NAPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -xv-
FIFTH THIRD MARKET PRICE AND DIVIDEND DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -xvi-
COMPARATIVE PER SHARE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -xvii-
PURPOSES OF THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Proposal to Merge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Vote Required; Shares Entitled to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Voting and Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
TERMS AND CONDITIONS OF THE PROPOSED MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Background of, and Reasons for, the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Opinion of Keefe, Bruyette & Woods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Conversion of Shares of Bank Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bank Stock Options and Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Rights of Dissenting Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conduct Pending Merger; Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Amendment; Waiver; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effect on the Bank's Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interests of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Effects of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Material Contracts Between Bank and Fifth Third Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 11
RESALE OF FIFTH THIRD COMMON STOCK BY AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FIFTH THIRD BANCORP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Capital Requirements for Fifth Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Bank Holding Companies In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Acquisitions of Savings Associations By Holding Companies . . . . . . . . . . . . . . . . . . . . . . . . . 14
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
BANK OF NAPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
BANK OF NAPLES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
BANK'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-v-
<PAGE> 14
<TABLE>
<S> <C>
MARKET FOR BANK SHARES AND DIVIDEND HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ADDITIONAL INFORMATION ON BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EFFECT OF GOVERNMENTAL POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DESCRIPTION OF FIFTH THIRD COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Rights Upon Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Indemnification and Personal Liability of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 34
Shareholders' Meetings; Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Subscription, Conversion, Redemption Rights; Stock Nonassessable . . . . . . . . . . . . . . . . . . . . . . 34
Change of Control Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
CERTAIN BENEFICIAL OWNERS OF FIFTH THIRD COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FIFTH THIRD MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
CERTAIN BENEFICIAL OWNERS OF BANK COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Security Ownership of Certain Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Security Ownership of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ADJOURNMENT OF BANK SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
INDEX TO BANK OF NAPLES FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
Annexes:
Annex A: Affiliation Agreement dated as of April 4, 1995 between Fifth
Third Bancorp and Bank of Naples (excluding exhibits) and
amendments thereto
Annex B: Agreement of Merger dated as of April 4, 1995 between Fifth
Third Bancorp and Bank of Naples
Annex C: Fairness Opinion of Keefe, Bruyette & Woods
Annex D: Section 658.44 of the Florida Statutes, Florida Banking Code
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
-vi-
<PAGE> 15
SUMMARY OF THE PROXY STATEMENT AND PROSPECTUS
The following is a summary of certain information contained elsewhere
in this Proxy Statement and Prospectus and the documents incorporated herein by
reference. This summary is not intended to be a summary of all information
relating to the Merger and is qualified in its entirety by reference to the
more detailed information contained elsewhere in this Proxy Statement and
Prospectus, including the Annexes hereto, and the documents incorporated by
reference in this Proxy Statement and Prospectus.
PARTIES TO THE TRANSACTION:
FIFTH THIRD: Fifth Third is a registered multi-bank
holding company, incorporated under Ohio law,
which conducts its principal activities
through its banking and non-banking
subsidiaries. Fifth Third's nine subsidiary
banks operate a general banking business from
350 offices located throughout Ohio, Indiana
and Kentucky. Fifth Third is also a
registered multi-savings and loan holding
company and operates two federally-chartered
savings banks, one in Kentucky and one in
Florida, from three offices. At March 31,
1995, on a consolidated basis, Fifth Third
had consolidated assets, deposits and
shareholders' equity of approximately $15.6
billion, $11.1 billion and $1.5 billion,
respectively. Fifth Third Common Stock is
traded over-the-counter and is listed on the
NASDAQ National Market System under the
symbol "FITB." Fifth Third's principal
executive offices are located at Fifth Third
Center, Cincinnati, Ohio 45263, and its
telephone number is (513) 579-5300.
BANK OF NAPLES: Bank of Naples ("Bank") is a commercial bank
organized and existing under the laws of the
State of Florida and is a member of the
Federal Reserve System. It is engaged in the
general business of banking and has three
offices located in Collier County, Florida.
At March 31, 1995, the Bank had
total assets, total deposits and
shareholders' equity of approximately $56.7
million, $51.4 million and $4.1 million,
respectively. Bank Common Stock is not
publicly traded and no public trading market
exists for the purchase and sale of Bank
Common Stock. The Bank's principal executive
offices are located at 4949 Tamiami Trail
North, Naples, Florida 33940, and its
telephone number is (941) 434-7200.
-vii-
<PAGE> 16
SPECIAL MEETING OF THE BANK'S SHAREHOLDERS:
TIME AND DATE: 4:30 p.m., Eastern Daylight Time, on
Thursday, August 10, 1995.
PLACE: Main office of Bank at 4949 Tamiami Trail
North, Naples, Florida 33940.
PURPOSE: To consider and vote upon the Affiliation
Agreement and the Merger Agreement which
provide for the acquisition of the Bank by
Fifth Third and the Merger of Fifth Third
Trust Co. & Savings Bank, F.S.B. ("5/3
F.S.B.") with and into the Bank. Pursuant to
the Affiliation Agreement and the Merger
Agreement, the Bank's shareholders will
receive shares of Fifth Third Common Stock in
exchange for shares of Bank Common Stock.
Copies of the Affiliation Agreement and the
Merger Agreement are attached hereto as Annex
A and Annex B, respectively, and are
incorporated herein by reference. At the
Special Meeting, Bank shareholders also will
be asked to adjourn the meeting if necessary
to solicit additional proxies. See "PURPOSES
OF THE SPECIAL MEETING - Proposal to Merge
Bank with Fifth Third."
REQUIRED VOTE FOR THE Approval of the Affiliation Agreement and the
MERGER, THE AFFILIATION Merger Agreement requires the affirmative
AGREEMENT AND THE MERGER vote of holders of both (1) a majority of the
AGREEMENT; RECORD DATE; 410,000 shares of Bank Common Stock issued
SHARES OWNED BY and outstanding as of the close of business
DIRECTORS AND OFFICERS: on June 30, 1995 and (2) two-thirds (2/3) of
the Bank's shares represented at a meeting at
which a quorum is present. An abstention or
failure to vote has the same effect as voting
against the proposed Merger. Accordingly,
shareholders are urged to sign and return
their proxies. See "PURPOSES OF THE SPECIAL
MEETING - Vote Required; Shares Entitled to
Vote" and " - Voting and Revocation of
Proxies." As of the close of business on
March 31, 1995, the executive officers and
directors of the Bank as a group (9 persons)
and their affiliates beneficially owned
89,283 shares, or approximately 21.78% of
Bank Common Stock.
RIGHTS OF DISSENTING Pursuant to Section 658.44 Florida Statutes,
SHAREHOLDERS: Florida Banking Code, Bank shareholders who
vote against, or provide the Bank with
written notice at or prior to the Special
Meeting that the shareholder dissents from,
the Affiliation Agreement and the Merger
Agreement may demand payment in cash of an
amount equal to the fair market value of
their shares in lieu of Fifth Third Common
Stock to be provided under the Affiliation
Agreement and the Merger Agreement. Failure
to comply with the procedures set forth in
such law will result in the loss of these
rights. See "TERMS AND CONDITIONS OF THE
PROPOSED MERGER - Rights of Dissenting
Shareholders" and Annex D.
-viii-
<PAGE> 17
TERMS OF THE MERGER:
CONVERSION OF BANK Upon consummation of the Merger, each
COMMON STOCK; STOCK shareholder of the Bank will receive, for
CONSIDERATION: each share of Bank Common Stock which he or
she holds at the Effective Time, .41174 of a
share of Fifth Third Common Stock (the
"Exchange Ratio"), subject to adjustment
depending upon the "Applicable Market Value
Per Share of Fifth Third Common Stock." The
"Applicable Market Value Per Share of Fifth
Third Common Stock" shall be the average of
the per share closing prices of Fifth Third
Common Stock as reported on the NASDAQ
National Market System for the twenty trading
days ending on the fifth trading day prior to
the Effective Time. If the Applicable Market
Value Per Share of Fifth Third Common Stock
is not less than $46.875 or not more than
$57.375, then there shall be no adjustment to
the Exchange Ratio. If the Applicable Market
Value Per Share of Fifth Third Common Stock
exceeds $57.375, then the Exchange Ratio
shall be adjusted such that each issued and
outstanding share of Bank Common Stock shall
be converted into the right to receive a
fraction (expressed in decimal figures
carried out to five (5) places) of a share of
Fifth Third Common Stock determined by
dividing $23.625 by the Applicable Market
Value Per Share of Fifth Third Common Stock.
Similarly, if the Applicable Market Value Per
Share of Fifth Third Common Stock is less
than $46.875, then the Exchange Ratio shall
be adjusted such that each issued and
outstanding share of Bank Common Stock shall
be converted into the right to receive a
fraction (expressed in decimal figures
carried to five (5) places) of a share of
Fifth Third Common Stock determined by
dividing $19.30 by the Applicable Market
Value Per Share of Fifth Third Common Stock.
The Exchange Ratio shall be adjusted so as to
give the Bank shareholders the economic
benefit of any stock dividends, distributions
or combinations or subdivisions of Fifth
Third Common Stock effected before the
Effective Time. The Affiliation Agreement
and the Merger Agreement may be terminated
and the Merger abandoned at any time prior to
the Effective Time in the following
instances, among others: (i) by the Bank if
the Applicable Market Value Per Share of
Fifth Third Common Stock is less than $44.25,
and (ii) by Fifth Third if the Applicable
Market Value Per Share of Fifth Third Common
Stock is greater than $59.875. See "TERMS AND
CONDITIONS OF THE PROPOSED MERGER -
Conversion of Shares of Bank Common Stock"
and "- Exchange Ratio."
NO FRACTIONAL SHARES: No fractional shares will be issued in
connection with the Merger. Bank shareholders
will receive cash in lieu of any fractional
shares which they otherwise would be entitled
to receive, based on the Applicable Market
Value Per Share of Fifth Third Common Stock
as defined above. See "TERMS AND CONDITIONS
OF THE PROPOSED MERGER - No Fractional
Shares."
CONDITIONS OF CLOSING: The Merger is subject to several significant
conditions, including but not limited to,
Bank shareholder approval, and approval by
the Board of Governors of the Federal Reserve
System, the Office of Thrift Supervision and
the Florida Department of Banking and
Finance, applications for which have been
filed. See "TERMS AND CONDITIONS OF THE
PROPOSED MERGER - Conditions to Closing."
-ix-
<PAGE> 18
MERGER: Upon consummation of the Merger, Bank and
Fifth Third Trust Co. & Savings Bank, F.S.B.,
a wholly-owned federal savings bank
subsidiary of Fifth Third ("5/3 F.S.B."),
will merge, with the Bank being the surviving
entity. By virtue of the Merger and through
operation of law, the shares of Bank Common
Stock each will be converted into .41174 of a
share of Fifth Third Common Stock, and the
Bank's shareholders will cease being
shareholders of the Bank and instead will
become Fifth Third shareholders. The Bank
will become a wholly-owned subsidiary of
Fifth Third under a new name, Fifth Third
Bank of Florida, and also will have trust
powers, which the Bank currently does not
possess. The resulting bank will have four
(4) offices, all in the Collier County,
Florida area. The current main office of Bank
will be consolidated with the main office of
5/3 F.S.B., which is in close proximity to
the Bank's main office and shall serve as the
main office of the resulting bank.
EFFECTIVE TIME; RIGHT TO The Effective Time will occur on a date
TERMINATE: mutually acceptable to Fifth Third and the
Bank following satisfaction or effective
waiver of all of the conditions precedent to
the closing, including receipt of all
regulatory approvals and the expiration of
any applicable statutory or regulatory
waiting periods. The parties anticipate that
the Merger will be consummated in September
1995. The Bank and Fifth Third each will
have the right to terminate the Affiliation
Agreement and the Merger Agreement if, among
other reasons, the Effective Time does not
occur on or before December 31, 1995. Also,
Fifth Third may terminate the Affiliation
Agreement and the Merger Agreement if the
Applicable Market Value Per Share of Fifth
Third Common Stock is greater than $59.875,
and the Bank may terminate the Affiliation
Agreement and the Merger Agreement if the
Applicable Market Value Per Share of Fifth
Third Common Stock is less than $44.25. See
"TERMS AND CONDITIONS OF THE PROPOSED MERGER
- Effective Time" and "Termination."
PROCEDURE FOR EXCHANGE OF Promptly after the Effective Time, Fifth
SHARES: Third will mail to each shareholder of the
Bank a form of transmittal letter and
instructions for the surrender of Bank Common
Stock certificates in exchange for
certificates representing the number of
shares of Fifth Third Common Stock to which
such shareholder is entitled. Certificates
for shares of Fifth Third Common Stock will
be issued to shareholders of the Bank only
after their certificates for Bank Common
Stock have been surrendered in accordance
with such instructions. See "TERMS AND
CONDITIONS OF THE PROPOSED MERGER - Exchange
of Certificates."
FEDERAL INCOME TAX The Merger is conditioned, in part, upon
CONSEQUENCES: receipt of an opinion of Fifth Third's
counsel with respect to certain tax matters,
including an opinion that no gain or loss
(other than with respect to cash received in
lieu of fractional shares or cash received
upon the exercise of dissenters' rights) will
be recognized by the Bank's shareholders upon
the exchange of their Bank Common Stock for
Fifth Third Common Stock. See "TERMS AND
CONDITIONS OF THE PROPOSED MERGER - Federal
Income Tax Consequences." BANK SHAREHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
AS TO THE SPECIFIC CONSEQUENCES TO THEM OF
THE MERGER UNDER FEDERAL, STATE, LOCAL AND
ANY OTHER APPLICABLE TAX LAWS.
ACCOUNTING: Consummation of the Merger is conditioned
upon the requirement that the Merger
transaction will qualify for pooling of
interests accounting treatment. See "TERMS
AND CONDITIONS OF THE PROPOSED MERGER -
Accounting Treatment."
-x-
<PAGE> 19
INTERESTS OF CERTAIN It is Fifth Third's intention (but not
PERSONS IN THE MERGER: obligation) to employ at Fifth Third Bank of
Florida or at another Fifth Third subsidiary
or affiliate as many of the employees of the
Bank as possible. Each employee of the Bank
who becomes an employee of Fifth Third or its
subsidiaries subsequent to the Merger will be
entitled to participate in the standard
package of all employee benefit plans
sponsored by Fifth Third or its subsidiaries
on the same terms and to the same extent as
similarly situated employees of Fifth Third.
Such employees shall receive credit for their
period of service to the Bank for purposes of
determining participation and vesting in all
Fifth Third employee benefit plans, except
for vesting in the Fifth Third Master
Retirement Plan, but not for purposes of
determining the benefits accrued thereunder.
For purposes of determining vesting under the
Fifth Third Master Retirement Plan, generally
only those employees of the Bank who
participated in comparable plans sponsored by
the Bank will receive credit for their period
of service to the Bank. It is not
anticipated that Fifth Third will enter into
employment agreements with any officers of
the Bank in connection with the transactions
contemplated by the Affiliation Agreement.
Bank's current employment contracts with K.R.
Barker, Robert Guididas and Patrick J.
Philbin each shall be terminated by the Bank
prior to the Effective Time of the Merger and
all amounts due thereunder (whether due at
the time of termination or change in control
of the Bank or over a period of time) shall
be paid in full. Also, the officers and
directors of the Bank will be provided
certain directors' and officers' liability
insurance protection for three years
following the Effective Time. See "TERMS AND
CONDITIONS OF THE PROPOSED MERGER - Effect on
Bank's Employees" and "- Interests of
Management."
BOARD RECOMMENDATION: The Board of Directors of the Bank believes
that the terms of the Merger are fair to, and
in the best interests of, the Bank's
shareholders and unanimously recommends
approval of the Merger. See "PURPOSES OF THE
SPECIAL MEETING - Recommendation" and "TERMS
AND CONDITIONS OF THE PROPOSED MERGER -
Background and Reasons for the Merger."
SECURITIES INVOLVED: For a description of
Fifth Third Common Stock, see "DESCRIPTION OF
FIFTH THIRD COMMON STOCK."
COMPARATIVE MARKET Fifth Third Common Stock is traded on the
PRICES: NASDAQ National Market System under the
symbol "FITB". Bank Common Stock is not
publicly traded, and no public trading market
exists for the purchase and sale of Bank
Common Stock. On April 3, 1995, the business
day immediately preceding the public
announcement of the execution of the
Affiliation Agreement and the Merger
Agreement setting forth the terms of the
Merger, and on _____________, 1995,
comparative market prices of Fifth Third
Common Stock were as follows:
-xi-
<PAGE> 20
<TABLE>
<CAPTION>
April 3, 1995 , 1995
------------- ------------
<S> <C> <C>
Bank Common Stock $12.25(1) $12.25(1)
(Last trade)
Fifth Third Common Stock $51.88 $______
(Closing sales price)
</TABLE>
(1) Bank Common Stock is not publicly traded and no public trading market exists
for the purchase and sale of Bank Common Stock. The prices shown above reflect
the most recent trade of Bank Common Stock, which occurred on December 14, 1994.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
-xii-
<PAGE> 21
SELECTED HISTORICAL FINANCIAL DATA OF FIFTH THIRD
<TABLE>
<CAPTION>
Three Months Ended March 31, Years Ended December 31,
---------------------------- ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations: (in thousands except per share amounts)
---------------------
Net interest income $133,725 $127,799 $516,753 $473,515 $427,870 $363,247 $317,643
Provision for credit losses 9,574 11,296 35,780 48,037 66,100 62,464 43,479
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after 124,151 116,503 480,973 425,478 361,770 300,783 274,164
provision for credit losses
Other operating income 70,360 64,121 255,908 231,150 206,308 189,002 141,490
Operating expenses 95,191 93,377 371,545 352,720 316,315 282,844 246,588
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 99,320 87,247 365,336 303,908 251,763 206,941 169,066
Applicable income taxes 33,202 29,366 120,877 97,673 79,742 63,987 48,040
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income $66,118 $57,881 $244,459 $206,235 $172,021 $142,954 $121,026
========== ========== ========== ========== ========== ========== ==========
Common Share Data:
-----------------
Primary net income per share $1.00 $ .88 $3.72 $3.22 $2.74 $2.30 $1.96
Fully diluted net income per share 1.00 .88 3.72 3.22 2.73 2.29 1.96
Cash dividends declared per share .35 .27 1.20 1.02 .90 .78 .68
Book value at period end 22.68 20.17 21.62 19.93 17.22 15.22 13.68
Average shares outstanding (000's)
Primary 67,503 66,740 66,925 65,338 63,082 62,303 61,698
Fully Diluted 67,509 66,740 66,924 65,338 63,188 62,527 61,749
Financial Condition at Period End:
---------------------------------
Securities Available for Sale $1,216,986 $1,177,952 $1,129,492 $898,074 -- -- --
Securities Held to Maturity 2,592,523 1,792,150 2,507,543 1,776,394 $2,419,421 $2,625,968 $2,002,083
Loans and Leases 10,728,615 9,701,286 10,286,457 9,566,898 8,115,590 6,325,918 6,165,808
Assets 15,603,780 13,553,730 14,957,009 13,128,544 11,390,289 9,981,383 9,344,994
Deposits 11,144,235 9,464,141 10,630,878 9,477,306 8,447,812 7,633,362 7,354,767
Short-Term Borrowings 2,459,427 2,215,171 2,452,218 1,691,744 1,348,105 1,127,768 832,457
Long-Term Debt and Convertible 173,849 283,129 178,713 407,864 309,730 52,436 125,798
Subordinated Notes
Stockholders' Equity 1,478,690 1,294,775 1,398,774 1,277,660 1,076,854 944,691 845,325
Ratios:
------
Profitability Ratios:
--------------------
Return on average assets 1.77% 1.77% 1.77% 1.71% 1.63% 1.50% 1.38%
</TABLE>
-xiii-
<PAGE> 22
<TABLE>
<CAPTION>
Three Months Ended March 31, Years Ended December 31,
---------------------------- ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average stockholders' equity 18.0% 18.1% 18.6% 17.8% 16.9% 15.9% 15.0%
Net interest margin 4.01 4.34 4.16 4.39 4.54 4.30 4.17
Overhead ratio (1) 45.0 47.3 46.6 48.7 48.6 49.5 51.5
Other operating income to total income(2) 34.5 33.3 33.1 32.2 31.6 33.2 30.8
Capital Ratios:
--------------
Average stockholders' equity to 9.83 9.77 9.50 9.61 9.62 9.42 9.21
average assets
Tier 1 Capital to risk-adjusted assets(3) 11.1 11.6 11.3 11.5 11.2 12.3 11.5
Total Capital to risk-adjusted assets(3) 12.8 13.6 13.2 13.9 14.1 13.6 12.7
Leverage(4) 9.6 9.5 9.6 9.6 9.2 9.3 8.9
Credit Quality Ratios:
---------------------
Reserve for credit losses to 551.6 381.3 570.5 362.8 155.5 68.0 64.0
nonperforming assets
Reserve for credit losses to loans 1.51 1.56 1.52 1.51 1.50 1.54 1.46
and leases outstanding
Net charge-offs to average loans .18 .21 .18 .31 .64 .89 .66
and leases outstanding
Nonperforming assets to loans, .27 .41 .27 .42 .96 2.24 2.27
leases and other real estate owned
</TABLE>
NOTE: Above financial information has been restated for the acquisition of The
Cumberland Federal Bancorporation, Inc., completed August 26, 1994 and accounted
for as a pooling of interests transaction.
(1) Operating expenses divided by the sum of fully taxable equivalent net
interest income and other operating income.
(2) Other operating income excluding securities gains and losses as a percent
of net interest income and other operating income excluding securities
gains and losses.
(3) Under final year-end 1992 guidelines.
(4) Tier 1 capital (under fiscal year-end 1992 rules) divided by adjusted
quarterly average assets.
-xiv-
<PAGE> 23
SELECTED HISTORICAL FINANCIAL DATA OF BANK OF NAPLES
The following table sets forth certain historical financial data concerning
Bank of Naples. This information is based on information contained in Bank of
Naples 1994 financial statements which are included in this Proxy Statement and
Prospectus under the heading "INDEX TO BANK OF NAPLES FINANCIAL STATEMENTS",
and should be read in conjunction therewith.
<TABLE>
<CAPTION>
3 Months Ended Year Ended December 31,
03/31
=================================================================
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
(END OF PERIOD):
Total assets $56,697 $41,859 $57,602 $36,872 $34,249 $35,365 $26,891
Total investments (incl. fed funds sold) 10,275 8,961 13,992 8,019 8,635 9,339 7,283
Net loans 42,329 29,567 39,806 26,194 22,336 24,057 17,488
Total deposits 51,413 37,452 52,653 32,545 31,574 32,797 23,503
Common shareholders' equity 4,071 3,292 3,749 3,230 2,756 2,377 3,226
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Interest income $1,226 $742 $3,456 $2,839 $2,858 $3,033 $2,204
Interest expense 391 234 1,121 956 1,302 1,841 1,426
Net interest income 835 508 2,335 1,883 1,556 1,192 778
Provision for loan losses 15 15 15 135 430 946 105
Net interest income after provision for 820 493 2,320 1,748 1,126 246 673
loan losses
Non-interest income 57 63 210 157 134 132 63
Securities gains / (losses) 0 0 0 3 179 48 15
Non-interest expense 508 406 1,732 1,460 1,249 1,276 1,064
Income / (Loss) before income taxes 369 150 798 448 190 (850) (313)
Income Taxes 129 0 41 0 0 0 0
Net Income / (Loss) 240 150 757 448 190 (850) (313)
CONSOLIDATED PER SHARE DATA:
Net income / (loss) per common share $0.59 $0.37 $1.85 $1.09 $0.46 ($2.07) ($0.76)
Book value 9.93 8.03 9.14 7.88 6.72 5.80 7.87
PERFORMANCE/ASSET QUALITY RATIOS:
Return on average assets (ROA) 1.70% 1.55% 1.75% 1.29% 0.57% (2.58%) (1.33%)
Return on average equity (ROE) 24.31% 18.22% 22.23% 16.18% 7.47% (27.80%) (9.42%)
Net interest income to average assets 5.93% 5.26% 5.40% 5.41% 4.65% 3.62% 3.30%
Allowance for loan losses to total loans 1.12% 1.56% 1.23% 1.73% 2.08% 2.21% 0.97%
</TABLE>
-xv-
<PAGE> 24
FIFTH THIRD MARKET PRICE AND DIVIDEND DATA
Fifth Third Common Stock is traded in the over-the-counter market and quoted
on the NASDAQ National Market System. Bank Common Stock is not publicly
traded, and no public trading market exists for the purchase and sale of Bank
Common Stock. The following table sets forth (in per share amounts), for the
quarterly periods indicated, the high and low closing sales prices of Fifth
Third Common Stock and the dividends declared during each quarterly period.
<TABLE>
<CAPTION>
Fifth Third Common Stock
----------------------------------------------------------
High Low Dividends
Declared
----------------------------------------------------------
<S> <C> <C> <C>
Year Ended December 31, 1992:
First Calendar Quarter $50.38 $43.00 $0.22
Second Calendar Quarter $46.75 $40.13 $0.22
Third Calendar Quarter $52.75 $40.75 $0.22
Fourth Calendar Quarter $54.00 $46.75 $0.24
Year Ended December 31, 1993:
First Calendar Quarter $55.13 $49.88 $0.24
Second Calendar Quarter $58.50 $50.25 $0.24
Third Calendar Quarter $54.63 $51.25 $0.27
Fourth Calendar Quarter $54.00 $49.75 $0.27
Year Ended December 31, 1994:
First Calendar Quarter $51.13 $45.13 $0.27
Second Calendar Quarter $55.00 $46.75 $0.31
Third Calendar Quarter $53.25 $49.88 $0.31
Fourth Calendar Quarter $52.50 $46.50 $0.31
Year Ended December 31, 1995:
First Calendar Quarter $52.75 $47.06 $0.35
Second Calendar Quarter(1) $56.00 $48.13 $0.35
</TABLE>
(1) Through June 20, 1995.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
-xvi-
<PAGE> 25
COMPARATIVE PER SHARE DATA
The following table sets forth certain per-share information for both
Fifth Third and the Bank on an historical basis and selected unaudited, pro
forma, combined, comparative per share data for Fifth Third and Bank of Naples
combined. The Merger is reflected under the pooling of interests method of
accounting, and pro forma data are derived in accordance with such method. The
Bank pro forma equivalent amounts are presented with respect to each set of pro
forma information. Such amounts are computed by multiplying the pro forma
amounts by the assumed Exchange Ratio of .41174 shares of Fifth Third Common
Stock for each share of Bank Common Stock. The pro forma data prior to the
Effective Time may not be indicative of the results that actually would have
occurred if the Merger had been in effect during the periods presented or which
may be attained in the future.
<TABLE>
<CAPTION>
Fifth Third (1) Bank of Naples
-------------------------------- ------------------------------
Pro Forma
Historical Pro Forma (2) Historical Equivalent (3)
---------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
Net Income Per Share
December 31, 1992 $2.74 $2.76 $0.46 $1.13
December 31, 1993 3.22 3.29 1.09 1.35
December 31, 1994 3.72 3.80 1.85 1.56
March 31, 1994 0.88 0.87 0.37 0.36
March 31, 1995 1.00 0.98 0.59 0.40
Dividends Declared Per Share
December 31, 1992 $0.90 $0.90 -- $0.37
December 31, 1993 1.02 1.02 -- 0.42
December 31, 1994 1.20 1.20 -- 0.49
March 31, 1994 0.27 0.27 -- 0.11
March 31, 1995 0.35 0.35 -- 0.14
Book Value Per Share
December 31, 1994 $21.62 $21.61 $9.14 $8.90
March 31, 1995 22.68 22.68 9.93 9.34
Market Value Per Share on April 3, 1995 (4) $51.88 $51.88 --(5) $21.36
</TABLE>
___________________________
(1) Fifth Third's historical financial information has been restated for
the acquisition of The Cumberland Federal Bancorporation, Inc.,
completed August 26, 1994 and accounted for as a pooling of interests
transaction.
(2) Pro forma information is based on an assumed Applicable Market Value
Per Share of Fifth Third Common Stock of $52.125 and an assumed
Exchange Ratio of .41174 shares of Fifth Third Common Stock for each
share of Bank Common Stock in connection with the Merger of Bank with
and into Fifth Third. See "TERMS AND CONDITIONS OF THE PROPOSED
MERGER - Exchange Ratio" for further information.
(3) The pro forma equivalent per share amounts for Bank Common Stock
represent, in the case of net income and book value, the pro forma
amounts for shares of Fifth Third multiplied by .41174 (the Exchange
Ratio) and, in the cases of dividends declared and market price, the
historical data for shares of Fifth Third multiplied by .41174 (the
Exchange Ratio).
(4) April 3, 1995 was the last day of trading preceding the public
announcement of the Merger.
(5) Bank Common Stock is not publicly traded, and no public trading market
exists for the purchase and sale of Bank Common Stock.
-xvii-
<PAGE> 26
BANK OF NAPLES
4949 TAMIAMI TRAIL NORTH
NAPLES, FLORIDA 33940
(941) 434-7200
AND
FIFTH THIRD BANCORP
FIFTH THIRD CENTER
CINCINNATI, OHIO 45263
(513) 579-5300
------------------------------
PROXY STATEMENT AND PROSPECTUS
------------------------------
GENERAL INFORMATION
This Proxy Statement and Prospectus is being furnished to the
shareholders of the Bank of Naples ("Bank") in connection with the solicitation
by the Board of Directors of the Bank of proxies to be used at a special
meeting of shareholders (the "Special Meeting") to be held on Thursday, August
10, 1995 at 4:30 p.m., Eastern Daylight Time, at the main office of the Bank at
4949 Tamiami Trail North, Naples, Florida 33940, and at any adjournments
thereof. This Proxy Statement and Prospectus, a copy of both the Bank's and
Fifth Third's 1994 financial statements and the enclosed form of proxy are
first being sent to shareholders of the Bank on or about _____________, 1995.
PURPOSES OF THE SPECIAL MEETING
At the Special Meeting, shareholders of the Bank will be asked to
approve an Affiliation Agreement dated as of April 4, 1995, between Fifth Third
Bancorp ("Fifth Third") and the Bank (the "Affiliation Agreement") and the
related Agreement of Merger dated April 4, 1995, between Fifth Third Trust Co.
& Savings Bank, F.S.B., a wholly-owned savings bank subsidiary of Fifth Third
("5/3 F.S.B."), and the Bank and agreed to by Fifth Third. Pursuant to the
Affiliation Agreement and the Merger Agreement, the Bank will merge with 5/3
F.S.B. (the "Merger"). See "TERMS AND CONDITIONS OF THE PROPOSED MERGER"
below.
At the Special Meeting Bank shareholders also will be asked to adjourn
the Special Meeting if necessary to solicit additional proxies. See
"ADJOURNMENT OF BANK SPECIAL MEETING" below.
PROPOSAL TO MERGE BANK WITH 5/3 F.S.B.
Pursuant to the Affiliation Agreement and the Merger Agreement, each
shareholder of the Bank shall receive for each share of Bank Common Stock, $7
par value per share ("Bank Common Stock"), which such shareholder holds at the
effective time of the Merger (the "Effective Time"), .41174 of a share of Fifth
Third Common Stock, no par value per share ("Fifth Third Common Stock") (the
"Exchange Ratio"), subject to adjustment depending upon the "Applicable Market
Value Per Share of Fifth Third Common Stock." The "Applicable Market Value Per
Share of Fifth Third Common Stock" shall be the average of the per share
closing prices of Fifth Third Common Stock as reported on the NASDAQ National
Market System for the twenty trading days ending on the fifth trading day prior
to the Effective Time. If the Applicable Market Value Per Share of Fifth Third
Common Stock is not less than $46.875 or not more than $57.375, then there
shall be no adjustment to the Exchange Ratio. If the Applicable Market Value
Per Share of Fifth Third Common Stock exceeds $57.375, then the Exchange Ratio
shall be adjusted such that each issued and outstanding share of Bank Common
Stock will be converted into the right to receive a fraction (expressed in
decimal figures carried out to five (5) places) of a share of Fifth Third
Common Stock determined by dividing $23.625 by the Applicable Market Value Per
Share of Fifth Third Common Stock. Similarly, if the Applicable Market Value
Per Share of Fifth Third Common Stock is less than $46.875, then the Exchange
Ratio shall be adjusted such that each issued and outstanding share of Bank
Common Stock shall be converted into the right to receive a fraction (expressed
in decimal figures carried to five (5) places) of a share of Fifth Third Common
Stock determined by dividing $19.30 by the Applicable Market Value Per Share of
Fifth Third Common Stock. The Exchange Ratio shall be adjusted so as to give
the Bank shareholders the economic benefit of any stock dividends,
distributions or combinations or subdivisions of Fifth Third Common Stock
effected before the Effective Time. The Affiliation Agreement and the Merger
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time in the following instances, among others: (i) by Bank if the
Applicable Market Value Per Share of Fifth Third Common Stock is less than
$44.25 and (ii) by Fifth Third if the Applicable Market Value Per Share of
Fifth Third Common Stock is greater than $59.875. See "TERMS AND CONDITIONS OF
THE PROPOSED MERGER - Exchange Ratio" below.
1
<PAGE> 27
RECOMMENDATION
The Bank's Board of Directors has unanimously approved the Affiliation
Agreement and the Merger Agreement and the transactions contemplated thereby
and recommends approval thereof by the shareholders of the Bank. The Board of
Directors of the Bank believes that the terms of the Merger are fair to, and in
the best interests of, the Bank's shareholders.
THE BANK'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AFFILIATION AGREEMENT AND THE MERGER AGREEMENT.
VOTE REQUIRED; SHARES ENTITLED TO VOTE
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Bank Common Stock will constitute a quorum for the
transaction of business at the Special Meeting. APPROVAL OF THE MERGER WILL
REQUIRE THE AFFIRMATIVE VOTE OF BOTH (1) A MAJORITY OF THE OUTSTANDING SHARES
OF BANK COMMON STOCK ENTITLED TO VOTE AND (2) TWO-THIRDS (2/3) OF THE SHARES
REPRESENTED AT A MEETING AT WHICH A QUORUM IS PRESENT. Broker non-votes will
not be treated as votes cast and, therefore, will have the same effect as a
vote against the proposal. Holders of record of Bank Common Stock at the close
of business on June 30, 1995 (the "Record Date") are entitled to receive notice
of, and to vote at, the Special Meeting. At the close of business on the
Record Date, there were 410,000 shares of Bank Common Stock outstanding. Each
share of Bank Common Stock will be entitled to one vote.
VOTING AND REVOCATION OF PROXIES
Shares represented by proxies properly signed and returned will be
voted at the Special Meeting in accordance with the instructions thereon,
unless revoked. If a proxy is signed and returned without voting instructions,
the shares represented thereby will be voted (1) FOR the approval of the
Affiliation Agreement and the Merger Agreement and (2) FOR adjournment of the
Special Meeting if necessary to solicit additional proxies. The Board of
Directors of the Bank knows of no business which will be presented for
consideration at the Bank Special Meeting other than the matters described in
this Proxy Statement and Prospectus and those incidental to the conduct of the
Special Meeting. If however, other matters are duly brought before the Special
Meeting, and any adjournment thereof, the persons appointed as proxies will
have discretion to vote or act thereon accordingly to their best judgment.
Each proxy may be revoked at any time before it is exercised by submitting a
later dated proxy, by attending the Special Meeting in person and notifying the
Cashier of the Bank of the revocation or by giving notice of revocation to the
Bank in a writing addressed to and received by the Cashier of the Bank before
the Special Meeting. A subsequently dated proxy will, if properly presented,
revoke a prior proxy. Any shareholder may attend the Special Meeting and vote
in person whether or not such shareholder has previously given a proxy.
SOLICITATION OF PROXIES
Following the mailing of proxy solicitation materials proxies may be
solicited by mail, telephone, telegraph and personal interviews by Directors,
officers and employees of the Bank who will not be specifically compensated for
such services. The Bank will bear the expense of proxy solicitation, including
reimbursement of reasonable out-of-pocket expenses incurred by brokerage houses
and other custodians, nominees and fiduciaries in forwarding proxy solicitation
materials to the beneficial owners of stock held of record by such persons.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
2
<PAGE> 28
TERMS AND CONDITIONS OF THE PROPOSED MERGER
The following description contains, among other information, summaries
of certain provisions of the Affiliation Agreement and the Merger Agreement and
is qualified in its entirety by reference to the full text thereof, copies of
which are appended as Annex A and Annex B, respectively, to this Proxy
Statement and Prospectus and are incorporated herein by reference.
BACKGROUND OF, AND REASONS FOR, THE MERGER
The Board of Directors of the Bank believes that the Affiliation
Agreement and Merger Agreement are in the best interests of the Bank and its
shareholders. Consummation of the Affiliation Agreement and the Merger
Agreement offers the Bank shareholders the opportunity to acquire an equity
interest in a larger, more diversified financial institution with a stronger
overall financial condition.
On February 1, 1995, at a special meeting, the Board of Directors of
the Bank determined that it was in the best interest of the Bank and its
shareholders to explore the possible sale of the Bank to another corporation or
other business entity and that the most desirable form of the transaction would
be either a merger of the Bank with, or a sale of all of its assets to, a
buyer. In reaching this decision, the Board took into consideration the
development of the Bank's business and its operations during the past two to
three years and examined the Bank's strategic alternatives, including
continuing to operate as an independent institution. In its evaluation, the
Board noted the consolidation of financial institutions occurring in both the
Bank's region and nationally. At this meeting, the Board of Directors voted to
retain the investment banking firm of Keefe, Bruyette & Woods, Inc. to assist
it in identifying potential buyers and to advise it on the fairness of any
purchase offers received.
To identify a pool of potential buyers, Keefe, Bruyette & Woods
solicited indications of interest from appropriate corporations and other
business entities and provided an informational package on the Bank to those
parties expressing an interest. Through this process, three potential buyers
were identified. Each potential buyer submitted a tentative purchase offer to
the Bank.
At a special meeting of the Board of Directors on March 6, 1995, a
representative of Keefe, Bruyette & Woods provided the Board with an in depth
review and analysis of the three potential buyers and of each offer submitted.
Thereafter, each potential buyer was afforded the opportunity to conduct a
review of the Bank's books and records.
Following an on-site review of the Bank's books and records, Fifth
Third submitted a letter, dated March 21, 1995, to the Board indicating its
interest, subject to certain contingencies, to acquire the Bank through a stock
exchange and merger. Under the terms of this letter, Fifth Third offered to
purchase the Bank's Common Stock for a purchase price that valued the Bank
Common Stock at $21.46 a share. Based upon the market price of Fifth Third as
of that date under the terms of this offer, one share of Bank Common Stock
would be exchanged for .41174 share of Fifth Third Common Stock.
On March 29, 1995, at a special meeting of the Board of Directors
called to consider the letter of interest from Fifth Third, a representative of
Keefe, Bruyette & Woods reviewed the actions taken by Keefe, Bruyette & Woods
to find a suitable buyer for the Bank. The representative discussed in detail
the offer of Fifth Third and reviewed with the Board the value of this offer
for the shareholders of the Bank. Based upon the Bank's December 1994 book
value, the offer of Fifth Third equated to 2.3 times the book value of the
Bank's shares. The representative also compared this offer against prices paid
in recent transactions by acquirors of financial institutions of a size
comparable to that of the Bank. The offer received by the Bank from Fifth
Third compared very favorably to these recent transactions. At this meeting,
the Board also reviewed Keefe, Bruyette & Wood's projections, based on various
assumptions, for the value of the Bank at 3 years and at 5 years if the Bank
continued as an independent financial institution. Using the present value of
the discounted projected future net earnings as a benchmark, the offer of Fifth
Third was very favorable to the Bank shareholders. Following this discussion,
the Board authorized the President of the Bank and one of the independent
directors to enter into discussions and negotiate with Fifth Third regarding
the terms and conditions of the proposed transaction.
Once the basic structure of the transaction had been agreed upon,
representatives and management of the Bank and Fifth Third negotiated the terms
and conditions of the Affiliation Agreement and the Merger Agreement. The
Board of Directors of the Bank then held a special meeting on April 3, 1995 to
review, discuss, and approve the Affiliation Agreement and the Merger
Agreement. The Board of Directors, together with its financial and legal
advisors, reviewed in detail the terms of both agreements with Fifth Third. On
April 3, 1995, Keefe, Bruyette & Woods delivered its oral opinion to the Bank's
Board of Directors that, as of such date, the Exchange Ratio was fair to the
holders of Bank Common Stock from a financial point of view. The Board of
Directors then unanimously approved the Affiliation Agreement and the Merger
Agreement and the transactions contemplated thereby subject to shareholder
approval and that of the appropriate government bank regulatory agencies. The
Affiliation Agreement and Merger Agreement were subsequently executed and
announced on April 4, 1995.
In reaching its decision to accept the offer of Fifth Third, the Board
of Directors of the Bank considered the value of the consideration offered, the
assets, obligations, historical operations and earnings of the Bank and Fifth
Third, their respective financial resources, the respective historical market
and book values of Bank Common Stock and Fifth Third Common Stock and their
respective dividend records, their capital resources and the Board's evaluation
of the future prospects of the Bank
3
<PAGE> 29
and Fifth Third. In addition, the Board considered the effect of the Merger on
the employees, customers and communities in which the Bank operates, including
the ability to provide increased commercial loan, consumer loan, trust and
other banking services. The Board also considered the opinion of Keefe,
Bruyette & Woods as to the fairness, from a financial point of view, to the
Bank's shareholders of the consideration being received in the Merger.
Upon careful review and analysis of all the factors described above,
no single factor being more substantially important in the review process than
any other, the Board determined that acceptance of the offer of Fifth Third was
in the best interest of the Bank and its shareholders; accordingly, the Board
voted to accept this offer, subject to the approval of the Bank's shareholders
and the approval of the appropriate government bank regulatory authorities.
Fifth Third's primary reason for consummating the Merger is to further
a long range commitment of realigning and expanding its branch system to better
meet and satisfy the needs of its customers, including those in the Bank's
service area.
All of the members of the Bank's Board of Directors have indicated
their intention to vote their shares of Bank's Common Stock in favor of the
Merger. As of March 31, 1995, such individuals beneficially owned 88,426
shares, or approximately 21.57% of the outstanding shares of Bank Common Stock.
THE BOARD OF DIRECTORS OF THE BANK HAS UNANIMOUSLY APPROVED THE MERGER
AND RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE AFFILIATION AGREEMENT AND
THE MERGER AGREEMENT.
OPINION OF KEEFE, BRUYETTE & WOODS
Pursuant to the engagement letter dated January 31, 1995 and approved
by the Bank's Board of Directors on February 1, 1995 (the "Engagement Letter"),
the Bank retained Keefe, Bruyette & Woods, Inc. as its financial advisor in
connection with the Merger, and requested that the firm render an opinion to
the Board of Directors with respect to the fairness, from a financial point of
view, of the Exchange Ratio, to the holders of the Bank Common Stock. At the
meeting of the Bank's Board of Directors on April 3, 1995, the Affiliation
Agreement and the Merger Agreement were approved. At such meeting, Keefe,
Bruyette & Woods rendered its oral opinion to the Bank's Board of Directors, to
the effect that, as of that date, the Exchange Ratio was fair, from a financial
point of view, to the holders of Bank Common Stock. In addition, Keefe,
Bruyette & Woods confirmed its oral opinion in writing as of the date of this
Proxy Statement and Prospectus stating that, as of the date of this Proxy
Statement and Prospectus, the Exchange Ratio was fair, from a financial point
of view, to the holders of Bank Common Stock. The opinion (the "Opinion") is
attached as Annex C to this Proxy Statement and Prospectus.
THE OPINION OF KEEFE, BRUYETTE & WOODS INCLUDES CERTAIN QUALIFICATIONS
AND ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEWS
UNDERTAKEN. THE SUMMARY AND DESCRIPTION OF THE OPINION OF KEEFE, BRUYETTE &
WOODS CONTAINED HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE OPINION, AND IT IS RECOMMENDED THAT HOLDERS OF BANK COMMON STOCK
READ SUCH OPINION IN ITS ENTIRETY. KEEFE, BRUYETTE & WOODS OPINION IS DIRECTED
TO THE BOARD OF DIRECTORS OF THE BANK ONLY AND ADDRESSES ONLY THE EXCHANGE
RATIO. SUCH OPINION SHOULD NOT BE CONSTRUED BY HOLDERS OF BANK COMMON STOCK AS
A RECOMMENDATION OF THE MANNER IN WHICH SUCH HOLDERS SHOULD VOTE.
In arriving at its Opinion, Keefe, Bruyette & Woods reviewed, among
other things, the Affiliation Agreement, the Merger Agreement and certain
related documents (including all schedules and exhibits), certain publicly
available information relating to the business, financial condition and
operations of the Bank and Fifth Third, as well as certain other non-public
information, primarily financial in nature, furnished to it by the Bank and
Fifth Third relating to their respective businesses, earnings and assets. In
addition, the Bank furnished Keefe, Bruyette & Woods with certain financial
forecasts relating to its operations. With respect to the financial forecasts
provided by the Bank, Keefe, Bruyette & Woods assumed that such forecasts were
reasonably prepared on a basis reflecting the best currently available
estimates and judgments of management. Keefe, Bruyette & Woods also reviewed
certain publicly available information concerning the trading of, and the
trading market for, Bank Common Stock and Fifth Third Common Stock and certain
publicly available information concerning comparable companies and
transactions, all as more fully set forth in Keefe, Bruyette & Woods' opinion.
In rendering its opinion, Keefe, Bruyette & Woods also took into account its
assessment of general economic, market and financial conditions.
Keefe, Bruyette & Woods was not engaged to inspect, and has not
conducted a physical inspection of any of the properties or assets of the Bank
or Fifth Third and was not engaged to and has not made, obtained or been
furnished with any independent evaluation or appraisals of any properties,
assets or liabilities of the Bank or Fifth Third. Keefe, Bruyette & Woods has
assumed and relied upon the accuracy and completeness of the financial and
other information provided to it or publicly available, has relied upon the
representations and warranties of the Bank and Fifth Third made pursuant to the
Affiliation Agreement and the Merger Agreement, and has not independently
attempted to verify any of such information. Keefe, Bruyette & Woods also has
assumed that all of the conditions to the Merger and covenants as set forth in
the Affiliation Agreement and the Merger Agreement, including the tax- free
treatment of the Merger to the holders of Bank Common Stock, would be satisfied
and that the Merger would be consummated on a timely basis in the manner
contemplated by the Affiliation Agreement and the Merger Agreement. No
limitations were imposed by the Bank upon Keefe, Bruyette & Woods or upon the
scope of its investigation, nor were any specific instructions given to Keefe,
Bruyette & Woods in connection with its fairness
4
<PAGE> 30
opinion. Keefe, Bruyette & Woods did not determine or recommend the Exchange
Ratio and did not address the Bank's business decision to effect the Merger or
any other terms of the Merger.
Keefe, Bruyette & Woods, as part of its investment banking business,
is customarily engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwriting, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Keefe, Bruyette & Woods was
retained by the Bank based upon, among other things, Keefe, Bruyette & Woods'
industry expertise with respect to financial institutions and because of its
substantial experience in transactions similar to the Merger. Keefe, Bruyette
& Woods is not affiliated with either the Bank or Fifth Third.
Pursuant to the Engagement Letter, the Bank has agreed to pay Keefe,
Bruyette & Woods a cash fee of $25,000 plus a cash fee equal to 1.25% of the
total consideration paid to the Bank's shareholders up to $9.0 million and 4.0%
of the total consideration paid to the Bank's shareholders over $9.0 million.
Such fee will total approximately $150,000 (assuming that the fractional shares
of Fifth Third Common Stock received in exchange for each share of the Bank's
Common Stock surrendered pursuant to the Merger have an aggregate market value
of $52.00 on the closing date) and is payable at the closing of the merger.
The Bank also has agreed to indemnify Keefe, Bruyette and Woods against certain
liabilities, including liabilities under federal securities laws, and to
reimburse Keefe, Bruyette and Woods for certain out-of-pocket expenses.
EFFECTIVE TIME
The Effective Time of the Merger will occur on a date mutually
acceptable to Fifth Third and the Bank following satisfaction or effective
waiver of all conditions precedent contained in the Affiliation Agreement have
been met or waived, including the expiration of all applicable statutory or
regulatory waiting periods. It is anticipated that the Merger will be
consummated in September, 1995, although no assurance can be given in this
regard. The Bank and Fifth Third each will have the right, but not the
obligation, to terminate the Affiliation Agreement if the Effective Time does
not occur on or before December 31, 1995.
CONVERSION OF SHARES OF BANK COMMON STOCK
Each share of Bank Common Stock (excluding treasury shares) which is
issued and outstanding immediately prior to the Effective Time will be
converted at the Effective Time into Fifth Third Common Stock and cash in lieu
of any fractional shares of Fifth Third Common Stock in accordance with the
Exchange Ratio. See "Exchange Ratio" below.
The Exchange Ratio shall be adjusted so as to give the Bank
shareholders the economic benefit of any stock dividends, distributions or
combinations or subdivision of Fifth Third Common Stock effected between the
date of the Affiliation Agreement and the Effective Time.
EXCHANGE RATIO
At the Effective Time, each of the shares of Bank Common Stock
(excluding treasury shares) then issued and outstanding shall be converted by
virtue of the Merger and without further action into .41174 of a share of Fifth
Third Common Stock (the "Exchange Ratio") subject to adjustment depending upon
the "Applicable Market Value Per Share of Fifth Third Common Stock." The
"Applicable Market Value Per Share of Fifth Third Common Stock" shall be the
average of the per share closing prices of Fifth Third Common Stock as reported
on the NASDAQ National Market System for the twenty trading days ending on the
fifth trading day prior to the Effective Time. If the Applicable Market Value
Per Share of Fifth Third Common Stock is not less than $46.875 or not more than
$57.375, then there shall be no adjustment to the Exchange Ratio. If the
Applicable Market Value Per Share of Fifth Third Common Stock exceeds $57.375,
then the Exchange Ratio shall be adjusted such that each issued and outstanding
share of Bank Common Stock will be converted into the right to receive a
fraction (expressed in decimal figures carried out to five (5) places) of a
share of Fifth Third Common Stock determined by dividing $23.625 by the
Applicable Market Value Per Share of Fifth Third Common Stock. Similarly, if
the Applicable Market Value Per Share of Fifth Third Common Stock is less than
$46.875, then the Exchange Ratio shall be adjusted such that each issued and
outstanding share of Bank Common Stock shall be converted into the right to
receive a fraction (expressed in decimal figures carried to five (5) places) of
a share of Fifth Third Common Stock determined by dividing $19.30 by the
Applicable Market Value Per Share of Fifth Third Common Stock. The Exchange
Ratio shall be adjusted so as to give the Bank's shareholders the economic
benefit of any stock dividends, distributions or combinations or subdivisions
of Fifth Third Common Stock effected between the date of the Affiliation
Agreement and Merger Agreement and effected before the Effective Time. The
Affiliation Agreement and the Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time in the following instances,
among others: (i) by Fifth Third if the Applicable Market Value Per Share of
Fifth Third Common Stock is greater than $59.875, and (ii) by the Bank if the
Applicable Market Value Per Share of Fifth Third Common Stock is less than
$44.25.
Certificates representing shares of Fifth Third Common Stock will be
distributed to the Bank shareholders upon the surrender to Fifth Third of their
certificates representing their shares of the Bank Common Stock.
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BANK STOCK OPTIONS AND STOCK OPTION PLAN
As of March 31, 1995, there were outstanding options to purchase
21,000 shares of the Bank Common Stock held by certain Directors and Officers
of the Bank pursuant to the Bank's 1994 Stock Option Plan (the "Bank Stock
Option Plan"), all of which are exercisable within the period of 30 days prior
to the Effective Time.
Pursuant to the Affiliation Agreement, all options granted under the
Bank Stock Option Plan shall be exercised prior to the Effective Time, or lost,
and as of the Effective Time the Bank Stock Option Plan will be terminated.
NO FRACTIONAL SHARES
Only whole shares of Fifth Third Common Stock will be issued in
connection with the Merger. In lieu of fractional shares, each shareholder of
Bank Common Stock otherwise entitled to a fractional share of Fifth Third
Common Stock will be paid an amount in cash equal to the product resulting from
multiplying such fraction by the Applicable Market Value Per Share of Fifth
Third Common Stock. No such shareholder will be entitled to dividends, voting
rights or other rights with respect to any such fractional share.
EXCHANGE OF CERTIFICATES
After the Effective Time, all shares of Bank Common Stock will be
cancelled and extinguished and holders of certificates previously representing
shares of Bank Common Stock will cease to have any rights as shareholders of
the Bank, except such rights, if any, as they may be entitled to under the
provisions of applicable Florida law with respect to the rights of dissenting
shareholders, and their sole rights will pertain to the shares of Fifth Third
Common Stock into which their shares of Bank Common Stock shall have been
converted pursuant to the Merger Agreement. As soon as practicable after the
Effective Time, Fifth Third will send to each former Bank shareholder a letter
of transmittal for use in submitting to Fifth Third (the "Exchange Agent")
certificates (or with instructions for handling lost, stolen, destroyed or
mislaid Bank stock certificates) formerly representing shares of the Bank
Common Stock to be exchanged for certificates representing Fifth Third Common
Stock (and, to the extent applicable, cash in lieu of fractional shares of
Fifth Third Common Stock) which the former shareholders of the Bank are
entitled to receive as a result of the Merger. Shareholders who become holders
of Fifth Third Common Stock in the Merger will not be entitled to receive any
dividends or other distributions which may be payable to holders of record of
Fifth Third Common Stock following the Effective Time until they have
surrendered and exchanged their certificates evidencing ownership of shares of
Bank Common Stock. Any dividends payable on Fifth Third Common Stock after the
Effective Time will be paid to the Exchange Agent and, upon receipt of the
certificates representing shares of Bank Common Stock, the Exchange Agent will
forward to the shareholders (i) certificates representing their shares of Fifth
Third Common Stock, (ii) dividends declared thereon subsequent to the Effective
Time (without interest) and (iii) the cash value of any fractional shares
(without interest). BANK SHAREHOLDERS ARE REQUESTED NOT TO SUBMIT STOCK
CERTIFICATES UNTIL THEY HAVE RECEIVED WRITTEN INSTRUCTIONS TO DO SO.
At the Effective Time, the stock transfer books of the Bank will be
closed and no transfer of Bank Common Stock will thereafter be made on such
books. If a certificate formerly representing shares of Bank Common Stock is
presented to the Bank or Fifth Third, it will be forwarded to the Exchange
Agent for cancellation and exchange for a certificate representing shares of
Fifth Third Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
Pursuant to the terms of the Affiliation Agreement, the Bank will
receive the opinion of Dinsmore & Shohl, counsel to Fifth Third, dated the
Effective Time, describing the material federal income tax consequences of the
Merger. The following discussion summarizes the material federal income tax
consequences of the Merger to the Bank shareholders.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW NECESSARILY IS NOT
SPECIFIC TO THE SITUATION OF A PARTICULAR SHAREHOLDER AND IS INCLUDED FOR
GENERAL INFORMATION ONLY. EACH OF THE BANK SHAREHOLDERS SHOULD CONSULT HIS OR
HER OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR
HER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER
TAX LAWS.
The federal income tax consequences to any of the Bank's shareholders
depend upon (i) the form of consideration received in exchange for the shares
of Bank Common Stock actually owned by him or her, and (ii) in the case of any
of the Bank's shareholders receiving cash, or a combination of cash and Fifth
Third Common Stock, the type of consideration received in exchange for shares
of Bank Common Stock deemed to be constructively owned by him or her under
Section 318(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
if any. Generally, under Section 318(a), a shareholder is deemed to
constructively own shares owned directly or indirectly by certain related
individuals (including spouses, children, grandchildren and parents) or by
certain related entities (including partnerships, trusts, estates and
corporations in which the shareholder owns, directly or indirectly, 50% or more
in value of the stock). Under Section 318(a), if any person has an option to
acquire stock, such stock is considered as owned by such person.
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BANK SHAREHOLDERS RECEIVING SOLELY FIFTH THIRD COMMON STOCK. A Bank
shareholder who receives solely Fifth Third Common Stock in exchange for all
shares of Bank Common Stock actually owned by him or her will not recognize any
gain or loss upon such exchange. The tax basis of the Fifth Third Common Stock
received in such exchange will be equal to the basis of the shares of Bank
Common Stock surrendered and, provided the shares of Bank Common Stock
surrendered were held as capital assets at the time of such exchange, the
holding period of the Fifth Third Common Stock received will include the
holding period of the shares of Bank Common Stock surrendered.
BANK SHAREHOLDERS RECEIVING SOLELY CASH. If all the shares of Bank
Common Stock actually owned and deemed to be constructively owned under Code
Section 318(a) by a Bank shareholder are exchanged solely for cash upon the
exercise of dissenters' rights, such Bank shareholder will recognize capital
gain or loss (provided he or she held the shares actually owned by him or her
as capital assets at the time of the exchange) measured by the difference
between such shareholder's tax basis in the shares of Bank Common Stock
actually owned by him or her and the amount of cash received by him or her in
exchange for such shares.
If a Bank shareholder exchanges all the shares of Bank Common Stock
actually owned by him or her solely for cash upon the exercise of dissenters'
rights but shares of Bank Common Stock constructively owned by him or her under
Code Section 318(a) are exchanged in whole or in part for Fifth Third Common
Stock, then the tax consequences to such shareholder will be determined under
Code Section 302 which deals with redemptions. Section 302 contains three
tests that are relevant in this context to determine whether a redemption is
taxed as ordinary income or as a capital gain or loss (provided that the shares
were held as capital assets at the time of the exchange). Under Section 302, a
redemption to the extent of available undistributed earnings and profits, is
treated as a dividend resulting in ordinary income unless it (1) is "not
essentially equivalent to a dividend"; (2) is "substantially disproportionate"
with respect to the shareholder; or (3) completely terminates the shareholder's
interest. If one of those tests is satisfied, capital gain or loss recognized
will be measured by the difference between the amount of cash received by the
shareholder in exchange for the shares of Bank Common Stock actually owned by
him or her and his or her tax basis in those shares. If none of the tests is
satisfied, the shareholder will be treated as having received dividend income
equal to the amount of cash received (without deduction for such shareholder's
tax basis in the Bank's shares).
Whether the transaction will be "not essentially equivalent to a
dividend" with respect to a Bank shareholder depends upon the particular
circumstances applicable to such shareholder, there being no precise
mathematical formula whereby it is possible to assure satisfaction of this
test. On the other hand, the "substantially disproportionate" test is a
mathematical test. The transaction will be "substantially disproportionate"
with respect to a Bank shareholder if:
(i) his or her percentage ownership of Fifth Third Common Stock
after the Merger (considering shares actually and
constructively owned) is less than 50% of all Fifth Third
Common Stock and less than 80% of
(ii) his or her hypothetical percentage ownership of the total
number of shares of Fifth Third Common Stock immediately after
the Merger if all of the Bank Common Stock had been exchanged
for Fifth Third Common Stock (considering shares actually and
constructively owned).
The third test is the complete termination of interest, which only can
be satisfied if all the Bank shares actually and constructively owned by a Bank
shareholder are exchanged solely for cash upon the exercise of dissenters'
rights, except that Code Section 302 sets forth a procedure, which, under
certain circumstances, allows a waiver of the constructive ownership rules as
they apply to family members.
Under the rules of Section 302, a Bank shareholder who receives cash
or exercises dissenters' rights for any Bank shares actually owned by him or
her risks having such amounts treated as a dividend rather than as capital
gains if any shares of Bank Common Stock constructively owned by him or her are
exchanged in whole or in part for Fifth Third Common Stock, the substantially
disproportionate test is not met, and the shareholder cannot or does not waive
constructive ownership of the shares held by others but which are attributed to
him or her.
CASH RECEIVED IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Fifth Third Common Stock will be issued pursuant to the Merger Agreement. A
shareholder of the Bank who receives cash in lieu of a fractional share will be
treated as having received such fractional share of Fifth Third Common Stock
and then as having received such cash in redemption of such fractional share
subject to the provisions of Section 302 of the Code. The circumstances under
which cash is being issued in lieu of a fractional share interest appear to
satisfy the Internal Revenue Service ruling guidelines under which the receipt
of such cash will qualify for capital gain or loss treatment (provided such
fractional interest is held as a capital asset at the time of such exchange).
Because of the complexity of the tax laws, and because the tax
consequences to any particular shareholder may be affected by specific matters
not common to all shareholders, it is recommended that Bank shareholders
consult their personal tax advisors concerning the consequences of the Merger
to them, including the consequences of the application of state and local tax
laws, if any.
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<PAGE> 33
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the requirement that
the Merger will qualify for pooling of interests accounting treatment.
Under pooling of interests accounting, as of the Effective Time, the
assets and liabilities of the Bank will be added to those of Fifth Third at
their recorded book values and the shareholders' equity account of the Bank
will be included on Fifth Third's consolidated balance sheet.
RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to Section 658.44 of the Florida Statutes ("Section 658.44"),
a copy of which is attached to this Proxy Statement and Prospectus as Annex D,
a shareholder of the Bank may dissent from the proposed corporate action to
approve the Affiliation Agreement and Merger Agreement and receive payment in
cash for the fair market value of such shareholder's shares in lieu of
receiving shares of Fifth Third Common Stock as provided under the Affiliation
Agreement and the Merger Agreement. The following discussion is not a complete
statement of the law relating to dissenters' rights and is qualified in its
entirety by reference to Annex D. This discussion and Annex D should be
reviewed carefully by any shareholder who wishes to preserve the right to
dissent because failure to comply with the procedures set forth herein and
therein will result in the loss of dissenters' rights. The exercise of
dissenters' rights is subject to consummation of the Merger.
To enforce his/her dissenters' rights under Section 658.44, a
dissenting shareholder must either (i) vote his/her shares against the approval
of the Affiliation Agreement and Merger Agreement, or (ii) give written notice
to the Bank prior to the Special Meeting, or at the Special Meeting but before
the vote on the Affiliation Agreement and Merger Agreement identifying
himself/herself and stating that he/she dissents from the approval of the
Affiliation Agreement and Merger Agreement. A shareholder may enforce his/her
dissenters' rights under Section 658.44 with respect to all or less than all of
the shares owned by such shareholder.
On or promptly after the Effective Time, Fifth Third may fix an amount
which it considers to be not more than the fair market value of the shares of
Bank Common Stock and which it will pay to the dissenting shareholders for
their shares. If Fifth Third fixes such amount, it shall offer to pay such
amount in cash to the dissenting shareholders for their shares of Bank Common
Stock. The amount payable by Fifth Third pursuant to any such offer which is
accepted by the dissenting shareholders, and the amount payable to the
dissenting shareholders pursuant to an appraisal (described below), shall
constitute a debt of Fifth Third Bank of Florida.
The value of shares of Bank Common Stock owned by dissenting
shareholders who have not accepted any such offer from Fifth Third will be
determined as of the Effective Time by three appraisers. Of the three
appraisers, one will be selected by the owners of at least two-thirds of such
dissenting shares, the second will be selected by the Board of Directors of
Fifth Third, and the third will be selected by the two appraisers so chosen.
The value agreed upon by any two of the appraisers will control and be final
and binding on all parties. If, within 90 days from the Effective Time, for
any reason one or more of the appraisers is not selected as provided in Section
658.44, or the appraisers fail to determine the value of such dissenting
shares, the Florida Department of Banking and Finance will cause an appraisal
of such dissenting shares to be made which will be final and binding on all
parties. The expenses of such appraisal will be paid by Fifth Third.
Upon consummation of the Merger, all shares of Bank Common Stock shall
be cancelled and extinguished and each dissenting shareholder will cease to
have any rights of a shareholder except the right to be paid the value of
his/her shares in accordance with Section 658.44.
A Bank shareholder considering exercising his/her dissenters' rights
should consult his/her tax advisor as to the specific tax consequences to
him/her. See "TERMS AND CONDITIONS OF PROPOSED MERGER - Federal Income Tax
Consequences - Bank Shareholder Receiving Solely Cash.
CONDUCT PENDING MERGER; REPRESENTATIONS AND WARRANTIES
The Bank has agreed, among other things, that prior to the Effective
Time it will carry on its business in the ordinary course. The Bank has agreed
to give Fifth Third and Fifth Third's representatives reasonable access during
business hours to its facilities and personnel. In addition, the Bank has
agreed that, without Fifth Third's prior written consent, it will not, among
other things: make any changes in its capital or corporate structure; issue any
additional shares of Bank Common Stock, except upon exercise of any presently
outstanding stock options; issue any securities of any kind; or make any
material changes in its method of business operations. The Bank also has
agreed not to make or become obligated to make any capital expenditures in
excess of $5,000, nor may it make or renew any agreement for services to be
provided to the Bank or permit the automatic renewal of any such agreement,
except any agreement for services having a term of not more than three months
or requiring the expenditure of not more than $2,500, without Fifth Third's
prior written consent. The Bank also has agreed not to: declare or pay any
cash dividends on its stock other than normal and customary cash dividends paid
in amounts and at times the Bank historically has paid them; pay any stock
dividends or make any other distributions on its stock;
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<PAGE> 34
or provide any increases in employee salaries or benefits other than in the
ordinary course of business, consistent with past practices.
Fifth Third and the Bank also have made numerous representations and
warranties to each other with respect to financial and other matters. These
include, without limitation, representations and warranties to the effect that
both Fifth Third and the Bank have the corporate power and authorization to
enter into the proposed transaction, that each will have provided the other
with financial statements, and that Fifth Third has enough authorized Fifth
Third Common Stock with which to accomplish the proposed transaction. No
representations or warranties made by either the Bank or Fifth Third will
survive beyond the Effective Time. Thereafter, neither the Bank, Fifth Third,
nor any officer or director of either of them, will have any liability or
obligation with respect to such representations or warranties, with the
exception of any misrepresentations, breaches of warranties or violations of
covenants that were made with intent to defraud.
CONDITIONS TO CLOSING
The Affiliation Agreement and the Merger Agreement must be approved by
the affirmative vote of both (1) a majority of the outstanding shares of Bank
Common Stock entitled to vote and (2) two-thirds (2/3) of the shares
represented at a meeting at which a quorum is present. The Merger also must be
approved in writing by the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), the Office of Thrift Supervision ("OTS") and the
Florida Department of Banking and Finance, applications for which have been
filed, and must comply with any applicable waiting periods. No assurance can
be given that the required governmental approvals will be forthcoming.
The obligations of the Bank and Fifth Third to consummate the Merger
are also subject to receipt of an opinion of counsel to Fifth Third with
respect to certain tax matters. See "TERMS AND CONDITIONS OF THE PROPOSED
MERGER - Federal Income Tax Consequences".
Fifth Third's and the Bank's obligations to consummate the Merger are
further subject to various other conditions set forth in the Affiliation
Agreement, including, but not limited to, the absence at the Effective Time of
any material actions, proceedings or investigations of any kind pending or
threatened with respect to the transactions contemplated by the Affiliation
Agreement and the Merger Agreement and both institutions having performed all
of the obligations required of them under the Affiliation Agreement and the
Merger Agreement.
Fifth Third's obligation to consummate the Merger is further subject
to conditions set forth in the Affiliation Agreement, including but not limited
to, the continuing truth and accuracy of all of the representations and
warranties of the Bank, the Bank's performance of all of the obligations
required of it under the Affiliation Agreement and the Merger Agreement,
delivery by the Bank's counsel of a certain legal opinion addressed to Fifth
Third, the taking of appropriate actions by the Bank to discontinue any ongoing
obligation after the Effective Time to continue contributions to its 401(k)
plan, the receipt by the Bank of a favorable determination letter from the
Internal Revenue Service that states that such plans satisfy all qualification
requirements, the aggregate amount of shareholders' equity of the Bank
immediately prior to the Effective Time, as shown by and reflected on its books
and records of accounts in accordance with generally accepted accounting
principles consistently applied, is not less than $4,100,000, less any
adjustments made in anticipation of, or in connection with, the Merger and
requested by Fifth Third, adjustments on unrealized gains or losses on
marketable securities and adjustments resulting from the fees paid to Keefe,
Bruyette & Woods, the Bank's investment adviser, in connection with the
representation of Bank in the Merger, the total issued and outstanding shares
of Bank Common Stock do not exceed 431,000 shares, satisfaction that the
transaction will qualify for "pooling of interests" accounting treatment and
the prior termination of Bank's employment contracts with Robert Guididas, K.R.
Barker and Patrick J. Philbin.
The Bank's obligation to consummate the Merger is further subject to
conditions set forth in the Affiliation Agreement, including but not limited
to, the continuing truth and accuracy of Fifth Third's representations and
warranties, Fifth Third's performance of all of the obligations required of it
under the Affiliation Agreement and the Merger Agreement, delivery by counsel
employed by The Fifth Third Bank of a certain legal opinion addressed to the
Bank, registration by Fifth Third of the shares of Fifth Third Common Stock to
be issued to the Bank's shareholders and the receipt of a fairness opinion from
Keefe, Bruyette & Woods dated as of a date reasonably prior and proximate to
the date of this Proxy Statement and Prospectus. The fairness opinion of
Keefe, Bruyette & Woods dated ______________, 1995 is attached to this Proxy
Statement and Prospectus as Annex C.
AMENDMENT; WAIVER; TERMINATION
The Affiliation Agreement and the Merger Agreement may be amended,
modified or supplemented by the written agreement of each of the parties, upon
the authorization of each company's respective Board of Directors and without
further approval of the Bank's shareholders, except that no amendment,
modification or supplement may be effected without Bank shareholder approval if
to do so would violate any provisions of applicable law.
The Affiliation Agreement and the Merger Agreement may be terminated
and the Merger abandoned at any time prior to the Effective Time by written
notice delivered by Fifth Third to the Bank or by the Bank to Fifth Third in
the following instances: (1) by Fifth Third or the Bank if there has been a
material misrepresentation, a material breach of warranty or a
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<PAGE> 35
material failure to comply with any covenant on the part of the other party
with respect to the representations, warranties and covenants set forth in the
Affiliation Agreement and such misrepresentation, breach or failure to comply
has not been cured within ten days of notice, provided the party in default has
no right to terminate for its own default; (2) by Fifth Third or the Bank if
the business or assets or financial condition of the other party have
materially and adversely changed from that in existence at December 31, 1994,
except for events relating to the business environment in general; (3) by Fifth
Third or the Bank if the Merger has not been consummated by December 31, 1995,
provided the terminating party is not in material breach or default of any
representation, warranty, or covenant contained in the Affiliation Agreement on
the date of termination; (4) by the Bank if the Applicable Market Value Per
Share of Fifth Third Common Stock is less than $44.25; (5) by Fifth Third if
the Applicable Market Value Per Share of Fifth Third Common Stock is greater
than $59.875; or (6) automatically if the Bank's shareholders fail to approve
the Affiliation Agreement and the Merger Agreement.
EFFECT ON THE BANK'S EMPLOYEES
Fifth Third intends, but is not obligated, to employ at Fifth Third
Bank of Florida as many of the employees of the Bank as possible. Additional
employment opportunities with Fifth Third may be available at other locations
with additional Fifth Third affiliates. Each employee of the Bank who becomes
an employee of Fifth Third or its subsidiaries subsequent to the Merger will be
entitled to participate in all employee benefit plans sponsored by Fifth Third
or its subsidiaries on the same terms and to the same extent as similarly
situated Fifth Third employees. Such employees shall receive credit for their
period of service to the Bank for purposes of determining participation and
vesting in all Fifth Third employee benefit plans, except for vesting in the
Fifth Third Master Retirement Plan, but not for purposes of determining the
benefits accrued thereunder. For purposes of determining vesting under the
Fifth Third Master Retirement Plan and the Fifth Third Master Profit Sharing
Plan, generally only those employees of the Bank who participated in comparable
plans sponsored by the Bank will receive credit for their period of service to
the Bank. The employees of the Bank retained by Fifth Third after the
Effective Time will be paid salaries by Fifth Third commensurate with the
salary levels of comparable Fifth Third employees, subject, on an ongoing
basis, to acceptable performance.
Any employee of the Bank who will not be hired by Fifth Third, in its
sole discretion, shall be terminated by the Bank immediately prior to the
Effective Time. Such terminated employees shall be entitled to severance pay
equal to, in the case of a salaried employee, two week's pay for each year of
service up to a maximum of twelve weeks' pay, and in the case of an hourly
employee, two week's pay for each year of service up to a maximum of six week's
pay, plus applicable COBRA benefits. In addition, such terminated employees
shall be entitled to a lump sum payment equal to the cost of such COBRA
benefits to such employee for a period of ninety (90) days less the amount
currently paid by such employee for similar health care benefits for a ninety
(90) day period. Fifth Third shall provide sufficient notification to the Bank
of those employees it will not be hiring in order that such employees
terminated by the Bank can be given appropriate notice of termination in
advance of the effectiveness thereof, and Fifth Third shall provide limited
outplacement services and assistance to such employees. Employees who leave of
their own free will shall not be entitled to any severance pay. Nothing
contained in the Affiliation Agreement shall be construed or interpreted to
limit or modify in any way Fifth Third's at will employment policy.
INTERESTS OF MANAGEMENT
It is not anticipated that Fifth Third will enter into employment
agreements with any officers of the Bank in connection with the transactions
contemplated by the Affiliation Agreement. In connection with the Merger, and
as a condition to Fifth Third's obligations to consummate the Merger, the
Bank's employment agreements with Robert Guididas, K.R. Barker and Patrick J.
Philbin each shall be terminated by the Bank prior to the Effective Time and
all amounts due thereunder (whether due at the time of termination or change in
control of the Bank or over a period of time) shall be paid in full. The
officers and directors of the Bank will be provided certain directors' and
officers' liability insurance protection for three years following the
Effective Time. See "TERMS AND CONDITIONS OF THE PROPOSED MERGER - Effect on
the Bank's Employees" and the immediately following paragraph.
The Affiliation Agreement provides that all provisions for
indemnification and limitation of liability now existing in favor of the
employees, agents, directors or officers of the Bank as provided by regulation
or in its Articles of Incorporation or Bylaws shall survive the Merger, shall
be assumed by Fifth Third and shall continue in full force and effect with
respect to acts or omissions occurring on or prior to the Effective Time and
for a period of three years thereafter, or in the case of matters occurring
prior to the Effective Time which have not been resolved prior to the third
anniversary of the Effective Time, until such matters are finally resolved.
Fifth Third shall also purchase and keep in force for a period of three years
following the Effective Time directors' and officers' liability insurance to
provide coverage for acts or omissions of the type and in the amount currently
covered by the Bank's existing directors' and officers' liability insurance for
acts or omissions occurring on or prior to the Effective Time, excluding claims
pending or threatened against the Bank. In addition, for actions occurring
after the Effective Time, Fifth Third shall provide to the officers and
directors of the Bank who become officers and directors of any Fifth Third
affiliate after consummation of the Merger, the same directors' and officers'
liability insurance that is provided throughout the Fifth Third holding company
system. Fifth Third agrees that all rights to indemnification existing in
favor of officers and directors of Fifth Third affiliates shall be accorded to
officers and directors of the Bank who become affiliated with any Fifth Third
affiliate in such capacities after the Effective Time and that such
indemnification will relate to covered actions or inactions prior to, as well
as after, the Effective Time, for a period of two years after the Effective
Time.
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EFFECTS OF MERGER
Upon consummation of the Merger, the Bank will merge with 5/3 F.S.B.,
with the Bank being the surviving institution but its name changed to Fifth
Third Bank of Florida.
The Board of Directors of Fifth Third Bank of Florida after the Merger
is consummated will consist of all of the members of 5/3 F.S.B. Board of
Directors who are in office at the Effective Time, each of whom will continue
to serve as a Director for the term for which such Director was elected,
subject to its Bylaws and in accordance with law. The officers of Fifth Third
Bank of Florida after the Merger is consummated will be those officers of 5/3
F.S.B. who are in office at the Effective Time, subject to its Bylaws and in
accordance with law.
MATERIAL CONTRACTS BETWEEN BANK AND FIFTH THIRD AFFILIATES
Pursuant to the Affiliation Agreement, the Bank will enter into an
agreement with Midwest Payment Systems, Inc. ("MPS"), a subsidiary of The Fifth
Third Bank, Fifth Third's largest subsidiary bank, to convert all of its
electronic funds transfer related services to MPS and the Jeanie(R) system.
Such agreement shall be effective at or prior to the Effective Time.
Similarly, the Bank will enter into an agreement with Fifth Third or an
affiliate of Fifth Third which will provide for the transfer to such entity of
the performance of any and all data processing services, including but not
limited to, item processing and application processing. Such agreement shall
be effective at or prior to the Effective Time.
RESALE OF FIFTH THIRD COMMON STOCK BY AFFILIATES
No restrictions on the sale, pledge, transfer or other disposition of
the shares of Fifth Third Common Stock issued pursuant to the Merger will be
imposed solely as a result of the Merger, other than restrictions on the
transfer of such shares issued to any Bank shareholders who may be deemed to be
an "affiliate" of Fifth Third or the Bank for purposes of Rule 145 promulgated
under the Securities Act of 1933, as amended (the "Securities Act").
Directors, executive officers or holders of 10% or more of the outstanding
shares of Bank Common Stock may be deemed to be affiliates of the Bank for
purposes of Rule 145. Affiliates may not sell, pledge, transfer or otherwise
dispose of the shares of Fifth Third Common Stock issued to them in exchange
for their shares of Bank Common Stock, unless the requirements of Rule 145(d)
are satisfied or the sale, pledge, transfer or disposition is otherwise in
compliance with the Securities Act and the rules and regulations promulgated
thereunder. Generally, under Rule 145(d), an affiliate of the Bank will be
permitted to sell, pledge, transfer or otherwise dispose of his or her shares
of Fifth Third Common Stock received pursuant to the Merger if one of the
following is satisfied:
(1) The shares are sold in "brokers' transactions" or in
transactions directly with a "market maker," the affiliate does not solicit or
arrange for the solicitation of purchase orders or make any payments in
connection with the sale to anyone other than the broker or market maker and
the number of shares sold, together with all other sales of Fifth Third Common
Stock by such affiliate within the preceding three months, does not exceed one
percent of the outstanding shares of Fifth Third Common Stock or the average
weekly trading volume for four weeks prior to the proposed sale; or
(2) The affiliate is not an affiliate of Fifth Third and a period
of at least two years has elapsed since the Fifth Third Common Stock was
acquired in the Merger and there is publicly available certain information
regarding Fifth Third.
In addition, shares of Fifth Third Common Stock issued to affiliates
in the Merger may not be sold, pledged, transferred or otherwise disposed of
until such time as financial results covering at least 30 days of combined
operations of 5/3 F.S.B. and the Bank have been published within the meaning of
Section 201.01 of the Securities and Exchange Commission's Codification of
Financial Reporting Policies.
Share certificates for Fifth Third Common Stock issued to affiliates
of the Bank will bear a legend as follows:
The shares of stock evidenced by this certificate are subject
to restrictions on transfer and may only be transferred after
the Issuer has received an opinion from its counsel that the
transfer will be in compliance with the requirements of Rule
145(d) promulgated under the Securities Act of 1933. The
Issuer will mail a copy of Rule 145(d) to the shareholder
without charge within five (5) days after written request
therefor.
The foregoing is only a general statement of the restrictions on the
disposition of the shares of Fifth Third Common Stock to be issued in the
Merger. Accordingly, those shareholders of the Bank who may be affiliates of
the Bank should confer with legal counsel with respect to the resale
restrictions.
FIFTH THIRD BANCORP
11
<PAGE> 37
DESCRIPTION OF BUSINESS
Fifth Third is an Ohio corporation organized in 1975 as a bank holding
company registered under the Bank Holding Company Act of 1956, as amended (the
"Bank Holding Company Act"), and subject to regulation by the Federal Reserve
Board. Fifth Third, with its principal office located in Cincinnati, is a
multi-bank, two-tiered, holding company that owns all of the outstanding stock
of six commercial banks with 251 offices in 36 counties in Ohio. Those banks
are: The Fifth Third Bank, The Fifth Third Bank of Northwestern Ohio, N.A.,
Fifth Third Bank of Northeastern Ohio, The Fifth Third Bank of Western Ohio,
The Fifth Third Bank of Southern Ohio and The Fifth Third Bank of Columbus.
Fifth Third also owns all of the outstanding capital stock of two commercial
banks with 71 offices in six counties in Kentucky. Those banks are: Fifth
Third Bank of Northern Kentucky, Inc. and Fifth Third Bank of Kentucky, Inc.
Further, Fifth Third owns all the outstanding capital stock of one commercial
bank which maintains 28 offices in seven counties in Indiana. That bank is:
The Fifth Third Bank of Central Indiana.
In addition, Fifth Third is a multi-savings and loan holding company
registered under the Savings and Loan Holding Company Act of 1967, as amended,
owning all of the outstanding capital stock of two federal savings banks, 5/3
F.S.B. and The Fifth Third Savings Bank of Western Kentucky, F.S.B., a
federally-chartered savings bank located in Mayfield, Kentucky. 5/3 F.S.B. has
one main office and one branch in Naples, Florida and The Fifth Third Savings
Bank of Western Kentucky, F.S.B. has a main office in Mayfield, Kentucky. As a
savings and loan holding company, Fifth Third is registered with and subject to
regulation by the Office of Thrift Supervision.
On January 20, 1995, Fifth Third, through its wholly-owned subsidiary,
The Fifth Third Bank, consummated its acquisition of Mutual Federal Savings
Bank of Miamisburg, A Stock Savings Bank ("Mutual Federal"). Mutual Federal
was merged into The Fifth Third Bank. The former offices of Mutual Federal
were retained and are being operated as full-service banking centers of The
Fifth Third Bank. The total amount of deposits involved in the transaction was
approximately $59 million.
On August 26, 1994, Fifth Third consummated its acquisition of The
Cumberland Federal Bancorporation, Inc., a savings and loan holding company,
and its wholly owned subsidiary, The Cumberland Federal Savings Bank
("Cumberland FSB"). In a related transaction, Fifth Third Bank of Kentucky,
Inc. ("Fifth Third Kentucky") acquired all branch offices except one and
acquired substantially all of the assets and assumed substantially all of the
liabilities of Cumberland FSB. Then, Cumberland FSB changed its name to The
Fifth Third Savings Bank of Western Kentucky, FSB ("Western Kentucky") and
moved its main office to Mayfield, Kentucky. The acquired offices of
Cumberland FSB are operated as branches of Fifth Third Kentucky, except that
Fifth Third later sold three of such branches. The total amount of deposits
assumed by Fifth Third Kentucky in such transaction was approximately $793
million and that remaining in Western Kentucky was approximately $31 million.
Prior to the Cumberland transaction, Fifth Third was a unitary savings and loan
holding company which owned all of the outstanding stock of 5/3 F.S.B.
On June 3, 1994, Fifth Third completed the acquisition of The National
Bancorp of Kentucky, Inc. Pursuant to that transaction, The National Bancorp
of Kentucky, Inc. was merged into Fifth Third, and The National Bancorp of
Kentucky, Inc.'s wholly owned subsidiaries, The First National Bank of
Falmouth, Falmouth, Kentucky ("FNB") and The National Bank of Cynthiana,
Cynthiana, Kentucky ("NBC"), became wholly owned subsidiaries of Fifth Third.
Simultaneously with the merger, FNB was merged with and into Fifth Third Bank
of Northern Kentucky, Inc. and NBC was merged with and into Fifth Third Bank of
Central Kentucky, Inc., n/k/a Fifth Third Bank of Kentucky, Inc. The total
amount of deposits transferred to Fifth Third's subsidiaries was approximately
$80 million.
On May 20, 1994, Fifth Third, through three of its affiliate banks,
completed the purchase of certain assets and the assumption of certain
liabilities of Citizens Federal Bank, a Federal Savings Bank, Miami, Florida
("Citizens"). The three affiliates acquired all of the assets and assumed all
of the liabilities of eight branches of Citizens located throughout Ohio.
Seven of the eight branches are being operated as full-service banking centers
and one branch was closed.
Fifth Third has several acquisition transactions pending. Fifth Third
and Falls Financial, Inc. entered into an agreement dated December 12, 1994,
whereby Falls Financial, Inc. will be merged into Fifth Third. The total
amount of deposits to be transferred to Fifth Third will be approximately $492
million, with substantially all of the assets and liabilities of Falls
Financial, Inc.'s savings bank subsidiary to be purchased and assumed by Fifth
Third Bank of Northeastern Ohio. This transaction is expected to be
consummated in the third quarter of 1995. The Fifth Third Bank has agreed to
purchase one branch office from Bank One, Dayton, N.A. located in Lebanon,
Ohio. The total amount of deposits to be transferred to The Fifth Third Bank
is approximately $19 million. This transaction is expected to be consummated
by June 30, 1995. On May 15, 1995, The Fifth Third Bank entered into an
agreement with PNC Bank, Ohio N.A. to purchase substantially all of the assets
and assume substantially all of the liabilities of 12 branch offices located in
the Dayton, Ohio area. The total amount of deposits to be transferred to The
Fifth Third Bank will be approximately $259 million. This transaction is
expected to be consummated by September 30, 1995.
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<PAGE> 38
At March 31, 1995, Fifth Third, its affiliated banks and other
subsidiaries had consolidated total assets of $15.6 billion, consolidated total
deposits of $11.1 billion and consolidated total shareholders' equity of $1.5
billion.
Fifth Third, through its subsidiaries, engages primarily in
commercial, retail and trust banking, investment services and leasing
activities and also provides credit life, accident and health insurance,
discount brokerage services and property management for its properties. Those
subsidiaries consist of The Fifth Third Company, Fifth Third Securities, Inc.,
The Fifth Third Leasing Company, Fifth Third Community Development Company,
Midwest Payment Systems, Inc., Fifth Third Investment Company and Fountain
Square Insurance Company. Fifth Third's affiliates provide a full 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
affiliates has deposit insurance provided by the FDIC through the Bank
Insurance Fund ("BIF"), and the savings bank affiliates have deposit insurance
provided by the FDIC through the Savings Association Insurance Fund ("SAIF").
Fifth Third, through its banking subsidiaries, operates for itself and
other financial institutions a proprietary automated teller machine ("ATM")
network, Jeanie(R). The Jeanie system participates in a shared ATM network
called "Money Station(R)," which includes several Ohio bank holding companies
and over 1,000 ATM's. The "Money Station" network participates in another
shared ATM network called "PLUS System(R)," which is a nationwide network with
over 17,000 participating ATM's. The Fifth Third Bank, through its
wholly-owned subsidiary, MPS, also provides electronic switch services for
several regional banks and bank holding companies in Ohio, Kentucky and
Illinois.
Fifth Third is a corporate entity legally separate and distinct from
its affiliates. The principal source of Fifth Third's income is dividends from
its affiliates. There are certain regulatory restrictions as to the extent to
which the affiliates can pay dividends or otherwise supply funds to Fifth
Third. See "DESCRIPTION OF CAPITAL STOCK."
CAPITAL REQUIREMENTS FOR FIFTH THIRD
The Federal Reserve Board, the Office of the Comptroller of the
Currency and the Federal Deposit Insurance Corporation (the "FDIC") issued new
guidelines to implement risk-based capital requirements for state member banks
and bank holding companies in the first quarter of 1989. The guidelines
established a systematic analytical framework that makes regulatory capital
requirements more sensitive to differences in risk profiles among banking
organizations, takes off-balance sheet exposures into explicit account in
assessing capital adequacy and minimizes disincentives to holding liquid,
low-risk assets.
The guidelines provided for phasing in risk-based capital standards
through the end of 1992, at which time the standards became fully effective.
At that time, banking organizations were required to have capital equivalent to
8 percent of assets, weighted by risk. Banking organizations must have at
least 4 percent Tier 1 capital, which consists of core capital elements
including common shareholders' equity, retained earnings and perpetual
preferred stock, to weighted risk assets. The other half of required capital
(Tier 2) can include, among other supplementary capital elements, limited-life
preferred stock and subordinated debt and loan loss reserves up to certain
limits.
Under Federal Reserve Board policy, a holding company is expected to
act as a source of financial strength to each subsidiary bank and to commit
resources to support each of its subsidiaries. Although this policy has been
rejected by several courts, nevertheless this support may be required at times
when, absent such Board policy, the holding company may not find itself able to
provide it.
Fifth Third, and each of its subsidiary banks, is in compliance with
both the current leverage ratios and the final risk-based capital standards.
As of March 31, 1995, Fifth Third had a leverage ratio of 9.58%, its Tier 1
risk-based capital ratio was 11.14% and its total risk-based capital ratio was
12.83%.
BANK HOLDING COMPANIES IN GENERAL
Bank holding companies and banks are extensively regulated under both
federal and state law. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions.
As a bank holding company, Fifth Third is registered with and subject
to regulation by the Federal Reserve Board. A bank holding company is required
to file with the Federal Reserve Board an annual report and such additional
information as the Federal Reserve Board may require pursuant to the Bank
Holding Company Act.
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<PAGE> 39
The Federal Reserve Board also may make examinations of a holding
company and each of its subsidiaries. The Bank Holding Company Act requires
each bank holding company to obtain the prior approval of the Federal Reserve
Board before it may acquire substantially all of the assets of any bank, or
before it may acquire ownership or control of any voting shares of any bank if,
after such acquisition, it would own or control directly or indirectly, more
than 5% of the voting shares of such bank.
The Bank Holding Company Act also restricts the types of businesses
and operations in which a bank holding company and its subsidiaries (other than
bank subsidiaries) may engage. Generally, permissible activities are limited
to banking and activities found by the Federal Reserve Board to be so closely
related to banking as to be a proper incident thereto.
The operations of the subsidiary banks of Fifth Third are subject to
requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon, and limitations on the types of investments that may be made and the
types of services which may be offered. Various consumer laws and regulations
also affect the operations of these banking subsidiaries.
National banks are subject to the supervision of and are regularly
examined by the Comptroller of the Currency. In addition, national banks may
be members of the Federal Reserve System and their deposits are insured by the
FDIC and, as such, may be subject to regulation and examination by each agency.
State chartered banking corporations are subject to federal and state
regulation of their business and activities, including, in the case of banks
chartered in Ohio, by the Ohio Division of Banks, in the case of banks
chartered in Kentucky, by the Kentucky Department of Financial Institutions,
and in the case of banks chartered in Indiana, by the Indiana Department of
Financial Institutions.
ACQUISITIONS OF SAVINGS ASSOCIATIONS BY HOLDING COMPANIES
Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843)
("BHC Act") prohibits bank holding companies from acquiring or retaining shares
of any company that is not a bank or is not engaging in any activity other than
managing and controlling banks, except under certain circumstances. The
primary exception permits bank holding companies to conduct activities and
acquire companies solely in activities the Federal Reserve Board has determined
in to be closely related to banking and a proper incident thereto. Section 346
of the Reigle Community Development and Regulatory Improvement Act of 1994
("Section 346") amends amended Section 4 of the BHC Act to establish a new
notice procedure for obtaining Federal Reserve Board approval under Section
4(a)(2) and 4(c)(8) of the BHC Act. Under Section 346, a proposal requiring
Federal Reserve Board approval under Section 4(a)(2) or 4(c)(8) may be
consummated 60 days after providing the Federal Reserve Board with complete
written notice of the proposal, unless the notice period is extended as
provided in the statute. Section 346 also permits proposals to be consummated
at any time during this notice period if approved by the Federal Reserve Board
during this period. This interim rule replaced the application procedures of
Section 4(c)(8) of the BHC Act with a new notice procedure and streamlined the
procedures for obtaining Federal Reserve Board approval for nonbanking
proposals in several respects. The interim rule contemplates action by the
Federal Reserve Board on nonbanking proposals involving listed activities
(including the acquisition of a thrift or thrift assets) within 30 days after a
notice containing all of the information required by the rule has been received
by the Federal Reserve Board. In approving the activities contained in such a
notice, the Federal Reserve Board is precluded from opposing any restrictions
on transactions between the bank holding company and the acquired savings
association, except as required by Section 23A or 23B of the Federal Reserve
Act or any other applicable law.
Section 18(c) of the Federal Deposit Insurance Act ("FDI Act") (12
U.S.C. 1828(c)) authorizes the Federal Reserve Board to approve the application
of a bank to effect a merger, consolidation, acquisition of assets or
assumption of deposit liabilities, and, incident thereto, to establish a branch
or branches pursuant to Section 9 of the Federal Reserve Act (12 U.S.C. 321)
and Section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3)) authorizes the
Federal Reserve Board to approve the application of a bank to effect a merger,
consolidation or acquisition of assets or assumption of deposit liabilities of
a savings association by a bank that is insured by the Bank Insurance Fund.
ADDITIONAL INFORMATION
For more detailed information about Fifth Third, reference is made to
the Fifth Third Annual Report on Form 10-K for the year ended December 31,
1994, and the Fifth Third Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, which are incorporated herein by reference, and the Fifth Third
Annual Report to Shareholders for the year ended December 31, 1994 which
accompanies this Proxy Statement and Prospectus. See "AVAILABLE INFORMATION"
and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
14
<PAGE> 40
BANK OF NAPLES
DESCRIPTION OF BUSINESS
Bank of Naples received authorization from the Florida Department of
Banking and Finance ("FDBF") to commence business as a Florida-chartered bank
on May 11, 1989. The Bank's deposits are insured by the Bank Insurance Fund to
the maximum extent permitted by the Federal Deposit Insurance Corporation
("FDIC"), and it is a member of the Federal Reserve System. At March 31, 1995,
the Bank had approximately $56.7 million in assets, $51.4 million in deposits
and shareholders' equity of approximately $4.1 million.
The Bank principally is engaged in the general banking business of
attracting deposits from the general public and using such deposits and other
funds to originate retail and commercial loans. Through its three offices
located in Collier County, Florida, the Bank engages in a wide range of
commercial banking activities, including without limitation, the acceptance of
deposits for checking, savings and time deposit accounts, making of secured and
unsecured loans and rental of safe deposit boxes. The Bank's lending services
include the making of commercial, real estate, installment and credit card
loans, and its operating revenues are derived primarily from interest and fees
on its loans and interest earned on securities of the United States government
and agencies, states and municipalities. Collier County has a great deal of
tourist business and the services offered by the Bank and the business done by
it are subject to material seasonal fluctuations.
The banking industry in the Collier County market is highly
competitive. The Bank competes for loans and deposits with other financial
institutions, most of which are larger than the Bank. The larger commercial
banks, including branches of statewide and regional holding company banks,
possess significantly higher lending authorities and vastly greater resources
with which to attract new business. In addition to competing with banks and
thrifts for deposits, the Bank also competes against direct investment
opportunities available to its deposit customers, such as corporate securities,
mutual funds and other investment vehicles. Additionally, there is an
increasing number of lenders seeking the lending business typically provided by
banks and thrifts. These lenders include insurance companies, mortgage brokers
and small loan companies.
The Bank employs 21 full time employees and two part time employees.
The Bank's main office is located at 4949 Tamiami Trail North, Naples,
Florida 33940, and its telephone number is (941) 434-7200.
REGULATION
GENERAL
The Bank is a banking institution which is chartered by, and operates
in the state of, Florida; as such, it is subject to supervision and regulation
by the FDBF. The Bank is a member bank of the Federal Reserve System and its
operations are also subject to broad federal regulation and oversight by the
Federal Reserve Board. The deposit accounts of the Bank are insured by the
FDIC which gives the FDIC certain enforcement powers over the Bank. Various
consumer laws and regulations also affect the operations of the Bank, including
state usury laws, consumer credit and equal credit laws and fair credit
reporting.
The FDBF supervises and regulates all areas of the Bank's operations
including, without limitation, the making of loans, the issuance of securities,
the conduct of the Bank's corporate affairs, capital adequacy requirements, the
payment of dividends and the establishment or closing of branches. In this
regard, the FDBF has authorized the Bank to maintain 3 full service banking
facilities in Collier County.
As a state-chartered banking institution in the state of Florida, the
Bank is empowered by statute, subject to the limitations contained in those
statutes, to take savings and time deposits and pay interest on them, to accept
checking accounts, to make loans on residential and other real estate, to make
consumer and commercial loans and to provide various other banking services to
its customers.
As a member of the Federal Reserve System, the Bank is required to
comply with the capital adequacy guidelines of the Federal Reserve Board. The
capital guidelines applicable to the Bank are the same as those applicable to
Fifth Third. See "FIFTH THIRD BANCORP - Capital Requirements for Fifth Third."
As of March 31, 1995, the Bank met all of its minimum capital requirements: the
Bank had a leverage ratio of 7.40%, its Tier 1 risk-based capital ratio was
9.73%, and its total risk-based capital ratio was 10.84%.
The Bank is required to maintain reserves against its transaction
accounts. Reserve requirements and the amount of required reserves is subject
to adjustment by the Federal Reserve Board. The Federal Reserve Board also
imposes restrictions
15
<PAGE> 41
on the Bank with respect to loans and extensions of credit to certain related
parties and purchases from and other transactions with the Bank's principal
shareholders, officers, directors and affiliates.
Under the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), state-chartered institutions, such as the Bank, are prohibited
from conducting activities as principal that are not permitted for national
banks. A bank, however, may engage in an otherwise prohibited activity if it
meets its minimum capital requirements and the FDIC determines that the
activity does not present a significant risk to the deposit insurance fund.
The Bank does not engage in any activities not permitted a national bank.
FDICIA also enacted a number of other significant bank supervisory and
regulatory reforms, including: (1) a risk-based system for deposit insurance
assessments; (2) the requirement for prompt corrective action in certain
situations; (3) bank interagency adoption of safety and soundness regulations
and accompanying guidelines setting standards for bank operations and
management, asset quality, earnings and stock valuation and employee
compensation; (4) bank interagency adoption of real estate lending guidelines
which require depository institutions to adopt and maintain written real estate
lending policies that comply with these prescribed guidelines; and (5) the
Truth in Saving Act which requires clear and uniform disclosure by depository
institutions of the rates of interest payable on their deposit accounts and the
fees that are assessable against those accounts.
DIVIDENDS
The Bank is subject to legal limitations on the frequency and amount
of dividends that can be paid to its shareholders under Section 658.37 Florida
Statutes, Banking Code. Under this statute, the board of directors of a state
chartered bank, after making provision for reasonably anticipated future
losses, may quarterly, semi-annually or annually declare a dividend of up to
the aggregate net profits of that period combined with the bank's retained net
profits for the preceding two years and, with approval of the FDBF, declare a
dividend from retained net profits which accrued prior to the preceding two
years. Before declaring such dividends, 20% of the net profits for the
preceding period as is covered by the dividend must be transferred to the
surplus fund of the bank until this fund becomes equal to the amount of the
bank's common stock then issued and outstanding. No dividend may be declared
if the bank's net income from the current year combined with the retained net
income from the preceding two years is a loss or if the payment would cause the
bank's capital account to fall below required levels. Additionally, the
Federal Reserve Board may restrict the Bank's ability to pay dividends if such
payment would constitute an unsafe or unsound banking practice.
BANK OF NAPLES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
BANK'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is designed to provide an understanding
of the significant factors that influenced Bank of Naples' results of
operations and financial condition for the three months ended March 31, 1995
and 1994 and for the year ended December 31, 1994 as compared with 1993. This
discussion and analysis should be read in conjunction with Bank of Naples'
consolidated financial statements and corresponding notes.
As of March 31, 1995, Bank of Naples had total assets of $56,697,000 as
compared to $57,602,000 and $36,872,000 at December 31, 1994 and December 31,
1993 respectively. For the three months ended March 31, 1995, Bank of Naples
had net income of $240,000 as compared to $150,000 for the three months ended
March 31, 1994. For the year ended December 31, 1994, Bank of Naples had net
income of $757,000 as compared to net income of $448,000 for the year ended
December 31, 1993.
Florida, and in particular, Collier County, continues to be among the fastest
growing areas in the country. The 56% asset size growth of Bank of Naples in
1994 in general reflects the continued growth of its primary business area.
Additionally, the 1994 acquisition of two locally-based competitors by
out-of-state bank holding companies presented unique opportunities for deposit
and loan growth of which Bank of Naples has taken advantage. In 1994, Bank of
Naples opened its first two branches as part of a modest expansion strategy.
16
<PAGE> 42
LOANS
At March 31, 1995, total gross loans outstanding amounted to $42,932,000 as
compared to $40,421,000 and $26,743,000 at December 31, 1994 and 1993
respectively. The following table presents,in thousands, the loans of Bank of
Naples at the dates noted:
<TABLE>
<CAPTION>
March 31 December 31,
1995 1994 1993
-------------- -------------- --------------
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Real Estate
Mortgage
Secured by 1-4 family
residential properties $18,662 44% $18,377 46% $12,724 48%
Secured by non-farm,
non-residential properties 4,708 10% 4,802 11% 2,883 10%
------- ---- ------- ---- ------- ----
23,370 54% 23,179 57% 15,607 58%
Construction & Development 7,966 19% 6,257 16% 2,324 9%
Commercial 10,172 24% 9,623 24% 7,976 30%
Loans to Individuals 1,357 3% 1,278 3% 804 3%
Other 67 0% 84 0% 32 0%
------- ---- ------- ---- ------- ----
Total Gross Loans $42,932 100% $40,421 100% $26,743 100%
Deferred Fees 124 0% 121 0% 89 0%
------- ---- ------- ---- ------- ----
Gross Loans (net of deferred fees) $42,808 100% $40,300 100% $26,654 100%
Allowance for Loan Losses 479 1% 494 1% 460 2%
------- ---- ------- ---- ------- ----
Net Loans $42,329 99% $39,806 99% $26,194 98%
</TABLE>
Bank of Naples loan portfolio consists primarily of loans made for residential
and commercial real estate as well as other commercial purposes. At March 31,
1995, real estate secured loans comprised 73% of the entire loan portfolio.
The $2,511,000 (6%) increase in gross loans from December 31, 1994 to March 31,
1995 reflects Bank of Naples' 1995 growth plans and associated business
development efforts, and was generally spread among all loan categories.
The $13,678,000 (51%) increase in gross loans from December 31, 1993 to
December 31, 1994 reflects largely the new business gained after the
acquisition of two locally-based bank competitors by out-of state bank holding
companies, and was generally spread among all loan categories.
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<PAGE> 43
The following table shows the scheduled payments, in thousands, on loans
outstanding at March 31, 1995. In addition, amounts due after one year are
classified according to the sensitivity to changes in interest rates.
<TABLE>
<CAPTION>
Maturing
After 1 But
-------------------------------------
After 5
Within 1 Year Within 5 Years Years Total
------------- -------------- ------- -----
<S> <C> <C> <C> <C>
Real Estate
Mortgage $3,045 $7,508 $12,817 $23,370
Construction & Development 4,197 1,920 1,849 7,966
Commercial 5,414 3,549 1,209 10,172
Loans to Individuals 925 428 4 1,357
Other 67 67
------- ------- ------- -------
Total Loans $13,648 $13,405 $15,879 $42,932
======= ======= ======= =======
Loans maturing after one year with:
Fixed Interest Rates $1,785 $1,363
Variable Interest Rates 11,620 14,516
------- -------
Total Loans $13,405 $15,879
======= =======
</TABLE>
18
<PAGE> 44
RESTRUCTURED AND NON-PERFORMING ASSETS
Restructured loans consist of loans where the original terms have been modified
to provide for a reduction of the stated interest rate for the remaining
original life of the loans, an extension of the maturity date at a stated
interest rate lower than the current market rate for new loans with similar
risk, or a reduction in the face or maturity amount of the loans or accrued
interest as stated in the related agreements.
Non performing loans consist of loans which are 90 days past due for which Bank
of Naples continues to accrue interest and loans which have been placed on
non-accrual status. The accrual of interest on loans is generally discontinued
when a loan becomes 90 days past due as to principal or interest payments. In
certain instances, management may elect to continue the accrual of interest
when the loan is in the process of collection and the estimated net realizable
value of the collateral is sufficient to cover the principal balance, accrued
interest and collection costs.
The following table summarizes, in thousands, the amount of restructured and
non-performing loans and assets and related ratios.
<TABLE>
<CAPTION>
March 31 December 31,
-------- --------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Restructured Loans $0 $0 $0
Non-Performing Loans
Loans 90 or more days past due and
still accruing interest 5 49 0
Non-Accrual Loans 23 88 30
---- ---- ----
28 137 30
Other Real Estate Owned 125 125 608
---- ---- ----
Total Restructured and Non-Performing Assets $153 $399 $668
==== ==== ====
Ratio of Non-Performing Loans to Total Loans 0.07% 0.34% 0.11%
===== ===== =====
Ratio of Restructured And Non-Performing Assets to
Total Loans and Other Real Estate 0.36% 0.98% 2.44%
===== ===== =====
</TABLE>
At March 31, 1995, Bank of Naples had total non-performing loans of $28
thousand, or .07% of total loans as compared to $137 thousand, or .34% of total
loans at December 31, 1994. Other real estate owned remained constant at $125
thousand at both March 31, 1995 and December 31, 1994. No loss is anticipated
from the sale of this property.
At December 31, 1994, Bank of Naples had total non-performing loans of $137
thousand, or .34% of total loans as compared to $30 thousand, or .11% of total
loans at December 31, 1993. Other real estate owned decreased by $483 thousand
from $608 thousand at December 31, 1993 to $125 thousand at December 31, 1994.
This decrease resulted from the sale of three properties previously foreclosed
by Bank of Naples.
Loans past due 90 days or more and still accruing interest totaled $23
thousand, or .05% of total loans at March 31, 1995 as compared to $88 and $30
thousand (.22% and .11% of total loans) at December 31, 1994 and 1993
respectively. There were no restructured loans at March 31, 1995 or December
31, 1994 or 1993.
Bank of Naples has an internal system for evaluating and grading loans. Watch
list assets are those loans which have been graded substandard or worse by
management or supervisory authorities due to potential weaknesses in the
borrower's ability to repay the loan, the borrower's financial condition,
deficiencies in loan documentation, weaknesses in collateral, or other factors.
At March 31, 1995, $546 thousand in loans were included on Bank of Naples
internal watch list, of which $523 thousand were performing loans. Watch list
loans at December 31, 1994 and 1993 were $634 and $618 thousand respectively.
During the last quarter of 1994, the Federal Reserve Bank completed an
examination of Bank of Naples. Bank of Naples' level and classification of
identified potential problem loans were not materially revised as a result of
this regulatory examination process.
19
<PAGE> 45
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through provisions charged to the
statement of operations. Assessing the adequacy of the allowance for loan
losses involves substantial uncertainties and is based upon management's
evaluation of the amounts required to meet estimated charge-offs in the loan
portfolio after weighing various factors.
The following table summarizes, in thousands, the changes in the allowance for
loan losses, and related ratio:
<TABLE>
<CAPTION>
3 Months Ended 12 Months Ended
March 31 December 31,
---------------- ------------------
1995 1994 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance at beginning of period $494 $460 $460 $475
Loans charged off
Real Estate
Mortgage
Construction & Development (26)
Commercial (37) (13) (26) (182)
Loans to Individuals (1) (3) (19)
---- ---- ---- ----
Recoveries (37) (14) (55) (201)
Real Estate
Mortgage 3
Construction & Development
Commercial 7 5 66 35
Loans to Individuals 3 8 13
---- ---- ---- ----
7 8 74 51
---- ---- ---- ----
Net (charge offs) / recoveries (30) (6) 19 (150)
Provision for loan losses 15 15 15 135
---- ---- ---- ----
Balance at end of period $479 $469 $494 $460
Ratio of allowance for loan losses to loans at 1.12% 1.56% 1.23% 1.73%
end of period ===== ===== ===== =====
</TABLE>
Bank of Naples' net charge-offs and provision for loan losses decreased
markedly in 1994 reflecting the resolution in 1993 of various problem assets.
The decrease in the allowance for loan losses to loans ratio reflects the
overall growth of Bank of Naples in 1994 rather than the use of the allowance
for loan losses to fund loan charge-offs.
Bank of Naples' determination of the adequacy of the allowance for loan losses
is based on an evaluation of the risk characteristics of its loan portfolio,
generally past loan loss experience, the quality of specific loans, the level
of non-accruing loans, the value of underlying collateral, current economic
conditions, volume, growth of the loan portfolio and other relevant factors.
Bank of Naples maintained the allowance for loan losses at a level sufficient
to absorb estimated losses inherent in the loan portfolio. The allowance for
loan losses is made up of two primary components: amounts allocated to loans
based upon collateral type, loan grade, and delinquency status, and a general
portion designed to supplement the amounts allocated to specific loan types.
For purposes of complying with certain disclosure requirements the table below
presents, in thousands, an allocation of the allowance for loan losses among
various loan classifications and sets forth the percentage of loans in each
category to total loans. The allowance shown in the table should not be
construed as an indication that charge-offs in future periods will occur in
these amounts or proportions or that the allowance indicates future charge-off
trends.
20
<PAGE> 46
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------------------------------
1995 1994 1993
---------------------- --------------------- ----------------------
% of % of % of
Loans in Loans In Loans In
Each Each Each
Amount Category Amount Category Amount Category
---------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real Estate
Mortgage $257 52.0% $259 55.3% $161 58.4%
Construction
& Development 61 17.7% 49 14.9% 19 8.7%
Commercial 96 22.6% 133 23.0% 135 29.8%
Loans to Individuals 10 3.0% 10 3.0% 6 3.0%
Acceptances of Other 16 4.7% 12 3.8% 0 0.1%
Banks/Other
Unallocated 39 0.0% 31 0.0% 139 0.0%
---- ------ ---- ------ ---- ------
$479 100.0% $494 100.0% $460 100.0%
==== ====== ==== ====== ==== ======
</TABLE>
OTHER EARNING ASSETS
The following table presents, in thousands, the other earning assets of Bank of
Naples:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994 1993
--------- ------- ------
<S> <C> <C> <C>
Securities Held to Maturity
Obligations of state and political subdivisions $440 $440 $440
Securities Available for Sale
US Treasury Securities 487 476 759
US Government Agencies
Mortgage backed securities 357 352 522
Collateralized mortgage obligations 3,050 2,983 3,263
Other securities 1,182 1,154 1,266
Other securities
Domestic corporation bonds 250 250 250
Bankers Acceptances 1,999 1,493 0
Equity Securities
Federal Reserve Bank stock 123 99 86
Federal Home Loan Bank stock 187 160 158
Federal Funds Sold 2,200 6,585 1,275
------- ------- ------
$10,275 $13,992 $8,019
======= ======= ======
</TABLE>
In May, 1993 the Financial Accounting Standards Board issued Statement 115,
"Accounting for Investments in Certain Debt and Equity Securities" (FAS 115).
FAS 115 requires classification of investments into three categories. Debt
securities that Bank of Naples has the positive intent and ability to hold to
maturity are classified as "Held to Maturity" and must be reported at amortized
cost. Debt and equity securities that are bought and held principally for the
purpose of selling them in the near term
21
<PAGE> 47
are classified as "Trading" and must be reported at fair value, with unrealized
gains and losses included in earnings. All other debt and equity securities
must be considered "Available for Sale" and reported at fair value, with
unrealized gains and losses excluded from earnings and reported as a separate
component of shareholders' equity, net of tax effects. Bank of Naples
implemented FAS 115 as of December 31, 1993.
Bank of Naples did not significantly increase or alter its investment
securities portfolio in 1994 or the first quarter of 1995 in the face of rising
interest rates and interest rate volatility. Increases in the level of
investible funds have been generally allocated to overnight federal funds sold
investments so as to maintain the greatest liquidity to fund current and
near-term prospective loan growth.
The following table sets forth the amount of maturities, in thousands, and
average yields of investment securities at March 31, 1995.
<TABLE>
<CAPTION>
Maturity
----------------------------------------------------------------------------
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
----------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities Held to Maturity
Obligations of state and
political subdivisions $0 0.00% $0 0.00% $0 0.00% $440 9.23%
Securities Available for Sale
US Treasury Securities $0 0.00% $487 4.81% $0 0.00% $0 0.00%
US Government Agencies
Mortgage backed
securities 0 0.00% 0 0.00% 0 0.00% 357 8.19%
Collateralized
mortgage
obligations 0 0.00% 0 0.00% 643 5.21% 2,407 5.87%
Other securities 0 0.00% 711 5.95% 471 6.78% 0 0.00%
Other securities
Domestic
corporation
bonds 250 4.65% 0 0.00% 0 0.00% 0 0.00%
Bankers
Acceptances 1,999 6.34% 0 0.00% 0 0.00% 0 0.00%
----------------------------------------------------------------------------
2,249 6.15% 1,198 5.49% 1,114 5.87% 2,764 6.17%
----------------------------------------------------------------------------
$2,249 6.15% $1,198 5.49% $1,114 5.87% $3,204 6.59%
============================================================================
</TABLE>
The information indicated does not include any assumptions regarding regular
payments or prepayments on Bank of Naples' mortgage backed securities and
collateralized mortgage obligations.
22
<PAGE> 48
DEPOSITS
The following tables present, in thousands, the average deposits of Bank of
Naples and the change therein:
<TABLE>
<CAPTION>
Average Deposits
------------------------------------------------------------------------------------
Three Months Ended March 31 Year Ended December 31
1995 1994 1994 1993
------------------------------------------------------------------------------------
Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non Interest Bearing $10,668 20.89% $5,384 15.76% $6,206 16.14% $4,539 14.38%
Interest Bearing
NOW Checking Accounts 12,026 23.55% 7,040 20.61% 8,487 22.07% 5,230 16.57%
Savings Accounts 2,044 4.00% 868 2.54% 1,114 2.90% 805 2.55%
Money Market Accounts 10,385 20.33% 10,231 29.95% 10,549 27.43% 9,255 29.32%
Certificates of Deposit 15,952 31.23% 10,639 31.14% 12,102 31.46% 11,738 37.18%
------------------------------------------------------------------------------------
$51,075 100.00% $34,162 100.00% $38,458 100.00% $31,567 100.00%
</TABLE>
<TABLE>
<CAPTION>
Change in Average Deposits
------------------------------------------------------------
Three Months Year Ended
Ended March 31 December 31
------------------------------------------------------------
Amount % Amount %
------ - ------ -
<S> <C> <C> <C> <C>
Non Interest Bearing $5,284 98.14% $1,667 36.73%
Interest Bearing
NOW Checking Accounts 4,986 70.82% 3,257 62.28%
Savings Accounts 1,176 135.48% 309 38.39%
Money Market Accounts 154 1.51% 1,294 13.98%
Certificates of Deposit 5,313 49.94% 364 3.10%
------------------ -----------------
$16,913 49.51% $6,891 21.83%
================== =================
</TABLE>
At March 31, 1995 Bank of Naples had total deposits of $51.4 million, a
decrease of $1.3 million (2%) since December 31, 1994. Deposits are relatively
unchanged; this decrease is reflective of normal changes in deposit balances.
At December 31, 1994, Bank of Naples had total deposits of $52.7 million, an
increase of $20.2 million (62%) since December 31, 1993. This growth in
deposits is attributable to the opening of two branches which collectively had
deposits of $ 5.2 million at December 31, 1994, as well as the migration of
depositors from the two locally-based bank competitors which were acquired by
out-of- state bank holding companies in 1994.
The following table sets forth, in thousands, the maturity of certificates of
deposit of $100,000 or more at March 31, 1995:
<TABLE>
<S> <C>
3 Months or less $ 404
Over 3 Months but within 6 months 2,391
Over 6 Months but within 1 year 734
Over 1 year 808
-------
$ 4,337
=======
</TABLE>
SHORT TERM BORROWINGS
Bank of Naples short term borrowings consist of federal funds purchased,
securities sold under agreements to repurchase, and advances from the Federal
Home Loan Bank of Atlanta. The purchase of federal funds, and the sale of
securities sold under agreements to repurchase are typically done on an
overnight basis from correspondents under pre-approved lines of
23
<PAGE> 49
credit on an as needed basis. The securities sold are held in safekeeping by
the correspondent with whom the transaction is consummated. Advances from the
Federal Home Loan Bank of Atlanta are secured by a specific pledge of
residential mortgage loans.
The only short term borrowing outstanding at March 31, 1995, December 31, 1994,
and December 31, 1993, was a $1,000,000 advance from the Federal Home Loan Bank
of Atlanta which matures in September, 1995 and carries a rate of 4.31%.
CAPITAL RESOURCES
At March 31, 1995, Bank of Naples had total shareholder equity of $4.1 million,
an increase of $323 thousand over December 31, 1994. This increase derives
from net income of $240 thousand through March 31, 1995 and an $83 thousand
improvement in the fair market value of FAS 115 securities.
At December 31, 1994, Bank of Naples had total shareholder equity of $3.7
million, an increase of $518 thousand over December 31, 1993. This increase
derives from 1994 net after-tax income of $757 thousand offset by a net $239
thousand decline in the fair market value (net of tax effect) of FAS 115
securities.
The following table presents the capital resources, in thousands, and the
related ratios of Bank of Naples as of the dates shown:
<TABLE>
<CAPTION>
December 31,
---------------------------------
March 31,
1995 1994 1993
-------- ---- ----
<S> <C> <C> <C>
Total Shareholder Equity $4,071 $3,749 $3,230
Less: Unrealized (Gains) / Losses on Available for Sale Securities 130 212 (42)
Less: Intangible Assets (5) (7) (5)
Total Tier 1 Capital $4,196 $3,954 $3,183
Allowance for Loan Losses Includable as Tier 2 Capital 0 0 129
Total Risk Based Capital $4,196 $3,954 $3,312
Shareholder's Equity to Assets 7.18% 6.51% 8.76%
Leverage Ratio 7.40% 6.86% 8.63%
Risk Based Capital Ratios
Tier 1 9.73% 9.25% 11.43%
Total 10.84% 10.41% 12.69%
</TABLE>
In 1989 the Federal Reserve Bank adopted supervisory risk-based capital ratios
of capital to risk-weighted assets which required Bank of Naples to maintain,
as of December 31, 1992, a minimum total risk-based capital ratio of 8%. Bank
of Naples' Tier 1 risk- based capital ratio and total risk-based capital ratio
were 9.73% and 10.84% respectively at March 31, 1995.
24
<PAGE> 50
RESULTS OF OPERATIONS - GENERAL INFORMATION
The following is a condensed statement of operations, in thousands, for the
three months ended March 31, 1995 and 1994, and the years ended December 31,
1994 and 1993.
<TABLE>
<CAPTION>
Three Months Ended March 31 Year Ended December 31
-------------------------------------------------------------------------------------
1995 1994 1994 1993
-------------------------------------------------------------------------------------
Annualized Annualized
% of % of % of % of
Average Average Average Average
Amount Assets Amount Assets Amount Assets Amount Assets
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income $1,226 8.71% $742 7.69% $3,456 7.98% $2,839 8.15%
Interest Expense
Deposits 379 2.69% 223 2.31% 1,063 2.45% 938 2.69%
Borrowings 12 0.09% 11 0.11% 58 0.13% 18 0.05%
-------------------------------------------------------------------------------------
Net Interest Income 835 5.93% 508 5.26% 2,335 5.40% 1,883 5.41%
Provision for Loan
Losses 15 0.11% 15 0.16% 15 0.03% 135 0.39%
-------------------------------------------------------------------------------------
Net interest income
after loan loss 820 5.82% 493 5.11% 2,320 5.36% 1,748 5.02%
provision
Non-interest income 57 0.40% 63 0.65% 210 0.49% 157 0.45%
Securities gain 0 0.00% 0 0.00% 0.00% 3 0.01%
Non-interest expense 508 3.61% 406 4.21% 1,732 4.00% 1,460 4.19%
-------------------------------------------------------------------------------------
Pre-tax income 369 2.62% 150 1.55% 798 1.84% 448 1.29%
Income taxes 129 0.92% 0 0.00% 41 0.09% 0 0.00%
-------------------------------------------------------------------------------------
Net Income $240 1.70% $150 1.55% $757 1.75% $448 1.29%
=====================================================================================
</TABLE>
NET INTEREST INCOME
Net interest income is the difference between interest and fees on earning
assets and interest paid on interest bearing deposits and other interest
bearing liabilities. Net interest income is affected by changes in interest
rates earned and paid, and by changes in the volume of earning assets and
interest bearing liabilities.
The following table summarizes net interest income for the three months ended
March 31, 1995 and 1994, and the years ended December 31, 1994 and 1993.
25
<PAGE> 51
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------------------------------
1995 1994
--------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest Earning Assets:
Loans (1) $42,435 $1,065 10.04% $27,610 $631 9.14%
Investment Securities 8,274 130 6.28% 6,861 100 5.83%
Federal Funds Sold 2,088 31 5.94% 1,331 11 3.31%
-------------------------------------------------------
Total Interest Earning Assets $52,797 $1,226 9.29% $35,802 $742 8.29%
Non-Interest Earning Assets:
Cash & Due from Banks 2,778 1,771
Premises & Equipment 521 481
Other Assets 719 1,007
Allowance for Loan Losses (498) (454)
------- -------
Total Non-Interest Earning Assets 3,520 2,805
------- -------
Total Assets $56,317 $38,607
======= =======
LIABILITIES & SHAREHOLDERS' EQUITY
Interest Bearing Liabilities
NOW Checking $12,027 $88 2.93% $7,040 $42 2.39%
Money Market 10,384 80 3.08% 10,231 66 2.58%
Savings 2,044 14 2.74% 868 5 2.30%
Time Certificates of Deposit 15,952 197 4.94% 10,639 110 4.14%
Federal Funds Purchased 99 1 4.04% 62 1 6.45%
FHLB Borrowings 1,000 11 4.40% 1,000 10 4.00%
-------------------------------------------------------
Total Interest Bearing Liabilities $41,506 $391 3.77% $29,840 $234 3.14%
Non-Interest Bearing Liabilities
Demand Deposits 10,668 5,384
Other Liabilities 194 90
------- -------
Total Non-Interest Bearing Liabilities 10,862 5,474
------- -------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------------------
1994 1993
--------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest Earning Assets:
Loans (1) $32,345 $3,006 9.29% $24,218 $2,378 9.82%
Investment Securities 6,400 376 5.88% 7,257 427 5.88%
Federal Funds Sold 1,773 74 4.17% 1,126 34 3.02%
--------------------------------------------------------
Total Interest Earning Assets $40,518 $3,456 8.53% $32,601 $2,839 8.71%
Non-Interest Earning Assets:
Cash & Due from Banks 1,914 1,356
Premises & Equipment 495 499
Other Assets 861 859
Allowance for Loan Losses (491) (487)
------- -------
Total Non-Interest Earning Assets 2,779 2,227
------- -------
Total Assets $43,297 $34,828
======= =======
LIABILITIES & SHAREHOLDERS' EQUITY
Interest Bearing Liabilities
NOW Checking $8,487 $210 2.47% $5,230 $136 2.60%
Money Market 10,549 291 2.76% 9,256 264 2.85%
Savings 1,114 28 2.51% 805 21 2.61%
Time Certificates of Deposit 12,102 533 4.40% 11,738 518 4.41%
Federal Funds Purchased 48 2 4.17% 102 4 3.92%
FHLB Borrowings 1,249 57 4.56% 290 13 4.48%
--------------------------------------------------------
Total Interest Bearing Liabilities $33,549 $1,121 3.34% $27,421 $956 3.49%
Non-Interest Bearing Liabilities
Demand Deposits 6,207 4,539
Other Liabilities 135 99
------- -------
Total Non-Interest Bearing Liabilities 6,342 4,638
------- -------
</TABLE>
26
<PAGE> 52
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------------------------------
1995 1994
--------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Liabilities $52,368 $35,314
Shareholder's Equity 3,949 3,293
======= =======
Total Liabilities & Equity $56,317 $38,607
======= =======
Net Interest Income $835 5.82% $508 5.16%
============== ==============
Net Yield on Interest Earning Assets 6.33% 5.68%
===== =====
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------------------
1994 1993
--------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Liabilities $39,891 $32,059
Shareholder's Equity 3,406 2,769
======= =======
Total Liabilities & Equity $43,297 $34,828
======= =======
Net Interest Income $2,335 5.19% $1,883 5.22%
============== ================
Net Yield on Interest Earning Assets 5.76% 5.78%
===== =====
</TABLE>
27
<PAGE> 53
The following table presents, in thousands, the effect on net interest income
of changes from prior period in volume, and rate for the categories and periods
indicated. The effect of a change in volume has been determined by applying the
rate in the current period to the change in volume during the current period.
The effect of a change in rate has been determined by applying the volume in
the earlier period to the change in rate during the current period.
<TABLE>
<CAPTION>
Three Months Ended March 31 Year Ended December 31
------------------------------------- -------------------------------------
1995 Compared to 1994 1994 Compared to 1993
Increase (Decrease) Due to Increase (Decrease) Due to
Changes in Changes in
------------------------------------- -------------------------------------
Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans $339 $95 $434 $798 (170) $628
Investment
Securities 21 9 30 ($50) ($1) ($51)
Federal Funds Sold 6 14 20 $20 $20 $40
------------------------------------- -------------------------------------
Total Interest Income $366 $118 $484 $768 ($151) $617
Interest Expense
NOW Checking $30 $16 $46 $85 ($11) $74
Money Market 1 13 14 37 (10) 27
Savings 7 2 9 8 (1) 7
Time Certificates
of Deposit 55 32 87 16 (1) 15
Federal Funds
Purchased 0 (0) 0 (2) 0 (2)
FHLB Borrowings 0 1 1 43 1 44
------------------------------------- -------------------------------------
Total Interest Expense 93 64 157 187 (22) 165
------------------------------------- -------------------------------------
Net Interest Income $273 $54 $327 $581 ($129) ($452)
===================================== =====================================
</TABLE>
NON-INTEREST INCOME
The following table presents, in thousands, the non-interest income of Bank of
Naples for the three months ended March 31, 1995 and 1994, and the years ended
December 31, 1994 and 1993.
<TABLE>
<CAPTION>
3 Months Ended Year Ended
March 31 December 31
----------------------------------------------------------------------
Change Change
---------------- -------------------
1995 1994 Amount % 1994 1993 Amount %
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts $57 $63 ($6) (9.52%) $210 $157 $53 33.76%
Other 0 0 0 0.00% 0 3 (3) (100.00%)
$57 $63 ($6) (9.52%) $210 $160 $50 31.25%
======================================================================
</TABLE>
28
<PAGE> 54
NON-INTEREST EXPENSE
The following table presents, in thousands, the non-interest expense of Bank of
Naples for the three months ended March 31, 1995 and 1994, and the years ended
December 31, 1994 and 1993.
<TABLE>
<CAPTION>
3 Months Ended Year Ended
March 31 December 31
--------------------------------- ----------------------------------
Change Change
----------------- -------------------
1995 1994 Amount % 1994 1993 Amount %
--------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and benefits $256 $187 $69 36.90% $833 $694 $139 20.03%
Occupancy and furniture
and equipment expenses 88 72 16 22.22% 315 270 45 16.67%
Other 164 147 17 11.56% 584 496 88 17.74%
----------------------------------------------------------------------
$508 $406 $102 25.12% $1,732 $1,460 $272 18.63%
</TABLE>
COMPARISON OF 1993 TO 1994
Bank of Naples grew dramatically in 1994, primarily as a result of the opening
of its first two branch offices as well as by the migration of loan and deposit
business form two locally-based bank competitors which were acquired by
out-of-state bank holding companies in 1994.
Assets grew by 56% in 1994 from $36.9 million at December 31, 1993 to $57.6
million at December 31, 1994. This growth reflects the 57% growth of Bank of
Naples' loan portfolio over that same time. This growth was funded by increased
deposits. Deposits at December 31, 1994 stood at $52.7 million as compared to
$32.5 million at December, 1993, an increase of 62%. Net income grew by 69% in
1994 from $448 thousand in 1993 to $757 thousand in 1994.
Net interest income increased by 24% in 1994 from $1,883,000 in 1993 to
$2,335,000 in 1994. This increase reflects the growth in the loan portfolio and
overall deposits. As a percentage of average interest earning assets, net
interest income declined from 5.22% in 1993 to 5.19% in 1994. Generally
increasing interest rates in 1994 resulted in a decline in fee income from the
origination and sale of residential mortgage loans causing the average yield on
earning assets to decrease to 8.53% in 1994 from 8.71% in 1993 while Bank of
Naples was able to reduce the cost of interest bearing liabilities from 3.49%
in 1993 to 3.34% in 1994.
Bank of Naples' loan loss provision decreased from $135 thousand in 1993 to $15
thousand in 1994 on the basis of a $169 thousand decrease in the level of net
charge-offs in 1994. The decrease in the level of net charge-offs resulted from
management's ability to resolve various problem assets in 1993 and a generally
improving economy.
Non-interest income increased from $157 thousand in 1993 to $210 thousand in
1994 due primarily to an increase in service charges on deposit accounts
related to the growth in the Bank of Naples' deposits.
Non-interest expense increased from $1.5 million in 1993 to $1.7 million in
1994, generally as a result of Bank of Naples' overall growth throughout 1994.
The opening and staffing of two new branches caused personnel expense to rise;
at December 31, 1994 Bank of Naples had 26 full-time equivalent personnel as
compared to 20 at December 31, 1993. The 19% increase in non-interest expense
compares favorably to the 56% increase in the overall size of the bank and the
69% increase in net income.
COMPARISON OF 1994 TO 1995
The increase in net interest income from $508 thousand for the three months
ended March 31, 1994 to $835 thousand for the three months ended March 31, 1995
was due to the increase in the assets of Bank of Naples from $41.8 million at
March 31, 1994 to $56.7 million at March 31, 1995 as well as by generally
higher loan interest rates in 1995 versus 1994. As a percentage of average
interest earning assets, net interest income increased from 4.45% for the three
months ended March 31, 1994 to 5.52% for the three months ended March 31, 1995.
Bank of Naples recorded loan loss provision of $15 thousand both for the three
months ended March 31, 1994 and for the three months ended March 31, 1995.
29
<PAGE> 55
Non-interest income decreased from $63 thousand for the three months ended
March 31, 1994 to $57 thousand for the three months ended March 31, 1995. The
relative stability of first quarter non-interest income reflects the seasonal
swelling of individual deposit account balances and its dampening effect on
deposit-related service charge income.
Non-interest expense increased from $406 thousand for the three months ended
March 31, 1994 to $508 thousand for the three months ended March 31, 1995
generally as a result of Bank of Naples' overall growth throughout 1994. The
opening and staffing of two new branches caused personnel expense to rise; at
March 31, 1995 Bank of Naples had 25 full-time equivalent personnel as compared
to 20 at March 31, 1994. The 25% increase in non-interest expense compares
favorably to the 36% increase in the overall size of the bank between March 31,
1995 and 1994, and the 60% increase in net income between for the three months
ended March 31, 1994 and for the three months ended March 31, 1995.
ANALYSIS OF INTEREST RATE SENSITIVITY
Interest rate sensitivity management seeks to minimize the fluctuation in net
interest income during periods of changing interest rates. The difference
between interest rate sensitive assets and interest rate sensitive liabilities
for a specific period or on a cumulative basis is commonly referred to as a
rate sensitivity "gap". The gap is considered "positive" when rate sensitive
assets exceed rate sensitive liabilities and "negative" when rate sensitive
liabilities exceed rate sensitive assets. Institutions that have a "positive"
gap are generally considered to be in a position to benefit from rising rates
but to be adversely affected by falling rates whereas those that have a
"negative" gap are generally considered to be in a position to benefit from
falling rates but to be adversely affected by rising rates.
While gap analysis is a valuable tool in assessing the potential impact of
interest rate changes on net interest income, other factors, such as changes in
balance sheet composition and the interest rate spread relationship between
interest earning assets and interest bearing liabilities, also have an
important impact in determining net income.
The following table sets forth the interest rate sensitivity of Bank of Naples'
assets, liabilities and shareholder equity, in thousands, at March 31, 1995.
Amounts are classified as to the earlier of the next possible repricing date or
maturity.
<TABLE>
<CAPTION>
Immediately
Adjustable 2 Days 3 Months 6 Months Non-Rate
or 1 Day Through 3 Through 6 Through 1 Sensitive or
Maturity Months Months Year Over 1 Year Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Securities Held to $0 $440 440
Maturity
Securities 1,999 250 5,386 7,635
Available for Sale
Federal Funds Sold 2,200 2,200
Loans, Net 18,028 5,475 5,078 9,868 3,880 42,329
Non-Interest 4,093 4,093
Earning Assets
-----------------------------------------------------------------------------------------
Total Assets $20,228 $7,474 $5,078 $10,118 $13,799 $56,697
=========================================================================================
Liabilities &
Shareholder Equity
Demand Deposits $9,351 $9,351
NOW Checking 11,769 11,769
Money Market 10,749 10,749
Savings 2,428 2,428
Time Certificates 0 2,299 7,405 3,529 3,883 17,116
of Deposit
Federal Funds
Purchased
</TABLE>
30
<PAGE> 56
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FHLB Borrowings 1,000 1,000
Non-Interest 213 213
Bearing
Liabilities
Shareholder Equity 4,071 4,071
-------------------------------------------------------------------------------------
Total Liabilities & 22,518 2,299 8,405 3,529 19,946 $56,697
Shareholder Equity -------------------------------------------------------------------------------------
Interest Rate ($2,290) $5,175 ($3,327) $6,589 ($6,147)
Sensitivity Gap ======================================================================
Cumulative Interest ($2,290) $2,885 ($442) $6,147 $0
Rate Sensitivity Gap ======================================================================
Cumulative Interest (4.04)% 5.09% (0.78)% 10.84%
Rate Sensitivity Gap
as a Percentage of
Total Assets
======================================================
Cumulative Gap Ratio 0.90 1.12 0.99 1.17
======================================================
</TABLE>
As of March 31, 1995, Bank of Naples had a positive twelve month cumulative gap
ratio of 1.17. This gap ratio is within the predetermined interest rate gap
ratio range of .80 - 1.20 established by Bank of Naples' Asset Liability
Management / Investment Committee which approves policy and monitors Bank of
Naples' interest rate sensitivity.
ANALYSIS OF LIQUIDITY
Liquidity management involves the ability to meet the cash flow requirements of
customers who may be either depositors wanting to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs. Bank of Naples' liquidity is affected by seasonal factors affecting its
deposit base such that Bank of Naples experiences its greatest liquidity in the
winter while conversely experiencing its lowest liquidity in the summer. Bank
of Naples' liquidity ratio, which is calculated by dividing liquid assets (cash
and due from banks, federal funds sold, and investment securities less federal
funds purchased, secured deposits, and securities sold under agreement to
repurchase) into total deposits and debt payable within one year, less secured
deposits stood at 24.4% at March 31, 1995 compared to 30.2% and 27.5% at
December 31, 1994 and 1993 respectively. Unanticipated liquidity requirements
are met primarily by borrowing from the Federal Home Loan Bank of Atlanta.
Advances from the Federal Home Loan Bank of Atlanta are secured by a specific
pledge of residential mortgage loans. At March 31, 1995, Bank of Naples' sole
borrowing was a $1,000,000 advance from the Federal Home Loan Bank of Atlanta
against a credit line of $5,500,000.
MARKET FOR BANK SHARES AND DIVIDEND HISTORY
The Bank Common Stock is not listed on any organized market or exchange and
no public market exists for shares of the Bank Common Stock. The following
table sets forth the high and low sales prices for the Bank Common Stock, for
the period specified, to the best of the Bank's knowledge. However, it is
possible that purchases and sales of the Bank Common Stock occurred between
private parties during this period of which the Bank is not aware.
<TABLE>
<CAPTION>
HIGH PRICE LOW PRICE
---------- ---------
<S> <C> <C>
1993 1st Quarter 7.20 7.00
2nd Quarter 8.20 7.50
3rd Quarter 8.75 8.50
4th Quarter 8.50 8.25
1994 1st Quarter 10.00 8.05
2nd Quarter 11.00 10.00
3rd Quarter N/A N/A
4th Quarter 12.25 11.00
1995 1st Quarter N/A N/A
</TABLE>
As of June 30, 1995, the number of record holders of the Bank Common Stock
was __________________.
31
<PAGE> 57
During the last two fiscal years and during the first quarter of 1995, the
Bank has not declared any dividends. The payment of dividends by the Bank is
subject to certain bank regulatory restrictions. See "BANK OF NAPLES -
Regulation of Bank".
ADDITIONAL INFORMATION ON BANK
For more detailed information about the Bank, reference is made to the
Bank's financial statements included herein under the caption "INDEX TO BANK OF
NAPLES FINANCIAL STATEMENTS".
EFFECT OF GOVERNMENTAL POLICIES
The earnings of both the Bank and of Fifth Third and its subsidiaries are
affected not only by domestic and foreign economic conditions, but also by the
monetary and fiscal policies of the United States and its agencies,
particularly the Federal Reserve Board, foreign governments and other official
agencies. The Federal Reserve Board can and does implement national monetary
policy, such as the curbing of inflation and combating of recession, by its
open market operations in United States Government securities, control of the
discount rate applicable to borrowings and the establishment of reserve
requirements against deposits and certain liabilities of depository
institutions. The actions of the Federal Reserve Board influence the growth of
bank loans, investments and deposits and affect interest rates charged on loans
or paid on deposits. The nature and impact of future changes in monetary and
fiscal policies are not predictable.
From time to time various proposals are made in the United States Congress
and in state legislatures and before various regulatory authorities that would
alter the powers or the existing regulatory framework for banks, bank holding
companies, savings banks and other financial institutions. It is impossible to
predict whether any of the proposals will be adopted and the impact, if any, of
such adoption on the business of the Bank or Fifth Third and its subsidiaries.
DESCRIPTION OF FIFTH THIRD COMMON STOCK
Fifth Third is authorized to issue 140,000,000 shares of Fifth Third Common
Stock, no par value, and 500,000 shares of preferred stock, no par value
("Fifth Third Preferred Stock"). As of March 31, 1995, Fifth Third had
outstanding 65,200,241 shares of Fifth Third Common Stock and no shares of
Fifth Third Preferred Stock. Pursuant to Article Fourth of Fifth Third's
Second Amended Articles of Incorporation, as amended, the Board of Directors of
Fifth Third may, without further action of the shareholders, (a) divide into
one or more new series the authorized shares of Fifth Third Preferred Stock
which have not previously been designated, (b) fix the number of shares
constituting any such new series and (c) fix the dividend rates, payment dates,
whether dividend rights shall be cumulative or non-cumulative, conversion
rights, redemption rights (including sinking fund provisions) and liquidation
preferences. Except as otherwise provided by law, holders of any series of
Fifth Third Preferred Stock shall not be entitled to vote on any matter.
Set forth below is a description of Fifth Third Common Stock. This
description and analysis are brief summaries of relevant provisions of the
Articles of Incorporation of Fifth Third and are qualified in their entirety by
reference to such Articles and to the Code of Regulations of Fifth Third.
VOTING RIGHTS
Holders of both Fifth Third Common Stock are entitled to one vote per share
on all matters submitted to a vote of shareholders.
The Code of Regulations of Fifth Third provides for the division of its
Boards of Directors into three classes of approximately equal size. Members of
each class of the Board are elected for three-year terms, and the terms of
office of approximately one-third of the members of the classified Board of
Directors expire each year. This classification of Fifth Third's Board may
make it more difficult for a shareholder to acquire control of Fifth Third and
remove management by means of a hostile takeover.
Fifth Third's Second Amended Articles of Incorporation, as amended,
contains another potential anti-takeover device. As stated above, Fifth Third
is authorized to issue 500,000 shares of Fifth Third Preferred Stock, and its
Board of Directors may designate various characteristics and rights of such
stock, including conversion rights. Accordingly, as an anti-takeover measure,
Fifth Third's Board of Directors may authorize the conversion of shares of
Fifth Third Preferred Stock into any number of shares of Fifth Third Common
Stock and thus dilute the outstanding shares of Fifth Third Common Stock.
The holders of Fifth Third Common Stock have the right to vote cumulatively
in the election of directors. Under applicable Ohio law, cumulative voting in
the election of directors of a corporation will be permitted if (i) written
notice is given by any shareholder of such corporation to the President, Vice
President or the Secretary of such corporation, not less than 48 hours before
the time fixed for holding the meeting at which directors are to be elected,
indicating that such shareholder desires that voting for the election of
directors be cumulative and (ii) announcement of the giving of such notice is
made upon the convening of the meeting by the meeting Chairman or Secretary or
by or on behalf of the
32
<PAGE> 58
shareholder giving such notice. In such event, each shareholder will be
entitled to cumulate such voting power as he or she possesses and to give one
nominee as many votes as the number of directors to be elected multiplied by
the number of his or her shares, or to distribute such votes on the same
principle among two or more candidates, as each shareholder sees fit.
Generally actions required to be taken by Fifth Third shareholders require
the affirmative vote of the holders of a majority of the shares of Fifth Third
entitled to vote, except for certain actions which by statute require a
two-thirds vote. No vote of Fifth Third's shareholders is required to approve
the Merger.
DIVIDENDS
Holders of Fifth Third Common Stock are each entitled to dividends as and
when declared by the Board of Directors of Fifth Third out of funds legally
available for the payment of dividends. Fifth Third has, in the past, declared
and paid dividends on a quarterly basis, and intends to continue to do so in
the immediate future in such amounts as the Board of Directors shall determine.
Most of the revenues of Fifth Third available for payment of dividends
derive from amounts paid to it by its respective subsidiaries. Under
applicable banking law, the total of all dividends declared in any calendar
year by a national bank or a state-chartered bank may not, without the approval
of the Comptroller of the Currency, the Federal Reserve Board, or the FDIC, as
the case may be, exceed the aggregate of such bank's net profits (as defined)
and retained net profits for the preceding two years. Under the law applicable
to federally-chartered savings associations, the amount of dividends which a
savings association may make without the approval of the OTS depends upon the
amount of capital possessed by such savings association. Savings associations,
which have capital immediately prior to, and on a pro forma basis after giving
effect to, a proposed dividend that is equal to or greater than the amount of
their fully phased-in capital requirements, are authorized to pay dividends
during a calendar year up to one hundred percent of their net income during the
calendar year plus the amount that would reduce by one-half their surplus
capital. Some associations that have capital immediately prior to, and on a
pro forma basis after giving effect to, a proposed dividend that is equal to or
in excess of their minimum capital requirement, but less than their fully
phased-in capital requirements, may pay dividends equal to 75% of net income
during the most recent four quarters (minus dividends previously paid over that
period). Savings associations which have capital immediately prior to, or on a
pro forma basis after giving effect to, a proposed dividend that is less than
the amount of their minimum capital requirements, are not authorized to pay any
dividend unless such association receives prior approval from the OTS or unless
such association is operating in compliance with an OTS approved capital plan
and the dividend payment is consistent with such capital plan.
The affiliates of Fifth Third include both state and nationally chartered
banks and two federally-chartered savings banks. Under the applicable
regulatory limitations, during the year 1995, the affiliates of Fifth Third
could declare aggregate dividends limited to their 1995 eligible net profits,
as defined, and $271,979,000, their adjusted retained 1994 and 1993 net income,
without the approval of their respective regulators. The Comptroller of the
Currency, banking authorities of the States of Ohio, Indiana and Kentucky, and
the OTS, the principal regulators of such affiliates, have the statutory
authority to prohibit a depository institution under their supervision from
engaging in what, in their opinion, constitutes an unsafe or unsound practice
in conducting its banking or savings association business. The payment of
dividends could, depending upon the financial condition of affiliates, be
deemed to constitute such an unsafe or unsound practice. No affiliate of Fifth
Third has ever been prohibited from declaring dividends or restricted in paying
any dividends declared.
If, in the opinion of the applicable regulatory authority, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such bank cease and desist from the
practice. The Federal Reserve Board has similar authority with respect to bank
holding companies, and the OTS has similar authority with respect to savings
and loan holding companies. In addition, the Federal Reserve Board, the
Comptroller of the Currency and the FDIC have issued policy statements which
provide that insured banks and bank holding companies should generally only pay
dividends out of current operating earnings. Finally, the regulatory
authorities have established guidelines with respect to the maintenance of
appropriate levels of capital by a bank, bank holding company, savings
association or savings and loan holding company under their jurisdiction.
Compliance with the standards set forth in such guidelines could limit the
amount of dividends which Fifth Third and its affiliates may pay.
PREEMPTIVE RIGHTS
Shareholders of Fifth Third have no preemptive rights.
RIGHTS UPON LIQUIDATION
In the event of liquidation, dissolution or winding up of Fifth Third, the
holders of Fifth Third Common Stock would be entitled to receive, subject to a
priority holders of Fifth Third Preferred Stock may have over holders of Fifth
Third Common
33
<PAGE> 59
Stock in the event shares of Fifth Third Preferred Stock are ever issued, and
after payment or provision for payment of all of its debts and liabilities, all
of the assets of the Fifth Third available for distribution.
INDEMNIFICATION AND PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Fifth Third's Code of Regulations provides for the indemnification of each
director and officer of the corporation, to the fullest extent permitted by
Ohio law, against all expenses and liabilities reasonably incurred by or
imposed on him or her in connection with any proceeding or threatened
proceeding in which he or she may become involved by reason of his or her being
or having been a director or officer. Generally, Ohio law permits such
indemnification provided that the person seeking to be indemnified has acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation, and with respect to any criminal action, had
no reasonable cause to believe his or her conduct was unlawful, so long as no
judgment or other final adjudication adverse to such person establishes that
his or her acts or omissions (i) were in breach of his or her duty of loyalty
to the corporation or its shareholders, (ii) were not in good faith or involved
a knowing violation of law, or (iii) resulted in his or her receipt of an
improper personal benefit. The grant of indemnification in the context of a
derivative or other comparable suit may have a circular effect, inasmuch as any
damages recovered in such action will be offset by the cost of indemnification.
SHAREHOLDERS' MEETINGS; QUORUM
Special meetings of Fifth Third's shareholders may be called at any time by
the Board of Directors or by the shareholders of Fifth Third upon the written
application of the holders of at least 25% of all Fifth Third capital stock
entitled to vote on the matters to be considered at the meeting. Such
applications must set forth the purpose of the meeting.
The presence in person or by proxy of the holders of a majority of the
aggregate number of the outstanding shares of any class or series of capital
stock voting at a meeting constitutes a quorum under the Code of Regulations of
Fifth Third.
SUBSCRIPTION, CONVERSION, REDEMPTION RIGHTS; STOCK NONASSESSABLE
Fifth Third Common Stock has no subscription or conversion rights, and
there are no mandatory redemption provisions applicable thereto.
Shares of Fifth Third Common Stock issued to shareholders of the Bank
pursuant to the Affiliation Agreement and the Merger Agreement will be validly
issued, fully paid and non-assessable, and will not, upon such issuance, be
subject to preemptive rights of any shareholder of Fifth Third.
CHANGE OF CONTROL PROVISIONS
Fifth Third's Articles of Incorporation and Code of Regulations contain
various provisions which could make more difficult a change in control of each
corporation or discourage a tender offer or other plan to restructure each
corporation. Under Fifth Third's Articles of Incorporation, Fifth Third's
Board of Directors has the authority to issue 500,000 shares of Preferred Stock
and to fix the designations, powers, preferences and rights of such shares and
the qualifications, limitations or restrictions applicable thereto.
Ohio corporation law also provides certain change of control protective
provisions. Section 1701.831 of the Ohio Revised Code sets forth the
procedures for the acquisition of a control share of an Ohio corporation which
include the delivery of an acquiring person statement to the target corporation
and the affirmative vote of a majority of the shares held by the shareholders
of the target corporation prior to the acquisition of a control share, at a
meeting held for the purpose of voting on such acquisition. Finally, Fifth
Third's Code of Regulations provides for the election of directors on a
classified basis.
The Ohio corporation statute also includes a provision which permits a
corporation's board of directors, when determining whether an acquisition
proposal or any other matter is in the best interest of the corporation, to
take into consideration the interests of the corporation's employees,
suppliers, creditors and customers, the economy of the state and the nation,
community and societal considerations and the long-term and short-term
interests of the corporation and its shareholders, including the possibility
that such interests may be best served by the continued independence of the
corporation.
34
<PAGE> 60
CERTAIN BENEFICIAL OWNERS OF FIFTH THIRD COMMON STOCK
The following table shows those persons known to Fifth Third to be the
beneficial owners of more than 5% of Fifth Third Common Stock at December 31,
1995. To the knowledge of Fifth Third, there have been no substantial or
material changes in the share holdings of such beneficial owners:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Name and Address of Beneficial Owner Amount & Nature of Ownership Percent of Class
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cincinnati Financial Corporation 13,000,000(1) 20.19%
6200 South Gilmore
Fairfield, Ohio 45014
Fifth Third Bancorp 5,991,457(2) 9.26%
Subsidiary Banks
Fifth Third Center
Cincinnati, Ohio 45263
The Western-Southern Life Insurance Company 4,425,255(3) 6.84%
400 Broadway
Cincinnati, Ohio 45202
Ruane, Cunniff & Co. 3,623,022 5.60%
767 Fifth Avenue, Suite 4701
New York, New York 10153
</TABLE>
(1) Cincinnati Financial Corporation owns 9,890,700 shares of Fifth Third
Common Stock. Cincinnati Insurance Company, a subsidiary of
Cincinnati Financial Corporation, owns 2,695,000 shares. Cincinnati
Casualty Company, another subsidiary, owns 210,000 shares. Cincinnati
Life Insurance Company, another subsidiary of Cincinnati Financial,
owns 204,300 shares. In addition, Mr. John J. Schiff, Jr., a director
of Fifth Third and Chairman and a director of Cincinnati Financial
Corporation, individually beneficially owns 65,440 shares and Mr.
Robert B. Morgan, a director of Fifth Third, who is President and a
director of Cincinnati Financial Corporation and Cincinnati Insurance
individually beneficially owns 12,965 shares. Also affiliated is a
trust in which John J. Schiff, Jr. and Thomas R. Schiff are trustees
which owns 4,500 shares.
(2) There are five wholly-owned bank subsidiaries of Fifth Third, which
are beneficial owners of 3,520,630 shares. The banks hold these
shares in a fiduciary capacity under numerous trust relationships,
none of which relates to more than 5% of the shares, and have sole or
shared voting power, and sole or shared investment decision over these
shares. The banks also hold shares in a non-discretionary capacity,
and disclaim any beneficial interest in all shares held in these
capacities.
(3) The Western-Southern Life Insurance Co. owns 664,722 shares of Fifth
Third Common Stock. Waslic Delaware Company, II, a subsidiary of The
Western-Southern Life Insurance Co., owns 3,746,850 shares. In
addition, Mr. John F. Barrett, a director, President and Chief
Executive Officer of The Western-Southern Life Insurance Co., and a
director of Fifth Third, individually beneficially owns 13,683 shares.
Fifth Third, its directors, executive officers and their affiliates
owned no shares of Bank Common Stock outstanding on March 31, 1995.
35
<PAGE> 61
FIFTH THIRD MANAGEMENT
The names and ages of the Directors and certain executive officers of
Fifth Third, their current positions and offices held with Fifth Third, their
business experience during the past five years and certain other information,
together with their beneficial ownership of Fifth Third Common Stock at March
31, 1995, are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Shares of Fifth Third Common Stock
Beneficially Owned at March 31,
1995(3)(6)
Name, Age and Principal Occupation During Past Five Years; Other Director of Fifth Number of
Directorships(1) Third Since(2) Shares Owned Percent of Class
<S> <C> <C> <C>
DIRECTORS
John F. Barrett, 46, President, CEO and Director of The 1988 15,183 .0231
Western-Southern Life Insurance Co. since March, 1994. Formerly
President and COO, The Western-Southern Life Insurance Co.
Director of Cincinnati Bell Inc.(4)
Milton C. Boesel, Jr., 66, Counsel, Ritter, Robinson, McReady & 1989 11,658 .0178
James, Attorneys at Law, Toledo, Ohio, formerly Ritter, Boesel &
Robinson.
Clement L. Buenger, 68, Retired Chairman, Fifth Third and The Fifth 1971 266,600 .4063
Third Bank as of March, 1993. Retired as CEO of Fifth Third and
The Fifth Third Bank as of January, 1991. Previously President of
Fifth Third and The Fifth Third Bank. Director of Cincinnati Gas &
Electric Company.
Gerald V. Dirvin, 58, Retired April, 1994 as Director and Executive 1989 9,350 .0142
Vice President of The Procter & Gamble Company, manufacturers of
household and consumer products which position Mr. Dirvin held
since January, 1990. Formerly Mr. Dirvin was Senior Vice
President. Director of Cintas Corporation and Northern Telecom
Ltd...
Thomas B. Donnell, 48, Chairman, The Fifth Third Bank of 1984 139,346 .2123
Northwestern Ohio, N.A. (Toledo, Ohio), the resulting institution
from the November 12, 1991 merger of The Fifth Third Bank of
Northwestern Ohio, N.A. and The Fifth Third Bank of Toledo, N.A.
Formerly President and Chief Executive Officer of The Fifth Third
Bank of Northwestern Ohio, N.A.
Richard T. Farmer, 60, Chairman, Chief Executive Officer and 1982 29,155 .0444
Director, Cintas Corporation, a service company that designs,
manufactures and implements corporate identity uniform programs.
Director of Safety-Kleen Corp.
John D. Geary, 68, Retired as President, Midland Enterprises Inc., 1977 21,788 .0332
a company engaged in inland waterway transportation.
Ivan W. Gorr, 65, Retired in October, 1994 as Chairman and Chief 1991 6,352 .0097
Executive Officer of Cooper Tire & Rubber Company, a manufacturer
of tires and rubber products.
Director of Amcast Industrial Corporation, Arvin Industries, Inc.,
Cooper Tire & Rubber Company and OHM Corporation.
Joseph H. Head, Jr., 62, Chairman, Chief Executive Officer and 1987 45,688 .0696
Director, Atkins & Pearce, Inc., manufacturer of industrial
textiles, since January, 1990. Previously, Mr. Head was a partner
with Graydon, Head & Ritchey, Counsel to The Fifth Third Bank.
Director of Baldwin Piano & Organ, Co.
Joan R. Herschede, 55, President and Chief Executive Officer of The 1991 6,550 .0100
Frank Herschede Company, retailer of jewelry, china, crystal and
silver.
William G. Kagler, 62, Chairman of the Executive Committee of the 1983 15,645 .0238
Board, and Director of Skyline Chili, Inc., a restaurant chain and
frozen food product manufacturer, since November, 1994. Formerly,
Mr. Kagler was Chairman, CEO and Director of Skyline Chili, Inc.,
since November 1992, and President of Kagler and Associates, Inc.,
a consulting firm serving the food industry. Previously Mr. Kagler
was President, Chief Executive Officer and Director of Skyline
Chili, Inc. Director of The Union Central Life Insurance Company,
The Ryland Group, Inc. and The Future Now, Inc.
William J. Keating, 68, Retired Chairman and Publisher, The 1980 43,449 .0662
Cincinnati Enquirer, a regional newspaper, since March, 1990.
Previously Mr. Keating was President and Chief Executive Officer,
Detroit Newspaper Agency. Director of The Midland Co.
</TABLE>
36
<PAGE> 62
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Shares of Fifth Third Common Stock
Beneficially Owned at March 31,
1995(3)(6)
Name, Age and Principal Occupation During Past Five Years; Other Director of Fifth Number of
Directorships(1) Third Since(2) Shares Owned Percent of Class
<S> <C> <C> <C>
James D. Kiggen, 63, Chairman, President, Chief Executive Officer 1982 23,613 .0360
and Director, Xtek, Inc., manufacturer of hardened steel parts.
Director of Cincinnati Bell, Inc. and United States Playing Card
Co.
Robert B. Morgan, 60, President, Chief Executive Officer and 1986 14,465 .0220
Director of Cincinnati Financial Corporation and Cincinnati
Insurance Company since April, 1991. Previously, Mr. Morgan was
President and Director of Cincinnati Financial Corporation and
Cincinnati Insurance Company.(4)
Michael H. Norris, 58, Retired as President and Director, The 1985 16,087 .0245
Deerfield Manufacturing Co., a fabricator of sheet metal stampings,
deep drawn parts and assemblies, and retired as Group Vice
President and Director of the Ralph J. Stolle Company since
January, 1994.
Brian H. Rowe, 63, Chairman, GE Aircraft Engines, General Electric 1980 15,480 .0236
Company since September, 1993. Previously Mr. Rowe was President
and Chief Executive Officer of GE Aircraft Engines, General
Electric Company since August 1991. Formerly Mr. Rowe was Senior
Vice President of GE Aircraft Engines, General Electric Company.
George A. Schaefer, Jr., 49, President and Chief Executive Officer 1988 222,517 .3391
of Fifth Third and The Fifth Third Bank since January, 1991.
Previously Mr. Schaefer was President and Chief Operating Officer
of Fifth Third and The Fifth Third Bank.
Director of Community Mutual Insurance Company.
John J. Schiff, Jr., 51, Chairman and Director, John J. & Thomas R. 1983 67,165 .1024
Schiff & Co., Inc., an insurance agency. Chairman and Director of
Cincinnati Financial Corp. and Cincinnati Insurance Co.
Director of Cincinnati Gas & Electric Company, Standard Register
Co. and Cincinnati Bengals.(4)
Dennis J. Sullivan, Jr., 63, Executive Counselor of Dan Pinger 1984 21,264 .0324
Public Relations, Inc., a public relations agency, since February,
1993. Formerly Director, Executive Vice President and Chief
Financial Officer of Cincinnati Bell, Inc. and Cincinnati Bell
Telephone Company. Director of Community Mutual Insurance Company,
Access Corporation and The Future Now, Inc.
Dudley S. Taft, 54, President and Director, Taft Broadcasting 1981 20,773 .0317
Company, owner and operator of television broadcasting stations.
Director of The Union Central Life Insurance Company, Cincinnati
Gas & Electric Company, United States Playing Card Co., and The
Future Now, Inc.
</TABLE>
37
<PAGE> 63
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Shares of Fifth Third Common Stock
Beneficially Owned at March 31,
1995(3)(6)
Name, Age and Principal Occupation During Past Five Years; Other Director of Fifth Number of
Directorships(1) Third Since(2) Shares Owned Percent of Class
<S> <C> <C> <C>
EXECUTIVE OFFICERS
Michael D. Baker, 44, Senior Vice President of Fifth Third since ---- 49,182 .0749
March, 1993, and Senior Vice President of The Fifth Third Bank.
Michael K. Keating, 39, Senior Vice President and General Counsel ---- 24,601 .0375
of Fifth Third since March, 1993 and Senior Vice President and
Counsel of The Fifth Third Bank since November, 1989, and Secretary
of Fifth Third and The Fifth Third Bank since January, 1994.
Mr. Keating is a son of Mr. William J. Keating, Director.
George W. Landry, 55, Executive Vice President of Fifth Third and ---- 97,623 .1488
The Fifth Third Bank.
Stephen J. Schrantz, 45, Executive Vice President of Fifth Third ---- 66,151 .1008
and The Fifth Third Bank. Director of The Frank Herschede Company.
All Directors and Executive Officers as a Group (24 persons)(5) ---- 1,249,685 1.9044
</TABLE>
(1) Unless otherwise indicated, the director or officer has had the
same principal occupation for the past five years.
(2) On April 15, 1975, the Board of Directors of The Fifth Third Bank
became the Board of Directors of Fifth Third pursuant to an
Agreement and Plan of Reorganization under which Fifth Third
acquired The Fifth Third Bank. Service on the Board of The Fifth
Third Bank prior to April 15, 1975 is reflected in the dates
shown above. All of the Directors are also directors of The
Fifth Third Bank, except for Messrs. Boesel, Donnell and Gorr,
who are members of the Board of Directors of The Fifth Third Bank
of Northwestern Ohio, N.A.
(3) As reported to Fifth Third by the persons listed as of the date
stated. Includes shares held in the name of spouses, minor
children, certain relatives, trusts, estates and certain
affiliated companies as to which beneficial ownership may be
disclaimed.
(4) Messrs. Morgan and Schiff, Jr. are officers and directors of
Cincinnati Financial Corporation, and Mr. Barrett is an officer
and Director of The Western-Southern Life Insurance Company,
whose holdings of Fifth Third shares with their affiliates are
more fully set forth above under the caption "CERTAIN BENEFICIAL
OWNERS OF FIFTH THIRD COMMON STOCK."
(5) Shares of Fifth Third Common Stock held by The Fifth Third Bank
in its fiduciary capacity, as set forth above under the caption
"CERTAIN BENEFICIAL OWNERS OF FIFTH THIRD COMMON STOCK," are not
included in these totals.
(6) The amounts shown represent the total shares owned outright by
such individuals together with shares which are issuable upon the
exercise of all stock options which are currently exercisable.
Specifically, the following individuals have the right to acquire
the shares indicated after their names, upon the exercise of such
stock options: Mr. Baker, 17,063; Mr. Barrett, 8,625; Mr. Boesel,
8,625; Mr. Buenger, 3,000; Mr. Dirvin, 8,625; Mr. Donnell, 4,124;
Mr. Farmer, 8,625; Mr. Geary, 6,375; Mr. Gorr, 6,352; Mr. Head,
13,688; Ms. Herschede, 3,000; Mr. Kagler, 3,000; Mr. M. Keating,
14,250; Mr. W. Keating, 3,000; Mr. Kiggen, 8,625; Mr. Landry,
41,625; Mr. Morgan, 13,688; Mr. Norris, 5,000; Mr. Rowe, 8,625;
Mr. Schaefer, 112,500; Mr. Schiff, 5,250; Mr. Schrantz, 39,375;
Mr. Sullivan, 3,000; and Mr. Taft, 3,000.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
38
<PAGE> 64
CERTAIN BENEFICIAL OWNERS OF BANK COMMON STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
On March 31, 1995, the following persons owned of record, or were
known by the Bank to own beneficially, more than five percent of the Bank
Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
<S> <C> <C>
Michael Mueller 30,100 7.34%
276 Napa Ridge Road E.
Naples, FL 33999
John W. Hoyt 21,912 5.34%
717 Pitch Apple Lane
Naples, FL 33963
</TABLE>
(1) Includes direct and indirect ownership, and unless otherwise
indicated, also includes sole and shared voting and investment power
with respect to reported holdings.
SECURITY OWNERSHIP OF MANAGEMENT
The following identifies the names and addresses of Bank Directors and
Executive Officers and their beneficial ownership of Bank Common Stock as of
March 31, 1995.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP(1) CLASS
<S> <C> <C>
K.R. Barker, II 357 .09%
191 Old Tamiami Trail
Naples, FL 33942
Bruce D. Clausonthue 15,714 3.83%
2885 Gulf Shore Blvd. N., Apt. 704
Naples, FL 33940
Donald F. Garrett 10,714 2.61%
821 Buttonbush Lane
Naples, FL 33963
Robert Guididas 1,158 .28%
251 1st Street, Apt. C
Bonita Springs, FL 33923
David D. Hidy 12,500 3.05%
139 Seabreeze Avenue
Naples, FL 33963
John W. Hoyt 21,912 5.34%
717 Pitch Apple Lane
Naples, FL 33963
Patrick J. Philbin 500 .12%
550 Gabriel Circle, Apt. 2
Naples, FL 33942
Eugene G. Precht 13,714 3.35%
6820 San Marino Drive, Apt. 604
Naples, FL 33963
Ronald H. Stahnke, M.D. 12,714 3.10%
749 Portside Drive
Naples, FL 33940
</TABLE>
39
<PAGE> 65
All Directors and Officers as a Group 89,283 21.78%
(9 persons)
(1) Includes direct and indirect ownership, and unless otherwise
indicated, also includes sole and shared voting and investment power
with respect to reported holdings.
LEGAL MATTERS
Certain legal matters will be passed upon for the Bank by McCaffrey &
Raimi, P.A., Naples, Florida. Counsel employed by The Fifth Third Bank has
rendered his opinion that the shares of Fifth Third Common Stock to be issued
to the shareholders of the Bank in connection with the Merger have been duly
authorized and, if issued pursuant to the Affiliation Agreement and the Merger
Agreement, will be validly issued, fully paid and non-assessable under the
current laws of the State of Ohio. In addition, such counsel shall pass on
certain legal matters as required by the Affiliation Agreement. Dinsmore &
Shohl, Cincinnati, Ohio, will render its opinion with respect to certain
federal income tax consequences of the Merger to Fifth Third, the Bank and the
shareholders of the Bank. At March 1, 1995, attorneys at Dinsmore & Shohl
beneficially owned 33,837 shares of Fifth Third Common Stock.
ADJOURNMENT OF BANK SPECIAL MEETING
Each proxy solicited hereby requests authority to vote for an
adjournment of the Bank Special Meeting, if an adjournment is deemed to be
necessary. The Board of Directors of the Bank may seek an adjournment of the
Special Meeting in order to enable it to solicit additional votes in favor of
approval of the Affiliation Agreement and Merger Agreement in the event such
proposal has not received the affirmative votes of both of (1) a majority of
the issued and outstanding shares of Bank Common Stock entitled to vote and (2)
two-thirds (2/3) of the shares represented at a meeting at which a quorum is
present.
If the Board of Directors of the Bank desires to adjourn the meeting,
it will request a motion that the meeting be adjourned. Each proxy solicited
hereby, if properly signed and returned to the Bank and not revoked prior to
its use, will be voted on any motion for adjournment in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted in favor of any motion to adjourn the meeting for
the purpose of soliciting additional votes.
Unless revoked prior to its use, any proxy solicited for the Special
Meeting will continue to be valid for any adjourned meeting, and will be voted
in accordance with the instructions contained therein on any proposal on which
the Special Meeting was adjourned, and, if no contrary instructions are given,
for the proposal in question.
An adjournment will permit the Board of Directors of the Bank to
solicit additional proxies and will permit a greater expression of the
shareholders' views with respect to such proposal. Such an adjournment may be
disadvantageous to shareholders who are against a proposal on which the Special
Meeting may be adjourned, because an adjournment will provide the Board of
Directors additional time to solicit favorable votes and thus increase the
chances of passing such proposal.
An adjournment would not require either the setting of a new record
date or notice of the adjourned meeting as in the case of an original meeting.
The Bank has no reason to believe that an adjournment of the Special Meeting
will be necessary at this time.
Because the Board of Directors of the Bank recommends that the Bank's
shareholders vote FOR approval of the Affiliation Agreement and Merger
Agreement, the Board of Directors recommends that shareholders vote FOR the
possible adjournment of the Special Meeting. The holders of a majority of the
votes represented in person or by proxy of the Bank Common Stock will be
required to approve a motion to adjourn the Special Meeting.
EXPERTS
The financial statements incorporated in this Proxy Statement and
Prospectus by reference from Fifth Third's 1994 Annual Report to Shareholders
which accompanies this Proxy Statement and Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference (which report expresses an unqualified
opinion and includes an explanatory paragraph relating to a change in the
method of accounting
40
<PAGE> 66
for debt and equity securities) and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The financial statements of Bank for the years ended December 31, 1993
and 1994, which accompany this Proxy Statement and Prospectus, have been
audited by McGladrey & Pullen, LLP, independent auditors, as stated in their
report, which is incorporated herein by reference and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
OTHER MATTERS
The Board of Directors of the Bank knows of no other matters which may
come before the Special Meeting. However, if any matters other than those set
forth in the notice should be properly presented for action, including any
adjournment of the Special Meeting, such matters will be handled in accordance
with applicable legal requirements.
41
<PAGE> 67
BANK OF NAPLES
- --------------------------------------------------------------------------------
CONTENTS PAGE
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT F-1
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheets F-2
Statements of income F-3
Statements of stockholders' equity F-4
Statements of cash flows F-5
Notes to financial statements F-6
- --------------------------------------------------------------------------------
All schedules are omitted because of the absence of the conditions under which
they are required or because the required information is included in the
financial statements of Bank of Naples or related notes.
<PAGE> 68
BANK OF NAPLES
FINANCIAL REPORT
DECEMBER 31, 1994
<PAGE> 69
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Bank of Naples
Naples, Florida
We have audited the accompanying balance sheets of BANK OF NAPLES as of December
31, 1994 and 1993, and the related statements of income, stockholders' equity,
and cash flows for the years then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 Bank of Naples as of December
31, 1994 and 1993, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
- ---------------------------
Naples, Florida
January 13, 1995, except for Note 20
for which the date is April 4, 1995
F-1
<PAGE> 70
<TABLE>
BANK OF NAPLES
BALANCE SHEETS
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
------------------------------- -------------------------------
1995 1994 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents (Notes 3 and 17) $ 2,931,451 $ 1,890,957 $ 2,517,282 $ 1,161,819
Federal funds sold (Note 17) 2,200,000 2,275,000 6,585,000 1,275,000
Securities held to maturity, at cost
(fair value of $450,952 (unaudited),
$459,908 (unaudited), $444,624 and
$471,240 at March 31, 1995 and 1994, and
December 31,1994 and 1993, respectively) (Note 4) 440,000 440,000 440,000 440,000
Securities available for sale (Notes 5 and 10) 7,323,879 5,986,590 6,707,407 6,060,373
Federal Reserve and Federal Home Loan
Bank stock, at cost (Note 11) 310,400 259,100 259,100 244,200
Loans, net (Notes 6, 7, 11, 14 and 17) 42,329,145 29,568,103 39,805,954 26,193,916
Premises and equipment, net (Note 8) 509,430 468,271 526,328 485,065
Other real estate owned 125,000 482,717 125,000 607,718
Deferred tax assets (Note 10) 103,000 226,000 282,000 173,000
Other assets 424,247 262,497 353,834 230,789
- ------------------------------------------------------------------------------------------------------------------------------------
$ 56,696,552 $ 41,859,235 $ 57,601,905 $ 36,871,880
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Noninterest - bearing demand deposits $ 9,350,345 $ 6,289,348 $ 11,854,532 $ 5,113,554
Interest - bearing deposits:
NOW accounts 11,768,930 8,434,988 13,733,936 6,915,821
Savings 2,428,414 881,873 1,573,423 759,110
Money market accounts 10,749,072 11,536,278 9,995,693 8,722,293
Time, $100,000 and over 4,337,278 2,211,684 3,287,869 2,610,237
Other time deposits 12,778,874 8,097,557 12,207,500 8,424,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits 51,412,913 37,451,728 52,652,953 32,545,374
Accrued interest payable 144,437 70,583 110,671 67,205
Other liabilities 68,185 44,781 89,543 29,017
Federal Home Loan Bank advances (Note 11) 1,000,000 1,000,000 1,000,000 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 52,625,535 38,567,092 53,853,167 33,641,596
- ------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS, CONTINGENCIES AND CREDIT
RISK (Notes 15, 16, and 17)
STOCKHOLDERS' EQUITY (Notes 5, 13 and 18)
Common stock, par value $7 per share;
authorized 1,000,000 shares; issued and
outstanding 410,000 shares 2,870,000 2,870,000 2,870,000 2,870,000
Additional paid - in capital 1,230,000 1,230,000 1,230,000 1,230,000
Accumulated surplus (deficit) 101,505 (746,293) (138,920) (895,814)
Unrealized gain (loss) on securities available
for sale, net (Note 5) (130,488) (61,564) (212,342) 26,098
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 4,071,017 3,292,143 3,748,738 3,230,284
- ------------------------------------------------------------------------------------------------------------------------------------
$ 56,696,552 $ 41,859,235 $ 57,601,905 $ 36,871,880
====================================================================================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
F-2
<PAGE> 71
<TABLE>
BANK OF NAPLES
STATEMENTS OF INCOME
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Years Ended
March 31, December 31,
---------------------------- ----------------------------
1995 1994 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $1,064,897 $ 631,292 $3,005,567 $2,378,440
Investment securities 130,311 100,046 376,204 427,253
Federal funds sold 30,827 10,560 74,393 33,612
- ------------------------------------------------------------------------------------------------------------------------------------
1,226,035 741,898 3,456,164 2,839,305
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 378,799 223,326 1,062,565 937,808
Borrowings 12,443 11,180 57,884 18,075
- ------------------------------------------------------------------------------------------------------------------------------------
391,242 234,506 1,120,449 955,883
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 834,793 507,392 2,335,715 1,883,422
PROVISION FOR LOAN LOSSES (Note 7) 15,000 15,000 15,000 135,000
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 819,793 492,392 2,320,715 1,748,422
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Service charges and fees 57,053 62,638 209,616 157,179
Securities gains -- -- -- 2,747
- ------------------------------------------------------------------------------------------------------------------------------------
57,053 62,638 209,616 159,926
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salaries and employee benefits 255,398 186,261 832,838 693,975
Occupancy 61,804 48,114 221,975 189,080
Furniture and equipment 25,839 23,690 92,304 80,808
Other (Note 9) 164,679 147,444 585,320 496,597
- ------------------------------------------------------------------------------------------------------------------------------------
507,720 405,509 1,732,437 1,460,460
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 369,126 149,521 797,894 447,888
PROVISION FOR INCOME TAXES (Note 10)
Current -- -- 6,000 --
Deferred 128,701 -- 35,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
128,701 -- 41,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 240,425 $ 149,521 $ 756,894 $ 447,888
====================================================================================================================================
Net income per share $ 0.59 $ 0.37 $ 1.85 $ 1.09
====================================================================================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
F-3
<PAGE> 72
<TABLE>
BANK OF NAPLES
STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Unrealized
Gain (Loss)
Common Stock Additional Accumulated on Securities
------------ Paid-In Surplus Available for
Shares Amount Capital (Deficit) Sale, Net Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 410,000 $ 2,870,000 $ 1,230,000 $(1,343,702) $ -- $ 2,756,298
Net income -- -- -- 447,888 -- 447,888
Net change in unrealized gain (loss)
on securities available for sale,
net of deferred taxes (Notes 5 and 21) -- -- -- -- 26,098 26,098
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 410,000 2,870,000 1,230,000 (895,814) 26,098 3,230,284
Net income (unaudited) -- -- -- 149,521 -- 149,521
Net change in unrealized gain (loss)
on securities available for sale, net of
deferred taxes (Notes 5 and 21)
(unaudited) -- -- -- -- (87,662) (87,662)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1994 (unaudited) 410,000 $ 2,870,000 $ 1,230,000 $ (746,293) $ (61,564) $ 3,292,143
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
Additional Accumulated on Securities
Common Stock Paid-In Surplus Available for
--------------------
Shares Amount Capital (Deficit) Sale, Net Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 410,000 $2,870,000 $ 1,230,000 $ (895,814) $ 26,098 $ 3,230,284
Net income - - - 756,894 - 756,894
Net change in unrealized gain (loss)
on securities available for sale,
net of deferred taxes (Notes 5 and 21) - - - - (238,440) (238,440)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 410,000 2,870,000 1,230,000 (138,920) (212,342) 3,748,738
Net income (unaudited) - - - 240,425 - 240,425
Net change in unrealized gain (loss)
on securities available for sale, net of
deferred taxes (Notes 5 and 21)
(unaudited) - - - - 81,854 81,854
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1995 (unaudited) 410,000 $2,870,000 $ 1,230,000 $ 101,505 $ (130,488) $ 4,071,017
====================================================================================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
F-4
<PAGE> 73
<TABLE>
BANK OF NAPLES
STATEMENTS OF CASH FLOWS
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Years Ended
March 31, December 31,
------------------------ --------------------------
1995 1994 1994 1993
- --------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 240,425 $ 149,521 $ 756,894 $ 447,888
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 22,682 20,283 88,710 71,776
Amortization of organizational costs 525 4,545 5,913 20,305
Gain on sale of securities - - - (2,747)
Gain on sale of other real estate
owned - (14,757) (14,491) -
Provision for loan losses 15,000 15,000 15,000 135,000
Accretion of bond discount (651) (152) (2,554) (4,042)
Amortization of bond premium 3,133 8,805 29,650 51,707
Deferred tax assets 129,000 - 35,000 -
(Increase) decrease in other assets (70,938) (36,253) (128,958) 64,265
Increase (decrease) in:
Accrued interest payable 33,766 3,378 43,466 (29,163)
Other liabilities (21,358) 15,764 60,526 (863)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating
activities 351,584 166,134 889,156 754,126
- --------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Federal funds sold, net 4,385,000 (1,000,000) (5,310,000) 50,000
Net increase (decrease) in cash flows from
securities (Note 21) (487,100) (75,532) (1,056,570) 1,559,142
Federal Reserve and Federal Home Loan
Bank stock (51,300) (14,900) (14,900) -
Net increase in loans (2,538,191) (3,389,187) (13,627,038) (5,247,609)
Purchases of premises and equipment (5,784) (3,489) (129,973) (50,432)
Net proceeds from sales of other real estate
owned - 139,758 497,209 -
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities 1,302,625 (4,343,350) (19,641,272) (3,688,899)
- --------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits (1,240,040) 4,906,354 20,107,579 989,415
Net increase in borrowings - - - 1,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (1,240,040) 4,906,354 20,107,579 1,989,415
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 414,169 729,138 1,355,463 (945,358)
CASH AND CASH EQUIVALENTS
Beginning 2,517,282 1,161,819 1,161,819 2,107,177
- --------------------------------------------------------------------------------------------------------------------------------
Ending $ 2,931,451 $ 1,890,957 $ 2,517,282 $ 1,161,819
================================================================================================================================
<FN>
See Notes to Financial Statements (Additional Cash Flow Information - Note 21).
</TABLE>
F-5
<PAGE> 74
BANK OF NAPLES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Bank of Naples (Bank) was incorporated in September 1988. The Bank is chartered
with the Florida Department of Banking as a state banking institution. The Bank
received all required regulatory approvals and opened for business on May 11,
1989.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM INFORMATION: In the opinion of management, the unaudited
interim financial information reflects all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation. The results of
operations for the three months ended March 31, 1995, are not necessarily
indicative of the results expected for the year ending December 31, 1995.
CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, cash and cash
equivalents includes cash on hand and amounts due from banks, including cash
items in process of clearing. Cash flows from loans, deposits, and federal funds
purchased and sold are reported net.
The Bank maintains amounts due from banks which, at times, may exceed federally
insured limits. The Bank has not experienced any losses in such accounts.
INVESTMENT IN DEBT AND MARKETABLE EQUITY SECURITIES: The Bank accounts for debt
and equity securities in accordance with FASB Statement No. 115. This statement
requires that management determine the appropriate classification of securities
at the date of adoption and thereafter as each individual security is acquired.
In addition, the appropriateness of such classification should be reassessed at
each balance sheet date. The classifications and related accounting policies
under FASB Statement No. 115 are as follows:
SECURITIES HELD TO MATURITY: Securities classified as held-to-maturity are those
debt securities the Bank has both the intent and ability to hold to maturity
regardless of changes in market conditions, liquidity needs or changes in
general economic conditions. These securities are carried at cost adjusted for
amortization of premium and accretion of discount, computed by the interest
method over their contractual lives.
SECURITIES AVAILABLE FOR SALE: Securities classified as available-for-sale are
those debt securities that the Bank intends to hold for an indefinite period of
time but not necessarily to maturity. Any decision to sell a security classified
as available-for-sale would be based on various factors, including significant
movements in interest rates, changes in the maturity mix of the Bank's assets
and liabilities, liquidity needs, regulatory capital considerations, and other
similar factors. Securities available for sale are carried at fair value.
Unrealized gains or losses are reported as increases or decreases in
stockholders' equity, net of the related deferred tax effects. Realized gains or
losses, determined on the basis of the cost of specific securities sold, are
included in earnings.
TRADING SECURITIES: Trading securities, which are generally held for the short
term, in anticipation of market gains, are carried at fair value. Realized and
unrealized gains and losses on trading account assets are included in interest
income on trading account securities.
F-6
<PAGE> 75
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TRANSFERS: Transfers of debt securities into the held-to-maturity classification
from the available-for-sale classification are made at fair value on the date of
transfer. The unrealized holding gain or loss on the date of transfer is
retained as a separate component of stockholders' equity and in the carrying
value of the held-to-maturity securities. Such amounts are amortized over the
remaining contractual lives of the securities by the interest method.
LOANS AND ALLOWANCE FOR LOAN LOSSES: Loans are stated at the amount of unpaid
principal, reduced by unearned discounts and fees and an allowance for loan
losses.
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb
estimated losses on existing loans that may become uncollectible, based on
evaluation of the collectibility of loans and prior loan loss experience. This
evaluation also takes into consideration such factors as changes in the nature
and volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrower's
ability to pay. In addition, the Bank measures impaired loans at the present
value of expected future cash flows discounted at the loan's effective interest
rate, or as an expedient, at either the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent. A loan is
impaired when it is probable the creditor will be unable to collect all
contractual principal and interest payments due in accordance with the terms of
the loan agreement. While management uses the best information available to make
its evaluation, future adjustments to the allowance may be necessary if there
are significant changes in economic conditions.
Interest on loans is recognized over the terms of the loans and is calculated
using the simple-interest method on principal amounts outstanding. Accrual of
interest is generally stopped when a loan is greater than three months past due.
Interest on these loans is recognized only when actually paid by the borrower if
collection of the principal is likely to occur. Accrual of interest is generally
resumed when the customer is current on all principal and interest payments.
Loan origination and commitment fees and certain direct loan origination costs
are being deferred and the net amount amortized as an adjustment of the related
loan's yield. The Bank is amortizing these amounts over the contractual lives of
the loans. Commitment fees which are based upon a percentage of a customer's
unused line of credit and fees related to standby letters of credit are
recognized over the commitment periods.
OTHER REAL ESTATE OWNED: Other real estate owned (OREO) includes properties
acquired through foreclosure or acceptance of deeds in lieu of foreclosure.
These properties are recorded on the date acquired at the fair market value less
cost of disposal. Any write-down to fair value at the time of transfer to OREO
is charged to the allowance for loan losses. Costs relating to the development
and improvement of the property are capitalized, whereas the costs of holding
the property are charged to expense. Any subsequent write-downs or gains or
losses from disposition, are included in other expenses as incurred.
F-7
<PAGE> 76
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation. Depreciation is computed using accelerated and
straight-line methods over the following estimated useful lives:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Years
- --------------------------------------------------------------------------------
<S> <C>
Furniture, fixtures and equipment 3 - 10
Leasehold improvements 5 - 20
- --------------------------------------------------------------------------------
</TABLE>
INCOME TAXES: Deferred taxes are provided on an asset and liability method
whereby deferred tax assets are recognized for deductible temporary differences
and operating loss or tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the amounts of assets and liabilities recorded for income
tax and financial reporting purposes. Deferred tax assets are reduced by a
valuation allowance when management determines that it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment. Income tax expense is the tax
payable or refundable for the year plus or minus the change in deferred tax
assets or liabilities during the year.
COMMON STOCK AND NET INCOME PER SHARE: The net income per common share amounts
are computed using the weighted average number of common shares outstanding
during the period. The stock options did not have a dilutive effect on net
income per share.
RECLASSIFICATIONS: Certain of the 1993 amounts have been reclassified to
conform with the 1994 presentation. These reclassifications had no effect on
net income or stockholders' equity.
CURRENT ACCOUNTING DEVELOPMENTS:
FAIR VALUE OF FINANCIAL INSTRUMENTS: FASB Statement No. 107, Disclosures about
Fair Value of Financial Instruments, requires disclosure of fair value
information about financial instruments, whether or not recognized on the
balance sheet, for which it is practicable to estimate that value. Statement No.
107 excludes certain financial instruments and all nonfinancial instruments from
its disclosure requirements. This statement is effective for the Bank's year
ending December 31, 1995.
NOTE 3. CASH AND DUE FROM BANKS
The Bank is required to maintain reserve balances with the Federal Reserve Bank.
The Bank's balance of cash on hand and due from banks used to satisfy the
reserve requirements with the Federal Reserve Bank was $25,000.
F-8
<PAGE> 77
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4. SECURITIES HELD TO MATURITY
<TABLE>
- --------------------------------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal securities $ 440,000 $ 10,952 $ - $ 450,952
========================================================================================================
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------------------------------
March 31, 1994 (Unaudited)
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal securities $ 440,000 $ 19,908 $ - $ 459,908
========================================================================================================
</TABLE>
All of the securities designated as being held to maturity as of March 31, 1995,
are due to mature after ten years.
<TABLE>
- --------------------------------------------------------------------------------------------------------
December 31, 1994
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal securities $ 440,000 $ 4,624 $ - $ 444,624
========================================================================================================
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------------------------------
December 31, 1993
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal securities $ 440,000 $ 31,240 $ - $ 471,240
========================================================================================================
</TABLE>
F-9
<PAGE> 78
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5. SECURITIES AVAILABLE FOR SALE
<TABLE>
- --------------------------------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $ 502,498 $ - $ (15,935) $ 486,563
U.S. government agencies 1,248,382 - (66,652) 1,181,730
Mortgage-backed 3,532,514 6,529 (132,119) 3,406,924
Bankers' acceptances 1,998,973 - (311) 1,998,662
Corporate bonds 250,000 - - 250,000
- ----------------------------------------------------------------------------------------------------------
$ 7,532,367 $ 6,529 $ (215,017) $ 7,323,879
==========================================================================================================
</TABLE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------
March 31, 1994 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $ 753,226 $ 2,223 $ (9,757) $ 745,692
U.S. government agencies 1,248,086 - (25,298) 1,222,788
Mortgage-backed 3,833,842 17,344 (83,076) 3,768,110
Corporate bonds 250,000 - - 250,000
- ----------------------------------------------------------------------------------------------------------
$ 6,085,154 $ 19,567 $ (118,131) $ 5,986,590
==========================================================================================================
</TABLE>
F-10
<PAGE> 79
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5. SECURITIES AVAILABLE FOR SALE (CONTINUED)
<TABLE>
- ----------------------------------------------------------------------------------------------------------
December 31, 1994
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $ 502,505 $ - $ (26,215) $ 476,290
U.S. government agencies 1,248,308 - (93,859) 1,154,449
Mortgage-backed 3,553,889 - (220,268) 3,333,621
Bankers' acceptances 1,493,047 - - 1,493,047
Corporate bonds 250,000 - - 250,000
- ----------------------------------------------------------------------------------------------------------
$ 7,047,749 $ - $ (340,342) $ 6,707,407
==========================================================================================================
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------
December 31, 1993
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $ 752,198 $ 7,411 $ - $ 759,609
U.S. government agencies 1,247,697 18,247 - 1,265,944
Mortgage-backed 3,768,380 36,226 (19,786) 3,784,820
Corporate bonds 250,000 - - 250,000
- ----------------------------------------------------------------------------------------------------------
$ 6,018,275 $ 61,884 $ (19,786) $ 6,060,373
==========================================================================================================
</TABLE>
The amortized cost and approximate fair value of securities available for sale
as of March 31, 1995, by contractual maturity, are shown below. Maturities may
differ from contractual maturities in mortgage-backed securities because the
mortgages underlying the securities may be called or repaid without penalties.
Therefore, these securities are not included in the maturity categories in the
following maturity summary.
F-11
<PAGE> 80
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5. SECURITIES AVAILABLE FOR SALE (CONTINUED)
<TABLE>
<CAPTION>
(Unaudited)
- --------------------------------------------------------------------------------------------------------------
Amortized Fair
Cost Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 2,248,973 $ 2,249,028
Due after one year through five years 1,250,879 1,198,397
Due after five years through ten years 500,000 469,530
- --------------------------------------------------------------------------------------------------------------
3,999,852 3,916,955
Mortgage-backed securities 3,532,514 3,406,924
- --------------------------------------------------------------------------------------------------------------
$ 7,532,366 $ 7,323,879
==============================================================================================================
</TABLE>
Securities available for sale with a carrying amount of $250,000 (unaudited) at
March 31, 1995, were pledged as collateral on public deposits and for other
purposes as required or permitted by law.
NOTE 6. LOANS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
March 31, December 31,
--------------------------------- ----------------------------------
1995 1994 1994 1993
- ---------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Commercial $ 17,866,460 $ 13,774,959 $ 16,759,573 $ 12,041,367
Real estate 19,002,628 12,769,612 17,427,659 11,112,010
Construction 4,885,179 1,841,829 4,907,817 2,087,780
Installment 1,177,877 1,749,732 1,326,294 1,501,173
- ---------------------------------------------------------------------------------------------------------------
42,932,144 30,136,132 40,421,343 26,742,330
- ---------------------------------------------------------------------------------------------------------------
Deduct:
Allowance for loan losses 479,472 468,507 494,210 459,637
Unearned net loan fees 123,527 99,522 121,179 88,777
- ---------------------------------------------------------------------------------------------------------------
602,999 568,029 615,389 548,414
- ---------------------------------------------------------------------------------------------------------------
Loans, net $ 42,329,145 $ 29,568,103 $ 39,805,954 $ 26,193,916
===============================================================================================================
</TABLE>
Nonaccruing loans totaled approximately $23,547 (unaudited) and $11,050
(unaudited) at March 31, 1995 and 1994, respectively, and $88,000 and $29,600 at
December 31, 1994 and 1993, respectively. The effect of nonaccrual loans was not
significant to the results of operations. In addition, the nonaccrual loans at
March 31, 1995, are considered impaired loans for SFAS No. 114. There is no
specific allowance associated with these loans and the average outstanding
balance for the three months ended March 31, 1995, was approximately $56,000.
F-12
<PAGE> 81
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 7. ALLOWANCE FOR LOAN LOSSES
<TABLE>
Changes in the allowance for loan losses were as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Three Months Ended Years Ended
March 31, December 31,
------------------------------ -------------------------------
1995 1994 1994 1993
- ---------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Balance, beginning $ 494,210 $ 459,637 $ 459,637 $ 475,134
Provision charged to operating
expense 15,000 15,000 15,000 135,000
Loans charged off (36,712) (13,848) (54,757) (201,627)
Recoveries of amounts
charged off 6,974 7,718 74,330 51,130
- ---------------------------------------------------------------------------------------------------------
Balance, ending $ 479,472 $ 468,507 $ 494,210 $ 459,637
=========================================================================================================
</TABLE>
NOTE 8. PREMISES AND EQUIPMENT
<TABLE>
The major classes of premises and equipment and the total accumulated
depreciation are as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
March 31, December 31,
------------------------------ -------------------------------
1995 1994 1994 1993
- ---------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Furniture, fixtures and
equipment $ 389,471 $ 284,672 $ 383,687 $ 281,182
Leasehold improvements 508,324 480,977 508,324 480,977
- ---------------------------------------------------------------------------------------------------------
897,795 765,649 892,011 762,159
Less accumulated depreciation 388,365 297,378 365,683 277,094
- ---------------------------------------------------------------------------------------------------------
Premises and equipment $ 509,430 $ 468,271 $ 526,328 $ 485,065
=========================================================================================================
</TABLE>
F-13
<PAGE> 82
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9. OTHER EXPENSES
<TABLE>
A summary of other expenses is as follows:
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Three Months Ended Years Ended
March 31, December 31,
------------------------------- -------------------------------
1995 1994 1994 1993
- ------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Advertising $ 12,443 $ 4,259 $ 50,843 $ 19,028
Amortization of organizational
costs 525 4,545 5,913 20,305
Data processing 24,341 17,944 75,182 70,253
Dues and memberships 3,244 3,315 12,685 14,141
Examinations and assessments 30,011 22,649 91,784 98,734
Insurance 1,620 5,984 22,647 18,854
Other 20,904 26,036 76,473 58,750
Printing, stationery and
postage 24,516 13,227 67,050 44,369
Professional fees 17,927 31,865 99,829 92,284
Repairs and maintenance 12,133 5,968 37,287 41,812
Travel and entertainment 17,015 11,652 45,627 18,067
- ------------------------------------------------------------------------------------------------------------
Total $ 164,679 $ 147,444 $ 585,320 $ 496,597
============================================================================================================
</TABLE>
F-14
<PAGE> 83
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 10. INCOME TAXES
<TABLE>
The cumulative tax effects of the primary temporary differences are shown in the
following table:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
March 31, December 31,
------------------------------- ------------------------------
1995 1994 1994 1993
- ---------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Deferred tax assets:
Unrealized loss on available-
for-sale securities $ 78,000 $ 37,000 $ 128,000 $ -
Loan loss allowances 62,000 4,000 36,000 -
Other real estate owned - 11,000 - 11,000
Premises and equipment 10,000 5,000 3,000 5,000
Alternative minimum tax
credit - - 6,000 -
Deferred loan fees - - 12,000 13,000
Loss carryforwards - 391,000 146,000 448,000
- ---------------------------------------------------------------------------------------------------------
Total deferred tax assets 150,000 448,000 331,000 477,000
- ---------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Unrealized gain on available-
for-sale securities - - - (16,000)
Other--cash basis adjustment (5,000) - (40,000) (12,000)
Deferred loan fees - (4,000) - -
- ---------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (5,000) (4,000) (40,000) (28,000)
- ---------------------------------------------------------------------------------------------------------
Subtotal 145,000 444,000 291,000 449,000
Valuation allowance for
deferred tax assets (42,000) (218,000) (9,000) (276,000)
- ---------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 103,000 $ 226,000 $ 282,000 $ 173,000
=========================================================================================================
</TABLE>
F-15
<PAGE> 84
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 10. INCOME TAXES (CONTINUED)
<TABLE>
The provision for income taxes differs from the amount of income tax determined
by applying the U.S. federal income tax rate to pretax income as follows:
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, Years Ended December 31,
1995 1994 1994 1993
------------------------------------------------ ---------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent
- -----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Computed "expected"
federal tax expense $ 129,000 35.0% $ 52,000 35.0% $ 279,000 35.0% $ 152,000 34.0%
Increase (decrease) in
income taxes
resulting from:
State income taxes,
net of federal
tax benefit 13,000 3.5 5,000 3.3 29,000 3.6 16,000 3.5
Other (46,299) (12.5) 1,000 0.6 - - - -
Change in
valuation
allowance 33,000 (9.0) (58,000) (38.9) (267,000) (33.6) (168,000) (37.5)
- -----------------------------------------------------------------------------------------------------------------------------
Provision for
income taxes $ 128,701 35.0% $ - $ 41,000 5.0% $ -
==============================================================================================================================
</TABLE>
During the three months ended March 31, 1994, and during the years ended
December 31, 1994 and 1993, the Bank decreased its valuation allowance by
$58,000 (unaudited), $267,000 and $168,000, respectively, as a result of
utilization of operating loss carryforwards. Realization of deferred tax assets
is dependent upon sufficient future taxable income in the near future.
* * * * *
NOTE 11. FEDERAL HOME LOAN BANK ADVANCES
The Bank has a $5,500,000 line of credit with the Federal Home Loan Bank of
Atlanta. The Bank has pledged residential first mortgage loans with unpaid
principal balances at March 31, 1995, of approximately $4,127,000 (unaudited)
and Federal Home Loan Bank stock as security for the advances. The $1,000,000
outstanding bears interest at 4.31 percent and matures September 17, 1995.
NOTE 12. 401(K) PROFIT SHARING PLAN
The Bank provides a 401(k) profit sharing plan for its employees. Participants
may elect to make contributions to the plan in an amount not to exceed 25
percent of their compensation. The Bank makes certain matching contributions for
eligible employees. Contributions by the Bank were approximately $1,100
(unaudited) and $1,091 (unaudited) for March 31, 1995 and 1994, respectively,
and approximately $20,000 and $13,000 for December 31, 1994 and 1993,
respectively, and are included in salaries and employees' benefits.
F-16
<PAGE> 85
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 13. STOCK OPTION PLAN
The Bank adopted a stock option plan during 1994 and has reserved 41,000 shares
of common stock for issuance at the greater of $10.50 per share or the fair
market value of the shares on the date the option is granted. Options granted
will become exercisable over a 5-year period, at a cumulative rate of 20 percent
per year, on the anniversary dates of the option grants. At March 31, 1995
(unaudited), and December 31, 1994, incentive stock options for 21,000 shares at
an exercise price of $11 per share were outstanding with none being exercisable.
NOTE 14. RELATED-PARTY TRANSACTIONS
Some of the directors of the Bank are also owners or executive officers in other
business organizations. The Bank has made loans to these individuals and related
companies, as well as to officers of the Bank. Aggregate loans to these related
parties totaled $704,767 (unaudited) and $612,367 (unaudited) at March 31, 1995
and 1994, respectively, and $704,481 and $640,083 at December 31, 1994 and 1993,
respectively. Commitments to extend credit to these related parties were
$345,410 (unaudited) and $464,375 (unaudited) at March 31, 1995 and 1994,
respectively, and $346,010 and $563,646 at December 31, 1994 and 1993,
respectively. In management's opinion, these loans were on the same terms as
those for comparable loans with nonrelated parties.
NOTE 15. LEASES
The Bank leases its premises under non-cancelable operating leases. The main
office lease provides for five renewal options of five years each. The leases
for the two branches expire in 1997 and 1999, and each has three five-year
renewal options.
<TABLE>
Future minimum rental payments required under noncancelable operating leases at
December 31, 1994, were as follows:
<CAPTION>
- --------------------------------------------------
Years ending December 31:
<S> <C>
1995 $ 163,696
1996 163,696
1997 159,896
1998 28,000
1999 14,000
- --------------------------------------------------
$ 529,288
==================================================
</TABLE>
Total rent expense recorded by the Bank for the three months ended March 31,
1995 and 1994, was $43,728 (unaudited) and $32,784 (unaudited), respectively,
and for the years ended December 31, 1994 and 1993, was $160,398 and $161,323,
respectively.
NOTE 16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers and to
reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit and standby letters of credit.
These instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amounts recognized on the balance sheet. The
contractual amounts of those instruments reflect the Bank's involvement in
particular classes of financial instruments.
F-17
<PAGE> 86
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (CONTINUED)
<TABLE>
The Bank's exposure to credit loss in the event of nonperformance by the
counterparties to the financial instruments for commitments to extend credit and
standby letters of credit is represented by the contractual amounts of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments. These
commitments were as follows:
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
March 31, December 31,
--------------------------------- --------------------------------
1995 1994 1994 1993
- -------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Commitments to extend credit $ 9,260,260 $ 5,078,513 $ 10,017,091 $ 4,645,516
Standby letters of credit 511,525 339,685 509,520 509,253
- -------------------------------------------------------------------------------------------------------------
$ 9,771,785 $ 5,418,198 $ 10,526,611 $ 5,154,769
=============================================================================================================
</TABLE>
* * * * *
COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit are commitments to
lend to a customer as long as there is no violation of any condition established
in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
Bank evaluates each customer's creditworthiness on a case-by-case basis. The
amount of collateral obtained if deemed necessary by the Bank upon extension of
credit is based on management's credit evaluation of the counterparty.
Collateral held varies, but may include accounts receivable, inventory,
property, plant and equipment, and residential and commercial real estate.
STANDBY LETTERS OF CREDIT: Standby letters of credit are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
These guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, construction bonding, and similar
transactions. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers. The
collateral varies but may include accounts receivable, inventory, property,
plant and equipment, and residential and commercial real estate.
NOTE 17. CONCENTRATIONS OF RISK
Most of the Bank's business activity is with customers located within its
primary market area, which generally includes Southwest Florida. Included in the
Bank's loan portfolio (see Note 6) is a concentration of loans related to real
estate, a significant portion of which relates to commercial real estate. A
substantial portion of its debtors' abilities to honor their contracts is
dependent upon the local economy. The economy of the Bank's primary market area
is not heavily dependent on any individual economic sector. The Bank has no
significant concentrations of credit risk with any individual counterparty to
originate loans.
F-18
<PAGE> 87
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 17. CONCENTRATIONS OF RISK (CONTINUED)
The Bank also has a substantial concentration of funds at Barnett Bank. Such
concentrations consisted of deposit accounts and federal funds sold totaling
approximately $3,984,000 (unaudited) and $3,010,000 (unaudited) at March 31,
1995 and 1994, respectively, and $8,230,000 and $2,140,000 at December 31, 1994
and 1993, respectively.
NOTE 18. REGULATORY CAPITAL REQUIREMENTS
The Federal Reserve Board and other bank regulatory agencies have adopted
risk-based capital guidelines for banks and bank holding
companies. The main objectives of the risk-based capital framework are to
provide a more consistent system for comparing capital positions of banking
organizations and to take into account the different risks among banking
organizations' assets and off-balance sheet items. Bank regulatory agencies have
supplemented the risk-based capital standard with a leverage ratio for Tier 1
capital to total reported assets. The minimum leverage ratio standard is 3
percent. Depending upon the judgment of the various regulatory agencies, a
greater leverage ratio may be required based upon the relative risk of the
organization.
* * * * *
<TABLE>
Below is a comparison of the Bank's actual and minimum requirements for
well-capitalized and adequately capitalized banks, as defined by the federal
regulatory agencies' Prompt Corrective Action Rules:
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Minimum Requirements
March 31, December 31, --------------------------
------------------------- ------------------------- Well Adequately
1995 1994 1994 1993 Capitalized Capitalized
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Tier 1 risk-based capital 9.7% 11.0% 9.3% 11.4% 6.0% 4.0%
Total risk-based capital 10.8 12.2 10.4 12.7 10.0 8.0
Leverage ratio 7.4 8.0 6.9 8.9 5.0 3.0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Banking regulations restrict the amount of dividends that may be paid by the
Bank without prior approval of Bank supervisory authorities.
* * * * *
NOTE 19. EMPLOYMENT AGREEMENTS
The Bank has employment agreements or other compensation agreements with certain
key executives which require varying payments of six months' to one year's
salary if such executives are terminated other than for cause or if certain
changes in control conditions exist.
NOTE 20. SUBSEQUENT EVENT--AFFILIATION AGREEMENT
On April 4, 1995, the Board of Directors of Bank of Naples entered into a merger
agreement with Fifth Third Bancorp. Bank of Naples will be merged into Fifth
Third Bancorp's wholly-owned subsidiary. Each share of Bank of Naples common
stock issued and outstanding will be converted into .41174 shares of Fifth Third
Bancorp common stock when the merger becomes effective.
F-19
<PAGE> 88
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 21. ADDITIONAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Three Months Ended Years Ended
March 31, December 31,
------------------------------ ---------------------------------
1995 1994 1994 1993
- -----------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM
PURCHASES, SALES AND
MATURITIES OF SECURITIES
Available-for-sale
securities:
Maturities $ 1,514,356 $ 932,388 $ 1,442,147 $ -
Purchases (2,001,456) (1,007,920) (2,498,717)
- -
Securities held for
investment:
Maturities - - - 10,275,474
Purchases - - - (8,716,332)
- -----------------------------------------------------------------------------------------------------------
$ (487,100) $ (75,532) $ (1,056,570) $ 1,559,142
===========================================================================================================
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash payments for interest $ 357,476 $ 231,128 $ 1,076,983 $ 985,046
Cash payments for income
taxes - - 3,000 -
===========================================================================================================
</TABLE>
F-20
<PAGE> 89
AFFILIATION AGREEMENT ANNEX A
This Affiliation Agreement ("Affiliation Agreement") dated as of April _____,
1995, is entered into by and between FIFTH THIRD BANCORP, a corporation
organized and existing under the corporation laws of the State of Ohio with its
principal office located in Cincinnati, Hamilton County, Ohio ("Fifth Third"),
and BANK OF NAPLES, a state chartered bank organized and existing under the
laws of the State of Florida with its principal office located in Naples,
Collier County, Florida ("Seller").
W I T N E S S E T H:
WHEREAS, Fifth Third is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, and Seller is a state chartered bank
under the laws of the state of Florida, and Fifth Third and Seller desire to
effect a reverse triangular merger under the authority and provisions of the
corporation law of the State of Florida and the laws of the United States
pursuant to which at the Effective Time (as herein defined in Section IX) Fifth
Third's wholly-owned subsidiary, Fifth Third Trust Co. & Savings Bank, F.S.B.
("5/3 Savings Bank") will be merged with and into Seller with Seller to be and
become the surviving corporation; and
WHEREAS, under the terms of the Agreement of Merger ("Agreement of Merger")
between 5/3 Savings Bank and Seller (and agreed to by Fifth Third) appended
hereto as Appendix A, the terms of which are incorporated into this Agreement
and made a part hereof, all of the issued and outstanding shares of the Common
Stock, $1.00 par value per share, of Seller which are issued and outstanding
(excluding any treasury shares) immediately prior to the Effective Time will at
the Effective Time be cancelled and extinguished and in substitution therefor
each of such Seller shares will, at the Effective Time, be converted into
shares of the Common Stock of Fifth Third, all as more fully provided in this
Agreement and in the Agreement of Merger.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
Fifth Third and Seller agree together as follows:
I. Obligations of Fifth Third and Seller to be Performed Prior to the
Closing
A. Fifth Third will, as promptly as practicable, prepare and cause to be
filed at its expense such applications and other documents with the Board of
Governors of the Federal Reserve System, the Florida Department of Financial
Institutions, the Federal Deposit Insurance Corporation, the Office of Thrift
Supervision and any other governmental agencies as are required to secure the
requisite approval of such agencies to the consummation of the transactions
provided for in this Agreement and in the Agreement of Merger, and shall also
prepare and file at its expense (accounting, legal, investment banking,
financial consulting and associated expenses of Seller and its affiliates
excepted) any registration statements or other documents necessary to comply
with all federal and state securities laws relating to the registration and
issuance of the shares of Fifth Third Common Stock to the Seller's shareholders
in this transaction, and any other laws applicable to the transactions provided
for in this Agreement and the Agreement of Merger and use all reasonable
efforts to secure such approvals.
Seller agrees that it will, as promptly as practicable after request and at its
own expense, provide Fifth Third with all information and documents concerning
Seller as shall be required in connection with preparing such applications,
registration statements and other documents and in connection with securing
such approvals.
II. Representations and Warranties of Seller
Seller represents and warrants to Fifth Third that as of the date hereof or as
of the indicated date, as appropriate, and except as otherwise disclosed in a
writing referring to this Section II and delivered by Seller to Fifth Third
prior to the execution of this Agreement by Fifth Third ("Disclosure
Schedule"):
A. Seller (i) is duly chartered and validly existing as a state bank
under the laws of the state of Florida; (ii) is duly authorized to conduct the
business in which it is engaged; (iii) has 1,000,000 shares, $7.00 par value
per share, of Common Stock authorized pursuant to its Charter, which are the
total number of shares Seller is authorized to have outstanding; and (iv) has
no outstanding securities of any kind, nor any outstanding options, warrants or
other rights entitling another person to acquire any securities of Seller of
any kind, other than (a) 410,000 shares of its Common Stock, $7.00 par value
per share, ("Seller Common Stock") which presently are authorized, duly issued
and outstanding and (b) options to purchase a total of 21,000 shares of Seller
Common Stock, which options were granted to and are presently held by the
officers and directors of Seller (the "Stock Options"). Seller has no direct
or indirect subsidiaries.
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B. Seller has furnished to Fifth Third its financial statements as at
December 31, 1992, 1993 and 1994 and for the years then ended, together with
the opinion of its independent certified public accountants associated
therewith. Such financial statements of Seller fairly present the financial
condition of Seller as of their respective dates and for the respective periods
covered thereby in conformity with generally accepted accounting principles,
consistently applied. There are no material liabilities, obligations or
indebtedness of Seller required to be disclosed in such financial statements
other than the liabilities, obligations or indebtedness disclosed in such
financial statements (including footnotes). Seller shall furnish Fifth Third
with its unaudited financial statements as at March 31, 1995 and for the three
months then ended, duly certified by Seller's chief executive officer and chief
financial officer, as soon as such statements publicly are available, and shall
continue to furnish such financial information for subsequent monthly periods
to Fifth Third as soon as such becomes available until the Closing Date. The
unaudited financial statements do not include information or footnotes
necessary for a complete presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. However, all adjustments (consisting only of normal recurring
accruals) which, in the opinion of Seller, are necessary for a fair
presentation of the financial statements, have been included.
C. Seller has good title to all of the properties and assets reflected in
its financial statements as at December 31, 1994 and which are still owned by
it, and Seller has good title to all properties and assets acquired by it
after such date and still owned by it, subject to (i) any liens, encumbrances,
easements, covenants and restrictions, of record, that do not materially
adversely impair the use of the property in the manner in which it is currently
being used, (ii) statutory liens for taxes not yet due and payable and (iii)
minor defects and irregularities in title that do not materially adversely
impair Seller's or any Successor's use of the property.
D. Except for events relating to the business environment in general: (i)
since December 31, 1994, there have been no material adverse changes in the
financial condition, operations or business of Seller; (ii) neither Seller's
chief executive officer nor its chief financial officer (collectively the
"Executive Officers") is aware of any events which have occurred since December
31, 1994 or which are reasonably certain to occur in the future and which
reasonably can be expected to result in any material adverse change in the
financial condition, operations or business of Seller.
E. There are no actions, suits, proceedings, investigations or
assessments of any kind pending, or to the best knowledge of Seller's Executive
Officers, threatened against Seller which reasonably can be expected to result
in any material adverse change in the financial condition, operations or
business of Seller.
F. Since December 31, 1994, Seller has been operated in the ordinary
course of business, has not made any material adverse changes in its capital or
corporate structures, nor any material changes in its methods of business
operations and has not provided any unusual or extraordinary increases in
employee salaries or benefits. Since December 31, 1994, Seller has not
declared or paid any dividends nor made any distributions of any other kind to
its shareholders.
G. Seller timely has filed all Federal, state and local tax returns
required to be filed (after giving effect to all extensions) by it, and has
paid or provided for all tax liabilities shown to be due thereon or assessed
against it. All tax returns filed by Seller through the date hereof constitute
complete and accurate representations, in all material respects, of the tax
liabilities of Seller for such years and accurately set forth all material
items (to the extent required to be included or reflected in such returns)
relevant to its future tax liabilities, including the tax bases of its
properties and assets.
H. Seller is not a party to (i) any written employment contracts or
written contracts of any other kind with any of its officers, directors or
employees except for employment agreements with Robert Guididas, K.R. Barker
and Patrick J. Philbin or (ii) any material contract, lease or agreement of any
other kind which is not assignable as a result of the merger provided for
herein without the consent of another party, except for contracts, leases or
agreements which will expire or can be terminated by Seller prior to the
Closing Date or contracts, leases or agreements (excluding contracts, leases
and agreements pursuant to which credit has been extended by Seller) which do
not require the expenditure of more than $5,000.00 thereunder.
I. Since December 31, 1994, Seller has not incurred any unusual or
extraordinary loan losses which are material to Seller; and in light of
Seller's historical loan loss experience and its management's analysis of the
quality and performance of its loan portfolio, as of December 31, 1994, its
reserve for loan losses was adequate to absorb all known and reasonably
anticipated losses as of such date.
J. Except for Keefe, Bruyette & Woods, Seller (i) has not, directly or
indirectly, dealt with any broker or finder in connection with this transaction
and (ii) has not incurred or will not incur any obligation for any broker's or
finder's fee or commission in connection with the transactions provided for in
this Agreement and the Agreement of Merger.
K. 1. The directors of Seller, 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 and the Agreement of
Merger,
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and have directed that this Agreement and the Agreement of Merger be submitted
to a vote of Seller's shareholders at the annual or a special meeting of
shareholders to be called for that purpose, all in accordance with and as
required by law and in accordance with the Charter and Bylaws of Seller.
2. Seller has the corporate power and authority to enter into this
Agreement and the Agreement of Merger and to carry out its obligations
hereunder and thereunder subject to certain required regulatory and shareholder
approvals. This Agreement and the Agreement of Merger, when executed and
delivered, will have been duly authorized by Seller's board of directors and,
subject to the receipt of requisite regulatory approvals and the approval of
Seller's shareholders, will constitute valid and binding obligations of Seller,
enforceable in accordance with their respective 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, and
(ii) the availability of certain remedies may be precluded by general
principles of equity.
3. Neither the execution of this Agreement or the Agreement of
Merger, nor the consummation of the transactions contemplated hereby and
thereby, (i) conflicts with, results in a breach of, violates or constitutes a
default under, Seller's Charter or Bylaws or, to the best knowledge of its
Executive Officers, any federal, state or local law, statute, ordinance, rule,
regulation or court or administrative order, or any agreement, arrangement, or
commitment, to which Seller is subject or bound; (ii) to the best knowledge of
Seller's Executive Officers, results in the creation of or gives any person the
right to create any lien, charge, encumbrance, security agreement or any other
rights of others or other adverse interest upon any material right, property or
asset belonging to Seller other than such rights as may be given dissenting
shareholders of Seller pursuant to state law; (iii) terminates or gives any
person the right to terminate, amend, abandon, or refuse to perform any
material agreement, arrangement or commitment to which Seller is a party or by
which Seller's rights, properties or assets are subject or bound; or (iv)
accelerates or modifies, or gives any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, Seller is to
perform any duties or obligations or receive any rights or benefits under any
material agreements, arrangements or commitments. For purposes of
subparagraphs (iii) and (iv) immediately preceding, material agreements,
arrangements or commitments exclude agreements, arrangements or commitments
which will expire or can be terminated by Seller prior to the Closing Date or
which do not require the expenditure of more than $5,000 (but shall include all
agreements, arrangements or commitments pursuant to which credit has been
extended by Seller).
L. Complete and accurate copies of the Charter and Bylaws of Seller in
force as of the date hereof have been delivered to Fifth Third.
M. To the best knowledge of the Executive Officers of Seller, Seller has
not knowingly engaged in any activity or knowingly omitted to take any action
which, in any material way, has resulted or could result in the violation of
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 and
similar disclosure laws and regulations, and equal employment and employment
discrimination laws and regulations) or any regulation, order, injunction or
decree of any court or governmental body, if such violation could have a
material adverse effect on Seller. To the best knowledge of Seller's Executive
Officers, Seller possesses all licenses, franchises, permits and other
governmental authorizations necessary for the continued conduct of its business
without material interference or interruption.
N. 1. To the best knowledge of the Executive Officers of Seller, neither
this Agreement nor the Agreement of Merger nor any report, statement, list,
certificate or other information furnished by Seller to Fifth Third or its
agents in connection with this Agreement or any of the transactions
contemplated hereby (including, without limitation, any information which has
been or shall be supplied with respect to their business operations and
financial condition for inclusion in the proxy statement/prospectus and
registration statement relating to the merger) contains or shall contain (in
the case of information relating to the proxy statement/prospectus, at the time
it is mailed, in the case of the registration statement, at the time it becomes
effective, and in the case of the proxy statement/ prospectus and the
registration statement, at the time the annual or special meeting of
shareholders of Seller is held to consider the adoption of this Agreement and
the Agreement of Merger) an untrue statement of a material fact or omits or
shall omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
2. The securities of the Seller are not registered under the Securities
Exchange Act of 1934. Seller has furnished to Fifth Third or its agent true
and correct copies of all reports, financial statements, proxy statements and
other communications provided by Seller to its shareholders from January 1,
1994 to the date of this Agreement. Subsequent to the date of this Agreement,
Seller shall timely furnish to Fifth Third copies of any communications to its
shareholders prior to the mailing or release thereof.
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O. (1) To the best knowledge of the Executive Officers of Seller, there
are no actions, proceedings or investigations pending before any environmental
regulatory body and no civil, criminal or administrative proceedings,
arbitrations or actions pending before any court, administrative agency or
arbitration panel, with respect to or threatened against or affecting Seller in
respect of any "facility" owned, leased or operated by Seller (but excluding
any "facility" as to which the sole interest of Seller is that of a lienholder
or mortgagee, but including any "facility" to which legal and equitable title
has been taken by Seller pursuant to mortgage foreclosure or similar
proceedings and including any "facility" in which Seller ever participated in
the financial management of such facility 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" which, if adversely determined, (a) would require the payment
by Seller and/or require Seller to incur expenses of more than $5,000 (whether
or not covered by insurance) or (b) would otherwise have a material adverse
effect on Seller, nor, to the best knowledge of the Executive Officers of
Seller, 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 Seller is a
plaintiff or complainant. To the best knowledge of the Executive Officers of
Seller, Seller is not liable in any material respect under any applicable law
for any release by Seller 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, to the best knowledge of the Executive
Officers of Seller, is Seller liable for any material costs (as a result of the
acts or omissions of Seller or, to the best knowledge of the Executive Officers
of Seller, 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 Seller to prevent or minimize any actual or threatened
release by Seller 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 in, and defined in, CERCLA; in addition, toxic or
hazardous substances, as used in this Paragraph O, shall mean any material or
substance that is defined or classified as a "hazardous substance" pursuant to
Section 101 of CERCLA or Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1321); a "hazardous waste" pursuant to Section 1004 or
Section 3001 of the Resource Conservation and Recovery Act (42 U.S.C. Section
Section 6803, 6921); a "toxic pollutant" under Section 307(a)(1) of the Federal
Water Pollution Control Act (33 U.S.C. Section 1317(a)(1)); a "hazardous air
pollutant" under Section 112 of the Clean Air Act (42 U.S.C. Section 7412); a
"pesticide" under Section 1 of the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136); a "solid waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903) and
Section 3734.01 of Ohio's Solid and Hazardous Wastes Laws (O.R.C. Section
3734.01); "petroleum" under Section 9001 of the Resource Conservation and
Recovery Act (42 U.S.C. Section 6991) and Section 3787.87 of Ohio's Petroleum
Underground Storage Tank Laws (O.R.C. Section 3737.87); "industrial waste" or
"other wastes" under Section 6111.01 of the Ohio Water Pollution Control Act
(O.R.C. Section 6111.01); or "medical wastes" or "infectious wastes" pursuant
to Section 3734.01 of Ohio's Solid and Hazardous Wastes Laws (O.R.C. Section
3734.01); or a "hazardous material" under the Hazardous Materials
Transportation Uniform Safety Act of 1990 (49 U.S.C. App. Section 1802(4)).
(2) To the best knowledge of the Executive Officers of Seller, each
"facility" owned, leased or operated by Seller (but excluding any "facility" as
to which the sole interest of Seller is that of a lienholder or mortgagee, but
including any "facility" to which legal and equitable title has been taken by
Seller pursuant to mortgage foreclosure or similar proceedings and including
any "facility" in which Seller ever participated in the financial management of
such facility 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.
(3) To the best knowledge of the Executive Officers of Seller, and
except as permitted by law, no solid or hazardous wastes, pollutants,
contaminants, hazardous substances or petroleum substances have been
discharged, disposed, released, placed or dumped onto or under any real
property owned, used or leased by Seller, or into the air or water on or
surrounding such real property, presently or previously owned, leased or used
by Seller. To the best knowledge of the Executive Officers of Seller, no PCB's
(polychlorinated byphenols), asbestos, or underground storage tanks were used
in the construction and operation of the real property presently or previously
owned, leased, or used by Seller, whether wholly or partially owned, except as
set forth in the Disclosure Schedule.
(4) Seller has not caused or contributed to off-site treatment
storage and/or disposal of hazardous waste and Seller has not received any
formal or informal notice from any governmental agency or public or private
entity that it is responsible or potentially responsible for response costs
with respect to a release or threat of a release of hazardous substances,
pollutants, or contaminants at any off-site location not owned or operated by
Seller.
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(5) Seller shall permit Fifth Third and its employees, agents or
contractors upon reasonable prior notice access to all real property that is
presently owned, used or leased by Seller for the purpose of conducting at
Fifth Third's sole expense, a Phase I Environmental Site Assessment in
accordance with the standard practices adopted by The American Society for
Testing of Materials, and, as deemed necessary by Fifth Third, a Phase II
Environmental Site Assessment, the scope of which will be determined solely by
Fifth Third and its employees, contractors or agents. Subject to the
conditions set forth below, Seller grants to Fifth Third and its employees,
agents and contractors the right and permission at reasonable times prior to
Closing and upon reasonable notice to enter upon all real property that is
presently owned, used or leased by Seller to conduct a Phase I environmental
site assessment in accordance with the standard practices adopted by the
American Society for Testing of Materials as deemed necessary by Fifth Third
and, upon the consent of Seller, which shall not be unreasonably withheld, such
additional investigations and tests with respect to such properties as Fifth
Third chooses to conduct. All such Phase I environmental site assessments and
all additional investigations and tests (collectively "investigations") shall
be so conducted as not to unreasonably damage such properties. Fifth Third
indemnifies and holds harmless Seller from and against any and all losses,
claims, damages, expenses (including reasonable attorneys' and consultants'
fees), costs and liabilities caused by unreasonable damage from such
investigations. Fifth Third and its employees, agents and contractors shall
(i) keep and hold confidential all information obtained or developed during or
as a result of the investigations, (ii) submit copies of all said information
to Seller promptly upon receipt or generation by Fifth Third, and (iii) obtain
Seller's written consent before disseminating any of said information to
entities other than Fifth Third or Seller or their respective legal counsel,
except as otherwise required by applicable law, regulations or court order.
P. 1. Benefit Plans. The Disclosure Schedule lists the name and a
short description of each Benefit Plan (as herein defined), together with an
indication of its funding status (e.g., trust, insured or general company
assets). For purposes hereof, the term "Benefit Plan" shall mean any plan,
program, arrangement or system of employee or director benefits presently
maintained by Seller for the benefit of employees, former employees or
directors of Seller and shall include (a) any qualified retirement plan such as
a pension, profit sharing or stock bonus plan or employee stock ownership plan,
(b) any plan, program or arrangement providing deferred compensation, bonus
deferral or incentive benefits, whether funded through trust or otherwise, and
(c) any welfare plan, program or policy providing vacation, severance, salary
continuation, supplemental unemployment, disability, life, health coverage,
retiree health, Voluntary Employee Benefit 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.
2. Plan Documents, Reports and Filings. Except as noted on the
Disclosure Schedule, Seller has provided true, complete and correct copies of
all plan documents, if any, comprising each Benefit Plan, together with, when
applicable, (a) the most recent summary plan description, (b) the most recent
actuarial and financial reports and the most recent annual reports filed with
any governmental agency and (c) all Internal Revenue Service ("IRS") or other
governmental agency rulings and determination letters and any open requests for
IRS rulings or letters with respect to the 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) and which is intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code") (a "Qualified
Benefit Plan"), except as noted on the Disclosure Schedule: (a) the IRS has
issued a determination letter which determined that such Qualified Benefit Plan
satisfied the requirements of Section 401(a) of the Code taking into
consideration all amendments to the Code through the date hereof, and such
determination letter has not been revoked or threatened to be revoked by the
IRS; (b) such Qualified Benefit Plan is in material compliance with all
qualification requirements of Section 401(a) of the Code (and, if applicable,
Section 4975(e)(7) of the Code for employee stock ownership plans) and meets
the requirements of Section 1140 of the Tax Reform Act of 1986 ("TRA 1986");
(c) such Qualified Benefit Plan is in substantial compliance with all
applicable notice, reporting and disclosure requirements of ERISA and the Code;
and (d) any previously terminated Qualified Benefit Plan was terminated in
material compliance with the requirements of ERISA and the Code, has received a
favorable IRS determination letter therefor and the liabilities of such
Qualified Benefit Plan and the requirements of the Pension Benefit Guaranty
Corporation ("PBGC") were fully satisfied.
4. Welfare Plan Compliance. With respect to each Benefit Plan which
is an employee welfare benefit plan (as defined in Section 3(1) of ERISA) (a
"Welfare Benefit Plan"), except as noted in the Disclosure Schedule: (a) such
Welfare Benefit Plan, if intended to provide favorable tax benefits to plan
participants, has been in substantial compliance with Code provisions therefor;
(b) such Welfare Benefit Plan has been operated in substantial compliance with
all applicable notice, reporting and disclosure requirements of ERISA and the
Code; and (c) such Welfare Benefit Plan, if a group health plan subject to
Section 4980B of the Code ("COBRA"), has been operated in substantial
compliance with such COBRA requirements.
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5. Prohibited Transactions. To the best knowledge of the Executive
Officers of Seller, no prohibited transaction under Section 406 of ERISA and
not exempt under Section 408 of ERISA 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 liability under Section 409 of ERISA.
6. Lawsuits or Claims. No material actions, suits or claims (other
than routine claims for benefits) are pending or, to the best knowledge of the
Executive Officers of Seller, threatened against any Benefit Plan or against
Seller with respect to any Benefit Plan.
7. Disclosure of Unfunded Liabilities. All material Unfunded
Liabilities with respect to each Benefit Plan have been recorded and disclosed
on the most recent financial statements of Seller or, if not, have been
disclosed on the Disclosure Schedule. For purposes hereof, the term "Unfunded
Liabilities" shall mean any amounts properly accrued to date under generally
accepted accounting principles in effect as of the date of this Agreement
(GAAP) 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, and
shall include but not be 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
nondeductible payments or 20% excise tax under Section 4999 of the Code
relating to excess parachute payments under Section 280G of the Code, (d) any
authorized but unpaid profit sharing contributions or contributions under
Section 401(k) and Section 401(m) of the Code, (e) retiree health benefit
coverage and (f) unpaid premiums for contributions required under any group
health plan to maintain such plan's coverage through the date of this
Agreement.
8. Defined Benefit Pension Plan Liabilities. Seller (or any pension
plan maintained by Seller) has not incurred any material liability to the PBGC
or the IRS with respect to any Benefit 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. Neither Seller, nor any controlled group member of Seller, has ever
participated in, or incurred any liability under Sections 4201, 4063 or 4064 of
ERISA for a complete or partial withdrawal from, a multiple employer plan or a
multiemployer plan (as defined in Section 3(37) of ERISA).
9. Independent Trustee. To the best knowledge of the Executive
Officers of Seller, Seller (a) has not incurred any asserted or unasserted
material liability for breach of duties assumed in connection with acting as an
independent trustee of any employee pension plan (as defined in Section 3(2) of
ERISA) which is intended to be qualified under Section 401(a) of the code and
which is maintained by an employer unrelated in ownership to Seller, (b) has
not authorized nor knowingly participated in a material prohibited transaction
under Section 406 of ERISA and not exempt under Section 408 of ERISA and (c)
has not received notice of any material actions, suits or claims (other than
routine claims for benefits) pending or threatened against the unrelated
employer or against Seller.
10. Material. For purposes of this Paragraph P as a whole, the term
"material" in connection with a liability shall mean a liability or loss,
taxes, penalties, interest and related legal fees in the total amount of $5,000
or more, with such determination being made on the basis of the aggregate
affected participants of a Benefit Plan and not with respect to any single
participant.
Q. The investment portfolio of Seller consists of securities in
marketable form. Except as set forth in the Disclosure Schedule, since
December 31, 1994, Seller has not incurred any unusual or extraordinary losses
in its investment portfolio, and, except for events relating to the business
environment in general, including market fluctuations, the Executive Officers
of Seller are 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 Seller's investment portfolio.
R. There are no actions, suits, claims, proceedings, investigations or
assessments of any kind pending, or to the best knowledge of Seller's Executive
Officers, threatened against any of the directors or officers of Seller in
their capacities as such, and no director or officer of Seller currently is
being indemnified or seeking to be indemnified by Seller pursuant to applicable
law or Seller's Charter or Bylaws.
III. Representations and Warranties of Fifth Third
Fifth Third represents and warrants to Seller that as of the date hereof or as
of the indicated date, as appropriate:
A. Fifth Third is duly incorporated, validly existing and in good
standing as a corporation under the corporation laws of the State of Ohio, is a
registered bank 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.
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B. Pursuant to Fifth Third's Second Amended Articles of Incorporation, as
amended, the total number of shares of capital stock it is authorized to have
outstanding is 140,500,000 of which 140,000,000 shares are Common Stock without
par value ("Fifth Third Common Stock") and 500,000 shares are Preferred Stock
without par value. As of the close of business on February 28, 1995,
65,173,350 shares of Fifth Third Common Stock were issued and outstanding and
no shares were held in its treasury. As of the date of this Agreement, no
shares of its Preferred Stock have been issued. 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 and $143,750,000 of 4 1/4% Convertible
Subordinated Notes due January 15, 1998 (the "Notes"). At February 28, 1995,
1,564,464 shares of Fifth Third Common Stock were reserved for issuance in
connection with outstanding options under its stock option plans and 1,578,726
shares were reserved for issuance under options to be granted in the future.
The Notes are convertible at any time prior to maturity at the option of each
holder thereof, unless previously redeemed, into shares of Fifth Third Common
Stock at a conversion price of $63-5/8 per share of Fifth Third Common Stock
(equivalent to a conversion rate of approximately 15.72 shares per $1,000
principal amount of the Notes), subject to adjustment for stock splits, stock
dividends and similar stock distributions. If all of the Notes were converted,
Fifth Third would issue a maximum of approximately 2,259,750 shares of Fifth
Third Common Stock to the holders of the Notes in the aggregate.
C. All shares of Fifth Third Common Stock to be received by the
shareholders of Seller as a result of the merger pursuant to the terms of this
Agreement and the Agreement of Merger shall be, upon transfer or issuance,
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. Fifth Third has furnished to Seller its Consolidated Financial
Statements as at December 31, 1992, December 31, 1993 and December 31, 1994 and
for the respective years then ended together with the opinions of its
independent public accountants associated therewith. Such Consolidated
Financial Statements fairly present the consolidated financial condition of
Fifth Third as of their respective dates and for the respective periods covered
thereby in conformity with generally accepted accounting principles
consistently followed throughout the periods covered thereby. Neither Fifth
Third nor any subsidiaries of Fifth Third have any material liabilities,
obligations or indebtedness required to be disclosed in such financial
statements other than the liabilities, obligations and indebtedness disclosed
in such financial statements (including footnotes). Fifth Third shall furnish
Seller with its unaudited consolidated financial statements as at March 31,
1995 and for the three months then ended as soon as such statements publicly
are available, and shall continue to furnish such financial information for
subsequent calendar quarter periods to Seller as soon as such becomes publicly
available until the Closing Date.
E. Except for events relating to the business environment in general: (i)
since December 31, 1994 there have been no material adverse changes in the
consolidated financial condition, operations or business of Fifth Third; (ii)
the chief executive officer and the chief financial officer of Fifth Third are
not aware of any events which have occurred since December 31, 1994 or which
are reasonably certain to occur in the future and which reasonably can be
expected to result in any material adverse change in the consolidated financial
condition, operations or business of Fifth Third; and (iii) since December 31,
1994, there have been no material changes in the methods of business operations
of Fifth Third and its subsidiaries.
F. 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
on March 2, 1995, at which meeting a quorum was at all times present and
acting, has approved the transactions, and the terms thereof, contemplated by
this Agreement and the Agreement of Merger. Approval and adoption of this
Agreement and the Agreement of Merger by the shareholders of Fifth Third is not
required under Ohio law or under the Second Amended Articles of Incorporation,
as amended, or Code of Regulations of Fifth Third. No other corporate
approvals are required to be obtained by Fifth Third.
2. Fifth Third and 5/3 Savings Bank have the corporate power and
authority to enter into this Agreement and the Agreement of Merger, as
applicable, and to carry out each of their obligations hereunder and
thereunder, as applicable, subject to certain required regulatory approvals.
This Agreement and the Agreement of Merger when executed and delivered, will
have been duly authorized and will constitute valid and binding obligations of
Fifth Third and 5/3 Savings Bank, as applicable, enforceable in accordance
with their 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, and (ii) the availability of certain remedies
may be precluded by general principles of equity, subject, however, to the
receipt of requisite regulatory approvals.
3. Neither the execution of this Agreement or the Agreement of
Merger nor the consummation of the transactions contemplated hereby and
thereby, does or will (i) conflict with, result in a breach of, violate or
constitute a default, under Fifth Third's Third Amended Articles of
Incorporation, as amended, or Code of Regulations, or 5/3 Savings
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Bank's Federal Stock Charter or Bylaws, in effect on the date hereof, as
applicable, or, to the best knowledge of Fifth Third's chief executive officer
and chief financial officer, 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 and 5/3 Savings Bank are
subject or bound; (ii) to the best knowledge of the chief executive officer and
chief financial officer of Fifth Third, result in the creation of or give any
person the right to create any lien, charge, encumbrance, security agreement or
any other rights of others or other adverse interest upon any material right,
property or asset belonging to Fifth Third or 5/3 Savings Bank or any of their
subsidiaries other than such rights as may be given the shareholders of Seller
pursuant to the provisions of applicable federal law governing the rights of
dissenting shareholders; (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 5/3 Savings Bank is a party
or by which Fifth Third's or 5/3 Savings Bank'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 5/3 Savings Bank, as applicable, are to
perform any duties or obligations or receive any rights or benefits under any
material agreements, arrangements or commitments.
G. Complete and accurate copies of the Second Amended Articles of
Incorporation, as amended, and Code of Regulations of Fifth Third in force as
of the date hereof have been delivered to Seller.
H. To the best knowledge of the chief executive officer and chief
financial officer of Fifth Third, 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 any local, state or federal law or any regulation, order,
injunction or decree of any court or governmental body. To the best knowledge
of the chief executive officer and chief financial officer 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. Fifth Third shall
comply, and as of the Closing Date (as hereinafter defined) Fifth Third shall
have complied, with all applicable laws, rules, and regulations in connection
with the registration and issuance of the shares of Fifth Third Common Stock in
connection with the merger contemplated hereby.
I. 1. To the best knowledge of the chief executive officer and chief
financial officer of Fifth Third, neither this Agreement or the Agreement of
Merger nor any report, statement, list, certificate or other information
furnished or to be furnished by Fifth Third to Seller or its agents in
connection with this Agreement or any of the transactions contemplated hereby
(including, without limitation, any information which has been or shall be
supplied with respect to its business operations and financial condition for
inclusion in the proxy statement/prospectus and registration statement relating
to the merger) contains or shall contain (in the case of information relating
to the proxy statement/prospectus, at the time it is mailed, and, in the case
of the registration statement, at the time it becomes effective and, in the
case of the proxy statement/prospectus and the registration statement, at the
time the special meeting of shareholders of Seller is held to consider the
adoption of this Agreement and the Agreement of Merger) an untrue statement of
a material fact or omits or shall omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
2. Fifth Third has furnished to Seller or its agents true and
complete copies (including all exhibits and all documents incorporated by
reference) of the following documents as filed by Fifth Third with the
Securities and Exchange Commission (the "SEC"):
(a) Fifth Third's Annual Report on Form 10-K for the year
ended December 31, 1994;
(b) any Current Report on Form 8-K with respect to any
event occurring after December 31, 1994 and prior to
the date of this Agreement;
(c) any report filed by Fifth Third to amend or modify
any of the reports described above; and
(d) all proxy statements prepared in connection with
meetings of Fifth Third's shareholders held
subsequent to December 31, 1994.
The information set forth in the documents described in this subsection 2
(including all exhibits thereto and all documents incorporated therein by
reference) did not, as of the dates on which such reports were filed with the
SEC, (a) contain any untrue statement of a material fact, (b) omit any material
fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading, or (c) omit any material exhibit required to be filed
therewith. Prior to the date hereof no event has occurred subsequent to
December 31, 1994 which Fifth Third is required to describe in a Current Report
on Form 8-K other than the Current Reports
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heretofore furnished by Fifth Third to Seller. Fifth Third timely shall
furnish Seller with copies of all reports filed by Fifth Third with the SEC
subsequent to the date of this Agreement and until the Closing Date.
J. There are no actions, suits, proceedings, investigations or
assessments of any kind pending or, to the best knowledge of the chief
executive officer and chief financial officer of Fifth Third, threatened
against Fifth Third, which reasonably can be expected to result in any material
adverse change in the consolidated financial condition, operations or business
of Fifth Third.
K. Since December 31, 1994, none of Fifth Third's banking subsidiaries or
thrift subsidiaries have incurred any unusual or extraordinary loan losses
which would be material to Fifth Third on a consolidated basis; and to the best
knowledge and belief of the chief executive officer and chief financial officer
of Fifth Third, and in the light of such banking subsidiaries' and thrift
subsidiaries' historical loan loss experience and their managements' analyses
of the quality and performance of their respective loan portfolios, their
consolidated reserves for loan losses are adequate.
L. Fifth Third and its subsidiaries have 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 assessed against them respectively.
M. Fifth Third has not, directly or indirectly, dealt with any broker or
finder in connection with this transaction and has not incurred and will not
incur any obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement and the
Agreement of Merger.
N. Fifth Third has no unfunded liabilities with respect to any Benefit
Plan (as such term is defined in subparagraph Q.1. of Section II hereof, but
applied to Fifth Third, its subsidiaries and affiliates) that are material,
either individually or in the aggregate, to Fifth Third on a consolidated basis
and that have not been recorded and disclosed as required by generally accepted
accounting principles (GAAP) in the most recent year-end, audited financial
statements of Fifth Third supplied to Seller pursuant to Paragraph D of Section
III hereof.
O. The investment portfolios of Fifth Third and its affiliates consist of
securities in marketable form. Since December 31, 1994, Fifth Third and its
affiliates, on a consolidated basis, have not incurred any unusual or
extraordinary losses in their respective investment portfolios, and, except for
events relating to the business environment in general, including market
fluctuations, 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 affiliates on a
consolidated basis.
IV. Obligations of Seller Between the Date of this Agreement and the
Effective Time
A. Seller, after consultation with Fifth Third, will take all action
necessary to call and hold its annual or a special meeting of its shareholders
within forty-five (45) days after the Fifth Third registration statement
relating to this transaction has been declared effective by the SEC and under
all applicable state securities laws for the purpose of approving this
Agreement, the Agreement of Merger and any other documents or actions necessary
to the consummation of the merger provided for herein pursuant to law. Subject
only to (i) Seller's Board of Directors' review of Fifth Third's registration
statement to be filed with the SEC described in this subparagraph and their
reasonable satisfaction with the information set forth therein and (ii) the
exercise of their fiduciary duties, the Board of Directors of Seller intends to
inform the shareholders of Seller in the proxy materials relating to the annual
or special meeting that all directors intend to vote all shares of Seller
voting stock which they own of record or have voting control over in favor of
approving this Agreement, the Agreement of Merger and any such other necessary
documents or actions, and all directors will recommend approval of this
Agreement and the Agreement of Merger to the other shareholders of Seller.
Seller shall cooperate with Fifth Third in the preparation of such proxy
materials which shall be included and filed with, as a part of, Fifth Third's
registration statement on Form S-4 (or any such other appropriate form) filed
with the SEC for the registration of the shares of Fifth Third Common Stock to
be issued to Seller's shareholders pursuant to the transactions contemplated by
this Agreement and the Agreement of Merger.
B. (i) The merger between Seller and Fifth Third is intended to be
structured to qualify for treatment under present accounting rules as a pooling
of interests and Seller agrees to take no action which would disqualify this
treatment under generally accepted accounting principles. Seller agrees that
it will cooperate with Fifth Third prior to the Effective Time to conform its
valuation, collection and credit policies, practices and procedures to those of
5/3 Savings Bank, to the extent that it is not disruptive to or does not
interfere with, the business of Seller and is permitted by law and consistent
with the fiduciary duties of the directors and other officers of Seller and at
such times as reasonably acceptable to Fifth Third and Seller. Fifth Third
will direct 5/3 Savings Bank to provide such assistance and direction to Seller
as is necessary in conforming to such policies, practices and procedures; and
(ii) from the date of this Agreement until the Effective Time,
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Seller will be operated in the ordinary course of business, and will not,
without the prior written consent of Fifth Third, which consent shall not be
unreasonably withheld: make any material adverse changes in its capital or
corporate structures; issue any additional shares of its Common Stock except
upon exercise of presently outstanding Stock Options; issue any other equity
securities, or issue any long term debt or convertible or other securities of
any kind, or rights to acquire any of its securities, including without
limitation, any additional Stock Options; 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 $5,000; make,
enter into or renew any agreement for services to be provided to Seller or
permit the automatic renewal of any such agreement, except any agreement for
services having a term of not more than three months or requiring the
expenditure of not more than $2,500 (for this purpose the phrase "permit the
automatic renewal" includes the failure to send a notice of termination of such
a contract if such failure would constitute a renewal); open for business any
branch office which has been approved by the appropriate regulatory authorities
but not yet opened or apply to the appropriate regulatory authorities to
establish a new branch office or expand any existing branch office; 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;
declare or pay any cash dividends on its stock other than normal and customary
cash dividends paid in such amounts and at such times as Seller historically
has done; pay any stock dividends or make any other distributions on its stock;
and provide any increases in employee salaries or benefits other than in the
ordinary course of business or as described in the Disclosure Statement.
V. Cooperation and Other Obligations and Other Covenants
A. Each of the parties hereto agrees to use its 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 and the
Agreement of Merger 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.
B. Seller agrees to permit Fifth Third, its officers, employees,
accountants, agents and attorneys, and Fifth Third agrees to permit Seller, its
officers, employees, accountants, agents and attorneys, to have reasonable
access during business hours to their respective books, records and properties
for the purpose of examining the financial condition, assets, liabilities,
legal compliance, affairs and the conduct of the business of Seller or Fifth
Third, as the case may be, prior to the Effective Time, and to permit one
another to undertake a complete investigation to confirm the accuracy of each
other's representations, warranties and covenants contained in Sections II and
III hereof; provided, however, that any such investigation by Fifth Third or
Seller shall not relieve Fifth Third or Seller from any responsibility or
liability for any material misrepresentation or material breach of warranty
hereunder discovered in the course of or subsequent to such examination and
prior to the Effective Time.
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 and in the Agreement of Merger is subject to the
fulfillment on or prior to the Effective Time of each of the following
conditions:
1. The shareholders of Seller shall have duly approved this
Agreement and the Agreement of Merger in accordance with and as required by law
and in accordance with its 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 Florida Department of Financial
Institutions, the OTS and the Federal Deposit Insurance Corporation to the
extent required.
3. Dinsmore & Shohl, counsel for Fifth Third, shall have delivered
an opinion as to certain federal tax aspects of the transaction addressed to
Seller in substantially the form appended hereto as Appendix B.
4. Prior to or at the Effective Time, no material investigation by
any state or federal agency shall have been threatened or instituted and no
material action or proceeding shall have been threatened or instituted before
any court or government body or authority with respect to the transactions
contemplated hereby, other than investigations, actions and proceedings which
have been withdrawn prior to or at the Effective Time without material adverse
effect to Fifth Third or Seller and other than regularly- scheduled regulatory
examinations.
5. Any waiting period mandated by law in respect of the final
approval by any applicable Federal regulator(s) of the transaction contemplated
herein shall have expired.
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B. Conditions to the Obligations of Fifth Third:
The obligation of Fifth Third to consummate the transactions provided for
herein and in the Agreement of Merger are subject to the fulfillment at or
prior to the Effective Time of each of the following conditions unless waived
by Fifth Third in a writing delivered to Seller which specifically refers to
the condition or conditions being waived:
1. All of the representations and warranties of Seller set forth in
Section II of this Agreement shall be true and correct in all material respects
at and as of the respective dates set forth with respect to each, as of the
date of this Agreement and at and as of the Closing Date (as hereinafter
defined) as if each such representation and warranty was given on and as of the
Closing Date rather than on and as of the respective dates set forth with
respect to each and rather than as of the date of this Agreement.
2. Seller shall have performed all of the obligations required of it
under the terms of this Agreement and the Agreement of Merger in all material
respects.
3. McCaffrey & Raimi, P.A., counsel for Seller, shall have delivered
an opinion addressed to Fifth Third in substantially the form appended hereto
as Appendix C.
4. With respect to Seller's 401(k) Plan, at least 60 days prior to
the Effective Time: (1) Seller shall have taken any and all actions necessary
to discontinue any ongoing obligation after the Effective Time to continue
contributions (including employee 401(k) contributions) to said plan; and (2)
Seller shall have provided to Fifth Third a copy of a favorable determination
letter from the IRS in which the IRS has determined that such plan satisfies
all qualification requirements (without caveat or qualification), including all
amendments to the Code through the date hereof. No distributions in excess of
the amount of contributions accrued by Seller (which amount shall not exceed
$4,000 per month) shall be made from said plan without Fifth Third's consent.
With respect to distributions of amounts so accrued, Seller agrees to consult
with Fifth Third prior to distribution of such amounts and shall allocate such
amounts only as approved by Fifth Third. Seller shall not allocate or pay such
distributions to the extent that such payment would exceed the limitations of
Sections 415 or 416 of the Code or would otherwise result in a disqualification
of all or any portion of Seller's or Fifth Third's Plans.
5. Fifth Third's independent certified public accountants shall have
reviewed the unaudited financial statements of Seller as at the end of the
month immediately preceding the Effective Time, performed such other auditing
procedures as may be requested by Fifth Third and reported that they are not
aware of any material modifications that should be made in order for such
financial statements to (i) be in conformity with generally accepted accounting
principles, consistently applied, excluding the presentation of footnotes, and
(ii) present fairly the financial condition and results of operations of
Seller.
6. The Stock Options all shall have been exercised and fully paid,
there shall be no outstanding options to purchase any shares of Seller Common
Stock and any Seller stock option plan or arrangement effectively shall have
been terminated.
7. The receipt of a certificate from Seller, executed by its chief
executive officer and chief financial officer, dated the Closing Date,
certifying to their best knowledge that: (i) all of the representations and
warranties set forth in Section II were true and correct in all material
respects at and as of the respective dates set forth with respect to each; (ii)
all of such representations and warranties are also true and correct in all
material respects at and as of the Closing Date as if each such representation
and warranty was given on and as of the Closing Date; and (iii) Seller has met
and fully complied in all material respects with all of the obligations
required of it under the terms of this Agreement and the Agreement of Merger.
8. The total issued and outstanding shares of Seller Common Stock
shall not exceed 431,000 shares.
9. Fifth Third shall have received a letter from Deloitte & Touche,
Fifth Third's independent public accountants, to the effect that the
transaction will qualify for "pooling of interests" accounting treatment.
10. Seller's employment agreements with Robert Guididas, K.R. Barker
and Patrick J. Philbin each shall be terminated by Seller prior to the
Effective Time and all amounts due thereunder (whether due at the time of
termination or change in control of Seller or over a period of time) shall be
paid in full.
11. The aggregate amount of Shareholders' Equity (including Common
Stock, Additional Paid-In Capital and Retained Earnings and excluding Treasury
Stock) of Seller immediately prior to the Effective Time, as shown by and
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reflected in its books and records of accounts in accordance with generally
accepted accounting principles, consistently applied, shall not be less than
$4,100,000, with the exception of: (i) any adjustments or unrealized gains or
losses on marketable securities, (ii) adjustments requested by Fifth Third that
adversely impact Shareholders' Equity as defined in this subparagraph, and
(iii) adjustment resulting from the fees paid to Keefe, Bruyette & Woods in
connection with the representation of Seller in this transaction.
C. Conditions to the Obligations of Seller:
The obligation of Seller to consummate the transactions provided for herein and
in the Agreement of Merger is subject to the fulfillment at or prior to the
Effective Time of each of the following conditions unless waived by Seller in a
writing delivered to Fifth Third which specifically refers to the condition or
conditions being waived:
1. All of the representations and warranties of Fifth Third set
forth in Section III of this Agreement shall be true and correct in all
material respects at and as of the respective dates set forth with respect to
each, as of the date of this Agreement and at and as of the Closing Date as if
each such representation and warranty was given on and as of the Closing Date
rather than on and as of the respective dates set forth with respect to each
and rather than as of the date of this Agreement, except that the
representations and warranties set forth in paragraph B of Section III of this
Agreement shall be true only at and as of the date stated.
2. Fifth Third shall have performed all of the obligations required
of it under the terms of this Agreement and the Agreement of Merger in all
material respects.
3. Paul L. Reynolds, counsel for Fifth Third, shall have delivered
an opinion addressed to Seller in substantially the form appended hereto as
Appendix D.
4. The receipt of a certificate from Fifth Third, executed by its
chief executive officer and chief financial officer, dated the Closing Date,
certifying to their best knowledge that: (i) all of the representations and
warranties set forth in Section III were true and correct in all material
respects at and as of the respective dates set forth with respect to each; (ii)
all of such representations and warranties, with the exception of III.B., are
also true and correct in all material respects at and as of the Closing Date as
if such representations and warranties were given on and as of the Closing
Date; and (iii) Fifth Third has met and fully complied in all material respects
with all of the obligations required of it under the terms of this Agreement
and the Agreement of Merger.
5. Fifth Third shall have registered the shares of Fifth Third
Common Stock to be issued to Seller's shareholders hereunder and pursuant to
the Agreement of Merger with the SEC pursuant to the Securities Act of 1933, as
amended, 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.
6. The receipt of a fairness opinion from Keefe, Bruyette & Woods,
dated as of a date reasonably prior and proximate to the effective date of the
registration statement described in Section 5 immediately preceding stating
that the exchange ratio pursuant to this Agreement and the Agreement of Merger
is fair to Seller's shareholders from a financial point of view.
VII. Additional Covenants
A. 5/3 Savings Bank shall be merged with and into Seller effective the
Effective Time and Seller will thereafter change its name to Fifth Third Bank
of Florida ("5/3 Florida"). The parties hereto agree to cooperate with one
another to effect such merger.
B. 1. It is Fifth Third's intention (but not obligation) to employ in
Seller, following the merger of 5/3 Savings Bank into Seller as many of
Seller's employees as possible. Any hiring decisions are exclusively those of
Fifth Third and 5/3 Savings Bank and shall be made in accordance with Fifth
Third's and 5/3 Savings Bank's standard employment criteria. Additional
employment opportunities with Fifth Third may be available at other locations
with additional Fifth Third affiliates. If so, Fifth Third will consider for
employment at these additional locations any other of Seller's employees who
are willing to consider employment at such other locations. Any hiring
decisions are exclusively those of Fifth Third and shall be made in accordance
with its standard employment criteria. Seller shall not hire any new employees
from the date hereof until the Closing Date without the prior consent of Fifth
Third, which consent shall not be unreasonably withheld.
2. All Seller employees hired by Fifth Third (or an affiliate,
including 5/3 Florida) shall receive the standard package of Fifth Third
employee benefits which are in place throughout the Fifth Third holding company
system. These benefits include group health and major medical insurance, group
life insurance, pension and profit sharing participation, free checking and
traveler's checks and other customary benefits. Seller's employees hired by
Fifth Third (or an affiliate,
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including 5/3 Florida) shall be employed on an at will basis and shall be
entitled to participate immediately following the Closing Date in all employee
benefit plans sponsored by Fifth Third or its subsidiaries or affiliates on the
same terms and to the same extent as similarly-situated employees. Such
employees shall receive credit for their period of service to Seller for
purposes of determining participation and vesting in all Fifth Third employee
benefit plans (except for vesting in the Fifth Third Master Retirement Plan)
but not for purposes of determining the benefits accrued thereunder.
3. Any employee who will not be hired by Fifth Third shall be
terminated by Seller immediately prior to the Effective Time and shall be
entitled to severance pay equal to, in the case of the salaried employee, two
week's pay for each year of service up to a maximum of twelve week's pay, and,
in the case of an hourly employee, two week's pay for each year of service up
to a maximum of six week's pay, plus applicable COBRA benefits. In addition
such terminated employees shall be entitled to a lump sum payment equal to the
cost of such COBRA benefits to such employee for a period of ninety (90) days
less the amount currently paid by such employee for similar health care
benefits for a ninety (90) day period. Fifth Third shall provide sufficient
notification to Seller of those employees it will not be hiring in order that
such employees terminated by Seller can be given appropriate notice of
termination in advance of the effectiveness thereof and Fifth Third shall
provide limited outplacement services and assistance to such employees.
Nothing contained in this Paragraph VII.B.3 shall be construed or interpreted
to limit or modify in any way Fifth Third's at will employment policy.
4. The employees of Seller retained by Fifth Third after the Closing
Date will be paid salaries by Fifth Third commensurate with the salary levels
of comparable Fifth Third employees, subject, on an ongoing basis, to
acceptable performance.
C. All provisions for indemnification and limitation of liability now
existing in favor of the employees, agents, directors or officers of Seller as
provided by regulation or in its Charter or Bylaws shall survive the Effective
Time, shall be assumed by Fifth Third and shall continue in full force and
effect with respect to acts or omissions occurring on or prior to the Effective
Time for a period of three years thereafter, or in the case of matters
occurring prior to the Effective Time which have not been resolved prior to the
third anniversary of the Effective Time, until such matters are finally
resolved. Fifth Third shall cause the insurance company that issued its
current directors' and officers' liability insurance policy to issue an
endorsement to such policy providing that all persons who were covered under
similar policies purchased by Seller immediately prior to the Closing Date
shall be covered for a period of two years after the Closing Date under Fifth
Third's policy with respect to acts or failures to act prior to the Closing
Date, excluding pending or threatened claims against Seller 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
therein.
D. Fifth Third will not disclose to others and will hold in confidence
any non-public, confidential information disclosed to it by Seller concerning
Seller. Seller will not disclose to others 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 Seller or Fifth Third, as the case may be, and shall not
be used by Fifth Third or Seller, as the case may be, in any way detrimental to
Fifth Third or Seller.
E. All notices under this Agreement or under the Agreement of Merger
shall be in writing and shall be delivered in person or mailed by certified
mail, return receipt requested, with postage prepaid and addressed, if to
Seller to Robert Guididas, President, Bank of Naples, 4949 Tamiami Trail North,
P. O. Box 413001, Naples, Florida 33941, with a copy to McCaffrey & Raimi,
4501 Tamiami Trail North, Suite 202, Naples, Florida 33940; if to Fifth Third,
to Mr. George A. Schaefer, Jr., President and Chief Executive Officer, Fifth
Third Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, with a copy to
Paul L. Reynolds, Vice President and General Counsel, The Fifth Third Bank, 38
Fountain Square Plaza, Cincinnati, Ohio 45263. 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.
F. This Agreement and the Agreement of Merger (which together shall
constitute a single agreement), together with the written instruments
specifically referred to herein and such other written agreements delivered by
Fifth Third or Seller to each other pursuant hereto constitute the entire
agreement between the parties with regard to the transactions contemplated
herein and in the Agreement of Merger and supersede any prior agreements,
including, without limitation, that certain proposal letter from Fifth Third to
Seller dated March 21, 1995. This Agreement and the Agreement of Merger may be
hereafter amended only by a written instrument executed by each of the parties
pursuant to Section X hereof.
G. During the period from the date of this Agreement to the Effective
Time, except with the prior approval of Fifth Third, Seller shall not, and
shall not permit its representatives to, directly or indirectly, subject to the
exercise by the Directors of Seller of their fiduciary duties, initiate,
solicit, negotiate with, encourage discussions with, provide information to, or
agree to a transaction with, any corporation, partnership, person or other
entity or group concerning any merger
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in which Seller is not the acquiror or any sale of substantial assets, sale of
shares of capital stock (or securities convertible or exchangeable into or
otherwise evidencing, or any agreement or instrument evidencing, the right to
acquire capital stock) or similar transaction involving Seller (any such
transaction being referred to herein as an "Acquisition Transaction"). Subject
to the exercise by the Directors of Seller of their fiduciary duties, Seller
shall promptly communicate to Fifth Third the terms of any proposal which it
may receive in respect of an Acquisition Transaction and any request by or
indication of interest on the part of any third party with respect to
initiation of any Acquisition Transaction or discussions with respect thereto.
H. Fifth Third and Seller shall each indemnify and hold the other
harmless for any claim, liability or expense (including reasonable attorneys'
fees) arising from a misstatement or omission in the applications submitted to
regulatory agencies for approval of the transaction contemplated by this
Agreement and the Agreement of Merger relating to the indemnifying party which
is based or made in reliance upon any representation, warranty, or covenant of
such party in this Agreement or any certification, document, or other
information furnished or to be furnished by such party pursuant to this
Agreement. From and after the Closing Date, this subsection shall be of no
further force or effect.
I. 1. Upon the request of Fifth Third and at the sole option of Fifth
Third, Seller 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 Seller for a period of
five (5) years from the date such agreements are executed. Fifth Third agrees
that the cost of the conversion of Seller 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 Seller for the Jeanie(R) service shall not exceed those
charged by the current EFT service provider of Seller, 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 Section VIII hereof for any reason except a material breach or default by
Seller, and if, in such instance, Seller 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.
Fifth Third and Seller shall cooperate to carry out the terms of this Paragraph
and in no event shall Seller be required to take any actions pursuant to this
Paragraph I that would be disruptive to or interfere in any material respect
with Seller's business or otherwise take any action 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 Seller.
2. Upon the request of Fifth Third and at the sole option of Fifth
Third, Seller will contract with Fifth Third or an affiliate of Fifth Third for
the provision of any and all data processing services including, without
limitation, item processing and application processing. Fifth Third agrees
that Fifth Third will assume any and all expense related to the conversion to
such Fifth Third services and that the costs and fees payable by Seller for
such services shall not exceed the costs and fees payable by Seller under
existing agreements for such services, subject to any increases in such cost
and fees which would otherwise be permitted under their current agreements for
such services. In the event that Fifth Third determines that a third party
should provide such services to Seller, Seller agree to have such services
provided by the third party recommended for such purpose by Fifth Third
provided that the cost and fees for such services do not exceed those currently
being paid, or which may otherwise be payable by Seller under the existing
agreements. In the event this Agreement is terminated pursuant to Section VIII
hereof for any reason except a material breach or default by Seller, and if, in
such instance, Seller desires to convert to another provider of data processing
services, Fifth Third agrees to 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 data processing
industry. Fifth Third and Seller shall cooperate to carry out the terms of
this Paragraph and in no event shall Seller be required to take any actions
pursuant to this Paragraph I.2. that would be disruptive to or interfere in any
material respect with Seller's business or otherwise take any action 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 Seller.
J. Fifth Third and Seller agree that each will use its best efforts to
secure the regulatory approvals necessary to consummate the transactions
contemplated herein at the earliest practicable time, and Seller agrees to
cooperate with Fifth Third and Fifth Third agrees to cooperate with Seller in
all reasonable respects in securing such approvals.
K. Fifth Third and Seller shall agree with each other as to the form and
substance of any press release related to this Agreement and the Agreement of
Merger 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 counsel deems
necessary.
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L. Unless otherwise provided by this Agreement, each party hereto shall
bear and pay all costs and expenses incurred by it in connection with the
transactions contemplated by this Agreement and the Agreement of Merger,
including, without limitation, fees, costs and expenses of its own financial
consultants, investment bankers, accountants and counsel.
M. 1. Between the date hereof and the Closing Date, Seller 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.
2. Between the date hereof and the Closing Date, Fifth Third shall
promptly advise Seller 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.
VIII. Termination
A. This Agreement and the Agreement of Merger may be terminated at any
time prior to the Effective Time by written notice delivered by Fifth Third to
Seller or by Seller to Fifth Third in the following instances:
1. By Fifth Third or Seller, if there has been a material
misrepresentation, a material breach of warranty or a material failure to
comply with any covenant on the part of the other party with respect to the
representations, warranties, and covenants set forth herein and such
misrepresentation, breach or failure to comply has not been cured (if capable
of cure) within ten (10) days of notice, provided, the party in default shall
have no right to terminate for its own default.
2. By Fifth Third or Seller, if the business or assets or financial
condition of the other party shall have materially and adversely changed from
that in existence at December 31, 1994, except for events relating to the
business environment in general.
3. By Fifth Third or Seller, if the merger transaction contemplated
herein has not been consummated by December 31, 1995, 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.
4. By Seller if the Applicable Market Value Per Share of Fifth Third
Common Stock (as defined in the Agreement of Merger) is less than $44.25.
5. By Fifth Third if the Applicable Market Value Per Share of Fifth
Third Common Stock (as defined in the Agreement of Merger) is greater than
$59.875.
B. If Seller's shareholders, acting at a meeting held for the purpose of
voting upon this Agreement and the Agreement of Merger, fail to approve such
agreements in the manner required by law, then this Agreement and the Agreement
of Merger shall be deemed to be automatically terminated.
C. Upon termination as provided in this Section, this Agreement and the
Agreement of Merger, except for the provisions of Paragraphs D and I of Section
VII hereof, shall be void and of no further force or effect, and neither party
hereto not in material breach or default of its representations, warranties and
covenants hereunder shall have any liability of any kind to the other party
including but not limited to liability for expenses incurred by the other party
in connection with this transaction.
IX. Closing and Effective Time
The consummation of the transactions contemplated by this Agreement and the
Agreement of Merger shall take place at a closing to be held at 10:30 A.M. at
the offices of Fifth Third in Cincinnati, Ohio on a date mutually acceptable to
Fifth Third and Seller. Pursuant to the filing of a certificate/articles of
merger (which shall be acceptable to Seller and Fifth Third) with the Secretary
of State of Florida, and any other filings required to be made with any other
federal agency in accordance with law, this Agreement and the Agreement of
Merger, the merger provided for herein and in the Agreement of Merger shall
become effective at the close of business on the Closing Date (the "Effective
Time").
X. Amendment
This Agreement may be amended, modified or supplemented by the written
agreement of Seller and Fifth Third upon the authorization of each company's
respective Board of Directors and without further approval of Seller's
shareholders, except
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that no such amendment, modification or supplement may be effected without
Seller shareholder approval if to do so would violate any applicable provisions
of applicable state law.
XI. General
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. 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 none of the
provisions hereof shall inure to the benefit of any other person, firm or
corporation whomsoever. Neither this Agreement nor any of the rights, interest
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; provided, however, that the merger, consolidation or sale of all or
substantially all of the assets of Fifth Third shall not be deemed an
assignment hereunder if Fifth Third is the surviving corporation in a merger
and the Fifth Third Common Stock shall thereafter continue to be publicly
traded and issuable to Seller's shareholders pursuant to the terms of this
Agreement and the Agreement of Merger.
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 Affiliation Agreement
as of the date hereinabove set forth.
FIFTH THIRD BANCORP
(SEAL)
By:
-------------------------------------
Robert P. Niehaus
Senior Vice President
Attest:
---------------------------------
Paul L. Reynolds
Assistant Secretary
BANK OF NAPLES
(SEAL)
By:
-------------------------------------
Its:
------------------------------------
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AMENDED AND RESTATED ANNEX B
AGREEMENT OF MERGER
OF
FIFTH THIRD TRUST CO. & SAVINGS BANK, F.S.B.
INTO
BANK OF NAPLES
UNDER THE NAME
FIFTH THIRD BANK OF FLORIDA
THIS AMENDED AND RESTATED AGREEMENT OF MERGER (the "Agreement of Merger") dated
as of April 4, 1995, between BANK OF NAPLES, Naples, Florida, Collier County,
Florida, a state bank (hereinafter sometimes called "Surviving Corporation" or
"Seller"), and FIFTH THIRD TRUST CO. & SAVINGS BANK, F.S.B., Naples, Collier
County, Florida (hereinafter called "Fifth Third"), Seller and Fifth Third
being hereinafter sometimes collectively called "the Constituent Corporations",
and agreed to by FIFTH THIRD BANCORP, the parent of Fifth Third;
W I T N E S S E T H:
WHEREAS, the Constituent Corporations deem it advisable for their benefit
respectively, and for the benefit of their respective shareholders, that Fifth
Third merge into Seller pursuant to this Agreement and the applicable
provisions of the laws of the State of Florida and the United States; and
WHEREAS, Fifth Third and Naples previously entered into an Agreement of Merger
dated April 4, 1995 (the "Agreement of Merger"); and
WHEREAS, Fifth Third and Naples wish to amend and restate the Agreement of
Merger effective as of the date that the Agreement of Merger was executed, in
order to include additional provisions as required by applicable law; and
WHEREAS, Fifth Third Bancorp, the sole shareholder of Fifth Third wishes to
join in the Agreement for purposes of consenting thereto and agreeing to the
terms of the exchange of shares.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
JURISDICTIONS
The jurisdictions under the laws of which each of the Constituent Corporations
exists are as follows: Seller is a corporation which exists under the laws of
the State of Florida and Fifth Third is a Federal savings bank which exists
under the laws of the United States.
ARTICLE II
THE MERGER
When the Merger shall have been approved by the Office of Thrift Supervision
(the "OTS"), the Federal Reserve, the State of Florida Department of Financial
Institutions, and all corporate approvals shall have been obtained, and this
Agreement shall have been filed and recorded along with other necessary
documents in accordance with the laws of the State of Florida and the United
States, and the Merger becomes effective, the separate existence of Fifth Third
shall cease and Fifth Third shall be merged into Seller which will be the
Surviving Corporation and which shall continue its corporate existence under
the laws of the State of Florida under the name "Fifth Third Bank of Florida".
The Surviving Corporation will exercise trust powers.
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ARTICLE III
ARTICLES OF INCORPORATION
Effective as of the time this Merger shall become effective as specified in the
"Certificate of Merger" to be issued by the Comptroller of Florida, the
Articles of the Surviving Corporation shall read as follows:
AMENDED AND RESTATED ARTICLE OF INCORPORATION
OF FIFTH THIRD BANK OF FLORIDA
Article I
The name of the corporation shall be Fifth Third Bank of Florida, its
principal place of business shall be at 4099 Tamiami Trial North,
Naples, Collier County, State of Florida.
Article II
The general nature of the business to be transacted by the corporation
shall be: That of a general commercial banking business with all
rights, powers and privileges granted and conferred by the Florida
Banking Code, regulating the organization, powers and management of a
banking corporation.
Article III
The total number of shares authorized to be issued by the corporation
shall be fifteen thousand (15,000). Such shares shall be of a single
class and shall have a par value of One Hundred Dollars ($100.00) per
share.
Article IV
The term for which the corporation shall exist shall be perpetual
unless terminated pursuant to the Florida Banking Code.
Article V
The number of directors shall not be fewer than five (5).
ARTICLE IV
DIRECTORS AND OFFICERS
The Directors of Fifth Third who are in office at the time the Merger becomes
effective shall become the Directors of the Surviving Corporation, subject to
the Bylaws of the Surviving Corporation and in accordance with law. The
officers of Fifth Third who are in office at the time the Merger becomes
effective shall be the officers of the Surviving Corporation, subject to the
Bylaws of the Surviving Corporation and in accordance with law.
The names and addresses of the Directors of the Surviving Corporation shall be:
William Wallace Abbott Louis R. Fiore
6923 Greentree Drive 2920 Pony Lane
Naples, Florida 33963 Sarasota, Florida 34232
Nancy H. Gunter Michael K. Keating
633 Serendipity Drive 2958 Alpine Terrace
Naples, Florida 33963 Cincinnati, Ohio 45208
Colleen M. Kvetko Donald I. Lowry
Fifth Third Trust Co. & Savings Bank Carriage Club
4099 Tamiami Trail North 2011 Gulf Shore Boulevard, North
P.O. Box 413021 Naples, Florida 33940
Naples, Florida 33941-3021
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Duane J. Tabor Michael C. Nordberg
437 Rosemeade Lane 362 Pinehurst Circle
Naples, Florida 33999 Naples, Florida 33962
The names of the Executive Officers, and their addresses and respective titles
are as follows:
Colleen M. Kvetko President
229 Silverado Drive
Naples, Florida 33999
Robert P. Niehaus Senior Vice President
10030 Pondwoods Lane
Cincinnati, Ohio 45241
Susan M. Rogge Vice President and Controller
12680 Chartwell Drive
Ft. Myers, Florida 33912
ARTICLE V
REGULATIONS
The Bylaws of the Surviving Corporation at the time the Merger becomes
effective shall be the Bylaws of the Surviving Corporation, until amended as
provided therein and in accordance with law.
ARTICLE VI
SERVICE OF PROCESS
The names and addresses of the statutory agents of each of the Constituent
Corporations and the Surviving Corporation upon whom any process, notice or
demand may be served are as follows: the statutory agent for Fifth Third, one
of the Constituent Corporations and the Surviving Corporation, is Colleen M.
Kvetko, 4099 Tamiami Trail North, P. O. Box 413021, Naples, Florida
33941-3021; the agent for Seller, one of the Constituent Corporations, is
Robert Guididas, 4949 Tamiami Trail North, P. O. Box 413001, Naples, Florida
33941-3021.
ARTICLE VII
MODE OF EFFECTUATING CONVERSION OF SHARES
1. At the time the Merger becomes effective:
(a) All of the 15,000 shares of Common Stock, $100.00 par value
per share, of Fifth Third that are issued and outstanding or held by
Fifth Third as treasury shares immediately prior to the time the
Merger becomes effective will remain unchanged and will remain
outstanding, or as treasury shares, as the case may be, when the
Merger becomes effective as shares of the Common Stock without par
value of the Surviving Corporation. At the time the Merger shall
become effective, the Surviving Corporation shall have a Capital
Account of $1,500,000 as described above, Surplus of $8,331,000 and
Undivided Profits or Retained Earnings of $32,000, adjusted, however,
for normal earnings and expenses between March 31, 1995 and the
effective time of the Merger.
(b) All of the shares of the Common Stock without par value of
Fifth Third Bancorp ("Fifth Third Common Stock") that are issued and
outstanding or held by Fifth Third Bancorp as treasury shares
immediately prior to the time the Merger becomes effective will remain
unchanged and will remain outstanding, or as treasury shares as the
case may be, when the Merger becomes effective. Any stock options,
subscription rights, warrants or other securities outstanding
immediately prior to the time the Merger becomes effective, entitling
the holders to
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subscribe for or purchase any shares of the capital stock of any class
of Fifth Third Bancorp, and any securities outstanding at such time
that are convertible into shares of the capital stock of any class of
Fifth Third Bancorp will remain unchanged and will remain outstanding
when the Merger becomes effective 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 Bancorp to which
they are entitled under the terms of the governing documents.
(c) Each of the shares of the Common Stock, $7.00 par value per
share, of Seller ("Seller Common Stock") (not including shares held as
treasury shares) that is issued and outstanding immediately prior to
the time the Merger becomes effective will, when the Merger becomes
effective, be converted by virtue of the Merger and without further
action, into .41174 of a share of Fifth Third Common Stock (the
"Exchange Ratio"), subject to adjustment, if any, as set forth in
Article VII, Section 1(d) and Article VII, Section 4.
(d) If the Applicable Market Value Per Share of Fifth Third Common
Stock (as hereinafter defined) is more than ten percent (10%) above or
below $52.125, then the Exchange Ratio shall be adjusted in accordance
with this subsection. Accordingly, if the Applicable Market Value Per
Share of Fifth Third Common Stock exceeds $57.375, then the Exchange
Ratio shall be adjusted such that each issued and outstanding share of
Seller Common Stock shall be converted into the right to receive a
fraction (expressed in decimal figures carried to five (5) places) of
a share of Fifth Third Common Stock determined by dividing $23.625 by
the Applicable Market Value Per Share of Fifth Third Common Stock.
Similarly, if the Applicable Market Value Per Share of Fifth Third
Common Stock is less than $46.875, then the Exchange Ratio shall be
adjusted such that each issued and outstanding share of Seller Common
Stock shall be converted into the right to receive a fraction
(expressed in decimal figures carried to five (5) places) of a share
of Fifth Third Common Stock determined by dividing $19.30 by the
Applicable Market Value Per Share of Fifth Third Common Stock. If the
Applicable Market Value Per Share of Fifth Third Common Stock is not
less than $46.875 nor more than $57.375, then there shall be no
adjustment to the Exchange Ratio.
The "Applicable Market Value Per Share of Fifth Third Common Stock" shall
be the average of the per share closing prices of Fifth Third Common Stock as
reported on the NASDAQ National Market System for the twenty trading days
ending on the fifth trading day prior to the time the Merger becomes effective
(the "Valuation Period").
2. At the time the Merger becomes effective, all of the shares of Seller
Common Stock, whether issued or unissued, will be cancelled and extinguished
and the holders of certificates for shares thereof shall cease to have any
rights as shareholders of Seller, except such rights, if any, as they may be
entitled to under the provisions of applicable state law with respect to the
rights of dissenting shareholders, and, except as aforesaid, their sole rights
as shareholders shall pertain to the Fifth Third Common Stock and cash in lieu
of fractional shares, if any, into which their Seller Common Stock shall have
been converted by virtue of the Merger.
3. After the time the Merger becomes effective, each holder of a
certificate or certificates for shares of Seller Common Stock, upon surrender
of the same duly transmitted to Fifth Third Bancorp (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 Bancorp), 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 Seller Common
Stock shall have been converted by the Merger, plus a cash payment for any
fraction of a share to which the holder is entitled, in lieu of such fraction
of a share, equal in amount to the product resulting from multiplying such
fraction by the Applicable Market Value of Fifth Third Common Stock. Until so
surrendered, each outstanding certificate that prior to the time the Merger
becomes effective represented shares of Seller Common Stock shall be deemed for
all corporate purposes to evidence ownership of the number of full shares of
Fifth Third Common Stock into which the same shall have been converted;
provided, however, dividends or distributions otherwise payable with respect to
shares of Fifth Third Common Stock into which Seller Common Stock shall have
been so converted shall be paid with respect to such shares only when the
certificate or certificates evidencing shares of Seller 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 Bancorp) 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.
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4. The exchange ratio shall be adjusted so as to give Seller's
shareholders the economic benefit of any stock dividends, distributions or
combinations or subdivisions of Fifth Third Common Stock effected between the
date hereof and the time the Merger becomes effective. Any shares of Fifth
Third Common Stock not accepted by Seller's shareholders by reason of such
shareholders exercising their dissenter's rights shall remain as treasury
shares of Fifth Third Bancorp.
ARTICLE VIII
VESTING OF PROPERTIES AND OTHER MATTERS
1. At the time the Merger becomes effective, the effect shall be as
provided by the applicable provisions of the laws of Florida and the United
States. Without limiting the generality of the foregoing, and subject thereto,
at the time the Merger becomes effective: the separate existence of Fifth Third
shall cease; the Surviving Corporation shall possess all assets and property of
every description, and every interest therein, wherever located, of each of the
Constituent Corporations, and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as of a private nature, of the
Surviving Corporation, and all obligations owing by or due each of the
Constituent Corporations, shall be vested in, and become the obligations of,
the Surviving Corporation, without further act or deed, including without
limitation any liability to dissenting shareholders under applicable state law;
and all rights of creditors of each Constituent Corporation shall be preserved
unimpaired, and all liens upon the property of each of the Constituent
Corporations shall be preserved unimpaired, on only the property affected by
such liens immediately prior to the time the Merger becomes effective.
2. From time to time as and when requested by the Surviving Corporation,
or by its successors or assigns, the officers and Directors of Seller in office
at the time the Merger becomes effective 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 Seller and otherwise to carry out the purposes of this Agreement.
3. At the time the Merger becomes effective, the location of the home
office of the Surviving Corporation shall be 4099 Tamiami Trail North, P. O.
Box 413021, Naples, Florida 33941-3021, and such Surviving Corporation shall
have three (3) additional other offices as follows:
Carillon Place 5076 Airport Pulling North
Naples, Florida 33942
Lely 8801 East Tamiami Trail
Naples, Florida 33962
Everglades City 102 Broadway
Everglades City, Florida 33962
ARTICLE IX
REPRESENTATIONS AND AGREEMENTS OF SURVIVING CORPORATION
1. The Surviving Corporation, agrees that it may be served with process
in Florida in any proceeding for the enforcement of any obligation of Seller,
one of the Constituent Corporations, and in any proceeding for the enforcement
of the rights of a dissenting shareholder of Seller against the Surviving
Corporation.
2. The Surviving Corporation, irrevocably appoints the Secretary of State
of Florida as its agent to accept service of process in any such proceeding
referred to in paragraph 1 of this Article IX. The address of the Surviving
Corporation to which a copy of such process should be mailed by the Secretary
of State is set forth in Article VI of this Agreement.
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3. The Surviving Corporation, agrees that it will promptly pay to any
dissenting shareholders of Seller, one of the Constituent Corporations, the
amount, if any, to which they shall be entitled under the provisions of
applicable state law with respect to the rights of dissenting shareholders.
ARTICLE X
APPROVAL AND ADOPTION BY DIRECTORS AND SHAREHOLDERS;
EFFECTIVE TIME
1. Fifth Third represents and warrants that the Board of Directors of
Fifth Third and the sole shareholder of Fifth Third both duly have approved
this Agreement of Merger. Fifth Third Bancorp represents and warrants that the
Executive Committee of the Board of Directors of Fifth Third Bancorp duly has
approved this Agreement of Merger; Division (D) of Section 1701.78 of the Ohio
Revised Code does not require adoption of this Agreement of Merger by the
shareholders of Fifth Third Bancorp. Pursuant to Division (H) of Section
1701.78 of the Ohio Revised Code, the approval of this Agreement of Merger by
the Executive Committee of the Board of Directors of Fifth Third Bancorp shall
constitute adoption by Fifth Third Bancorp.
2. The Surviving Corporation, one of the Constituent Corporations,
represents and warrants that the directors of Seller have by resolution adopted
by them, approved this Agreement of Merger and directed that this Agreement of
Merger be submitted to a vote of the shareholders entitled to vote in respect
thereof at a meeting of shareholders held for such purpose. Notice of such
meeting as required by the provisions of applicable Florida law and the Bylaws
of Seller shall be duly given.
3. Seller, one of the Constituent Corporations, represents and warrants
that this Agreement of Merger is required to be approved by the affirmative
vote of the greater of (i) a majority of the issued and outstanding shares of
Seller entitled to vote or (2) the vote of two-thirds (2/3) of the Seller's
shareholders present at a meeting at which a quorum is present in accordance
with the provisions of applicable state law and the Bylaws of Seller.
4. This Agreement shall be filed and recorded along with a
Certificate/Articles of Merger and the Articles of Combination in accordance
with the requirements of the laws of the State of Florida and the United States
and shall become effective at the close of business on the day this Agreement
and other necessary documents are filed (unless another date is specified in
the Certificate/Articles of Merger) with the Secretary of State of Florida.
This Agreement shall not be filed with the Secretary of State of Florida until,
but shall be filed promptly after, all of the conditions precedent to
consummating the Merger as contained in Section VI of the Affiliation Agreement
dated April 4, 1995, by and between Seller and Fifth Third Bancorp (the
"Affiliation Agreement") shall have been fully met or effectively waived, the
filing of this Agreement of Merger being an acknowledgement that such
conditions precedent have been fully met or effectively waived.
ARTICLE XI
AMENDMENT; TERMINATION; ASSIGNMENT
1. At any time prior to the time the Merger becomes effective, the
Constituent Corporations may, from time to time, amend this Agreement of Merger
by mutual agreement authorized by their respective Boards of Directors or
Executive Committees (and whether before or after the shareholders of Seller
have approved and adopted this Agreement of Merger) to facilitate the
performance thereof, to augment the intention of the parties in carrying out
the transactions provided for herein, to clarify any ambiguities herein or to
comply with any applicable regulation, order or requirement of any governmental
authority; provided, however, that any such amendment shall be effected under,
and strictly in accordance with, the provisions of Section X of the Affiliation
Agreement.
2. This Agreement of Merger may be terminated by the parties hereto prior
to the time it becomes effective under the circumstances provided in, and
strictly in accordance with the provisions of, Section VIII of the Affiliation
Agreement.
3. This Agreement of Merger 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 none of the provisions hereof
shall inure to the benefit of any other person, firm or corporation whomsoever.
Neither this Agreement of Merger nor any of the rights,
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<PAGE> 111
interests or obligations hereunder shall be assigned or transferred by
operation of law or otherwise by either of the parties hereto without the prior
written consent of the other party; provided, however, that the merger,
consolidation or sale of all or substantially all of the assets of Fifth Third
Bancorp shall not be deemed an assignment hereunder if Fifth Third Bancorp is
the surviving corporation in a merger and Bancorp Common Stock shall thereafter
continue to be publicly traded and issuable to Seller's shareholders pursuant
to the terms of this Agreement of Merger and the Affiliation Agreement.
4. 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
day and year first above written.
FIFTH THIRD TRUST CO. & SAVINGS BANK, F.S.B.
(SEAL)
By:
---------------------------------------------
Colleen M. Kvetko
President and Chief Executive Officer
Attest:
---------------------------------------------
By:
Its:
BANK OF NAPLES
(SEAL)
By:
---------------------------------------------
Its:
---------------------------------------------
Attest:
---------------------------------------------
By:
Its:
AGREED TO:
FIFTH THIRD BANCORP
By:
----------------------
Robert P. Niehaus
Senior Vice President
Attest:
--------------------------------
Paul L. Reynolds
Assistant Secretary
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<PAGE> 112
Annex C
- FORM OF FAIRNESS OPINION -
August _____, 1995
The Board of Directors
Bank of Naples
4949 Tamiami Trail N.
Naples, FL 33941-3001
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the stockholders of Bank of Naples
(the "Bank") of the consideration to be offered to the Bank's shareholders in
the proposed merger (the "Merger") of the Bank with Fifth Third Bancorp ("Fifth
Third") pursuant to the Affiliation Agreement and related Agreement of Merger
both dated April 4, 1995 (the "Affiliation Agreement and the Agreement of
Merger, respectively). Under the terms of the Affiliation Agreement and the
Agreement of Merger, the Bank's shareholders will receive for each share held
0.41174 shares of Fifth Third (the "Exchange Ratio") subject to adjustment
based on the stock price of Fifth Third (the "Applicable Market Value Per
Share"). The Applicable Market Value Per Share shall be the average of the per
share closing prices of Fifth Third Common Stock as reported on the Nasdaq
Market System for the twenty trading days ending on the fifth trading day prior
to the effective date of the Merger. If the Applicable Market Value Per Share
is not less than $46.875 or not more than $57.325, then there shall be no
adjustment to the Exchange Ratio. If the Applicable Market Value Per Share
exceeds $57.325, then the Exchange Ratio shall be adjusted such that each
issued and outstanding share of Bank Common Stock shall be converted into the
right to receive a fraction of a share of Fifth Third Common Stock determined
by dividing $23.625 by the Applicable Market Value Per Share. Similarly, if
the Applicable Market Value Per Share is less than $46.875, then the Exchange
Ratio shall be adjusted such that each issued fraction of a share of Fifth
Third Common Stock determined by dividing $19.30 by the Applicable Market Value
Per Share of Fifth Third Common Stock.
If Fifth Third's stock price is less than $44.250 or greater than
$59.875, both parties, the Bank and Fifth Third, will have the option to
terminate the Merger. It is our understanding that the Merger will be
structured as a pooling accounting transaction under generally accepted
accounting practices.
Keefe, Bruyette & Woods, Inc., as part of its investment banking
business, is continually engaged in the valuation of bank and thrift company
securities in connection with acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for various other purposes. As specialists in the securities of
banking companies, we have experience in, and knowledge of, the valuation of
banking enterprises. In the ordinary course of our business as a
broker-dealer, we may, from time to time, purchase securities from, and sell
securities to, the Bank and Fifth Third and as a market maker in securities we
may from time to time have a long or short position in, and buy or sell, equity
securities of Fifth Third for our own account and for the accounts of our
customers. To the extent we have any such position as of the date of this
opinion it has been disclosed to the Bank. We have acted exclusively for the
Board of Directors of the Bank in rendering this fairness opinion and will
receive a fee from the Bank for our services, a significant portion of which is
contingent upon the consummation of the Merger.
In arriving at our opinion, we have reviewed, analyzed and relied upon
material bearing upon the financial and operating condition of the Bank and
Fifth Third, including, among other things, the following: (i) the Affiliation
Agreement and the Agreement of Merger; (ii) Annual Reports to Stockholders and
Form F-2's for the three years ended December 31, 1994 for the Bank and the
Annual Report and Form 10-K for the year ended December 31, 1994 for Fifth
Third; (iii) certain interim reports to stockholders of the Bank and Fifth
Third and Quarterly Reports of the Bank and Fifth Third and
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<PAGE> 113
The Board of Directors
Bank of Naples
August _____, 1995
Page ____
certain other communications from the Bank and Fifth Third to their respective
stockholders; (iv) other financial information concerning the businesses and
operations of the Bank and Fifth Third furnished to us by the Bank and Fifth
Third for purposes of our analysis, including certain internal financial
analyses and forecasts for the Bank and Fifth Third prepared by the senior
management of the Bank and Fifth Third; (v) certain publicly available
information concerning trading of, and the trading market for, the Common Stock
of the Bank and Fifth Third; and (vi) certain publicly available information
concerning trading of, and the trading market for, the Common Stock of the Bank
and Fifth Third; and (vi) certain publicly available information with respect
to banking companies and the nature and terms of certain other Mergers that we
consider relevant to our inquiry. Additionally, we have held discussions with
senior management at the Bank and Fifth Third concerning the past and current
operations, financial conditions and prospects and the results of regulatory
examinations.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position, results of operations and assets
and liabilities of the Bank and Fifth Third; and (ii) the nature and terms of
certain other Mergers involving banks, bank holding companies and thrift
institutions. We have also taken into account our assessment of general
economic, market and financial conditions and our experience in other Mergers,
as well as our experience in securities valuation and our knowledge of banks,
bank holding companies and thrift institutions generally. Our opinion is
necessarily based upon conditions as they exist and can be evaluated on the
date hereof and the information made available to us through the date hereof.
In conducting our review and arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of all the financial and other
information provided to us or publicly available and we have not attempted
independently to verify such information. We have relied upon the managements
of the Bank and Fifth Third as to the reasonableness and achievability of the
financial and operating forecasts (and the assumptions and bases therefor)
provided to us, and we have assumed that such forecasts reflect the best
currently available estimates and judgments of such managements and that such
forecasts, will be realized in the amounts and in the time periods currently
estimated by such managements. We have also assumed, without independent
verification, that the aggregate allowances for loan losses for the Bank and
Fifth Third are adequate to cover such losses. We have not made or obtained
any evaluations or appraisals of the property of the Bank and Fifth Third, nor
have we examined any individual loan credit files.
Based upon and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio in the proposed Merger is fair, from
a financial point of view, to the stockholders of the Bank.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
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ANNEX D
WEST'S FLORIDA STATUTES ANNOTATED
TITLE XXXVIII BANKS AND BANKING
CHAPTER 658. BANKING CODE: BANKS AND TRUST COMPANIES
658.44. Approval by stockholders; rights of dissenters; preemptive rights
(1) The department shall not issue a certificate of merger to a
resulting state bank or trust company unless the plan of merger and merger
agreement, as adopted by a majority of the entire board of directors of each
constituent bank or trust company, and as approved by each appropriate federal
regulatory agency and by the department, has been approved:
(a) By the stockholders of each constituent national bank
as provided by, and in accordance with the procedures required by, the laws of
the United States applicable thereto, and
(b) After notice as hereinafter provided, by the
affirmative vote or written consent of the holders of at least a majority of
the shares entitled to vote thereon of each constituent state bank or state
trust company, unless any class of shares of any constituent state bank or
state trust company is entitled to vote thereon as a class, in which event as
to such constituent state bank or state trust company the plan of merger and
merger agreement shall be approved by the stockholders upon receiving the
affirmative vote or written consent of the holders of a majority of the shares
of each class of shares entitled to vote thereon as a class and of the total
shares entitled to vote thereon. Such vote of stockholders of a constituent
state bank or state trust company shall be at an annual or special meeting of
stockholders or by written consent of the stockholders without a meeting as
provided in s. 607.0704.
Approval by the stockholders of a constituent bank or trust company of a plan
of merger and merger agreement shall constitute the adoption by the
stockholders of the articles of incorporation of the resulting state bank or
state trust company as set forth in the plan of merger and merger agreement.
CR01
(2) Written notice of the meeting of, or proposed written consent
action by, the stockholders of each constituent state bank or state trust
company shall be given to each stockholder of record, whether or not entitled
to vote, and whether the meeting is an annual or a special meeting or whether
the vote is to be by written consent pursuant to s. 607.0704, and the notice
shall state that the purpose or one of the purposes of the meeting, or of the
proposed action by the stockholders without a meeting, is to consider the
proposed plan of merger and merger agreement. Except to the extent provided
otherwise with respect to stockholders of a resulting bank or trust company
pursuant to subsection (7), the notice shall also state that dissenting
stockholders will be entitled to payment in cash of the value of only those
shares held by the stockholders:
(a) Which at a meeting of the stockholders are voted
against the approval of the plan of merger and merger agreement;
(b) As to which, if the proposed action is to be by
written consent of stockholders pursuant to s. 607.0704, such written consent
is not given by the holder thereof; or
(c) With respect to which the holder thereof has given
written notice to the constituent state bank or trust company, at or prior to
the meeting of the stockholders or on or prior to the date specified for action
by the stockholders without a meeting pursuant to s. 607.0704 in the notice of
such proposed action, that the stockholder dissents from the plan of merger and
merger agreement.
Hereinafter in this section, the term "dissenting shares" means and includes
only those shares, which may be all or less than all the shares of any class
owned by a stockholder, described in paragraphs (a), (b) and (c).
CR02
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(3) On or promptly after the effective date of the merger, the
resulting state bank or trust company, or a bank holding company which, as set
out in the plan of merger or merger agreement, is offering shares rights,
obligations, or other securities or property in exchange for shares of the
constituent banks or trust companies, may fix any amount which it considers to
be not more than the fair market value of the shares of that constituent bank
or trust company and which it will pay to the holders of dissenting shares of
that constituent bank or trust company and, if it fixes such amount, shall
offer to pay such amount to the holders of all dissenting shares of that
constituent bank or trust company. The amount payable pursuant to any such
offer which is accepted by the holders of dissenting shares, and the amount
payable to the holders of dissenting shares pursuant to an appraisal, shall
constitute a debt of the resulting state bank or state trust company.
(4) The owners of dissenting shares who have accepted an offer
made pursuant to subsection (3) shall be entitled to receive the amount so
offered for such shares in cash upon surrendering the stock certificates
representing such shares at any time within 30 days after the effective date of
the merger, and the owners of dissenting shares, the value of which is to be
determined by appraisal, shall be entitled to receive the value of such shares
in cash upon surrender of the stock certificates representing such shares at
any time within 30 days after the value of such shares has been determined by
appraisal made on or after the effective date of the merger.
(5) The value of dissenting shares of each constituent state bank
or state trust company, the owners of which have not accepted an offer for such
shares made pursuant to subsection (3), shall be determined as of the effective
date of the merger by three appraisers, one to be selected by the owners of at
least two-thirds of such dissenting shares, one to be selected by the board of
directors of the resulting state bank, and the third to be selected by the two
so chosen. The value agreed upon by any two of the appraisers shall control
and be final and binding on all parties. If, within 90 days from the effective
date of the merger, for any reason one or more of the appraisers is not
selected as herein provided, or the appraisers fail to determine the value of
such dissenting shares, the department shall cause an appraisal of such
dissenting shares to be made which will be final and binding on all parties.
The expenses of appraisal shall be paid by the resulting state bank or trust
company.
(6) Upon the effective date of the merger, all the shares of stock
of every class of each constituent bank or trust company, whether or not
surrendered by the holders thereof, shall be void and deemed to be canceled,
and no voting or other rights of any kind shall pertain thereto or to the
holders thereof except only such rights as may be expressly provided in the
plan of merger and merger agreement or expressly provided by law.
(7) The provisions of subsection (6) and, unless agreed by all the
constituent banks and trust companies and expressly provided in the plan of
merger and merger agreement, subsections (3), (4), and (5) are not applicable
to a resulting bank or trust company or to the shares or holders of shares of a
resulting bank or trust company the cash, shares, rights, obligations, or other
securities or property of which, in whole or in part, is provided in the plan
of merger or merger agreement to be exchanged for the shares of the other
constituent banks or trust companies.
(8) The stock, rights, obligations, and other securities of a
resulting bank or trust company may be issued as provided by the terms of the
plan of merger and merger agreement, free from any preemptive rights of the
holders of any of the shares of stock or of any of the rights, obligations, or
other securities of such resulting bank or trust company or of any of the
constituent banks or trust companies.
(9) After approval of the plan of merger and merger agreement by
the stockholders as provided in subsection (1), there shall be filed with the
department, within 30 days after the time limit in s. 658.43(5), a fully
executed counterpart of the plan of merger and merger agreement as so approved
if it differs in any respect from any fully executed counterpart thereof
theretofore filed with the department, and copies of the resolutions approving
the same by the stockholders of each constituent bank or trust company,
certified by the president, or chief executive officer if other than the
president, and the cashier or corporate secretary of each constituent bank or
trust company, respectively, with the corporate seal impressed thereon.
CR01 Amended by Laws 1992, c. 92-303, Section 127, eff. July 3, 1992. CR02
Amended by Laws 1992, c. 92-303, Section 127, eff. July 3, 1992.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
Section 1701.13 of the Ohio Revised Code provides that a corporation
may indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and with respect to any criminal action or proceeding that he
had reasonable cause to believe that his conduct was unlawful. Section 1701.13
further specifies that a corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or
for profit, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue, or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty to the corporation unless, and only to the extent that the court of
common pleas, or the court in which such action or suit was brought, determines
upon application that, despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court of common pleas or such
other court shall deem proper. In addition, Section 1701.13 requires a
corporation to pay any expenses, including attorneys' fees, of a director in
defending an action, suit or proceeding referred to above as they are incurred,
in advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director in which he agrees to
both (i) repay such amount if it is proved by clear and convincing evidence
that his action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the corporation or undertaken with
reckless disregard for the best interests of the corporation and (ii)
reasonably cooperate with the corporation concerning the action, suit or
proceeding. The indemnification provided by Section 1701.13 shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under the Articles of Incorporation or Code of Regulations of Fifth
Third.
The Code of Regulations of Fifth Third provides that Fifth Third shall
indemnify each director and each officer of Fifth Third, and each person
employed by Fifth Third who serves at the written request of the President of
Fifth Third as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, to the full extent
permitted by Ohio law. Fifth Third may indemnify assistant officers, employees
and others by action of the Board of Directors to the extent permitted by Ohio
law.
Fifth Third carries directors' and officers' liability insurance
coverage which insures its directors and officers and the directors and
officers of its subsidiaries in certain circumstances.
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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Page Number in
Sequential
Document Exhibit Numbering System
-------- ------- ----------------
<S> <C> <C>
Affiliation Agreement (excluding exhibits) and Agreement 2
of Merger both dated as of April 4, 1995, by and between
Fifth Third Trust Co. and Savings Bank, F.S.B. and Bank
of Naples and amendments thereto (set forth in Annex A
and Annex B to the Proxy Statement and Prospectus
included in this Registration Statement)
Seconded Amended Articles of Incorporation of Fifth Third 3.1 Incorporated by
Bancorp, as amended Reference(1)
Code of Regulations of Fifth Third Bancorp, as amended 3.2 Incorporated by
Reference(1)
Form of opinion of counsel employed by The Fifth Third 5
Bank as to the legality of the securities being issued
Form of opinion of Dinsmore & Shohl as to tax matters 8
Fifth Third Bancorp 1982 Stock Option Plan 10.1 Incorporated by
Reference(2)
Fifth Third Bancorp 1987 Stock Option Plan 10.2 Incorporated by
Reference(3)
Fifth Third Bancorp Unfunded Deferred Compensation Plan 10.3 Incorporated by
for Non-Employee Directors Reference(4)
Fifth Third Bancorp Nonqualified Deferred Compensation 10.4 Incorporated by
Plan Reference(5)
Fifth Third Bancorp 1990 Stock Option Plan 10.5 Incorporated by
Reference(6)
1994 Annual Report to Shareholders of Fifth Third Bancorp 13.1 Incorporated by
Reference
Quarterly Report on Form 10-Q for quarter ended March 31, 13.2 Incorporated by Reference
1995
Subsidiaries of Fifth Third Bancorp 21 ____ and Incorporated by
Reference(7)
Consent of Deloitte & Touche LLP (with respect to Fifth 23.1
Third Bancorp)
Consent of McGladrey & Pullen, LLP (with respect to Bank 23.2
of Naples)
Consent of Keefe, Bruyette & Woods 23.3 To be provided by
amendment
Consent of Dinsmore & Shohl 23.4(8)
Consent of counsel employed by The Fifth Third Bank 23.5(8)
</TABLE>
71
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<TABLE>
<S> <C>
A power of attorney where various individuals authorize 24
the signing of their names to any and all amendments to
this Registration Statement and other documents submitted
in connection herewith is contained on the first page of
the signature pages following Part II of this
Registration Statement
Fairness Opinion of Keefe, Bruyette & Woods (set forth in 99.1
Annex C to the Proxy Statement and Prospectus included in
this Registration Statement)
Form of Proxy Card 99.2
</TABLE>
(1) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-4, Registration No. 33-63966, which is
effective.
(2) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-2, Registration No. 2-98550, which is
effective.
(3) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-2, Registration No. 33-13252, which is
effective.
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
filed for the year ended December 31, 1985.
(5) Filed with the Securities and Exchange Commission as Exhibit 10.4 to a
Registration Statement on Form S-4, Registration No. 33-21139, declared
effective April 20, 1988.
(6) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-34075, which is
effective.
(7) Incorporated by reference to the Registrant's Annual Report on Form 10-K
filed for the year ended December 31, 1994.
(8) The consent of counsel is contained in its opinion.
Undertakings
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is part of this registration statement by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(3) The registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (2) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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(4) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(5) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(6) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(7) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-4, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cincinnati, State of Ohio, on March 15, 1995.
FIFTH THIRD BANCORP
/s/ George A. Schaefer, Jr.
By: George A. Schaefer, Jr.
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints GEORGE A. SCHAEFER, JR. his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign and execute on behalf of the undersigned any and all
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection with any such amendments, as
fully to all intents and purposes as he might or could do in person, and does
hereby ratify and confirm all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Principal Executive Officer:
<TABLE>
<S> <C> <C>
/s/ George A. Schaefer, Jr. President and Chief June 20, 1995
George A. Schaefer, Jr. Executive Officer
/s/ P. Michael Brumm Senior Vice June 20, 1995
P. Michael Brumm President and Chief
Financial Officer
Directors of the Company:
/s/ John F. Barrett June 20, 1995
John F. Barrett
/s/ Milton C. Boesel, Jr. June 20, 1995
Milton C. Boesel, Jr.
</TABLE>
80
<PAGE> 121
<TABLE>
<S> <C>
/s/ Clement L. Buenger June 20, 1995
Clement L. Buenger
__________________________________________ June 20, 1995
Gerald V. Dirvin
__________________________________________ June 20, 1995
Thomas B. Donnell
__________________________________________ June 20, 1995
Richard T. Farmer
/s/ John D. Geary June 20, 1995
John D. Geary
/s/ Ivan W. Gorr June 20, 1995
Ivan W. Gorr
/s/ Joseph H. Head, Jr. June 20, 1995
Joseph H. Head, Jr.
/s/ Joan R. Herschede June 20, 1995
Joan R. Herschede
/s/ William G. Kagler June 20, 1995
William G. Kagler
/s/ William J. Keating June 20, 1995
William J. Keating
/s/ James D. Kiggen June 20, 1995
James D. Kiggen
/s/ Robert B. Morgan June 20, 1995
Robert B. Morgan
__________________________________________ June 20, 1995
Michael H. Norris
/s/ Brian H. Rowe June 20, 1995
Brian H. Rowe
</TABLE>
81
<PAGE> 122
<TABLE>
<S> <C>
/s/ George A. Schaefer, Jr. June 20, 1995
George A. Schaefer, Jr.
/s/ John J. Schiff, Jr. June 20, 1995
John J. Schiff, Jr.
/s/ Dennis J. Sullivan, Jr. June 20, 1995
Dennis J. Sullivan, Jr.
__________________________________________ June 20, 1995
Dudley S. Taft
</TABLE>
82
<PAGE> 1
EXHIBIT 5
[Form of Corporate Opinion of Paul L. Reynolds -
may be issued in ABA Opinion Accord format]
, 1994
--------------
THE FOLLOWING OPINION IS INTENDED TO BE RENDERED UPON THE CLOSING OF THE
TRANSACTION DESCRIBED THEREIN IN SUBSTANTIALLY THE FORM PRESENTED, ASSUMING NO
CHANGES IN THE FACTS OR THE LAW UPON WHICH SUCH OPINION IS BASED, AND SUBJECT TO
RECEIPT, REVIEW AND APPROVAL OF FINAL DOCUMENTS
Bank of Naples
- ---------------------
- ---------------------
Gentlemen:
We have acted as counsel to Fifth Third Bancorp in connection with the
transactions provided for in the Affiliation Agreement dated as of April 4, 1995
("Affiliation Agreement") by and between Fifth Third Bancorp ("Fifth Third") and
Bank of Naples ("Naples") and the Plan and Agreement of Merger dated as of April
4, 1995 by and between Fifth Third Trust Co. & Savings Bank, F.S.B. ("Fifth
Third Savings Bank"), and Naples, and consented to by Fifth Third ("Agreement of
Merger"). This opinion is rendered to you pursuant to paragraph 3 of Section
VI.C. of the Affiliation Agreement.
We have examined and are familiar with originals or copies, certified or
otherwise, identified to our satisfaction, of such statutes, regulations,
documents, corporate records, and certificates of public officials and corporate
officers as we have deemed necessary for the purposes of this opinion, including
but not limited to the following: (a) the Second Amended Articles of
Incorporation of Fifth Third, as amended; (b) the Code of Regulations, as
amended, of Fifth Third; and, (c) the record of all actions taken by the Board
of Directors and Executive Committee of the Board of Directors of Fifth Third in
connection with any matters covered by this opinion.
We have made such examination of Ohio and Federal law as we deem relevant for
the purposes of this opinion, but we have not made amu review of the laws of any
state other than Ohio. Accordingly, we express no opinion as to the laws of any
state or jurisdiction other than the United States of America and the State of
Ohio.
Based upon and subject to the foregoing, we are of the opinion that:
1. Fifth Third is duly incorporated, validly existing and in good standing
as a corporation under the laws of Ohio, and has all the requisite
power and authority to consummate the transactions provided for in the
Affiliation Agreement and the Agreement of Merger. Fifth third is a
registered bank holding company under the Bank Holding Company Act of
1956, as amended, 12 U.S.C. ss.1841 et seq., and has all requisite
corporate power and
<PAGE> 2
authority to conduct the business in which it is
engaged and as now conducted by it.
2. The Affiliation Agreement and the Agreement of Merger and the
transactions provided for therein have been duly approved by the
Directors of Fifth Third, and no action is required to be taken by the
shareholders of Fifth Third to authorize, approve or adopted the
Affiliation Agreement and the Agreement of Merger or the transactions
provided for therein.
3. The Affiliation Agreement and the Agreement of Merger have been duly
executed and delivered by Fifth Third and Fifth Third Savings Bank
and constitute valid and binding obligations of Fifth Third and Fifth
Third Savings Bank enforceable against Fifth Third and Fifth Third
Savings Bank in accordance with their respective terms, except to the
extent that (i) enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance or other laws relating
to or from time to time affecting the enforcement of creditors' rights
generally or the rights of creditors of bank holding companies, the
accounts of whose subsidiaries are insured by the Federal Deposit
Insurance Corporation and (ii) the availability of certain remedies
may be precluded by general principles of equity.
4. Fifth Third has taken all necessary and required corporate action to
authorize the issuance or transfer of the shares of its Common Stock to
be received by holders of the Common Stock of Naples and, when so
issued or transferred, such shares will be legally and validly issued
and outstanding, fully paid and nonassessable and will not upon such
transfer or issuance be subject to the preemptive rights of any
shareholder of Fifth Third, and such shares have been registered under
the Securities Act of 1933, as amended.
5. The registration statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, Registration
No. (the "Registration Statement"), by Fifth Third to register the
shares of Common Stock of Fifth Third being offered to the shareholders
of Naples in the merger provided for in the Affiliation Agreement and
the Agreement of Merger has been declared effective and no stop order
has been issued and no proceeding for the purpose has been initiated
or, to our best knowledge, contemplated or threatened by the Securities
and Exchange Commission.
6. The Registration Statement and the Proxy Statement/Prospectus included
therein at the time it became effective complied as to form with the
Securities Act of 1993, as amended, and the rules and regulations
thereunder.
7. All necessary approvals for the transactions provided for in the
Affiliation Agreement and the Agreement of Merger have been obtained
from the appropriate regulatory authorities.
We participated in the preparation of the Registration Statement and nothing has
come to our attention that would lead us to believe that at the time the
Registration Statement became effective it contained any untrue statement of
material fact or omitted to state a 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. To the best of our knowledge, it is not
necessary as of the date hereof to supplement or amend the Registration
Statement or the Proxy Statement/Prospectus included therein. In making the
statements this paragraph and in rendering our opinion in paragraph 6 above, we
express no opinion as to any financial statements or other financial data of
Fifth Third or Naples or as to any information concerning
<PAGE> 3
Naples.
Very truly yours,
FIFTH THIRD BANCORP
Paul L. Reynolds
Counsel
PLR:km
<PAGE> 1
EXHIBIT 8
, 1995
----------
THE FOLLOWING OPINION IS INTENDED TO BE RENDERED UPON THE CLOSING OF THE
TRANSACTION DESCRIBED THEREIN IN SUBSTANTIALLY THE FORM PRESENTED, ASSUMING NO
CHANGES IN THE FACTS OR THE LAW UPON WHICH SUCH OPINION IS BASED, AND SUBJECT TO
RECEIPT, REVIEW AND APPROVAL OF FINAL DOCUMENTS
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Bank of Naples
- --------------------
- --------------------
Dear Sirs:
As counsel for Fifth Third Bancorp, we have been requested to render our opinion
with respect to certain Federal income tax consequences of the exchange of
Common Stock (the "Exchange") of Bank of Naples ("Naples") for that of Fifth
Third Bancorp ("Fifth Third") and the subsequent merger of Fifth Third Trust Co.
& Savings Bank, F.S.B., into Naples, as more fully described in the Affiliation
Agreement dated as of April 4, 1995, between Fifth Third and Naples and the Plan
and Agreement of Merger dated as of April 4, 1995, between Fifth Third and
Naples.
We have reviewed the terms of the proposed transaction as set forth in the
Affiliation Agreement and the Plan and Agreement of Merger and have received
representations from certain executive officers of Fifth Third and Naples
relating to various factual matters relevant to the opinions expressed herein.
Our opinion is based on the Affiliation Agreement and the Plan and Agreement of
Merger, the facts set forth in such representations and on our analysis of the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations, Internal Revenue Service Rulings, and judicial
decisions interpreting the Code as in effect on the date hereof. We have not
independently verified the factual matters set forth in the representations.
Based upon and subject to the foregoing, our opinion is as follows:
1. The exchange of Common Stock of Naples for that of Fifth Third
will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code and, for purposes thereof, Fifth Third
and Naples will each qualify as a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
2. No gain or loss will be recognized by Naples as a consequence of
the merger;
3. No gain or loss will be recognized by Fifth Third on the receipt
by Fifth Third of substantially all the assets of Naples and the
assumption by Fifth Third of Naples' liabilities;
<PAGE> 2
4. No gain or loss will be recognized by the shareholders of Naples
who receive solely Fifth Third Common Stock in exchange for shares
of Naples Common Stock pursuant to the Plan and Agreement of
Merger (disregarding for this purpose any cash received for
fractional share interest to which they may be entitled);
5. The tax basis of Fifth Third Common Stock including any fractional
share received by Naples shareholders in the merger will be, in
each instance, the same as the federal income tax basis of the
Naples Common Stock surrendered in exchange therefor decreased by
the amount of any cash received in lieu of a fractional share
interest and increased by the amount of cash received that was
treated as a dividend (if any);
6. The holding period of Fifth Third Common Stock (including any
fractional share) received by a Naples shareholder will include,
in each case, the period during which the Naples Common Stock
surrendered in exchange therefor was held, provided that he Naples
Common Stock was held as a capital asset by such shareholder on
the date of the exchange; and
7. Holders of Naples Common Stock who receive cash in lieu of
fractional shares of Fifth Third Common Stock will be treated as
having received such fraction share of Fifth Third Common Stock
and then as having received such cash in redemption of such
fractional share subject to the provisions of Section 302 of the
Code.
We consent to the filing of the form of this opinion as an exhibit to the
Registration Statement filed in connection with the merger.
Very truly yours,
DINSMORE & SHOHL
By:
---------------------------
<PAGE> 1
EXHIBIT 21
Fifth Third Kentucky Bank Holding Company ("BHC"), a wholly-owned
second-tier subsidiary bank holding company of Fifth Third Bancorp ("Bancorp"),
owned all of the outstanding shares of Fifth Third Bank of Kentucky, Inc. ("5/3
Ky.") and The Fifth Third Savings Bank of Western Kentucky, F.S.B. ("5/3,
F.S.B."). BHC transferred by dividend up to its parent, Bancorp, all
outstanding shares of 5/3 Ky. and 5/3, F.S.B. Bancorp now directly owns 5/3 Ky.
and 5/3, F.S.B. BHC's sole purpose is to own property possessed in lieu of debt
previously contracted.
The Fifth Third Bank of Southeastern Indiana merged with and into The
Fifth Third Bank of Central Indiana.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Fifth Third Bancorp on Form S-4 of our report dated January 13, 1995 (which
expresses an unqualified opinion and includes an explanatory paragraph relating
to a change in the method of accounting for debt and equity securities),
incorporated by reference in the Annual Report on Form 10-K of Fifth Third
Bancorp for the year ended December 31, 1994 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ Deloitte & Touche
Cincinnati, Ohio
June 21, 1995
75
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in the Form S-4 Registration Statement of Fifth Third
Bancorp and the Proxy Statement of Bank of Naples, our report dated January 13,
1995 relating to the statement of financial condition of Bank of Naples, as of
December 31, 1994, and the related statements of income, stockholders' equity
and cash flows for the year then ended and to the reference to our firm in the
Registration Statement under the heading of "Experts."
/s/ McGladrey & Pullen, LLP
West Palm Beach, Florida
June 23, 1995
76
<PAGE> 1
[Proxy Card] EXHIBIT 99
BANK OF NAPLES
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints the Board of Directors of Bank of
Naples ("Bank") and the survivor of them with full powers of substitution, to
act as attorneys and proxies for the undersigned to vote all shares of the
Common Stock of Bank which the undersigned is entitled to vote at the Special
Meeting of Stockholders to be held at the main office of the Bank at 4949
Tamiami Trail North, Naples, Florida 33940 on Thursday, August 10, 1995 at 4:30
p.m., Eastern Daylight Time, and at any and all adjournments thereof, with all
the powers the undersigned would possess if personally present as specified on
the reverse hereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE AFFILIATION
AGREEMENT AND THE PLAN AND AGREEMENT OF MERGER. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
(Continued on reverse side)
78
<PAGE> 2
1. Proposal to approve the Affiliation Agreement dated as of April 4,
1994, between Fifth Third Bancorp and Bank, and the Agreement of Merger dated as
of April 4, 1995, as amended, between Fifth Third Trust Co. & Savings Bank,
F.S.B. and Bank (copies of which are annexed to the accompanying Proxy Statement
and Prospectus as Annexes A and B, respectively) pursuant to which Bank shall
merge with Fifth Third Trust Co. & Savings Bank, F.S.B.
<TABLE>
<S> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
2. Adjournment of Meeting
<TABLE>
<S> <C> <C>
/ / FOR the adjournment / / AGAINST the / / ABSTAIN from the vote
of the Annual Meeting adjournment regarding the adjournment
to obtain additional of the Annual of the Annual Meeting to
proxies Meeting to obtain obtain additional proxies
additional proxies
</TABLE>
3. Such other matters as may properly come before the meeting and any
adjournment or adjournments thereof, as they in their discretion may determine.
The Board of Directors is not aware of any such matters.
<TABLE>
<S> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
The undersigned acknowledges receipt from Bank, before the execution of
this Proxy, of notice of the Special Meeting and of the related Proxy Statement
and Prospectus.
Dated ___________________, 1995
Signature_________________________________
Additional signature if held jointly____________________
Please sign exactly as your name or names appear to the
left. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
79
