<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 1994 Commission File Number 0-8076
FIFTH THIRD BANCORP
(Exact name of Registrant as specified in its charter)
Ohio 31-0854434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
38 Fountain Square Plaza
Cincinnati, Ohio 45263
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 579-5300
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Without Par Value
4-1/4% Convertible Subordinated Notes due 1998
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes: /X/ No: / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The Aggregate Market Value of the Voting Stock held by non-affiliates of the
Registrant was $2,270,808,002 as of February 1, 1995. (NOTE 1)
The number of shares outstanding of the Registrant's Common Stock, without par
value, as of February 1, 1995 was 65,164,031 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1994 Annual Report to Stockholders: Parts I, II and IV
Proxy Statement for 1995 Annual Meeting of Stockholders: Parts III and IV
NOTE 1: In calculating the market value of securities held by non-affiliates
of Registrant as disclosed on the cover page of this Form 10-K, Registrant has
treated as securities held by affiliates as of December 31, 1994, voting stock
owned of record by its directors and principal executive officers, stockholders
owning greater than 10% of the voting stock, and voting stock held by
Registrant's trust departments in a fiduciary capacity.
Total Pages: ___
<PAGE>
FIFTH THIRD BANCORP
1994 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
PAGE
Item 1. Business 3
Item 2. Properties 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
PART II
Item 5. Market For Registrant's Common Equity and Related
Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 13
PART III
Item 10. Directors and Executive Officers of the Registrant 14
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and Management 15
Item 13. Certain Relationships and Related Transactions 15
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 16
Page 2
<PAGE>
PART I
ITEM 1. BUSINESS
ORGANIZATION
Registrant was organized in 1974 under the laws of the State of Ohio. It began
operations in 1975 upon reorganization of its principal subsidiary, The Fifth
Third Bank. The executive offices of the Registrant are located in Cincinnati,
Ohio. The Registrant is a two-tiered, multi-bank holding company as defined in
the Bank Holding Company Act of 1956, as amended, and is registered as such with
the Board of Governors of the Federal Reserve System. The Registrant is also
a multi-savings-and-loan holding company and is registered with the Office of
Thrift Supervision. Registrant has thirteen wholly-owned subsidiaries: Fifth
Third Kentucky Bank Holding Company; The Fifth Third Bank; The Fifth Third Bank
of Columbus; The Fifth Third Bank of Northwestern Ohio, National Association;
The Fifth Third Bank of Southern Ohio; The Fifth Third Bank of Western Ohio;
Fifth Third Trust Co. & Savings Bank, FSB; Fifth Third Bank of Northern
Kentucky, Inc.; The Fifth Third Bank of Central Indiana; The Fifth Third Bank
of Southeastern Indiana; Fifth Third Community Development Company; Fifth Third
Investment Company; and Fountain Square Insurance Company. Unless the context
otherwise indicates the term "Company" as used herein means the Registrant and
the term "Bank" means its wholly-owned subsidiary, The Fifth Third Bank.
As of December 31, 1994, the Company's consolidated total assets were
$14,957,009,000 and stockholders' equity totalled $1,398,774,000.
Fifth Third Kentucky Bank Holding Company has two wholly-owned subsidiaries:
Fifth Third Bank of Kentucky, Inc. and The Fifth Third Savings Bank of Western
Kentucky, FSB. In addition, the Bank has four wholly-owned subsidiaries:
Midwest Payment Systems, Inc.; Fifth Third Securities, Inc.; The Fifth Third
Company; and The Fifth Third Leasing Company.
PRIOR ACQUISITIONS
The Company is the result of mergers and acquisitions over the years involving
27 financial institutions throughout Ohio, Indiana, Kentucky, and Florida. The
Company made the following acquisitions during 1994:
On May 20, 1994, the Company purchased $294 million in deposits from Equitable
Savings Bank. The seven offices were located in southern and central Ohio and
were acquired by the Bank, The Fifth Third Bank of Columbus and The Fifth Third
Bank of Southern Ohio.
On June 3, 1994, the Company acquired The National Bancorp of Kentucky, Inc.,
with consolidated assets of approximately $90 million, in a transaction
accounted for as a pooling of interests. The Consolidated Financial Statements
for prior periods have not been restated for this acquisition due to
immateriality. National Bancorp's subsidiaries, First National Bank of Falmouth
and National Bank of Cynthiana, were merged with Fifth Third Bank of Northern
Kentucky, Inc. and Fifth Third Bank of Kentucky, Inc. (formerly Fifth Third Bank
of Central Kentucky, Inc.), respectively.
Page 3
<PAGE>
On August 26, 1994, the Company acquired The Cumberland Federal Bancorporation,
Inc., with consolidated assets of approximately $1.1 billion, and its wholly-
owned subsidiary, The Cumberland Federal Savings Bank ("Cumberland FSB") in a
transaction accounted for as a pooling of interests. Financial information for
all prior periods has been restated. In concurrent transactions, Fifth Third
Bank of Kentucky, Inc. purchased substantially all of the assets and assumed
substantially all of the liabilities of The Cumberland FSB, and The Cumberland
FSB's main office was relocated to Mayfield, Kentucky and renamed The Fifth
Third Savings Bank of Western Kentucky, FSB.
COMPETITION
There are hundreds of commercial banks, savings and loans and other financial
services providers in Ohio, Kentucky, Indiana, Florida and nationally, which
provide strong competition to the Company's banking subsidiaries. As providers
of a full range of financial services, these subsidiaries compete with national
and state banks, savings and loan associations, securities dealers, brokers,
mortgage bankers, finance and insurance companies, and other financial service
companies. With respect to data processing services, the Bank's data processing
subsidiary, Midwest Payment Systems, Inc., competes with other third party
service providers such as Deluxe Data Services, EDS and Electronic Payment
Systems.
The earnings of the Company are affected by general economic conditions as well
as by the monetary policies of the Federal Reserve Board. Such policies, which
include regulating the national supply of bank reserves and bank credit, can
have a major effect upon the source and cost of funds and the rates of return
earned on loans and investments. The Federal Reserve influences the size and
distribution of bank reserves through its open market operations and changes in
cash reserve requirements against member bank deposits.
REGULATION AND SUPERVISION
The Company, as a bank holding company, is subject to the restrictions of the
Bank Holding Company act of 1956, as amended. This Act provides that the
acquisition of control of a bank is subject to the prior approval of the Board
of Governors of the Federal Reserve System. The Company is required to obtain
the prior approval of the Federal Reserve Board before it can acquire control
of more than 5% of the voting shares of another bank. The Act does not permit
the Federal Reserve Board to approve an acquisition by the Company, or any of
its subsidiaries, of any bank located in a state other than Ohio, unless the
acquisition is specifically authorized by the law of the state in which such
bank is located.
On September 29, 1994, the Act was amended by The Interstate Banking and Branch
Efficiency Act of 1994 which authorizes interstate bank acquisitions anywhere
in the country effective one year after the date of enactment, and interstate
branching by acquisition and consolidation effective June 1, 1997, in those
states that have not opted out by that date. The impact of this amendment on
the Company cannot be measured at this time.
Page 4
<PAGE>
The Company's subsidiary state banks are primarily subject to the laws of the
state in which each is located, the Board of Governors of the Federal Reserve
System and/or the Federal Deposit Insurance Corporation. The subsidiary banks
which are organized under the laws of the United States are primarily subject
to regulation by the Comptroller of the Currency and the Federal Deposit
Insurance Corporation. The Company and Fifth Third Kentucky Bank Holding
Company, as savings and loan holding companies, and their savings and loan
subsidiaries are subject to regulation by the Office of Thrift Supervision.
The Company and its subsidiaries are subject to certain restrictions on
intercompany loans and investments. The Company and its subsidiaries are also
subject to certain restrictions with respect to engaging in the underwriting and
public sale and distribution of securities. In addition, the Company and its
subsidiaries are subject to examination at the discretion of supervisory
authorities.
The Bank Holding Company Act limits the activities which may be engaged in by
the Company and its subsidiaries to ownership of banks and those activities
which the Federal Reserve Board has deemed or may in the future find to be so
closely related to banking as to be a proper incident thereto.
The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA) provides
that a holding company's controlled insured depository institutions are liable
for any loss incurred by the Federal Deposit Insurance Corporation in connection
with the default of, or any FDIC-assisted transaction involving, an affiliated
insured bank or savings association.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the "FDIC
Improvement Act") covers a wide expanse of banking regulatory issues. The FDIC
Improvement Act deals with the recapitalization of the Bank Insurance Fund, with
deposit insurance reform, including requiring the FDIC to establish a risk-based
premium assessment system, and with a number of other regulatory and supervisory
matters. The full effect of the FDIC Improvement Act generally on the financial
services industry, and specifically on the Company, is not determinable.
EMPLOYEES
As of December 31, 1994, there were no employees of the Company. Subsidiaries
of the Company employed 6,045 employees--1,015 were officers and 1,237 were
part-time employees.
STATISTICAL INFORMATION
Pages 6 to 12 contain statistical information on the Company and its
subsidiaries.
Page 5
<PAGE>
SECURITIES PORTFOLIO
The securities portfolio as of December 31 for each of the last five years, and
the maturity distribution and weighted average yield of securities as of
December 31, 1994, are incorporated herein by reference to the securities tables
on page 30 of the Company's 1994 Annual Report to Stockholders attached to this
filing as Exhibit 13.
The weighted average yields for the securities portfolio are yields to maturity
weighted by the par values of the securities. The weighted average yields on
securities exempt from income taxes are computed on a taxable equivalent basis.
The taxable equivalent yields are net after-tax yields to maturity divided by
the complement of the full corporate tax rate (35%). In order to express yields
on a taxable equivalent basis, yields on obligations of states and political
subdivisions (municipal securities) have been increased as follows:
Under 1 year 2.16%
1 - 5 years 2.61%
6 - 10 years 2.63%
Over 10 years 2.74%
Total municipal securities 2.49%
AVERAGE BALANCE SHEETS
The average balance sheets are incorporated herein by reference to Table 1 on
pages 26 and 27 of the Company's 1994 Annual Report to Stockholders attached to
this filing as Exhibit 13.
ANALYSIS OF NET INTEREST INCOME AND NET INTEREST INCOME CHANGES
The analysis of net interest income and the analysis of net interest income
changes are incorporated herein by reference to Table 1 and Table 2 and the
related discussion on pages 26 through 28 of the Company's 1994 Annual Report
to Stockholders attached to this filing as Exhibit 13.
Page 6
<PAGE>
<TABLE>
Types of Loans and Leases
- -------------------------
A summary of loans and leases by major category as of December 31 follows ($000's):
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural loans $3,045,315 2,685,558 2,490,077 2,212,069 2,272,349
Real estate - construction loans 286,088 342,177 330,587 306,655 288,997
Real estate - mortgage loans 3,076,463 3,434,496 2,964,402 1,919,438 1,777,999
Consumer loans 2,407,261 2,090,154 1,713,842 1,517,022 1,511,852
Lease financing 1,703,492 1,170,231 737,186 478,125 429,231
---------- --------- ---------- ---------- ----------
Loans and leases, gross 10,518,619 9,722,616 8,236,094 6,433,309 6,280,428
Unearned income (232,162) (155,718) (120,504) (107,391) (114,620)
Reserve for credit losses (155,918) (144,537) (121,452) (97,319) (90,242)
---------- --------- ---------- ---------- ----------
Loans and leases, net $10,130,539 9,422,361 7,994,138 6,228,599 6,075,566
========== ========= ========== ========== ==========
</TABLE>
<TABLE>
Maturities and Sensitivity of Loans to Changes in Interest Rates
- -------------------------------------------------------------------
The remaining maturities of the loan portfolio distributed to reflect expected cash flows
(excluding residential mortgage and consumer loans) at December 31, 1994, and the
sensitivity of loans to interest rate changes for loans due after one year was as follows ($000's):
<CAPTION>
Commercial,
Financial
and Real Estate Real Estate
Agricultural Construction Commercial
Loans Loans Loans Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Due in one year or less $1,710,365 124,408 77,294 1,912,067
Due after one year through five years 1,070,601 113,960 386,411 1,570,972
Due after five years 264,349 47,720 265,827 577,896
---------- ---------- -------- ----------
Total $3,045,315 286,088 729,532 4,060,935
========== ========== ======== ==========
Loans due after one year:
Predetermined interest rate $720,308 159,188 484,008 1,363,504
========== ========== ======== ==========
Floating or adjustable interest rate $614,642 2,492 168,230 785,364
========== ========== ======== ==========
</TABLE>
Page 7
<PAGE>
<TABLE>
Risk Elements
- -------------
Interest on loans is normally accrued at the rate agreed upon at the time each loan was negotiated. It
is the Company's policy to discontinue accrual of interest on commercial, construction and mortgage
loans when there is a clear indication that the borrower's cash flow may not be sufficient to meet
payments as they become due. Loans, other than consumer loans, are placed on nonaccrual status
when principal or interest is past due ninety days or more, unless the loan is well secured and in the
process of collection. The following table presents data concerning loans and leases at risk at
December 31, 1994 and previous years ($000's):
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans and leases $20,725 18,961 32,772 70,618 95,534
Loans and leases contractually
past due ninety days or more as
to interest, principal or rental
payments 13,237 10,444 21,804 27,699 27,857
Loans and leases renegotiated to
provide a reduction or deferral of
interest, principal or rental payments
because of the financial position
deterioration of the borrower 443 2,378 3,693 4,370 8,748
Loans and leases now current
where there are serious doubts
as to the ability of the
borrower to comply with present
repayment terms 35,254 35,992 35,097 32,819 36,690
<FN>
For calendar year 1994, interest income of $556,000 was recorded on nonaccrual and renegotiated
loans and leases. Additional interest income of $1,767,000 would have been recorded if the
nonaccrual and renegotiated loans and leases had been current in accordance with their original terms.
</TABLE>
Page 8
<PAGE>
<TABLE>
Summary of Credit Loss Experience
- ------------------------------------
A summary of the activity in the reserve for credit losses arising from provisions charged to
operations, losses charged off and recoveries of losses previously charged off was as follows ($000's):
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Loans and leases outstanding at
December 31 $10,286,457 9,566,898 8,115,590 6,325,918 6,165,808
============ ========== =========== =========== ===========
Average loans and leases outstanding $9,902,901 8,869,432 7,189,975 6,246,679 5,920,686
============ ========== =========== =========== ===========
Reserve for credit losses, January 1 $144,537 121,452 97,319 90,242 85,664
--------- --------- --------- --------- ---------
Losses charged off:
Commercial, financial and
agricultural loans (8,793) (12,113) (24,156) (22,380) (13,021)
Real estate - construction loans -- -- -- -- (1,724)
Real estate - mortgage loans (3,485) (7,174) (6,488) (11,994) (7,524)
Consumer loans (16,416) (16,035) (22,164) (26,473) (22,395)
Lease financing (2,252) (1,850) (1,910) (2,556) (2,339)
--------- --------- --------- --------- ---------
Total losses (30,946) (37,172) (54,718) (63,403) (47,003)
--------- --------- --------- --------- ---------
Recoveries of losses previously
charged off:
Commercial, financial and
agricultural loans 1,795 2,103 1,109 1,580 1,995
Real estate - construction loans -- -- -- -- --
Real estate - mortgage loans 3,006 564 462 398 548
Consumer loans 7,898 6,793 6,883 5,202 4,337
Lease financing 773 638 499 538 1,222
--------- --------- --------- --------- ---------
Total recoveries 13,472 10,098 8,953 7,718 8,102
--------- --------- --------- --------- ---------
Net losses charged off:
Commercial, financial and
agricultural loans (6,998) (10,010) (23,047) (20,800) (11,026)
Real estate - construction loans -- -- -- -- (1,724)
Real estate - mortgage loans (479) (6,610) (6,026) (11,596) (6,976)
Consumer loans (8,518) (9,242) (15,281) (21,271) (18,058)
Lease financing (1,479) (1,212) (1,411) (2,018) (1,117)
--------- --------- --------- --------- ---------
Total net losses charged off (17,474) (27,074) (45,765) (55,685) (38,901)
--------- --------- --------- --------- ---------
LOC contract (7,800) -- -- -- --
Reserve of acquired banks 875 2,122 3,798 298 --
Provision charged to operations 35,780 48,037 66,100 62,464 43,479
--------- --------- --------- --------- ---------
Reserve for credit losses, December 31 $163,718 144,537 121,452 97,319 90,242
========= ========= ========= ========= =========
</TABLE>
Page 9
<PAGE>
<TABLE>
Summary of Credit Loss Experience, continued
- --------------------------------------------
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Reserve for credit losses,
December 31:
Commercial, financial and
agricultural loans $5,405 6,442 6,096 -- 5,198
Real estate - construction loans 26,298 23,397 16,638 20,182 6,142
Real estate - mortgage loans 36,272 33,450 26,997 23,428 19,191
Consumer loans 15,037 9,423 5,461 4,351 4,659
Lease financing 155,918 144,537 121,452 97,319 90,242
--------- --------- --------- --------- ---------
Total reserve for
credit losses $238,930 217,249 176,644 145,280 125,432
========= ========= ========= ========= =========
<FN>
The analysis above is for analytical purposes. The reserve for credit losses is general in nature and
available to absorb losses from any portion of the loan and lease portfolio.
</TABLE>
<TABLE>
The distribution of loans and leases by type, the ratio of net charge-offs to average loans and leases
outstanding and the ratio of the reserve for credit losses to loans and leases outstanding is as
follows:
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Percentage of loans and leases to total
loans and leases at December 31
Commercial, financial and
agricultural loans 29.5 % 32.7 37.3 40.4 42.3
Real estate - construction loans 2.8 4.1 4.8 4.4 5.2
Real estate - mortgage loans 29.9 32.0 25.5 22.3 20.6
Consumer loans 23.4 21.5 24.4 25.2 23.8
Lease financing 14.4 9.7 8.0 7.7 8.1
------ ------ ------ ------ ------
Total 100.0 % 100.0 100.0 100.0 100.0
------ ------ ------ ------ ------
Ratio of net charge-offs during year to
average loans and leases outstanding during
year
Commercial, financial and
agricultural loans 0.24 % 0.38 0.98 0.92 0.50
Real estate - construction loans -- -- -- -- 0.57
Real estate - mortgage loans 0.01 0.21 0.25 0.63 0.42
Consumer loans 0.38 0.49 0.96 1.44 1.29
Lease financing 0.12 0.15 0.29 0.54 0.32
Weighted Average Ratio 0.18 0.31 0.64 0.89 0.66
</TABLE>
Page 10
<PAGE>
Reserve for Credit Losses
- -------------------------
The reserve for credit losses is established through charges to
operations by a provision for credit losses. Loans and leases which
are determined to be uncollectible are charged against the reserve and
any subsequent recoveries are credited to the reserve. The amount
charged to operations is based on several factors. These include the
following:
1. Analytical reviews of the credit loss experience in relationship to
outstanding loans and leases to determine an adequate reserve for
credit losses required for loans and leases at risk.
2. A continuing review of problem or at risk loans and leases and the
overall portfolio quality.
3. Regular examinations and appraisals of the loan and lease portfolio
conducted by the Bank's examination staff and the banking supervisory
authorities.
4. Management's judgement with respect to the current and expected
economic conditions and their impact on the existing loan and lease
portfolio.
The amount provided for credit losses exceeded actual net charge-offs by
$18,306,000 in 1994, $20,963,000 in 1993 and $20,335,000 in 1992.
Management reviews the reserve on a quarterly basis to determine whether
additional provisions should be made after considering the factors noted above.
Based on these procedures, management is of the opinion that the reserve at
December 31, 1994 of $155,918,000 is adequate.
Maturity Distribution of Domestic Certificates of Deposit of $100,000
- ---------------------------------------------------------------------
and Over at December 31, 1993 ($000's)
--------------------------------------
Three months or less $142,325
Over three months through six months 70,936
Over six months through twelve months 23,816
Over twelve months 25,325
--------
Total certificates - $100,000 and over $262,402
========
Note: Foreign office deposits are denominated in amounts greater than $100,000.
Page 11
<PAGE>
Short-Term Borrowings
- ---------------------
Short-term borrowings is comprised of various short-term sources of funds,
primarily Federal funds borrowed from correspondent banks, securities sold under
agreements to repurchase, short-term bank notes and commercial paper issuances.
A summary of the average amount outstanding, maximum month-end balance and
weighted average interest rate for the years ended December 31 follows ($000's):
1994 1993 1992
------ ------ ------
Average outstanding $1,967,819 1,365,070 1,229,664
Maximum month-end balance $2,452,218 1,734,920 1,551,092
Weighted average interest rate 4.12% 3.17 3.80
Return on Equity and Assets
- ---------------------------
The following table presents certain operating ratios:
1994 1993 1992
------ ------ ------
Return on assets (A) 1.77% 1.71 1.63
Return on equity (B) 18.6% 17.8 16.9
Dividend payout ratio (C) 32.3% 31.7 33.0
Equity to assets ratio (D) 9.50% 9.61 9.62
- ------------------------------------
(A) net income divided by average assets
(B) net income divided by average equity
(C) dividends declared per share divided by fully diluted net income per share
(D) average equity divided by average assets
Page 12
<PAGE>
ITEM 2. PROPERTIES
The Company's executive offices and the main office of the Bank are located on
Fountain Square Plaza in downtown Cincinnati, Ohio, located in a 32-story office
tower and a 5-story office building and parking garage known as the Fifth Third
Center and the William S. Rowe Building, respectively. One of the Bank's
subsidiaries owns 100% of these buildings.
The Company, through its subsidiary banks and savings banks, five located in
Ohio, three in Kentucky, two in Indiana and one in Florida, operate 353 banking
centers, of which 177 are owned and 176 are leased. The properties owned are
free from mortgages and encumbrances.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are not parties to any material legal
proceedings other than routine litigation incidental to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to
Page 1 of Registrant's 1994 Annual Report to Stockholders attached to this
filing as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference to
page 35 of Registrant's 1994 Annual Report to Stockholders attached to this
filing as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated herein by reference to
pages 26 through 34 of Registrant's 1994 Annual Report to Stockholders attached
to this filing as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to
pages 13 through 25 and page 35 of Registrant's 1994 Annual Report to
Stockholders attached to this filing as Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
Page 13
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item concerning Directors is incorporated
herein by reference under the caption "ELECTION OF DIRECTORS" of the
Registrant's 1995 Proxy Statement. The names, ages and positions of the
Executive Officers of the Company as of January 31, 1995 are listed below along
with their business experience during the past 5 years. Officers are appointed
annually by the Board of Directors at the meeting of Directors immediately
following the Annual Meeting of Stockholders.
CURRENT POSITION AND
NAME AND AGE BUSINESS EXPERIENCE DURING PAST 5 YEARS
- ------------ ----------------------------------------
George A. Schaefer, Jr., 49 PRESIDENT AND CEO. President and Chief
Executive Officer of the Company and the
Bank since January, 1991. Previously,
Mr. Schaefer was President and COO of
the Company and the Bank.
George W. Landry, 54 EXECUTIVE VICE PRESIDENT. Executive Vice
President of the Company and the Bank.
Stephen J. Schrantz, 46 EXECUTIVE VICE PRESIDENT. Executive Vice
President of the Company and the Bank.
Michael D. Baker, 44 SENIOR VICE PRESIDENT. Senior Vice
President of the Company since March, 1993,
and of the Bank.
P. Michael Brumm, 47 SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER. CFO of the Company and the Bank
since June, 1990, and Senior Vice President
of the Bank.
Robert P. Niehaus, 48 SENIOR VICE PRESIDENT. Senior Vice
President of the Company since March 1993,
and Senior Vice President of the Bank.
Previously, Mr. Niehaus was Vice President
of the Company.
James R. Gaunt, 49 SENIOR VICE PRESIDENT. Senior Vice
President of the Company and President and
CEO of Fifth Third Bank of Kentucky, Inc.
since August, 1994. Previously, Mr. Gaunt
was Senior Vice President of the Bank.
Michael K. Keating, 39 SENIOR VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY. Senior Vice President and
General Counsel of the Company since March,
1993 and Senior Vice President and Counsel
of the Bank since November, 1989, and
Secretary of the Company and the Bank since
January, 1994. Mr. Keating is a son of Mr.
William J. Keating, Director.
Page 14
<PAGE>
CURRENT POSITION AND
NAME AND AGE BUSINESS EXPERIENCE DURING PAST 5 YEARS
- ------------ ------------------------------------------
Neal E. Arnold, 34 TREASURER. Treasurer of the Company and
the Bank since October, 1990 and Senior
Vice President of the Bank since April,
1993. Previously, Mr. Arnold was Vice
President of the Bank since October, 1990.
Previously, Mr. Arnold was CFO and Senior
Vice President with First National Bank of
Grand Forks, North Dakota.
Gerald L. Wissel, 38 AUDITOR. Auditor of the Company and the
Bank since March 1990 and Senior Vice
President of the Bank since November 1991.
Previously, Mr. Wissel was Vice President
of the Bank since March 1990. Mr. Wissel
was formerly with Deloitte and Touche LLP,
independent public accountants.
Roger W. Dean, 32 CONTROLLER. Controller of the Company and
Vice President of the Bank since June,
1993. Previously, Mr. Dean was with
Deloitte & Touche LLP, independent public
accountants.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference under
the caption "EXECUTIVE COMPENSATION" of the Registrant's 1995 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference under
the captions "CERTAIN BENEFICIAL OWNERS, ELECTION OF DIRECTORS, AND EXECUTIVE
COMPENSATION" of the Registrant's 1995 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference under
the caption "CERTAIN TRANSACTIONS" of the Registrant's 1995 Proxy Statement.
Page 15
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) Documents Filed as Part of the Report PAGE
1. Index to Financial Statements
Consolidated Statements of Income for the
Years Ended December 31, 1994, 1993 and 1992 *
Consolidated Balance Sheets, December 31, 1994
and 1993 *
Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992 *
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1994, 1993 and 1992 *
Notes to Consolidated Financial Statements *
* Incorporated by reference to pages 13 through 25 of Registrant's 1994
Annual Report to Stockholders attached to this filing as Exhibit 13.
2. Financial Statement Schedules
The schedules for Registrant and its subsidiaries are omitted because
of the absence of conditions under which they are required, or
because the information is set forth in the consolidated financial
statements or the notes thereto.
3. Exhibits
EXHIBIT
NO.
3- Amended Articles of Incorporation and Code of Regulations**
10(a)- Fifth Third Bancorp Unfunded Deferred Compensation Plan for
Non-Employee Directors ***
10(b)- Fifth Third Bancorp 1990 Stock Option Plan ****
10(c)- Fifth Third Bancorp 1987 Stock Option Plan *****
10(d)- Fifth Third Bancorp 1982 Stock Option Plan ******
10(e)- Fifth Third Bancorp Stock Option Plan for Employees of The
Fifth Third Bank of Miami Valley, National Association
*******
10(f)- Fifth Third Bancorp Stock Option Plan for Employees of The
Fifth Third Bank of Eastern Indiana ********
10(g)- Indenture effective November 19, 1992 between Fifth Third
Bancorp, Issuer and NBD Bank, N.A., Trustee *********
Page 16
<PAGE>
10(h)- Fifth Third Bancorp Amended and Restated Stock Option Plan
for Employees and Directors of The TriState Bancorp
**********
10(i)- Fifth Third Bancorp 1993 Discount Stock Purchase Plan
***********
10(j)- Fifth Third Bancorp Amended and Restated Stock Incentive
Plan for selected Executive Officers, Employees and
Directors of The cumberland Federal Bancorporation, Inc.
************
10(k)- Fifth Third Bancorp Master Profit Sharing Plan*************
11- Computation of Consolidated Net Income Per Share for the
Years Ended December 31, 1994, 1993, 1992, 1991 and 1990
13- Fifth Third Bancorp 1994 Annual Report to Stockholders
21- Fifth Third Bancorp Subsidiaries
23- Independent Auditors' Consent
b) Reports on Form 8-K
NONE.
____________________
** Incorporated by reference to Registrant's Registration
Statement, Exhibits 3.1 and 3.2, on Form S-4, Registration
No. 33-19965 which is effective.
*** Incorporated in this Form 10-K Annual Report by reference to
Form 10-K filed for fiscal year ended December 31, 1985.
**** Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
34075, which is effective.
***** Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
13252, which is effective.
****** Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 2-98550,
which is effective.
******* Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
20888, which is effective.
Page 17
<PAGE>
******** Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission on November 18, 1992 a
Form 8-K Current Report as an exhibit to a Registration
Statement on Form S-8, Registration No. 33-30690, which is
effective.
********* Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission on November 18, 1992 a
Form 8-K Current Report dated November 16, 1992 and as
Exhibit 4.1 to a Registration Statement on Form S-3,
Registration No. 33-54134, which is effective.
********** Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
51679, which is effective.
*********** Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
60474, which is effective.
************ Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
55223, which is effective.
************* Incorporated by reference to Registrant's filing with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-
55553, which is effective.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIFTH THIRD BANCORP
(Registrant)
/s/George A. Schaefer, Jr. February 21, 1995
- -----------------------------
George A. Schaefer, Jr.
President and CEO
(Principal Executive Officer)
Pursuant to requirements of the Securities Exchange Act of 1934, this report has
been signed on February 21, 1995 by the following persons on behalf of the
Registrant and in the capacities indicated.
/s/P. Michael Brumm /s/Roger W. Dean
- --------------------------------- ------------------------------
P. Michael Brumm Roger W. Dean
Senior Vice President and CFO Controller
(Chief Financial Officer) (Principal Accounting Officer)
Page 18
<PAGE>
/s/John F. Barrett
- --------------------- ----------------------- -------------------------
John F. Barrett Ivan W. Gorr Michael H. Norris
Director Director Director
/s/Joseph H. Head, Jr. /s/Brian H. Rowe
- --------------------- ----------------------- -------------------------
Milton C. Boesel, Jr. Joseph H. Head, Jr. Brian H. Rowe
Director Director Director
/s/George A. Schaefer, Jr.
- --------------------- ----------------------- -------------------------
Clement L. Buenger Joan R. Herschede George A. Schaefer, Jr.
Director Director Director
/s/Gerald V. Dirvin /s/William G. Kagler /s/John J. Schiff, Jr.
- --------------------- ----------------------- -------------------------
Gerald V. Dirvin William G. Kagler John J. Schiff, Jr.
Director Director Director
/s/William J. Keating /s/Dennis J. Sullivan, Jr.
- --------------------- ----------------------- -------------------------
Thomas B. Donnell William J. Keating Dennis J. Sullivan, Jr.
Director Director Director
/s/James D. Kiggen
- --------------------- ----------------------- -------------------------
Richard T. Farmer James D. Kiggen Dudley S. Taft
Director Director Director
/s/John D. Geary
- --------------------- -----------------------
John D. Geary Robert B. Morgan
Director Director
Page 19
<PAGE><TABLE>
EXHIBIT 11
FIFTH THIRD BANCORP
COMPUTATION OF CONSOLIDATED NET INCOME PER SHARE
($000's except per share data)
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Income $ 244,459 206,235 172,021 142,954 121,026
======== ======== ======== ======== ========
Net income per common share - assuming no dilution:
Weighted average number of shares outstanding (a) 64,387 62,649 62,329 61,897 61,544
======== ======== ======== ======== ========
Per share (net income divided by the weighted average
number of shares outstanding) $ 3.80 3.29 2.76 2.31 1.97
======== ======== ======== ======== ========
Net income per common and common equivalent share:
Net income $ 244,459 206,235 172,021 142,954 121,026
Add - Interest on 4 1/4% convertible subordinated notes
due 1998, net of applicable income taxes 4,332 4,393 546 -- --
-------- -------- -------- -------- --------
Adjusted net income $ 248,791 210,628 172,567 142,954 121,026
======== ======== ======== ======== ========
Adjusted weighted average number of shares outstanding -
after giving effect to the conversion of stock options
and convertible subordinated notes (a) 66,925 65,338 63,082 62,303 61,698
======== ======== ======== ======== ========
Per share (adjusted net income divided by the adjusted
weighted average number of shares outstanding) $ 3.72 3.22 2.74 2.30 1.96
======== ======== ======== ======== ========
Net income per common share - assuming full dilution:
Adjusted net income $ 248,791 210,628 172,567 142,954 121,026
======== ======== ======== ======== ========
Adjusted weighted average number of shares outstanding -
after giving effect to the conversion of stock options
and convertible subordinated notes (a) 66,924 65,338 63,188 62,527 61,749
======== ======== ======== ======== ========
Per share (adjusted net income divided by the adjusted
weighted average number of shares outstanding) $ 3.72 3.22 2.73 2.29 1.96
======== ======== ======== ======== ========
<FN>
(a) Per share amounts and average shares outstanding reflect the three-for-two stock splits effected
in the form of stock dividends paid April 15, 1992 and January 13, 1990.
</TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1994 1993 %Change
=============================================================================================
<S> <C> <C> <C>
EARNINGS AND DIVIDENDS ($000'S)
Net Income.................................. $244,459 206,235 18.5
Cash Dividends Declared..................... 76,906 63,471 21.2
- ---------------------------------------------------------------------------------------------
PER SHARE
Net Income.................................. $ 3.80 3.29 15.5
Cash Dividends Declared..................... 1.20 1.02 17.6
Year-End Book Value......................... 21.62 19.93 8.5
Year-End Market Price....................... 48.00 51.75 ( 7.2)
- ---------------------------------------------------------------------------------------------
AT YEAR END ($ IN MILLIONS)
Assets...................................... $ 14,957 13,129 13.9
Loans and Leases............................ 10,286 9,567 7.5
Deposits.................................... 10,631 9,477 12.2
Stockholders' Equity........................ 1,399 1,278 9.5
- ---------------------------------------------------------------------------------------------
KEY RATIOS
Return on Average Assets.................... 1.77% 1.71 3.5
Return on Average Equity.................... 18.6 17.8 4.5
Net Interest Margin......................... 4.16 4.39 ( 5.2)
=============================================================================================
Number of Shares............................ 64,709,304 64,099,139 1.0
Number of Stockholders...................... 13,763 13,418 2.6
Number of Banking Locations................. 353 331 6.6
Number of Full-Time Equivalent Employees.... 5,644 5,401 4.5
=============================================================================================
</TABLE>
<TABLE>
FIFTH THIRD BANCORP
STOCKHOLDER AND CORPORATE INFORMATION
<CAPTION>
============================================================
STOCK DATA Dividends
Paid Per
Year Period High Low Share
<S> <C> <C> <C>
- ------------------------------------------------------------
1993 First Quarter $55 1/8 $497 3/8 $.24
Second Quarter 58 1/2 501 1/4 .24
Third Quarter 54 5/8 511 1/4 .24
Fourth Quarter 54 493 1/4 .27
- ------------------------------------------------------------
1994 First Quarter $51 1/8 $45 1/8 $.27
Second Quarter 55 46 3/4 .27
Third Quarter 53 1/4 49 7/8 .31
Fourth Quarter 52 1/2 46 1/2 .31
- ------------------------------------------------------------
</TABLE>
The common stock of Fifth Third Bancorp is traded in the over-the-counter
market and is listed under the symbol "FITB" on the NASDAQ National
Market System.
<TABLE>
<CAPTION>
============================================================
RATINGS STANDARD
MOODY'S & POOR'S FITCH
- ------------------------------------------------------------
<S> <C> <C> <C>
FIFTH THIRD BANCORP
Commercial Paper P1 A1+ F1+
- ------------------------------------------------------------
FIFTH THIRD BANKCCINCINNATI
Short-Term Deposit P1 A1+ F1
Long-Term Deposit Aa2 AA- AA
Medium-Term Deposit Aa2 AA- AA
- ------------------------------------------------------------
FIFTH THIRD BANK OF NORTHWESTERN OHIO, N.A.
Short-Term Deposit P1 A1+ F1
Long-Term Deposit Aa3 AA- AA
- ------------------------------------------------------------
</TABLE>
CORPORATE OFFICE
The Corporate Office is located at Fifth Third Center, Cincinnati, Ohio 45263.
The telephone number is (513) 579-5300.
ANNUAL MEETING
The Annual Meeting of Stockholders will be held at 11:30 a.m. on Tuesday, March
21, 1995, on the fifth floor of the Corporate Office.
FORM 10-K
Any individual requesting general information or a copy of the Corporation's
1994 Form 10-K Report (to be filed with the Securities and Exchange Commission
before March 31, 1995) may obtain these by writing to Investor Relations at the
Corporate Office.
DIVIDEND REINVESTMENT
For the convenience of stockholders, the Corporation has established a plan
whereby stockholders may have their dividends automatically reinvested in Fifth
Third Bancorp common stock. Details of the plan will be sent on request (see
back page).
TRANSFER AGENT AND REGISTRAR
Transfer agent and registrar is Fifth Third Bank, Fifth Third Center,
Cincinnati, Ohio 45263.
1
<PAGE> 2
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($000's) 1994 1993 1992
===========================================================================================================
<S> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans and Leases..................................$735,530 665,649 607,485
- -----------------------------------------------------------------------------------------------------------
Interest on Securities
Taxable........................................................... 169,316 134,387 165,160
Exempt from Income Taxes.......................................... 16,436 12,559 10,789
- -----------------------------------------------------------------------------------------------------------
Total Interest on Securities........................................... 185,752 146,946 175,949
- -----------------------------------------------------------------------------------------------------------
Interest on Other Short-Term Investments............................... 1,019 319 3,806
- -----------------------------------------------------------------------------------------------------------
Total Interest Income.................................................. 922,301 812,914 787,240
- -----------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on Deposits
Interest Checking................................................. 25,572 28,295 28,322
Savings........................................................... 14,511 16,298 17,183
Money Market...................................................... 40,326 37,465 45,635
Other Time........................................................ 194,375 173,764 190,086
Certificates-$100,000 and Over.................................... 13,135 15,622 23,456
Foreign Office.................................................... 24,165 8,030 1,714
- -----------------------------------------------------------------------------------------------------------
Total Interest on Deposits............................................. 312,084 279,474 306,396
Interest on Federal Funds Borrowed..................................... 34,925 18,963 17,316
Interest on Short-Term Bank Notes...................................... 20,285 --- ---
Interest on Other Short-Term Borrowings................................ 25,818 24,326 29,420
Interest on Long-Term Debt and Notes................................... 12,436 16,636 6,238
- -----------------------------------------------------------------------------------------------------------
Total Interest Expense................................................. 405,548 339,399 359,370
- -----------------------------------------------------------------------------------------------------------
NET INTEREST INCOME.................................................... 516,753 473,515 427,870
Provision for Credit Losses............................................ 35,780 48,037 66,100
- -----------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES.................. 480,973 425,478 361,770
- -----------------------------------------------------------------------------------------------------------
OTHER OPERATING INCOME
Trust Income........................................................... 55,238 53,442 49,183
Service Charges on Deposits............................................ 60,905 57,212 51,525
Data Processing Income................................................. 64,394 52,823 45,842
Other Service Charges and Fees......................................... 74,978 61,595 50,780
Securities Gains....................................................... 393 6,078 8,978
- -----------------------------------------------------------------------------------------------------------
Total Other Operating Income........................................... 255,908 231,150 206,308
- -----------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Salaries and Wages..................................................... 144,513 129,644 117,717
Employee Benefits...................................................... 36,710 36,436 31,927
Equipment Expenses..................................................... 16,045 15,446 14,548
Net Occupancy Expenses................................................. 26,137 26,014 23,270
Other Operating Expenses............................................... 148,140 145,180 128,853
- -----------------------------------------------------------------------------------------------------------
Total Operating Expenses............................................... 371,545 352,720 316,315
- -----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES............................................. 365,336 303,908 251,763
Applicable Income Taxes................................................ 120,877 97,673 79,742
- -----------------------------------------------------------------------------------------------------------
NET INCOME ............................................................$244,459 206,235 172,021
===========================================================================================================
NET INCOME PER SHARE...................................................$ 3.80 3.29 2.76
===========================================================================================================
AVERAGE SHARES OUTSTANDING (000'S)..................................... 64,387 62,649 62,329
CASH DIVIDENDS DECLARED PER SHARE......................................$ 1.20 1.02 .90
===========================================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
13
<PAGE> 3
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
December 31 ($000's) 1994 1993
===============================================================================================================
<S> <C> <C>
ASSETS
- ---------------------------------------------------------------------------------------------------------------
Cash and Due from Banks .......................................................... $ 695,009 594,892
Securities Available for Sale (amortized cost 1994-$1,203,677
and 1993-$878,963) ............................................................ 1,129,492 898,074
Securities Held to Maturity (market value 1994-$2,410,536
and 1993-$1,813,913) .......................................................... 2,507,543 1,776,394
Other Short-Term Investments ..................................................... 23,765 4,603
Loans and Leases
Commercial Loans ......................................................... 3,045,315 2,685,558
Construction Loans ....................................................... 286,088 342,177
Commercial Mortgage Loans ................................................ 729,532 703,282
Commercial Lease Financing ............................................... 569,539 350,306
Residential Mortgage Loans ............................................... 2,346,931 2,731,214
Consumer Loans ........................................................... 2,407,261 2,090,154
Consumer Lease Financing ................................................. 1,133,953 819,925
Unearned Income .......................................................... (232,162) (155,718)
Reserve for Credit Losses ................................................ ( 155,918) ( 144,537)
- ---------------------------------------------------------------------------------------------------------------
Total Loans and Leases ........................................................... 10,130,539 9,422,361
Bank Premises and Equipment ...................................................... 176,897 163,990
Accrued Income Receivable ........................................................ 114,039 99,460
Other Assets ..................................................................... 179,725 168,770
- ---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ..................................................................... $14,957,009 13,128,544
===============================================================================================================
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------
Deposits
Demand ................................................................... $ 1,679,625 1,464,931
Interest Checking ........................................................ 1,486,780 1,479,119
Savings .................................................................. 637,609 711,863
Money Market ............................................................. 1,688,147 1,536,783
Other Time ............................................................... 3,863,103 3,809,437
Certificates-$100,000 and Over ........................................... 262,402 305,530
Foreign Office ........................................................... 1,013,212 169,643
- ---------------------------------------------------------------------------------------------------------------
Total Deposits ................................................................... 10,630,878 9,477,306
Federal Funds Borrowed ........................................................... 716,312 1,031,564
Short-Term Bank Notes ............................................................ 844,995 ---
Other Short-Term Borrowings ...................................................... 890,911 660,180
Accrued Taxes, Interest and Expenses ............................................. 194,753 191,517
Other Liabilities ................................................................ 101,673 82,453
Long-Term Debt ................................................................... 35,409 265,119
Convertible Subordinated Notes ................................................... 143,304 142,745
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ................................................................ 13,558,235 11,850,884
- ---------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (a)
- ---------------------------------------------------------------------------------------------------------------
Common Stock (b) ................................................................. 143,655 142,300
Capital Surplus .................................................................. 272,999 260,150
Retained Earnings ................................................................ 1,030,338 862,785
Unrealized Gains/(Losses) on Securities Available for Sale ....................... ( 48,218) 12,425
- ---------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY ....................................................... 1,398,774 1,277,660
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....................................... $14,957,009 13,128,544
===============================================================================================================
<FN>
(a) 500,000 shares of no par value preferred stock are authorized of which none have been issued.
(b) Stated value $2.22 per share; authorized 100,000,000; outstanding 1994 -- 64,709,304 and 1993 -- 64,099,139.
See Notes to Consolidated Financial Statements.
</TABLE>
14
<PAGE> 4
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
------------------------- UNREALIZED
SHARES CAPITAL RETAINED TREASURY GAINS
($000'S) OUTSTANDING AMOUNT SURPLUS EARNINGS STOCK (LOSSES) TOTAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1992:
As Originally Reported ..... 39,583,509 $87,897 187,237 604,720 (404) --- 879,450
Of Pooled Acquisition ...... 1,797,921 3,991 18,366 42,884 65,241
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1,
1992, RESTATED ............. 41,381,430 91,888 205,603 647,604 (404) --- 944,691
Net Income ..................... 172,021 172,021
Cash Dividends Declared:
Fifth Third Bancorp, at
$.90 per share ............. ( 53,758) ( 53,758)
Pooled Acquisition ......... ( 1,514) ( 1,514)
Three-for-Two Stock Split
Effected
in the Form of a Stock
Dividend ............... 20,690,716 45,933 ( 1,996) ( 43,937) ---
Shares Acquired for
Treasury ................... ( 11,980) (491) ( 491)
Stock Options Exercised,
Including Treasury
Shares Issued .......... 212,533 422 3,269 491 4,182
Corporate Tax Benefit Related
to Exercise of Non-Qualified
Stock Options .............. 56 56
Fractional Shares Purchased in
Stock Split Effected in the
Form of a Stock Dividend.... ( 106) ( 106)
Stock Issued in Aquisitions and
Other ...................... 255,723 603 11,459 ( 289) 11,773
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992 ... 62,528,422 138,846 218,391 720,021 (404) --- 1,076,854
Net Income ..................... 206,235 206,235
Cash Dividends Declared:
Fifth Third Bancorp, at
$1.02 per share ............ ( 61,544) ( 61,544)
Pooled Acquisition ......... ( 1,927) ( 1,927)
Shares Acquired for Treasury ... ( 440) ( 22) ( 22)
Stock Options Exercised,
Including Treasury Shares
Issued ................. 218,843 452 3,672 426 4,550
Corporate Tax Benefit Related to
Exercise of Non-Qualified
Stock Options .............. 286 286
Stock Issued in Acquisition
and Other .................. 1,352,314 3,002 37,801 40,803
Effect of Change in Accounting
for Securities Available
for Sale ................... 12,425 12,425
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 ... 64,099,139 142,300 260,150 862,785 --- 12,425 1,277,660
Net Income ..................... 244,459 244,459
Cash Dividends Declared:
Fifth Third Bancorp at
$1.20 per share ............ ( 75,843) ( 75,843)
Pooled Acquisition ......... ( 1,063) ( 1,063)
Shares Acquired for Treasury ... ( 3,409) (178) ( 178)
Stock Options Exercised,
Including Treasury
Shares Issued ......... 400,482 882 7,671 178 8,731
Corporate Tax Benefit Related to
Exercise of Non-Qualified
Stock Options .............. 2,328 2,328
Stock Issued in Acquisition
and Other................... 213,092 473 2,850 3,323
Change in Unrealized Gains/Losses
on Securities Available
for Sale ................... (60,643) ( 60,643)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 ... 64,709,304 $143,655 272,999 1,030,338 --- (48,218) 1,398,774
====================================================================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
15
<PAGE> 5
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($000's) 1994 1993 1992
===================================================================================================================
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income......................................................... $ 244,459 206,235 172,021
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Provision for Credit Losses................................ 35,780 48,037 66,100
Depreciation, Amortization and Accretion................... 29,987 32,394 34,062
Provision for Deferred Income Taxes........................ 44,719 21,929 4,523
Securities Gains........................................... ( 720) ( 7,640) ( 9,787)
Securities Losses.......................................... 327 1,562 809
Proceeds from Sales of Residential Mortgage Loans Held
for Sale................................................. 615,590 727,169 189,287
Gains from Sales of Residential Mortgage Loans Held for Sale ( 9,870) ( 11,210) ( 3,521)
Increase in Residential Mortgage Loans Held for Sale....... ( 503,233) ( 850,168) ( 208,918)
Decrease (Increase) in Accrued Income Receivable........... ( 13,761) ( 15,389) 3,729
Decrease (Increase) in Other Assets........................ ( 5,545) 21,938 48,418
Increase (Decrease) in Accrued Taxes, Interest and Expenses ( 9,378) 41,766 ( 33,160)
Increase (Decrease) in Other Liabilities................... 13,321 ( 9,703) 863
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......................... 441,676 206,920 264,426
===================================================================================================================
INVESTING ACTIVITIES
Proceeds from Sales of Securities Available for Sale............... 185,114 270,206 ---
Proceeds from Calls, Paydowns and Maturities of Securities
Available for Sale......................................... 296,922 213,299 ---
Purchases of Securities Available for Sale......................... ( 710,030) ( 301,520) ---
Proceeds from Sales of Securities Held to Maturity................. 62,487 --- ---
Proceeds from Calls, Paydowns and Maturities of
Securities Held to Maturity...................................... 565,319 898,732 ---
Purchases of Securities Held to Maturity........................... (1,084,102) ( 881,696) ---
Proceeds from Sales of Securities.................................. --- --- 393,874
Proceeds from Calls, Paydowns and Maturities of Securities......... --- --- 1,264,137
Purchases of Securities............................................ --- --- (1,217,395)
Decrease (Increase) in Other Short-Term Investments................ ( 12,628) ( 950) 221,031
Increase in Loans and Leases....................................... (1,145,395) (1,449,143) (1,770,785)
Purchases of Bank Premises and Equipment........................... ( 27,564) ( 44,415) ( 17,814)
Proceeds from Disposals of Bank Premises and Equipment............. 1,728 2,040 4,113
Cash Acquired (Paid) in Purchases of Subsidiaries.................. ( 10,012) ( 11,207) 13,536
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES.............................. (1,878,161) (1,304,654) (1,109,303)
===================================================================================================================
FINANCING ACTIVITIES
Increase in Deposits............................................... 779,104 442,589 203,913
Purchases of Deposits.............................................. 294,126 290,857 277,717
Increase (Decrease) in Federal Funds Borrowed...................... ( 315,252) 564,675 98,731
Increase in Short-Term Bank Notes.................................. 844,995 --- ---
Increase (Decrease) in Other Short-Term Borrowings................. 229,437 ( 222,371) 88,606
Proceeds from Issuance of Long-Term Debt and Notes................. --- 180,000 382,194
Repayment of Long-Term Debt........................................ ( 232,512) ( 83,845) ( 93,784)
Payment of Cash Dividends.......................................... ( 73,425) ( 61,155) ( 52,643)
Exercise of Stock Options.......................................... 10,307 4,754 4,238
Other.............................................................. ( 178) 236 ( 564)
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES.......................... 1,536,602 1,115,740 908,408
- -------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND DUE FROM BANKS................................ 100,117 18,006 63,531
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR....................... 594,892 576,886 513,355
- -------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR............................. $ 695,009 594,892 576,886
===================================================================================================================
<FN>
Note: The Bancorp paid Federal income taxes of $78,000,000, $74,000,000 and $69,575,000 in 1994, 1993 and 1992, respectively.
The Bancorp paid interest of $392,688,000, $327,916,000 and $369,299,000 in 1994, 1993 and 1992, respectively.
The Bancorp had noncash investing activities consisting of the securitization and transfer to securities of $341,199,000,
$291,586,000 and $120,813,000 of residential mortgage loans in 1994, 1993 and 1992, respectively.
The Bancorp had noncash activities consisting of the reclassification of $932,971,000 in securities as available for sale in
1993.
See Notes to Consolidated Financial Statements.
</TABLE>
16
<PAGE> 6
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of Fifth Third
Bancorp (Bancorp) and its subsidiaries. All material intercompany transactions
and balances have been eliminated. Certain prior period data has been
reclassified to conform to current period presentation.
The Consolidated Financial Statements and related notes have been restated
to include The Cumberland Federal Bancorporation, Inc. (The Cumberland),
acquired August 26, 1994, in a transaction accounted for as a pooling of
interests.
SECURITIES
Statement of Financial Accounting Standards (SFAS) No. 115, ''Accounting for
Certain Investments in Debt and Equity Securities," requires securities to be
classified as held to maturity, available for sale or trading. Only those
securities classified as held to maturity, and which management has the intent
and ability to hold to maturity, are reported at amortized cost. Available for
sale and trading securities are reported at fair value with unrealized gains
and losses included in stockholders' equity or income, respectively. The
Bancorp adopted this Statement effective December 31, 1993. Prior to 1993, all
securities were classified in a single portfolio accounted for at amortized
cost. Realized securities gains or losses are reported in the Consolidated
Statements of Income. The cost of securities sold is based on the specific
identification method.
LOANS
Residential mortgage loans held for sale are valued at the lower of aggregate
cost or market value and were $4,168,000 and $179,389,000 at December 31,
1994 and 1993, respectively. The Bancorp has commitments to sell residential
mortgage loans held for sale in the secondary market. Gains or losses on sales
are recognized in Other Service Charges and Fees upon delivery.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan,'' requires
that impaired loans be measured based on the present value of expected future
cash flows discounted at the loan's effective interest rate or the fair value
of the underlying collateral. SFAS No. 114 is effective for fiscal years
beginning after December 15, 1994 and the effect on the Consolidated Financial
Statements is not expected to be material.
RESERVE FOR CREDIT LOSSES
The reserve is maintained at a level management considers to be adequate to
absorb potential loan and lease losses. Credit losses are charged and
recoveries are credited to the reserve. Provisions for credit losses are based
on management's review of the historical credit loss experience and such other
factors which, in management's judgment, deserve recognition under existing
economic conditions in estimating potential credit losses.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment, including leasehold improvements, are stated at
cost less accumulated depreciation and amortization. Depreciation is
computed on the straight-line method over the estimated useful lives of the
related assets. Amortization of leasehold improvements is computed on the
straight-line method over the lives of the related leases or useful lives of
the related assets, whichever is shorter. Maintenance, repairs and minor
improvements are charged to operating expenses as incurred.
INTANGIBLE ASSETS
Goodwill and other intangible assets are amortized on a straight-line basis
generally over a period of 15 years.
REVENUE RECOGNITION
Interest income on loans is based on the principal balance outstanding, with
the exception of interest on discount basis loans which is computed using a
method which approximates the interest method. The accrual of interest for
commercial, construction and mortgage loans is discontinued when there is a
clear indication that the borrower's cash flow may not be sufficient to meet
payments as they become due. Such loans are also placed on nonaccrual status
when principal or interest is past due ninety days or more, unless the loan is
well secured and in the process of collection. When a loan is placed on
nonaccrual status, all previously accrued and unpaid interest is charged
against income.
Loan origination and commitment fees and certain direct loan origination
costs are deferred and the net amount amortized over the estimated life of the
related loans or commitments as a yield adjustment.
Income on direct financing leases is recognized on a basis to achieve a
constant periodic rate of return on the outstanding investment. Income on
leveraged leases is recognized on a basis to achieve a constant rate of return
on the outstanding investment in the lease, net of the related deferred tax
liability, in the years in which the net investment is positive.
Trust income is recognized on the accrual basis.
DERIVATIVE FINANCIAL INSTRUMENTS
The Bancorp enters into foreign exchange forward contracts primarily to enable
customers involved in international trade to hedge their exposure to foreign
currency fluctuations. The Bancorp hedges its exposure to market rate
fluctuations by entering into offsetting third party forward contracts.
Unrealized gains and losses on forward contracts are generally insignificant
and are recognized in Other Service Charges and Fees at the settlement date.
The Bancorp has two interest rate swap agreements acquired with The Cumberland
with a total notional amount of $30 million. These agreements are used as a
hedge of short-term variable-rate liabilities of one of the Bancorp's
subsidiary banks. The expected settlement payments on these contracts are
accounted for on an accrual basis as an adjustment to interest expense on the
related liabilities.
The Bancorp does not hold or issue derivative financial instruments for
trading purposes.
NET INCOME PER SHARE
Net income per share is calculated by dividing net income for the period by
the weighted average number of shares of common stock outstanding during the
period. The assumed conversion of convertible subordinated notes and the
exercise of stock options does not have a materially dilutive effect.
17
<PAGE> 7
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OTHER
Securities and other property held by the Trust and Investment Group of
the Bancorp subsidiaries in a fiduciary or agency capacity are not included in
the Consolidated Balance Sheets since such items are not assets of the
subsidiaries.
<TABLE>
NOTE 2--SECURITIES
Securities available for sale as of December 31:
<CAPTION>
- ---------------------------------------------------------------------------------
1994
---------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
($000's) COST GAINS LOSSES VALUE
=================================================================================
<S> <C> <C> <C> <C>
U.S. Government
and agencies
obligations....... $ 233,512 --- ( 4,455) 229,057
Agency mortgage-
backed
securities........ 965,154 168 (69,391) 895,931
Other securities.... 5,011 --- ( 507) 4,504
- ---------------------------------------------------------------------------------
Total securities.... $1,203,677 168 (74,353) 1,129,492
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
1993
---------------------------------------------------------
Amortized Unrealized Unrealized Market
($000's) Cost Gains Losses Value
=================================================================================
<S> <C> <C> <C> <C>
U.S. Government
and agencies
obligations....... $195,950 3,536 --- 199,486
Agency mortgage-
backed
securities........ 586,030 10,241 (1,138) 595,133
Other bonds,
notes and
debentures........ 96,068 314 ( 13) 96,369
Other securities.... 915 6,171 --- 7,086
- ---------------------------------------------------------------------------------
Total securities.... $878,963 20,262 (1,151) 898,074
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
SECURITIES HELD TO MATURITY AS OF DECEMBER 31:
- ---------------------------------------------------------------------------------
1994
---------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
($000's) COST GAINS LOSSES VALUE
=================================================================================
<S> <C> <C> <C> <C>
U.S. Government
and agencies
obligations....... $ 98,742 150 --- 98,892
Obligations of
states and
political
subdivisions...... 463,759 22 ( 6,953) 456,828
Agency mortgage-
backed
securities........ 1,750,549 --- (86,813) 1,663,736
Other bonds,
notes and
debentures........ 160,394 330 ( 3,743) 156,981
Other securities.... 34,099 --- --- 34,099
- ---------------------------------------------------------------------------------
Total securities.... $2,507,543 502 (97,509) 2,410,536
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1993
----------------------------------------------------------
Amortized Unrealized Unrealized Market
($000's) Cost Gains Losses Value
=================================================================================
<S> <C> <C> <C> <C>
U.S. Government
and agencies
obligations........ $ 13,189 274 --- 13,463
Obligations of
states and
political
subdivisions....... 327,636 6,725 --- 334,361
Agency mortgage-
backed
securities......... 1,249,465 30,413 ( 9) 1,279,869
Other bonds,
notes and
debentures......... 166,954 1,750 (1,634) 167,070
Other securities..... 19,150 --- --- 19,150
- ---------------------------------------------------------------------------------
Total securities..... $1,776,394 39,162 (1,643) 1,813,913
=================================================================================
</TABLE>
The amortized cost and approximate market value of securities at
December 31, 1994, by contractual maturity, are shown in the following table.
Actual maturities may differ from contractual maturities when there exists a
right to call or prepay obligations with or without call or prepayment
penalties. Maturities of mortgage-backed securities were estimated based on
historical and expected future prepayment trends.
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
---------------------- --------------------------
AMORTIZED MARKET AMORTIZED MARKET
($000's) COST VALUE COST VALUE
=================================================================================
<S> <C> <C> <C> <C>
Debt securities:
Under 1 year....... $ 44,830 45,284 $ 322,949 321,778
1-5 years.......... 647,510 618,957 2,018,037 1,927,454
6-10 years......... 498,496 453,105 113,099 107,292
Over 10 years...... 7,830 7,642 9,359 19,913
Other securities..... 5,011 4,504 34,099 34,099
- ---------------------------------------------------------------------------------
Total securities..... $1,203,677 1,129,492 $2,507,543 2,410,536
=================================================================================
</TABLE>
At December 31, 1994 and 1993, securities with a book value of
$1,984,935,000 and $1,267,599,000, respectively, were pledged to secure
short-term borrowings, public deposits, trust funds and for other purposes as
required or permitted by law.
During the first quarter of 1994, the Bancorp sold $62,280,000 of GNMA
adjustable rate mortgage-backed securities, which were classified as held to
maturity at December 31, 1993, at an immaterial gain. As a result of this sale,
the Bancorp no longer holds any amount of this sector of securities, nor are
future purchases expected.
18
<PAGE> 8
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 3--RESERVE FOR CREDIT LOSSES
Transactions in the reserve for credit losses for the years ended December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993 1992
=============================================================================
<S> <C> <C> <C>
Balance at January 1............ $144,537 121,452 97,319
Losses charged off.............. ( 30,946) ( 37,172) ( 54,718)
Recoveries of losses previously
charged off................ 13,472 10,098 8,953
- -----------------------------------------------------------------------------
Net charge-offs................. ( 17,474) ( 27,074) ( 45,765)
Letter of credit contract....... ( 7,800) --- ---
Provision charged to operations. 35,780 48,037 66,100
Reserve of acquired banks....... 875 2,122 3,798
- -----------------------------------------------------------------------------
Balance at December 31.......... $155,918 144,537 121,452
=============================================================================
</TABLE>
For calendar years 1994, 1993 and 1992, interest income of $556,000,
$547,000 and $965,000, respectively, was recorded on nonaccrual and
renegotiated loans and leases. Additional interest income of $1,767,000,
$1,469,000 and $4,112,000 would have been recorded if the nonaccrual and
renegotiated loans and leases had been current in accordance with their
original terms.
<TABLE>
NOTE 4--LEASE FINANCING
A summary of the gross investment in lease financing at December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993
=============================================================================
<S> <C> <C>
Direct financing leases..................... $1,650,923 1,131,016
Leveraged leases............................ $ 52,569 39,215
- -----------------------------------------------------------------------------
Total lease financing....................... $1,703,492 1,170,231
=============================================================================
</TABLE>
The components of the investment in lease financing at December 31:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993
=============================================================================
<S> <C> <C>
Rentals receivable, net of principal and
interest on nonrecourse debt.............. $1,100,040 779,034
Estimated residual value of leased assets...... 603,452 391,197
- -----------------------------------------------------------------------------
Gross investment in lease financing............ 1,703,492 1,170,231
Unearned income................................ ( 217,970) ( 147,280)
- -----------------------------------------------------------------------------
Total net investment in lease financing........ $1,485,522 1,022,951
=============================================================================
</TABLE>
<TABLE>
NOTE 5--BANK PREMISES AND EQUIPMENT
A summary of bank premises and equipment at December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) Estimated Useful Life 1994 1993
=============================================================================
<S> <C> <C>
Land and improvements......... $ 34,258 30,893
Buildings..................... 18 to 50 yrs. 133,654 125,563
Equipment..................... 3 to 20 yrs. 99,023 93,240
Leasehold improvements........ 6 to 25 yrs. 31,352 27,395
Accumulated depreciation
and amortization......... (121,390) (113,101)
- -----------------------------------------------------------------------------
Total bank premises and
equipment................ $176,897 163,990
=============================================================================
</TABLE>
Depreciation and amortization expense related to bank premises and
equipment was $15,388,000 in 1994, $14,305,000 in 1993 and $12,627,000 in 1992.
Occupancy expense has been reduced by rental income from leased premises
of $8,900,000 in 1994, $8,618,000 in 1993 and $7,451,000 in 1992.
The Bancorp's subsidiaries have entered into a number of noncancelable
lease agreements with respect to bank premises and equipment. A summary of the
minimum annual rental commitments under these leases at December 31, 1994,
exclusive of taxes and other charges payable by the lessee:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
LAND AND
($000's) BUILDINGS EQUIPMENT TOTAL
=============================================================================
<S> <C> <C> <C>
1995.............................. $ 8,124 314 8,438
1996.............................. 6,916 247 7,163
1997.............................. 5,516 198 5,714
1998.............................. 4,955 10 4,965
1999.............................. 4,159 --- 4,159
2000 and subsequent years......... 19,466 --- 19,466
- -----------------------------------------------------------------------------
Total............................. $49,136 769 49,905
=============================================================================
</TABLE>
Rental expense for cancelable and noncancelable leases was $11,891,000 for
1994, $11,500,000 for 1993 and $10,045,000 for 1992.
<TABLE>
NOTE 6--INTANGIBLES
Intangibles, net of accumulated amortization, included in Other Assets
in the Consolidated Balance Sheets at December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993
=============================================================================
<S> <C> <C>
Goodwill........................................... $30,204 32,569
Premium on purchased deposits...................... 31,361 21,468
Purchased mortgage servicing rights................ 56 404
- -----------------------------------------------------------------------------
Total intangibles.................................. $61,621 54,441
=============================================================================
</TABLE>
<TABLE>
NOTE 7--SHORT-TERM BORROWINGS
A summary of short-term borrowings at December 31:
<CAPTION>
- ------------------------------------------------------------------------------
1994 1993
----------------- -----------------
($000's) AMOUNT RATE Amount Rate
=============================================================================
<S> <C> <C> <C> <C>
Federal funds borrowed........ $716,312 5.34% $1,031,564 2.90%
- -----------------------------------------------------------------------------
Short-term bank notes......... 844,995 5.90 --- ---
- -----------------------------------------------------------------------------
Securities sold under
agreements to repurchase.... 687,493 4.30 472,250 2.64
Commercial paper.............. 48,407 5.57 56,296 3.11
Federal Home Loan Bank
cash management advances.... 58,000 7.00 33,300 3.55
U.S. Treasury demand notes.... 97,011 5.09 98,334 2.60
- -----------------------------------------------------------------------------
Other short-term borrowings... 890,911 4.63 660,180 2.72
- -----------------------------------------------------------------------------
Total short-term borrowings... $2,452,218 5.28% $1,691,744 2.83%
=============================================================================
Average outstanding........... $1,967,819 $1,365,070
Maximum month-end balance..... $2,452,218 $1,734,920
Weighted average interest rate 4.12% 3.17%
=============================================================================
</TABLE>
19
<PAGE> 9
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A $1 billion short-term bank note facility was established in 1994. The
notes are offered with maturity dates of less than one year and are uninsured
obligations of two of the Bancorp's subsidiary banks.
At December 31, 1994, the Bancorp had unused lines of credit of
$60,000,000 available to support commercial paper transactions and other
corporate requirements.
<TABLE>
NOTE 8--LONG-TERM BORROWINGS
A summary of long-term borrowings at December 31:
<CAPTION>
- --------------------------------------------------------------------------------
($000's) 1994 1993
================================================================================
<S> <C> <C>
Convertible subordinated notes,
4.25%, due 1998.............................. $143,304 142,745
- --------------------------------------------------------------------------------
Federal Home Loan Bank advances................... 35,000 165,000
Medium-term bank notes,
4.00%, due 1994.............................. --- 99,603
Other, net of discount............................ 409 516
- --------------------------------------------------------------------------------
Total long-term debt.............................. 35,409 265,119
- --------------------------------------------------------------------------------
Total long-term borrowings........................ $178,713 407,864
================================================================================
</TABLE>
The subordinated notes are convertible into Bancorp common stock at
$63.625 per share and are redeemable in whole or in part at 101.70% from
January 22, 1996 to January 21, 1997, and at 100.85% thereafter, until
maturity. A portion of these notes qualify as total capital for regulatory
capital purposes.
At December 31, 1994, Federal Home Loan Bank (FHLB) advances mature
quarterly in $5,000,000 installments and have rates ranging from 4.05% to
4.55%. Interest is payable monthly and the advances were secured by certain
residential mortgage loans with book values of $234,667,000 and $424,958,000 at
December 31, 1994 and 1993, respectively.
The medium-term bank notes were direct, unsecured obligations of a
subsidary bank and were paid in full upon maturity in 1994.
Other promissory notes bear interest of approximately 7-9% and mature
as follows: $114,000 in 1995, $90,000 in 1996, $100,000 in 1997 and $105,000 in
1998.
<TABLE>
NOTE 9--INCOME TAXES
The Bancorp and its subsidiaries file a consolidated Federal income tax
return. A summary of applicable income taxes included in the Consolidated
Statements of Income:
<CAPTION>
- --------------------------------------------------------------------------------
($000's) 1994 1993 1992
================================================================================
<S> <C> <C> <C>
Current U.S. income taxes.......... $ 74,013 73,674 73,694
State and local income taxes....... 2,145 2,070 1,525
- --------------------------------------------------------------------------------
Total.............................. 76,158 75,744 75,219
- --------------------------------------------------------------------------------
Deferred U.S. income taxes
resulting from temporary
differences........................ 44,719 21,929 4,523
- --------------------------------------------------------------------------------
Applicable income taxes............ $120,877 97,673 79,742
================================================================================
</TABLE>
<TABLE>
Deferred income taxes are included in the caption Accrued Taxes,
Interest and Expenses in the Consolidated Balance Sheets and are comprised of
the following temporary differences at December 31:
<CAPTION>
- --------------------------------------------------------------------------------
($000's) 1994 1993
================================================================================
<S> <C> <C>
Lease financing............................. $159,770 111,402
Reserve for credit losses................... ( 54,113) ( 47,206)
Bank premises and equipment 8,241 ( 4,600)
Unrealized gains(losses) on
securities available for sale............ ( 25,967) 6,686
Other...................................... ( 2,430) ( 4,582)
- --------------------------------------------------------------------------------
Total net deferred tax liability........... $ 85,501 70,900
================================================================================
</TABLE>
<TABLE>
The effect on deferred taxes of the increase in statutory tax rates
during 1993 was $1,039,000. A reconciliation between the statutory U.S. income
tax rate and the Bancorp's effective tax rate:
<CAPTION>
- --------------------------------------------------------------------------------
1994 1993 1992
================================================================================
<S> <C> <C> <C>
Statutory tax rate.................. 35.0% 35.0 34.0
Increase (decrease) resulting from:
Tax-exempt interest.............. ( 2.5) ( 2.8) ( 2.9)
Other--net....................... .6 ( .1) .6
- --------------------------------------------------------------------------------
Effective tax rate.................. 33.1% 32.1 31.7
================================================================================
</TABLE>
As a result of The Cumberland aquisition, retained earnings at December
31, 1994 include approximately $24.3 million of cumulative statutory additions
to bad debt reserves, as permitted by provisions of the Internal Revenue Code,
for which no federal income taxes have been provided. Elimination of the thrift
charter aquired with The Cumberland would cause this amount to be included in
future taxable income.
<TABLE>
NOTE 10--OTHER SERVICE CHARGES AND FEES AND OTHER OPERATING EXPENSES
The major components for the years ended December 31:
<CAPTION>
- --------------------------------------------------------------------------------
($000's) 1994 1993 1992
================================================================================
<S> <C> <C> <C>
Other Service Charges and Fees:
Bank card operations.......... $ 13,003 10,742 11,040
Consumer loan fees............ 12,526 10,279 8,659
Commercial banking............ 13,249 11,271 10,929
Mortgage banking.............. 20,249 21,078 11,390
Other......................... 15,951 8,225 8,762
- --------------------------------------------------------------------------------
Total other service charges
and fees...................... $ 74,978 61,595 50,780
================================================================================
Other Operating Expenses:
Marketing and
communications.......... $ 25,001 23,513 21,267
FDIC insurance................ 20,669 19,203 18,253
Franchise taxes............... 13,460 11,305 10,751
Printing and supplies......... 11,720 11,487 9,494
Other......................... 77,290 79,672 69,088
- --------------------------------------------------------------------------------
Total other operating expenses.. $148,140 145,180 128,853
================================================================================
</TABLE>
20
<PAGE> 10
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11--STOCK OPTIONS
Options have been granted under the Bancorp's Stock Option Plans to key
employees and directors of the Bancorp and its subsidiaries. A summary of
option transactions during 1994, 1993 and 1992:
<CAPTION>
- ---------------------------------------------------------------------------
1994 1993 1992
--------------- ---------------- ----------------
AVERAGE Average Average
SHARES OPTION Shares Option Shares Option
(000'S) PRICE (000's) Price (000's) Price
===========================================================================
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning
of year....... 1,624 $37.15 1,369 $29.19 1,297 $22.15
Exercised....... ( 400) 18.34 ( 219) 20.60 ( 213) 19.45
Expired......... ( 80) 51.88 ( 34) 47.08 ( 18) 32.80
Granted......... 455 52.13 508 52.12 303 52.67
- ---------------------------------------------------------------------------
Outstanding,
end of year... 1,599 $45.37 1,624 $37.15 1,369) $29.19
===========================================================================
</TABLE>
At December 31, 1994, there were 1,092,604 incentive options and
506,352 nonqualified options outstanding. At December 31, 1994, options to
purchase 911,366 shares were exercisable and 572,200 shares were available for
granting additional options.
NOTE 12--RETIREMENT PLAN AND BENEFIT PLANS
The Bancorp maintains a noncontributory retirement plan covering
substantially all regular full-time employees and providing defined benefits
based on years of credited service and compensation level, partially offset by
social security benefits. Contributions to the plan are based on the entry age
actuarial cost method and are limited to amounts currently deductible for
income tax purposes.
In determining the actuarial present value of the projected benefit
obligation, the weighted average discount rate was 8.25% in 1994 and 7.25% in
1993, and the rate of increase in future compensation levels was 5.5% in both
years. The expected long-term rate of return on retirement plan assets was 9.0%
in 1994 and in 1993.
<TABLE>
A summary of the qualified plans funded status at December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993
=============================================================================
<S> <C> <C>
Vested benefit obligation.................... $11,899 19,716
Non-vested benefit obligation................ 1,706 1,323
- -----------------------------------------------------------------------------
Accumulated benefit obligation............... $13,605 21,039
=============================================================================
Plan assets at fair value, primarily
common trust and mutual funds managed
by The Fifth Third Bank, listed stocks
and U.S. bonds............................. $37,837 45,822
Projected benefit obligation for service
rendered to date........................... 18,018 25,157
- -----------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation.............................. 19,819 20,665
Unrecognized transition asset................ ( 1,642) ( 2,254)
Unrecognized reduction in prior service cost. ( 4,047) ( 4,377)
Unrecognized net gain........................ ( 1,299) ( 2,918)
- -----------------------------------------------------------------------------
Prepaid pension cost......................... $12,831 11,116
=============================================================================
</TABLE>
<TABLE>
A summary of the components of the provision for retirement cost for the
qualified plan for the years ended December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000 s) 1994 1993 1992
=============================================================================
<S> <C> <C> <C>
Service cost for current year..... $1,567 1,453 1,462
Interest cost..................... 1,976 1,928 1,971
Actual return on plan assets...... ( 527) ( 104) (2,548)
Amortization, primarily of initial
unrecognized asset and prior
service cost.................... ( 942) (1,004) (1,227)
Net loss -- deferred.............. (3,217) (4,284) (1,907)
- -----------------------------------------------------------------------------
Net retirement income............. $(1,143) (2,011) (2,249)
=============================================================================
</TABLE>
The Bancorp also sponsors a nonqualified, unfunded Supplemental
Retirement Income Plan (SERP) that provides certain officers with defined
pension benefits in excess of the limits imposed on the qualified plan by
federal tax law.
In determining the actuarial present value of the projected benefit
obligation, the weighted average discount rate was 8.25% in 1994 and 7.25% in
1993, and the rate of increase in future compensation levels was 7.5% in 1994
and 10% in 1993.
<TABLE>
A summary of the SERP's status at December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993
=============================================================================
<S> <C> <C>
Vested benefit obligation....................... $1,769 1,043
Non-vested benefit obligation................... 456 179
Accumulated benefit obligation.................. $2,225 1,222
=============================================================================
Projected benefit obligation for service
rendered to date.............................. $4,748 5,479
Unrecognized transition asset................... 90 104
Unrecognized increase in prior
service cost.................................. ( 832) ( 784)
Unrecognized net loss........................... ( 805) (3,027
- -----------------------------------------------------------------------------
Accrued pension cost............................ $3,201 1,772
=============================================================================
</TABLE>
<TABLE>
A summary of the components of the provision for SERP expense for the
years ended December 31:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993 1992
=============================================================================
<S> <C> <C> <C>
Service cost for current year....... $ 472 90 108
Interest cost....................... 566 163 109
Amortization, primarily of initial
unrecognized asset and prior
service cost...................... 62 91 85
Net gain -- deferred................ 392 89 33
- -----------------------------------------------------------------------------
Net SERP expense.................... $1,492 433 335
=============================================================================
</TABLE>
The Bancorp has a profit sharing plan covering substantially all
regular full-time employees. The contribution to the plan is an amount
determined annually by the Board of Directors and was $16,770,000 for 1994,
$15,400,000 for 1993 and $14,560,000 for 1992.
21
<PAGE> 11
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13--COMMITMENTS AND CONTINGENT LIABILITIES
The Bancorp, in the normal course of business, is a party to financial
instruments with off-balance-sheet risk to meet the financing needs of its
customers in Ohio, Kentucky, Indiana and Florida, and to minimize exposure to
fluctuations in interest and foreign exchange rates. These financial
instruments primarily include commitments to extend credit, standby and
commercial letters of credit, foreign exchange contracts, interest rate swaps
and commitments to sell residential mortgage loans. These instruments involve,
to varying degrees, elements of credit risk, counterparty risk and market risk
in excess of the amounts recognized in the Consolidated Balance Sheets. The
contract or notional amounts of these instruments reflect the extent of
involvement the Bancorp has in particular classes of financial instruments.
Creditworthiness for all instruments is evaluated on a case-by-case
basis in accordance with Bancorp credit policies. Collateral, if deemed
necessary, is based on management's credit evaluation of the counterparty and
may include business assets of commercial borrowers as well as personal
property and real estate of individual borrowers and guarantors.
<TABLE>
A summary of significant commitments at December 31:
<CAPTION>
Contract or Notional Amount
----------------------------
($000's) 1994 1993
===============================================================================
<S> <C> <C>
Commitments to extend credit ................... $4,162,788 3,476,585
Letters of credit (including
standby letters of credit) ................... 563,267 447,202
Interest rate swaps ............................ 30,000 40,000
Foreign exchange contracts:
Commitments to purchase ...................... 107,407 77,157
Commitments to sell .......................... 108,723 84,080
Commitments to sell residential
mortgage loans ............................... 7,532 106,000
===============================================================================
</TABLE>
Commitments to extend credit are agreements to lend. Commitments
generally have fixed expiration dates or other termination clauses that may
require payment of a fee. Since many of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Bancorp's exposure to credit risk in the event
of nonperformance by the other party is the contract amount. Fixed rate
commitments are subject to market risk resulting from fluctuations in interest
rates and the Bancorp's exposure is limited to the replacement value of those
commitments.
Standby and commercial letters of credit are conditional commitments
issued to guarantee the performance of a customer to a third party. At December
31, 1994, approximately $256,509,000 of standby letters of credit will expire
within one year, $232,041,000 expire between one to five years and $54,117,000
expire thereafter. At December 31, 1994, letters of credit of approximately
$20,600,000 are issued to commercial customers for a duration of one year or
less to facilitate trade payments in domestic and foreign transactions. The
amount of credit risk involved in issuing letters of credit in the event of
nonperformance by the other party is the contract amount.
Foreign exchange forward contracts are for future delivery or purchase
of foreign currency at a specified price. Risks arise from the possible
inability of counterparties to meet the terms of their contracts and from any
resultant exposure to movement in foreign exchange rates, limiting the
Bancorp's exposure to the replacement value of the contracts rather than the
notional principal or contract amounts. The Bancorp reduces its market risk
for foreign exchange contracts by entering into offsetting third party forward
contracts. The foreign exchange contracts outstanding at December 31, 1994
mature in one year or less.
The Bancorp enters into forward contracts for future delivery of
residential mortgage loans at a specified yield to reduce the interest rate
risk associated with fixed-rate residential mortgages held for sale and
commitments to fund residential mortgages. Credit risk arises from the
possible inability of the other parties to comply with the contract terms. The
majority of the Bancorp's contracts are with U.S. government-sponsored agencies
(FNMA, FHLMC).
At December 31, 1994, the Bancorp had two interest rate swaps acquired
with The Cumberland which have a total notional amount of $30,000,000. Both
agreements require the Bancorp to pay a fixed interest rate of 4.69% and
receive a variable rate based on the three-month London Interbank Offering Rate
(LIBOR). Both agreements expire in 1995. These agreements involve the risk of
dealing with counterparties and their ability to meet the terms of the
contracts.
There are claims pending against the Bancorp and its subsidiaries.
Based on a review of such litigation with legal counsel, management believes
that any resulting liability would not have a material effect upon the
Bancorp's consolidated financial position or results of operations.
<TABLE>
NOTE 14--ACQUISITIONS
<CAPTION>
- ----------------------------------------------------------------------------
CONSIDERATION
-------------
COMMON
DATE CASH SHARES METHOD OF
COMPLETED ($000'S) ISSUED ACCOUNTING
============================================================================
<S> <C> <C> <C> <C>
THE CUMBERLAND FEDERAL 08/26/94 $15 2,696,882 POOLING
BANCORPORATION, INC.
LOUISVILLE, KENTUCKY
THE NATIONAL BANCORP OF
KENTUCKY, INC. 06/03/94 --- 254,092 POOLING
CYNTHIANA, KENTUCKY
The TriState Bancorp 12/23/93 12 1,356,314 Pooling
Cincinnati, Ohio
First Federal Savings and 09/08/92 --- 49,096 Purchase
Loan Association of Lima
Lima, Ohio
Pinnacle Bancorp, Inc. 03/27/92 23 206,627 Purchase
Middletown, Ohio
============================================================================
</TABLE>
The Consolidated Financial Statements have not been restated to include
the acquisitions of The National Bancorp of Kentucky, Inc. and The TriState
Bancorp due to immaterality.
22
<PAGE> 12
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
The contribution of The Cumberland to consolidated net interest income,
other operating income and net income for the periods prior to the merger was
as follows:
<CAPTION>
- --------------------------------------------------------------------------------
($000's) 1994 1993 1992
================================================================================
<S> <C> <C> <C>
BANCORP
Net interest income.............. $497,794 436,389 394,194
Other operating income........... 246,348 226,578 200,053
Net income....................... 239,672 196,447 164,092
THE CUMBERLAND
Net interest income.............. 18,959 37,126 33,676
Other operating income........... 9,560 4,572 6,255
Net income....................... 4,787 9,788 7,929
================================================================================
</TABLE>
In May of 1994, the Bancorp entered into a merger agreement with Mutual
Federal Savings Bank of Miamisburg (Ohio), A Stock Savings Bank, with $85
million in assets. The merger is expected to be completed in early 1995 and
will be accounted for as a pooling of interests.
In December of 1994, the Bancorp entered into a merger agreement with
Falls Financial, Inc., a thrift holding company with $581 million in assets
head-quartered in Akron, Ohio. This transaction is expected to be completed in
the third quarter of 1995, will be accounted for as a pooling of interests and
is subject to approval by shareholders and appropriate regulatory agencies.
NOTE 15-REGULATORY MATTERS
The principal source of income and funds for the Bancorp (parent
company) are dividends from its subsidiaries. During the year 1995, the amount
of dividends that the subsidiaries can pay to the Bancorp without prior
approval of regulatory agencies is limited to their 1995 eligible net profits,
as defined, and $271,979,000, the adjusted retained 1994 and 1993 net income of
the subsidiaries.
The banks must maintain noninterest-bearing cash balances on reserve
with the Federal Reserve Bank. In 1994 and 1993, the banks were required to
maintain average reserve balances of $203,410,000 and $176,627,000,
respectively.
NOTE 16-RELATED PARTY TRANSACTIONS
At December 31, 1994 and 1993, certain directors, executive officers,
principal holders of Bancorp common stock and associates of such persons were
indebted to the banking subsidiaries in the aggregate amount of $153,262,000
and $172,016,000, respectively. During 1994, new loans aggregating $18,438,000
were made to such parties and loans aggregating $37,192,000 were repaid. Such
indebtedness was incurred in the ordinary course of business on substantially
the same terms as those prevailing at the time of comparable transactions with
unrelated parties.
<TABLE>
NOTE 17-FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts and estimated fair values for financial instruments as
of December 31:
<CAPTION>
- --------------------------------------------------------------------------
1994
---------------------------------
CARRYING FAIR
($000's) AMOUNT VALUE
==========================================================================
<S> <C> <C>
FINANCIAL ASSETS:
Cash and due from banks......... $ 695,009 695,009
Securities available for sale... 1,129,492 1,129,492
Securities held to maturity..... 2,507,543 2,410,536
Other short-term investments.... 23,765 23,765
Loans, net...................... 8,645,017 8,501,868
FINANCIAL LIABILITIES:
Deposits........................ 10,630,878 10,570,852
Federal funds borrowed.......... 716,312 716,312
Short-term bank notes........... 844,995 844,995
Other short-term borrowings..... 890,911 890,911
Long-term debt.................. 35,409 34,005
Convertible subordinated notes.. 143,304 137,622
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS:
Commitments to extend credit.... 805 5,723
Letters of credit............... 1,598 6,196
Interest rate swap agreements... --- 576
Forward contracts:
Commitments to sell loans..... --- 40
Foreign exchange contracts:
Commitments to purchase..... --- 2,583
Commitments to sell......... --- ( 2,531)
================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1993
------------------------------
CARRYING FAIR
($000's) AMOUNT VALUE
================================================================================
<S> <C> <C>
FINANCIAL ASSETS:
Cash and due from banks................... $ 594,892 594,892
Securities available for sale............. 898,074 898,074
Securities held to maturity............... 1,776,394 1,813,913
Other short-term investments.............. 4,603 4,603
Loans, net................................ 8,399,410 8,583,166
FINANCIAL LIABILITIES:
Deposits.................................. 9,477,306 9,538,236
Federal funds borrowed.................... 1,031,564 1,031,564
Other short-term borrowings............... 660,180 660,180
Long-term debt............................ 265,119 265,215
Convertible subordinated notes............ 142,745 142,399
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS:
Commitments to extend credit.............. 657 7,678
Letters of credit......................... 1,542 6,901
Interest rate swap agreements............. --- ( 490)
FORWARD CONTRACTS:
Commitments to sell loans................. --- 476
Foreign exchange contracts................ --- 169
================================================================================
</TABLE>
Fair values for financial instruments were based on various assumptions
and estimates as of a specific point in time, represent liquidation values and
may vary significantly from amounts that will be realized in actual
transactions. In addition, certain financial instruments and all non-financial
instruments were excluded from the fair value disclosure requirements.
Therefore, the fair values presented above should not be construed as the
underlying value of the Bancorp.
23
<PAGE> 13
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following methods and assumptions were used in determining the fair
value of selected financial instruments:
Short-term financial assets and liabilities--for financial instruments
with short or no stated maturity, prevailing market rates and limited credit
risk, carrying amounts approximate fair value. Those financial instruments
include cash and due from banks, other short-term investments, certain deposits
(demand, interest checking, savings and money market), Federal funds borrowed,
short-term bank notes and other short-term borrowings.
Securities, available for sale and held to maturity--fair values were
based on quoted market prices, dealer quotes and prices obtained from
independent pricing services.
Loans--fair values were estimated by discounting the future cash flows
using the current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
Deposits--fair values for other time, certificates of deposit--$100,000
and over and foreign office were estimated using a discounted cash flow
calculation that applies interest rates currently being offered for deposits of
similar remaining maturities.
Long-term debt and convertible subordinated notes--fair value of
convertible subordinated notes was based on quoted market prices. Fair value of
long-term debt was based on quoted market prices, when available, and a
discounted cash flow calculation using prevailing market rates for borrowings
of similar terms.
Commitments and letters of credit--fair values of loan commitments,
letters of credit and commitments to sell loans, representing assets to the
Bancorp, were based on fees currently charged to enter into similar agreements
with similar maturities.
Interest rate swap agreements--fair values were based on the amount the
Bancorp would receive or pay to terminate the swap agreements, taking into
account the current interest rates and the creditworthiness of the swap
counterparties. The fair values represent an asset at December 31, 1994 and a
liability at December 31, 1993.
Foreign exchange contracts--fair value was based on quoted market
prices of comparable instruments and represents an asset to the Bancorp.
<TABLE>
NOTE 18--PARENT COMPANY FINANCIAL STATEMENTS
The condensed financial statements of the Bancorp ($000's):
<CAPTION>
- -----------------------------------------------------------------------------
CONDENSED STATEMENTS OF INCOME (PARENT COMPANY ONLY)
For the Years Ended December 31 1994 1993 1992
=============================================================================
<S> <C> <C> <C>
INCOME
Dividends from Subsidiaries..... $ 79,855 67,360 143,405
Interest on Loans to
Subsidiaries.................. 16,075 15,890 6,508
Other......................... 119 107 1,673
- -----------------------------------------------------------------------------
TOTAL INCOME.................... 96,049 83,357 151,586
- -----------------------------------------------------------------------------
EXPENSES
Interest........................ 10,193 9,578 4,393
Other........................... 2,222 2,956 2,598
- -----------------------------------------------------------------------------
TOTAL EXPENSES.................. 12,415 12,534 6,991
- -----------------------------------------------------------------------------
INCOME BEFORE TAXES AND CHANGE
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES............... 83,634 70,823 144,595
Applicable Income Taxes......... 1,554 1,640 20
- -----------------------------------------------------------------------------
INCOME BEFORE CHANGE IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES.................. 82,080 69,183 144,575
Increase in Undistributed
Earnings of Subsidiaries...... 162,379 137,052 27,446
- -----------------------------------------------------------------------------
NET INCOME...................... $244,459 206,235 172,021
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY)
December 31 1994 1993
=============================================================================
<S> <C> <C>
ASSETS
Cash................................. $ 200 4,151
Securities Held to Maturity.......... --- 90
Loans to Subsidiaries................ 367,825 374,506
Investment in Subsidiaries........... 1,230,465 1,095,368
Dividends Receivable
from Subsidiaries.................. --- 6,818
Goodwill............................. 12,893 13,154
Other Assets......................... 2,830 2,496
- -----------------------------------------------------------------------------
TOTAL ASSETS......................... $1,614,213 1,496,583
=============================================================================
LIABILITIES
Other Short-Term Borrowings.......... $ 48,407 56,296
Accrued Expenses and
Other Liabilities.................. 23,728 19,882
Convertible Subordinated Notes....... 143,304 142,745
- -----------------------------------------------------------------------------
TOTAL LIABILITIES.................... 215,439 218,923
- -----------------------------------------------------------------------------
STOCKHOLDERS' EQUITY................. 1,398,774 1,277,660
- -----------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY............... $1,614,213 1,496,583
=============================================================================
</TABLE>
24
<PAGE> 14
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
- -----------------------------------------------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY)
For the Years Ended December 31 1994 1993 1992
=============================================================================
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income....................... $244,459 206,235 172,021
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Amortization................ 1,285 1,236 810
Provision for Deferred
Income Taxes.............. 44 ( 1,099) ( 171)
Securities Gains............ --- --- ( 25)
Securities Losses........... --- --- 123
Decrease (Increase) in
Dividends Receivable
from Subsidiaries......... 6,818 ( 6,324) 23,306
Decrease (Increase) in
Other Assets.............. ( 5,392) 399 ( 7,821)
Increase in Accrued
Expenses and
Other Liabilities......... 718 3,744 4,549
Increase in Undistributed
Earnings of Subsidiaries.. (162,379) (137,052) ( 27,446)
- -----------------------------------------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES........... 85,553 67,139 165,346
- -----------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from Maturities of
Securities Held to Maturity.... 90 475 ---
Proceeds from Sales of
Securities..................... --- --- 740
Proceeds from Maturities of
Securities..................... --- --- 450
Purchases of Securities.......... --- --- ( 700)
Decrease (Increase) in
Loans to Subsidiaries.......... 6,681 71,425 (242,051)
Capital Contributions to
Subsidiaries................... ( 22,801) ( 37,000) ( 22,401)
Purchases of Subsidiaries........ ( 15) ( 12) ( 23)
Proceeds from Liquidation of
Subsidiaries................... --- --- 3,018
- ----------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES........... ( 16,045) 34,888 (260,967)
- ----------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase (Decrease) in Other
Short-Term Borrowings.......... ( 7,889) ( 43,326) ( 1,921)
Repayment of
Long-Term Debt................. ( 2,402) ( 1,152) ---
Proceeds from Issuance of
Convertible Subordinated
Notes.......................... --- --- 142,207
Payment of Cash Dividends........ ( 73,425) ( 61,155) ( 52,643)
Shares Acquired for Treasury..... ( 178) ( 22) ( 491)
Fractional Shares Purchased
in Stock Split................. --- --- ( 106)
Exercise of Stock Options........ 10,307 4,754 4,238
Other............................ 128 269 33
- ----------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES........... ( 73,459) (100,632) 95,159
- ----------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH...... ( 3,951) 1,395 (462)
CASH AT BEGINNING OF YEAR........ 4,151 2,756 3,218
- ----------------------------------------------------------------------------
CASH AT END OF YEAR.............. $ 200 4,151 2,756
============================================================================
</TABLE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Fifth Third Bancorp:
We have audited the accompanying consolidated balance sheets of Fifth
Third Bancorp and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Companies' 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 the Companies at
December 31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the Consolidated Financial Statements, the
Bancorp changed its method of accounting for debt and equity securities
effective December 31, 1993.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
January 13, 1995
25
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The data presented in the following pages should be read in conjunction
with the audited Consolidated Financial Statements on pages 13 to 25 of this
report.
<TABLE>
RESULTS OF OPERATIONS
SUMMARY
Net income advanced in 1994 for the twenty-first consecutive year. The
Bancorp's net income to average assets, referred to as return on assets (ROA),
has gradually increased for the last five years as has return on average
stockholders' equity (ROE):
<CAPTION>
- ------------------------------------------------------------------------------
1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income ($000's)...............$244,459 206,235 172,021 142,954 121,026
Net income per share (a)..........$ 3.80 3.29 2.76 2.31 1.97
Return on assets.................. 1.77% 1.71 1.63 1.50 1.38
Return on equity.................. 18.6% 17.8 16.9 15.9 15.0
- ------------------------------------------------------------------------------
<FN>
(a) Per share amounts reflect the three-for-two stock splits effected in
the form of stock dividends paid April 15, 1992 and January 13, 1990.
</TABLE>
These measures in prior years were affected by The Cumberland's results
which were pooled with the Bancorp's for all periods presented. The Cumberland
experienced provisions and other losses related to commercial real estate
totalling nearly $40 million from 1990 to 1993. The Cumberland's ROA and ROE
ranged from .04% and 1.0%, respectively, in 1990 to .85% and 12.8%,
respectively, in 1993.
NET INTEREST INCOME
The largest source of the Bancorp's revenue is net interest income. Net
interest income is the spread between interest income on interest-earning
assets, such as loans and leases and securities, and the interest expense on
liabilities used to fund those assets, such as interest-bearing deposits and
borrowings. Net interest income is affected by both changes in the level of
interest rates and changes in the amount and composition of interest-earning
assets and interest-bearing liabilities. Changes in net interest income are
frequently measured by two statistics--net interest margin and net interest rate
spread. Net interest margin is expressed as net interest income divided by
average interest-earning assets. Net interest rate spread is the difference
between the average yield earned on interest-
<TABLE>
TABLE 1.--CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST
INCOME
For the Years Ended December 31 (Taxable Equivalent Basis)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1994 1993
----------------------------- --------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
OUT- REVENUE/ YIELD/ OUT- REVENUE/ YIELD/
($000's) STANDING COST RATE STANDING COST RATE
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-Earning Assets
Loans and Leases..................$ 9,902,901 $751,974 7.59% $ 8,869,432 $679,792 7.66%
Securities
Taxable.......................... 2,741,490 169,316 6.18 2,098,650 134,387 6.40
Exempt from Income Taxes......... 359,830 24,568 6.83 267,247 18,797 7.03
Other Short-Term Investments...... 23,988 1,019 4.25 10,426 319 3.06
- ----------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets....... 13,028,209 946,877 7.27 11,245,755 833,295 7.41
- ----------------------------------------------------------------------------------------------------------------
Cash and Due from Banks............. 526,007 494,141
Other Assets........................ 428,266 435,966
Reserve for Credit Losses...........( 153,141) ( 134,808)
- ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS........................$13,829,341 $12,041,054
================================================================================================================
Liabilities
Interest-Bearing Liabilities
Interest Checking.................$ 1,512,670 25,572 1.69 $ 1,326,759 28,295 2.13
Savings........................... 698,756 14,511 2.08 656,868 16,298 2.48
Money Market...................... 1,582,863 40,326 2.55 1,493,802 37,465 2.51
Other Time Deposits............... 3,923,418 194,375 4.95 3,531,301 173,764 4.92
Certificates-$100,000 and Over.... 336,521 13,135 3.90 441,882 15,622 3.54
Foreign Office Deposits........... 529,434 24,165 4.56 242,245 8,030 3.31
Federal Funds Borrowed............ 848,217 34,925 4.12 622,068 18,963 3.05
Short-Term Bank Notes............. 429,642 20,285 4.72 --- --- ---
Other Short-Term Borrowings....... 689,960 25,818 3.74 743,002 24,326 3.27
Long-Term Debt and Convertible
Subordinated Notes.............. 249,612 12,436 4.98 343,617 16,636 4.84
- ----------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities.. 10,801,093 405,548 3.75 9,401,544 339,399 3.61
- ----------------------------------------------------------------------------------------------------------------
Demand Deposits..................... 1,414,048 1,268,371
Other Liabilities................... 299,859 213,727
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities................... 12,515,000 10,883,642
- ----------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY................ 1,314,341 1,157,412
- ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................$13,829,341 $12,041,054
================================================================================================================
NET INTEREST INCOME
MARGIN ON A TAXABLE EQUIVALENT
BASIS............................. $541,329 4.16% $493,896 4.39%
================================================================================================================
NET INTEREST RATE SPREAD............ 3.52% 3.80%
================================================================================================================
INTEREST-BEARING LIABILITIES
TO INTEREST-EARNING ASSETS........ 82.91% 83.60%
================================================================================================================
</TABLE>
26
<PAGE> 16
MANAGEMENT'S DISCUSSION OF ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
earning assets and the average rate incurred on interest-bearing liabilities.
Both of these measures are reported on a taxable equivalent basis. Net interest
margin is greater than net interest rate spread due to the interest income
earned on interest-earning assets funded by non-interest-bearing sources, or
free funding sources, primarily demand deposits and stockholders' equity.
Table 1. Consolidated Average Balance Sheets and Analysis of Net Interest
Income, presents the net interest income, net interest margin and net interest
rate spread for the five years 1990 through 1994, comparing interest revenue
and average interest-earning assets outstanding with interest cost and average
interest-bearing liabilities outstanding. All three of these measures are
reported on a taxable equivalent basis. Nonaccrual loans and leases have been
included in the average loan and lease balances. Average outstanding
securities balances were based on amortized cost excluding unrealized gains or
losses on securities available for sale.
The Bancorp's net interest income grew to $541.3 million in 1994, an increase
of 9.6% over the $493.9 million earned during 1993. Net interest income grew by
$48.9 million or 11.0% in 1993 over 1992. For 1994, the increase was primarily
attributable to the increase in average interest-earning assets and continued
growth in lower cost retail deposits, offset by lower net interest margins.
During 1994, average interest-earning assets grew $1.8 billion to $13.0
billion, up 15.9% over 1993. Average loans and leases were up $1.0 billion or
11.7% over 1993 and represented 76.0% of total average interest-earning assets
as compared to 78.9% for 1993. This shift in earning-asset growth from loans
and leases to securities was in part attributable to securitizations and sales
of fixed-rate residential mortgage loans to improve liquidity and manage
interest rate risk in a rising rate environment. Average interest-earning
asset growth in 1993 consisted of a $1.7 billion or 23.4% increase in average
loans and leases offset by a $229.0 million or 8.8% decrease in average
securities and other short-term investments.
Average interest-bearing liabilities grew $1.4 billion to $10.8 billion in
1994, up 14.9% over 1993, including higher average retail deposit growth, up
$709.0 million or 10.1% over 1993. Retail, or core, deposits, which exclude
certificates-$100,000 and over and foreign office deposits, remain our most
important funding source because they are relatively lower cost and form the
basis for an ongoing
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1992 1991
----------------------------- --------------------------------
AVERAGE AVERAGE Average Average
OUT- REVENUE/ YIELD/ Out- Revenue/ Yield/
($000's) STANDING COST RATE standing Cost Rate
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-Earning Assets
Loans and Leases..................$ 7,189,975 $619,626 8.62% $ 6,246,679 $631,283 10.11%
Securities
Taxable.......................... 2,289,817 165,160 7.21 2,159,002 183,401 8.49
Exempt from Income Taxes......... 203,418 15,801 7.77 214,914 18,216 8.48
Other Short-Term Investments...... 112,052 3,806 3.40 262,844 15,851 6.03
- ----------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets....... 9,795,262 804,393 8.21 8,883,439 848,751 9.55
- ----------------------------------------------------------------------------------------------------------------
Cash and Due from Banks............. 440,908 378,185
Other Assets........................ 439,332 368,909
Reserve for Credit Losses........... (109,908) (96.334)
- ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS........................$10,565.594 $9,534,199
================================================================================================================
Liabilities
Interest-Bearing Liabilities
Interest Checking.................$ 1,097,918 28,322 2.58 $ 830,723 33,886 4.08
Savings........................... 539,997 17,183 3.18 438,708 20,196 4.60
Money Market...................... 1,440,309 45,635 3.17 1,277,134 63,811 5.00
Other Time Deposits............... 3,275,879 190,086 5.80 3,087,476 227,154 7.36
Certificates-$100,000 and Over.... 490,293 23,456 4.78 876,369 57,021 6.51
Foreign Office Deposits........... 48,200 1,714 3.56 13,079 756 5.78
Federal Funds Borrowed............ 529,201 17,316 3.27 298,923 16,760 5.61
Short-Term Bank Notes............. --- --- --- --- --- ---
Other Short-Term Borrowings....... 700,463 29,420 4.20 614,685 37,274 6.06
Long-Term Debt and Convertible
Subordinated Notes.............. 127,639 6,238 4.89 109,205 9,523 8.72
- ----------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities.. 8,249,899 359,370 4.36 7,546,302 466,381 6.18
- ----------------------------------------------------------------------------------------------------------------
Demand Deposits..................... 1,070,387 892,906
Other Liabilities................... 299,029 197,046
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities................... 9,549,315 8,636,254
- ----------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY................ 1,016,279 897,945
- ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................$10,565,594 $9,534,199
================================================================================================================
NET INTEREST INCOME
MARGIN ON A TAXABLE EQUIVALENT
BASIS............................. $445,023 4.54% $382.370 4.30%
================================================================================================================
NET INTEREST RATE SPREAD............ 3.85% 3.37%
================================================================================================================
INTEREST-BEARING LIABILITIES
TO INTEREST-EARNING ASSETS........ 84.22% 84.95%
================================================================================================================
<CAPTION>
- -------------------------------------------------------------------
1990
-----------------------------
AVERAGE AVERAGE
OUT- REVENUE/ YIELD/
($000's) STANDING COST RATE
===================================================================
<S> <C> <C> <C>
ASSETS
Interest-Earning Assets
Loans and Leases..................$ 5,920,686 $650,490 10.99%
Securities
Taxable.......................... 1,683,470 148,945 8.85
Exempt from Income Taxes......... 161,943 15,610 9.64
Other Short-Term Investments...... 330,723 27,274 8.25
- -------------------------------------------------------------------
Total Interest-Earning Assets....... 8,096,822 842,319 10.40
- -------------------------------------------------------------------
Cash and Due from Banks............. 389,521
Other Assets........................ 361,659
Reserve for Credit Losses........... (88,227)
- -------------------------------------------------------------------
TOTAL ASSETS........................$ 8,759,775
===================================================================
Liabilities
Interest-Bearing Liabilities
Interest Checking.................$ 719,378 33,370 4.64
Savings........................... 451,571 22,804 5.05
Money Market...................... 1,183,786 75,142 6.35
Other Time Deposits............... 2,851,996 233,255 8.18
Certificates-$100,000 and Over.... 935,769 75,921 8.11
Foreign Office Deposits........... 2,313 187 8.08
Federal Funds Borrowed............ 166,788 13,323 7.99
Short-Term Bank Notes............. --- --- ---
Other Short-Term Borrowings....... 489,154 38,675 7.91
Long-Term Debt and Convertible
Subordinated Notes.............. 132,327 12,273 9.27
- -------------------------------------------------------------------
Total Interest-Bearing Liabilities.. 6,933,082 504,950 7.28
- -------------------------------------------------------------------
Demand Deposits..................... 826,426
Other Liabilities................... 193,771
- -------------------------------------------------------------------
Total Liabilities................... 7,953,279
- -------------------------------------------------------------------
STOCKHOLDERS' EQUITY................ 806,496
- -------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................$ 8,759,775
===================================================================
NET INTEREST INCOME
MARGIN ON A TAXABLE EQUIVALENT
BASIS............................. $337,369 4.17%
===================================================================
NET INTEREST RATE SPREAD............ 3.12%
===================================================================
INTEREST-BEARING LIABILITIES
TO INTEREST-EARNING ASSETS........ 85.63%
===================================================================
</TABLE>
27
<PAGE> 17
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<CAPTION>
TABLE 2.-ANALYSIS OF NET INTEREST INCOME CHANGES (TAXABLE EQUIVALENT BASIS)
1994 COMPARED TO 1993 1993 COMPARED TO 1992
------------------------------------------------ -----------------------------------------------
($000'S) VOLUME YIELD/RATE MIX TOTAL VOLUME YIELD/RATE MIX TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Interest Income
Loans and Leases....... $ 79,210 $( 6,294) $( 734) $ 72,182 $ 144,734 $(68,555) $(16,013) $ 60,166
Securitie
Taxable .............. 41,164 ( 4,773) ( 1,462) 34,929 ( 13,789) (18,532) 1,548 (30,773)
Exempt from Income
Taxes................ 6,512 ( 550) ( 191) 5,771 4,958 ( 1,493) ( 469) 2,996
Other Short-Term
Investments........... 415 124 161 700 ( 3,452) ( 378) 343 ( 3,487)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME
CHANGE................... 127,301 (11,493) ( 2,226) 113,582 132,451 (88,958) (14,591) 28,902
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in
Interest Expense
Interest Checking...... 3,965 ( 5,866) ( 822) ( 2,723) 5,903 ( 4,907) ( 1,023) ( 27)
Savings................ 1,039 ( 2,657) ( 169) ( 1,787) 3,719 ( 3,785) ( 819) ( 885)
Money Market........... 2,234 592 35 2,861 1,695 ( 9,512) ( 353) ( 8,170)
Other Time Deposits.... 19,295 1,185 131 20,611 14,821 (28,890) ( 2,253) (16,322)
Certificates-$100,000
and Over.............. ( 3,725) 1,625 ( 387) ( 2,487) ( 2,316) ( 6,123) 605 ( 7,834)
Foreign Office
Deposits.............. 9,520 3,027 3,588 16,135 6,900 ( 116) ( 468) 6,316
Federal Funds
Borrowed.............. 6,894 6,650 2,418 15,962 3,039 ( 1,184) ( 208) 1,647
Short-Term Bank Notes.. -- -- 20,285 20,285 -- -- -- --
Other Short-Term
Borrowings............ ( 1,737) 3,477 ( 248) 1,492 1,787 ( 6,487) ( 394 ( 5,094)
Long-Term Debt and
Convertible
Subordinated Notes.... ( 4,551) 483 ( 132) ( 4,200) 10,555 ( 58) ( 99) 10,398
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE
CHANGE................... 32,934 8,516 24,699 66,149 46,103 (61,062) ( 5,012) (19,971)
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
INTEREST INCOME ON A
TAXABLE EQUIVALENT BASIS. $ 94,367 $(20,009) $(26,925) 47,433 $ 86,348 $(27,896) $( 9,579) 48,873
==================================================================================================================================
INCREASE IN TAXABLE
EQUIVALENT ADJUSTMENT.... ( 4,195) ( 3,228)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME
CHANGE................... $ 43,238 $ 45,645
==================================================================================================================================
</TABLE>
customer relationship. Slower growth rates for core deposits in 1994 reflect the
difficulty of attracting these deposits in a low interest rate environment.
The low overall level of interest rates during most of 1993 and 1994 caused
interest-earning asset yields to fall to historical lows. The net interest
margin declined to 4.16% in 1994, down 23 basis points (bp) (a basis point is
equivalent to .01%) from 4.39% in 1993 and down 38 bp from 1992's 4.54%.
Although free funding sources have increased, their positive impact on the net
interest margin declined from 105 bp in 1990 to 64 bp in 1994 due to the lower
interest-earning asset yields. Rising rates will increase the positive impact
of free funds. The acquisitions of several thrifts in recent years, which have
lower interest rate spreads and margins due to asset mix and less free funding
sources, have also contributed to the tightening of net interest margins. And,
dramatic increases in short-term interest rates in 1994 caused short-term
liabilities to reprice upward faster than term assets.
Table 2, the Analysis of Net Interest Income Changes, separates the Bancorp's
change in net interest income into its three components: (1) volume of average
interest-earning assets and interest-bearing liabilities outstanding; (2)
average yields on interest-earning assets and average rates for
interest-bearing liabilities; and (3) combined volume and yield/rate effects.
Table 2 shows the income impact of balance sheet changes and changes in
interest rate levels which occurred during 1994 and 1993. The increase in net
interest income during both years was due primarily to the increase in average
interest-earning assets.
OTHER OPERATING INCOME
The table below shows the components of other operating income for the five
years ending December 31, 1994. Total other operating income excluding
securities gains and losses increased 13.5% over 1993 and was up 14.1% in 1993
over 1992.
Trust income totalled $55,238,000 in 1994, an increase of 3.4% over 1993's
$53,442,000. During 1993, trust income increased 8.7% over 1992. Both
increases can be attributed to growth in trust assets, pricing enhancements and
sales of new products. The growth rate was lower in 1994 due to the overall
poor performance of equity markets, the basis for much of our trust fees.
Service charges on deposits totalled $60,905,000 in 1994 and $57,212,000 in
1993, up 6.5% and 11.0% over 1993 and 1992, respectively. Contributing to
these increases were the growth in number of customer accounts, due in part to
deposit purchases and acquisitions, as well as increased fee schedules. The
slower growth in service charges on deposits in 1994 versus 1993 was caused
primarily by slower growth in average demand deposits, up 11.5% over 1993 after
increasing 18.5% in 1993 over 1992. These non-
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
($000's) 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust income......................... $ 55,238 53,442 49,183 42,412 35,930
Service charges on deposits.......... 60,905 57,212 51,525 43,223 36,141
Data processing income............... 64,394 52,823 45,842 40,601 34,830
Other service charges and fees....... 74,978 61,595 50,780 54,498 34,641
- ---------------------------------------------------------------------------------------------------------
Subtotal............................. 255,515 225,072 197,330 180,734 141,542
- ---------------------------------------------------------------------------------------------------------
Securities gains (losses)............ 393 6,078 8,978 8,268 ( 52)
- ---------------------------------------------------------------------------------------------------------
Total................................ $255,908 231,150 206,308 189,002 141,490
- ---------------------------------------------------------------------------------------------------------
After-tax securities gains (losses).. $ 255 3,658 6,009 5,450 ( 117)
=========================================================================================================
</TABLE>
28
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
interest-bearing deposits represent a significant source of service charges and
commercial analysis fees.
Data processing income in 1994 totalled $64,394,000, an increase of
21.9% over 1993's $52,823,000. The past two years' increases of over 15% have
been due primarily to increased merchant processing customers and volumes, with
1,075 new customers added in 1994 and related merchant processing volumes up
75%.
Other service charges and fees in 1994 were $74,978,000, an increase of
21.7% over 1993. Consumer loan and commercial banking fees were up a combined
19.6% over 1993, consistent with the increase in loan balances. Bank card
operations fees were up 21.0%, reflecting the increase in credit card balances
during 1994. Mortgage banking fee income decreased 3.9% over 1993, reflecting a
slow down in origination volume and loan sales. Mortgage loan servicing fees
were up 18.8%, while gains on sales of mortgage loans declined 12.0%. At
December 31, 1994, the Bancorp was servicing $4.4 billion in residential
mortgage loans including $2.1 billion serviced for others.
Other service charges and fees in 1993 totalled $61,595,000, an increase
of $10,815,000 or 21.3% over 1992. Included in this increase is mortgage banking
fee income, increasing $9,688,000 or 85.1%.
OPERATING EXPENSES
The Bancorp's profitability levels have been achieved in large part due
to successful control over expense growth. Contributing factors include
efficient staffing, a comprehensive budgeting process and centralization of
various internal functions such as data processing and loan operations.
One measure of this success is the overhead ratio (operating expenses
divided by the sum of taxable equivalent net interest income and other operating
income). This ratio, at 46.6% for 1994, has remained at or under 52% over the
last five years, well below our peers.
The increase in total operating expenses over the last five years has
slowed to a 5.3% increase in 1994 in comparison to 1993's 11.5% increase and
1992's 11.8% increase over prior years. Cost-savings ideas, in large part
submitted by our employees, have concentrated on back-office functions, data
processing and productivity, without hindering our growth or customer service.
The table below shows the dollar amounts and the components of operating
expenses for the last five years.
Salaries, wages and employee benefits, which comprised 48.8% and 47.1%
of total operating expenses in 1994 and 1993, respectively, increased 9.1% in
1994 and 11.0% in 1993 over the previous year. The net addition of 243
full-time equivalent (FTE) employees, along with employee-related costs
associated with The Cumberland merger, contributed to 1994's increase. The
Bancorp's productivity ratios (average interest-earning assets and net income
per FTE employee), which measure the degree of efficiency of our employees,
have shown continued improvement since 1989. Average interest-earning assets
per employee has increased 35% since 1989, while net income per employee has
increased 66%.
Equipment and net occupancy expenses increased 1.7% in 1994 and 9.6% in
1993. Increased rental property costs, utilities, real estate taxes and
depreciation, due in part to the expanded number of locations, contributed to
the higher expenditures.
Other operating expenses of $148,140,000 in 1994 were up 2.0% over
1993. While FDIC insurance was up 7.6% and marketing and communications were up
6.3%, all other operating expenses showed little change from 1993. Other real
estate owned expenses were $549,000 in 1994, $1,041,000 in 1993 and $2,183,000
in 1992.
Other operating expenses of $145,180,000 in 1993 increased 12.7% over
1992. Contributing to the increase were marketing and communications expenses,
up $2,246,000 or 10.6% and FDIC insurance, up $950,000 or 5.2%.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
($000's) 1994 1993 1992 1991 1990
================================================================================================================
<S> <C> <C> <C> <C> <C>
Salaries and wages ............................ $144,513 129,644 117,717 104,760 97,449
Employee benefits ............................. 36,710 36,436 31,927 27,975 24,483
Equipment expenses ............................ 16,045 15,446 14,548 13,398 13,870
Net occupancy expenses ........................ 26,137 26,014 23,270 21,100 17,500
Other operating expenses ...................... 148,140 145,180 128,853 115,611 93,286
- ----------------------------------------------------------------------------------------------------------------
Total ......................................... $371,545 352,720 316,315 282,844 246,588
================================================================================================================
</TABLE>
<TABLE>
Following are tables representing three bar graphs which appear across the
bottom of page 29.
<CAPTION>
OTHER OPERATING INCOME ($ IN MILLIONS)
Five Year Growth Rate: 14.6% 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Other Operating Income $129.6 $141.5 $189.0 $206.3 $231.2 $255.9
</TABLE>
<TABLE>
<Caption
GROWTH IN NET INCOME PER EMPLOYEE
1989 Base Year = 100 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Growth in net income per employee 100 104 119 131 146 166
</TABLE>
<TABLE>
OVERHEAD RATIO 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Fifth Third 50.8 51.5 49.5 48.6 48.7 46.6
Peer 64.1 66.1 63.9 62.6 62.0 62.4
</TABLE>
29
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
SECURITIES
The investment portfolio is comprised largely of fixed and floating
rate mortgage related securities, predominantly underwritten to the standards
of and guaranteed by the government-sponsored agencies of FHLMC and FNMA. These
securites differ primarily from traditional debt securites in that they have
uncertain maturity dates and are priced based on estimated prepayment rates on
the underlying mortgages. The estimated average life of the portfolio is 3.5
years based on current prepayment expectations.
The Bancorp securitized $341,199,000 and $291,586,000 fixed and
adjustable rate residential mortgages in 1994 and 1993, respectively. These
securitizations improve liquidity, reduce the reserve for credit losses and
increase risk-based capital ratios. This activity is expected to continue in
1995.
<TABLE>
SECURITIES AT DECEMBER 31
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
($000'S) 1994 1993 1992 1991 1990
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Securities Available for Sale:
U.S. Treasury.................................. $ 210,599 63,183 - - -
- ------------------------------------------------------------------------------------------------------------------------
U.S. Govenment agencies and corporations....... 18,458 136,303 - - -
- ------------------------------------------------------------------------------------------------------------------------
Agency mortgage-backed securities.............. 895,931 595,133 - - -
- ------------------------------------------------------------------------------------------------------------------------
Other bonds, notes and debentures.............. - 96,369 - - -
- ------------------------------------------------------------------------------------------------------------------------
Other securities............................... 4,504 7,086 - - -
- ------------------------------------------------------------------------------------------------------------------------
Securities Held to Maturity:
U.S. Treasury.................................. 98,742 - 111,268 295,404 536,307
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government agencies and corporation....... - 13,189 179,849 282,195 259,499
- ------------------------------------------------------------------------------------------------------------------------
States and political subdivisions.............. 463,759 327,636 222,015 207,049 187,921
- ------------------------------------------------------------------------------------------------------------------------
Agency mortgage-backed securities.............. 1,750,549 1,249,465 1,689,391 1,701,155 824,781
- ------------------------------------------------------------------------------------------------------------------------
Other bonds, notes and debentures.............. 160,394 166,954 196,259 121,246 172,939
- ------------------------------------------------------------------------------------------------------------------------
Other securities............................... 34,099 19,150 20,639 18,919 20,636
========================================================================================================================
</TABLE>
<TABLE>
SECURITIES AT DECEMBER 31, 1994
<CAPTION>
Maturity 1-5 Year 6-10 Year Over 10
Under 1 Year Maturity Maturity Year Maturity Total
------------ ------------ ------------ ------------- ------------
($000's) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities Available for Sale:
U.S. Treasury............ $ 8,475 5.39% $202,124 7.21% $ - -% $ - -% $210,599 7.14%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Government agencies
and corporations....... - - 18,392 5.25 - - 66 5.25 18,458 5.25
- -------------------------------------------------------------------------------------------------------------------------------
Agency mortgage-
backed securities (a).. 36,809 8.35% 398,441 6.08 453,105 6.19 7,576 6.18 895,931 6.23
- -------------------------------------------------------------------------------------------------------------------------------
Securities Held to Maturity:
U.S. Treasury............ - - 98,742 7.75 - - - - 98,742 7.75
- -------------------------------------------------------------------------------------------------------------------------------
States and political
subdivisions (b)....... 133,358 6.16 206,997 7.45 108,829 7.52 14,575 7.82 463,759 7.11
- -------------------------------------------------------------------------------------------------------------------------------
Agency mortgage-backed
securities (c)......... 126,120 6.34 1,616,162 6.02 3,635 5.50 4,632 6.10 1,750,549 6.04
- -------------------------------------------------------------------------------------------------------------------------------
Other bonds, notes and
debentures............. 63,471 6.87 96,136 6.69 635 6.96 152 6.96 160,394 6.76
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
Maturities of mortgage-backed securities were estimated based on historical and predicted prepayment trends.
(a) included in agency mortgage-backed securities available for sale are floating rate investments totalling $44,071,000.
(b) taxable equivalent yield
(c) included in agency mortgage-backed securities held to maturity are floating rate investments totalling $735,192,000.
</TABLE>
30
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
LOANS AND LEASES
The following table shows the history of commercial and consumer loans
and leases by major category at December 31.
LOAN AND LEASE PORTFOLIOS
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
($ in millions) Amount % Amount % Amount % Amount % Amount %
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial.......... $ 3,032 29.5% $2,680 28.0% $2,481 30.5% $2,202 34.8% $2,264 36.7%
Mortgage............ 729 7.1 703 7.3 567 7.0 498 7.9 459 7.5
Construction........ 286 2.8 342 3.6 331 4.1 306 4.8 289 4.7
Leases.............. 479 4.6 302 3.2 236 2.9 201 3.2 192 3.1
- ----------------------------------------------------------------------------------------------------------------------------------
4,526 44.0 4,027 42.1 3,615 44.5 3,207 50.7 3,204 52.0
- ----------------------------------------------------------------------------------------------------------------------------------
Consumer:
Installment.......... 2,131 20.7 1,881 19.7 1,531 18.9 1,304 20.6 1,265 20.5
Mortgage............. 2,347 22.8 2,731 28.5 2,397 29.5 1,421 22.5 1,318 21.4
Credit Card.......... 275 2.7 207 2.2 178 2.2 197 3.1 216 3.5
Leases............... 1,007 9.8 721 7.5 395 4.9 197 3.1 163 2.6
- ----------------------------------------------------------------------------------------------------------------------------------
5,760 56.0 5,540 57.9 4,501 55.5 3,119 49.3 2,962 48.0
- ----------------------------------------------------------------------------------------------------------------------------------
Total.................. $10,286 100.0% $9,567 100.0% $8,116 100.0% $6,326 100.0% $6,166 100.0%
==================================================================================================================================
</TABLE>
The consumer loan and lease portfolio's most significant growth during
1994 and 1993 was in consumer leases and installment loans. Leasing continued
its popularity as an alternative financing tool for new automobiles, reaching
record outstandings of $1.0 billion at year-end 1994, after increasing over 83%
in 1993. Installment loans remained at approximately 20% of the total loan and
lease portfolio over the last five years, aided by the strength of automobile
and home equity loans. Residential mortgage loan volume in 1994 declined from
1993's historical highs because of less favorable interest rate movements and a
slow down in refinancing volume. However, originations still exceeded $1
billion during 1994.
Commercial loan and lease outstandings were up 12.4% in 1994 and 11.4%
in 1993. Commercial leasing was a noteworthy contributor, with increases of
58.6% and 28.0%, respectively, consisting largely of credits within our market
areas of Ohio, Kentucky and Indiana. Commercial mortgages represent
approximately 7% of our total loan and lease portfolio and include primarily
financing of owner-occupied properties-loans on properties occupied by the
principal borrower.
PROVISION AND RESERVE FOR CREDIT LOSSES
The Bancorp provides as an expense an amount which reflects expected
credit losses. This provision is based on the growth of the loan and lease
portfolio and on recent loss experience and is called the provision for credit
losses in the Consolidated Statements of Income. Actual losses on loans and
leases are charged against the reserve built up on the Consolidated Balance
Sheets through the provision for credit losses. The amount of loans and leases
actually removed as assets from the Consolidated Balance Sheets is referred to
as charge-offs and, after netting out recoveries on previously charged off
assets, becomes net charge-offs.
Net charge-offs are at their lowest level in five years, at .18% of
average loans and leases outstanding, contributing to a lower provision. During
1994 and 1993, $3.8 million and $1.7 million, respectively, was provided for
additional expected losses on letter of credit (LOC) obligations acquired in The
Cumberland acquisition. In the fourth quarter of 1994, the Bancorp entered into
a contract to settle these LOCs, decreasing the reserve for credit losses by
$7.8 million.
The table below presents credit loss data for the most recent five year
period.
<TABLE>
<CAPTION>
Reserve For Credit Losses Five Year History
- ----------------------------------------------------------------------------------------------------------------------------------
($000's) 1994 1993 1992 1991 1990
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance at January 1.............................. $144,537 121,452 97,319 90,242 85,664
Provision for credit losses....................... 35,780 48,037 66,100 62,464 43,479
Losses charged off................................ ( 30,946) ( 37,172) ( 54,718) ( 63,403) ( 47,003)
Recoveries of losses previously charged off 13,472 10,098 8,953 7,718 8,102
Letter of credit contract......................... ( 7,800) -- -- -- --
Reserve of acquired banks......................... 875 2,122 3,798 298 --
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31............................ $155,918 144,537 121,452 97,319 90,242
==================================================================================================================================
Loans and leases outstanding at December 31....... $10,286,457 $9,566,898 $8,115,590 $6,325,918 $6,165,808
Reserve as a percent of loans and leases outstanding 1.52% 1.51% 1.50% 1.54% 1.46%
Average loans and leases.......................... $ 9,902,901 $8,869,432 $7,189,975 $6,246,679 $5,920,686
Net charge-offs as a percent of average loans and
leases outstanding............................. .18% .31% .64% .89% .66%
Reserve as a percent of total nonperforming assets 570.50% 362.84% 155.53% 68.01% 64.03%
Reserve as a percent of total under-performing assets 384.35% 287.47% 121.58% 56.98% 53.47%
==================================================================================================================================
</TABLE>
31
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) nonaccrual loans and leases on
which the ultimate collectibility of the full amount of interest is uncertain,
(2) loans and leases which have been renegotiated to provide for a reduction or
deferral of interest or principal because of a deterioration in the financial
position of the borrower, (3) loans and leases past due ninety days or more as
to principal or interest and (4) other real estate owned. A summary of
under-performing assets at December 31 follows:
<CAPTION>
- -----------------------------------------------------------------------------
($000's) 1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans and leases............ $20,725 18,961 32,772
Renegotiated loans and leases.......... 443 2,378 3,693
Other real estate owned................ 6,162 18,496 41,622
- -----------------------------------------------------------------------------
Total nonperforming assets............. 27,330 39,835 78,087
Ninety days past due loans and leases.. 13,237 10,444 21,804
=============================================================================
Total under-performing assets $40,567 50,279 99,891
=============================================================================
Nonperforming assets as a percent
of total loans, leases and other
real estate owned................... .27% .42 .96
Under-performing assets as a
percent of total loans, leases
and other real estate owned......... .39% .52 1.22
=============================================================================
</TABLE>
Of the total under-performing assets at December 31, 1994, $24,190,000
are to borrowers or projects in the Cincinnati-Dayton market area, $2,734,000
in the Toledo market area, $2,847,000 in Columbus, $2,641,000 in the
Louisville market area, $5,048,000 distributed in the market areas of our
smaller affiliate banks and $3,107,000 outside of the Ohio-Kentucky-Indiana
area. Of the total nonperforming assets at December 31, 1994, $17,031,000 or
62.3% were related to commercial real estate. Nonaccrual commercial real estate
loans and leases were $11,640,000, an increase of 29.3% from 1993's $9,000,000.
At December 31, 1994, there were no renegotiated commercial real estate loans
and leases compared to $2,001,000 in 1993. Commercial other real estate owned
decreased from $17,492,000 in 1993 to $5,391,000 in 1994, a decline of 69.2%.
DEPOSITS
Interest-earning assets are funded primarily by core deposits. The
accompanying tables show the relative composition of the Bancorp's average
deposits and the change in average deposit sources during the last five years.
Other time deposits is comprised primarily of consumer certificates of deposit.
The Bancorp completed $584,983,000 in deposit acquisitions during the
last two years ($294,126,000 from Equitable Savings Bank in 1994 and
$290,857,000 from Savings of America, First National Bank of Dayton and World
Savings and Loan Association in 1993).
<TABLE>
DISTRIBUTION OF AVERAGE DEPOSITS
<CAPTION>
- --------------------------------------------------------------------------
1994 1993 1992 1991 1990
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Demand................ 14.2% 14.2 13.4 12.1 11.9
Interest checking..... 15.1 14.8 13.8 11.2 10.3
Savings............... 7.0 7.3 6.8 5.9 6.5
Money market.......... 15.8 16.7 18.1 17.2 17.0
Other time............ 39.2 39.4 41.1 41.6 40.9
Certificates-
$100,000
and over........... 3.4 4.9 6.2 11.8 13.4
Foreign office........ 5.3 2.7 .6 .2 -
- --------------------------------------------------------------------------
Total................. 100.0% 100.0 100.0 100.0 100.0
==========================================================================
</TABLE>
<TABLE>
CHANGE IN AVERAGE DEPOSIT SOURCES
<CAPTION>
- --------------------------------------------------------------------------
($000) 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Demand $145,677 197,984 177,481 66,480 5,038
Interest checking 185,911 228,841 267,195 111,345 114,297
Savings 41,888 116,871 101,289 ( 12,863) ( 7,278)
Money market 89,061 53,493 163,175 93,348 89,785
Other time 392,117 255,422 188,403 235,480 571,774
Certificates-
$100,000
and over (105,361) (48,411) ( 386,076) ( 59,400) 45,967
Foreign office 287,189 194,045 35,121 10,766 ( 3,283)
- --------------------------------------------------------------------------
Total change $1,036,482 998,245 546,588 445,156 816,300
==========================================================================
</TABLE>
SHORT-TERM BORROWINGS
These primarily represent the borrowing of short-term excess funds from
correspondent banks, securities sold under agreements to repurchase, short-term
bank notes and commercial paper issuances. The Bancorp resells the funds or may
retain a portion to fund short-term, rate-sensitive interest-earning asset
growth. The increase in borrowed funds is in part a result of the Bancorp's
strategy to shift large certificate of deposit customers into non-FDIC assessed
products. As the following table of average short-term borrowings and average
Federal funds loaned indicates, the Bancorp was a net borrower of funds of
$1,950,107,000 in 1994, up from $1,355,728,000 in 1993:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
($000) 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Federal funds
borrowed $ 848,217 622,068 529,201 298,923 166,788
Short-term
bank notes 429,642 - - - -
Other
short-term
borrowings 689,960 743,002 700,463 614,685 489,154
- --------------------------------------------------------------------------
Total -
short-term
borrowings 1,967,819 1,365,070 1,229,664 913,608 655,942
- --------------------------------------------------------------------------
Federal funds
loaned 17,712 9,342 79,194 227,754 289,796
- --------------------------------------------------------------------------
Net funds
borrowed $1,950,107 1,355,728 1,150,470 685,854 366,146
==========================================================================
</TABLE>
32
<PAGE> 22
CAPITAL RESOURCES
The Bancorp maintains a relatively high level of capital as a margin of
safety for its depositors and stockholders. At December 31, 1994, stockholders'
equity was $1,398,774,000 compared to $1,277,660,000 at December 31, 1993, an
increase of $121,114,000 or 9.5%. This increase in capital resulted primarily
from the retention of earnings offset by unrealized losses on securities
available for sale.
During 1990, the Federal Reserve Board adopted a minimum leverage ratio
of 3.0% for bank holding companies. The Bancorp's leverage ratio (defined as
stockholders' equity less goodwill and certain other intangibles and excluding
unrealized gains and losses on securities available for sale, divided by
adjusted quarterly average assets) was 9.62% at December 31, 1994, and 9.59% at
December 31, 1993, well above the Federal Reserve Board's ''well capitalized''
level of 5%.
The Federal Reserve Board has adopted risk-based capital guidelines
which assign risk weightings to assets and off-balance sheet items and also
define and set minimum capital requirements (risk-based capital ratios). Under
the final 1992 rules, all banks are required to have core capital (Tier 1) of
at least 4.0% of risk-weighted assets and total capital of 8.0% of
risk-weighted assets. Tier 1 capital consists principally of stockholders'
equity excluding unrealized gains and losses on securities available for sale,
less goodwill and certain other intangibles, while total capital consists of
core capital plus certain debt instruments and the reserve for credit losses,
subject to limitation by the guidelines. The guidelines also define well
capitalized levels of Tier 1 and total capital as 6% and 10%, respectively.
The Bancorp had Tier 1 capital ratios of 11.26% and 11.50% and total capital
ratios of 13.21% and 13.85% for December 31, 1994 and 1993, respectively. The
Bancorp and each of its subsidiaries had Tier 1 and total capital ratios above
the well capitalized levels at December 31, 1994.
The Federal Reserve Board has proposed regulations which would revise
the current risk-based capital guidelines to include a measurement of interest
rate risk. Based on an analysis of the Bancorp's current interest rate
sensitivity, management believes there would be no adverse effects caused by
the adoption of these new capital guidelines.
<TABLE>
The following table shows several capital and liquidity ratios for the
last three years:
<CAPTION>
- -------------------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------
<S> <C> <C> <C>
Average stockholders' equity to
Average assets................... 9.50% 9.61% 9.62%
Average deposits................. 13.15 12.92 12.76
Average loans and leases......... 13.27 13.05 14.13
Risk-based capital ratios
Tier 1........................... 11.26 11.50 11.24
Total............................ 13.21 13.85 14.07
=============================================================
</TABLE>
LIQUIDITY AND INTEREST RATE SENSITIVITY
The objective of the Bancorp's Asset/Liability Management function is
to maintain consistent growth in net interest income within the Bancorp's
policy guidelines. This objective is accomplished through flexible management
of the Bancorp's balance sheet liquidity and interest rate risk exposures due
to changes in economic conditions, interest rate levels and customer
preferences.
The goal of liquidity management is to provide adequate funds to meet
changes in loan demand or any potential unexpected deposit withdrawals. This
goal is accomplished primarily by maintaining sufficient liquid assets, along
with consistent core deposit growth to fund interest-earning assets and the
availability of unused capacity to purchase funds in the national money
markets.
At year-end 1994, the Bancorp had approximately $1.4 billion in
securities and other short-term investments maturing within one year compared
to $1.3 billion at year-end 1993. Additional asset liquidity is provided by
the remainder of the securities portfolio and selected securitizable loan
assets. The Bancorp has a practice of maintaining core deposits as the primary
means of funding interest-earning assets. Average core deposits have funded
approximately 73% of total average interest-earning assets over the last five
years. This, in addition to the Bancorp's 10% average equity capital base,
serves as a stable funding base.
In addition to its core deposit funding, the Bancorp accesses other
short-term funding sources. During 1994, a $1 billion short-term bank note
facility was established through two of its subsidiary banks. The notes are
offered with maturity dates of up to one year and are uninsured obligations of
those subsidiaries. In addition, the Bancorp utilizes the Federal Home Loan
Bank (FHLB) as a funding source, issuing notes payable of less than one year
through its FHLB-member subsidiaries.
The Bancorp has significant unused national money market funding
capability. The Bancorp maintains A1+/P1 Standard & Poor's and Moody's ratings
on its commercial paper, and its lead bank, The Fifth Third Bank in Cincinnati,
Ohio, maintains an Aa2 Moody's rating for long-term deposits. The Bancorp's
subsidiary in Toledo, The Fifth Third Bank of Northwestern Ohio, N.A.,
maintains P1 and Aa3 Moody's ratings on its short-term and long-term deposits,
respectively. These ratings, along with capital ratios significantly above the
current regulatory guidelines, provide the Bancorp additional liquidity.
Management does not rely on any one source of liquidity and has managed these
levels in response to other balance sheet factors.
The Bancorp employs a variety of measurement techniques to identify and
manage its exposure to changing interest rates. The Bancorp uses simulation
techniques which attempt to measure the net interest income volatility of
changes in the level of interest rates, basic banking interest rate spreads,
the shape of the yield curve and changing product growth patterns. The table
which follows shows the Bancorp's interest rate sensitivity analysis for the
year ended December 31, 1994. The assets and liabilities are distributed to
reflect expected cash flows and are based on historical deposit rate
relationships to changes in market interest over long-term rate changes.
33
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
RATE SENSIVITITY ANALYSIS December 31, 1994
==================================================================================================================================
MATURING OR REPRICING
-------------------------------------------------------------------------------------
Total Non-Rate
1-30 31-90 91-180 181-365 1 Year Sensitive &
($ in millions) Days Days Days Days & Under Over 1 Year Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets
Loans and leases .......................... $2,782 565 724 1,327 5,398 4,888 10,286
Securities available for sale ............. 24 46 69 146 285 844 1,129
Securities held to maturity ............... 107 200 351 454 1,112 1,396 2,508
Other short-term investments .............. 24 --- --- --- 24 --- 24
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets ................ 2,937 811 1,144 1,927 6,819 7,128 13,947
Other assets ................................. --- --- --- --- --- 1,010 1,010
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets ................................. 2,937 811 1,144 1,927 6,819 8,138 14,957
- ----------------------------------------------------------------------------------------------------------------------------------
Interest-Bearing Liabilities
Interest checking ......................... 297 --- --- --- 297 1,190 1,487
Savings ................................... 128 --- --- --- 128 510 638
Money market .............................. 1,013 --- --- --- 1,013 675 1,688
Other time deposits ....................... 949 475 529 693 2,646 1,217 3,863
Certificates-$100,000 and
over (including foreign office) ........ 1,092 98 36 24 1,250 25 1,275
Federal funds borrowed .................... 716 --- --- --- 716 --- 716
Short-term bank notes ..................... 570 275 --- --- 845 --- 845
Other short-term borrowings ............... 868 14 3 6 891 --- 891
Long-term debt and convertible
subordinated notes ..................... --- 5 5 10 20 159 179
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities ........... 5,633 867 573 733 7,806 3,776 11,582
- ----------------------------------------------------------------------------------------------------------------------------------
Demand deposits .............................. --- --- --- --- --- 1,680 1,680
Other liabilities ............................ --- --- --- --- --- 296 296
Stockholders' equity ......................... --- --- --- --- --- 1,399 1,399
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity ... 5,633 867 573 733 7,806 7,151 14,957
- ----------------------------------------------------------------------------------------------------------------------------------
Interest rate swaps .......................... 30 --- --- ( 30) --- --- ---
- ----------------------------------------------------------------------------------------------------------------------------------
Rate Sensitivity Gap ......................... (2,666) ( 56) 571 1,164 ( 987) 987
==================================================================================================================================
Cumulative Gap ............................... $(2,666) (2,722) (2,151) ( 987)
==================================================================================================================================
Cumulative Gap as a Percentage
of Total Assets .......................... ( 17.8)% ( 18.2)% ( 14.4)% ( 6.6)%
==================================================================================================================================
</TABLE>
34
<PAGE> 24
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED SIX YEAR SUMMARY OF OPERATIONS
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($000's) 1994 1993 1992 1991 1990 1989
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Interest Income.............................. $922,301 812,914 787,240 829,628 822,593 756,749
Interest Expense............................. 405,548 339,399 359,370 466,381 504,950 460,376
- ----------------------------------------------------------------------------------------------------------------------------
Net Interest Income.......................... 516,753 473,515 427,870 363,247 317,643 296,373
Provision for Credit Losses.................. 35,780 48,037 66,100 62,464 43,479 43,058
- ----------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for
Credit Losses............................... 480,973 425,478 361,770 300,783 274,164 253,315
Other Operating Income....................... 255,908 231,150 206,308 189,002 141,490 129,580
Operating Expenses........................... 371,545 352,720 316,315 282,844 246,588 226,205
- ----------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes................... 365,336 303,908 251,763 206,941 169,066 156,690
Applicable Income Taxes...................... 120,877 97,673 79,742 63,987 48,040 43,353
- ----------------------------------------------------------------------------------------------------------------------------
Net Income................................... $244,459 206,235 172,021 142,954 121,026 113,337
============================================================================================================================
Net Income Per Share (a)..................... $ 3.80 3.29 2.76 2.31 1.97 1.86
============================================================================================================================
Cash Dividends Declared Per Share (a)........ $ 1.20 1.02 .90 .78 .68 .60
============================================================================================================================
<FN>
(a) Per share amounts reflect the three-for-two stock splits effected in the
form of stock dividends paid April 15, 1992 and January 13, 1990.
</TABLE>
<TABLE>
Following is the consolidated six year summary of operations for the Bancorp as
originally reported, excluding the results of The Cumberland prior to 1994:
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31 ($000's) 1994 1993 1992 1991 1990 1989
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Interest Income.............................. $922,301 727,349 694,460 713,501 689,547 643,444
Interest Expense............................. 405,548 290,960 300,266 381,280 402,926 374,741
- ----------------------------------------------------------------------------------------------------------------------------
Net Interest Income.......................... 516,753 436,389 394,194 332,221 286,621 268,703
Provision for Credit Losses.................. 35,780 44,487 65,315 55,744 39,879 36,468
- ----------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for
Credit Losses............................... 480,973 391,902 328,879 276,477 246,742 232,235
Other Operating Income....................... 255,908 226,578 200,053 171,911 144,865 124,851
Operating Expenses........................... 371,545 323,387 289,276 249,792 223,324 207,527
- ----------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes................... 365,336 295,093 239,656 198,596 168,283 149,559
Applicable Income Taxes...................... 120,877 98,646 75,564 60,446 47,872 41,241
- ----------------------------------------------------------------------------------------------------------------------------
Net Income................................... $244,459 196,447 164,092 138,150 120,411 108,318
============================================================================================================================
Return on Average Assets..................... 1.77% 1.80 1.74 1.68 1.64 1.62
============================================================================================================================
Return on Average Equity..................... 18.6% 18.2 17.3 16.6 16.2 16.5
============================================================================================================================
</TABLE>
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
As of December 31 ($000's) 1994 1993 1992 1991 1990 1989
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Securities.................................. $ 3,637,035 2,674,468 2,419,421 2,625,968 2,002,083 1,685,396
Loans and Leases............................ 10,286,457 9,566,898 8,115,590 6,325,918 6,165,808 5,827,543
Assets...................................... 14,957,009 13,128,544 11,390,289 9,981,383 9,344,994 8,515,317
Deposits.................................... 10,630,878 9,477,306 8,447,812 7,633,362 7,354,767 6,829,418
Short-Term Borrowings....................... 2,452,218 1,691,744 1,348,105 1,127,768 832,457 580,263
Long-Term Debt and Convertible
Subordinated Notes......................... 178,713 407,864 309,730 52,436 125,798 153,799
Stockholders' Equity........................ 1,398,774 1,277,660 1,076,854 944,691 845,325 762,283
============================================================================================================================
</TABLE>
<TABLE>
SUMMARIZED QUARTERLY FINANCIAL INFORMATION
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------- -------------------------------------------
FOURTH THIRD SECOND FIRST Fourth Third Second First
(Unaudited)($000's) QUARTER QUARTER QUARTER QUARTER Quarter Quarter Quarter Quarter
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income............. $248,739 236,911 223,065 213,586 206,421 203,443 204,254 198,796
Net interest income......... 130,436 131,172 127,346 127,799 121,611 118,500 118,491 114,913
Provision for credit losses. 9,379 7,263 7,842 11,296 7,818 10,369 15,880 13,970
Income before income taxes.. 96,505 92,421 89,163 87,247 81,349 81,791 75,553 65,215
Net income.................. 64,653 62,844 59,081 57,881 54,068 54,159 50,435 47,573
Net income per share........ 1.00 .98 .92 .90 .86 .86 .81 .76
=========================================================================================================================
</TABLE>
35
<PAGE> 25
<TABLE>
FIFTH THIRD BANCORP AND SUBSIDIARIES
CONSOLIDATED TEN YEAR COMPARISON
<CAPTION>
AVERAGE ASSETS ($000'S)
- --------------------------------------------------------------------------------------------------------------------------
Interest-Earning Assets
-------------------------------------------------------------------
Federal Interest Bearing Cash and Total
Loans and Funds Deposits Due from Other Average
Year Leases Loaned(a) in Banks(a) Securities Total Banks Assets Assets
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $9,902,901 $ 17,712 $ 6,276 $3,101,320 $13,028,209 $526,007 $428,266 $13,829,341
1993 8,869,432 9,342 1,084 2,365,897 11,245,755 494,141 435,966 12,041,054
1992 7,189,975 79,194 32,858 2,493,235 9,795,262 440,908 439,332 10,565,594
1991 6,246,679 227,754 35,090 2,373,916 8,883,439 378,185 368,909 9,534,199
1990 5,920,686 289,796 40,927 1,845,413 8,096,822 389,521 361,659 8,759,775
1989 5,450,876 245,017 35,610 1,520,720 7,252,223 374,155 310,550 7,858,542
1988 4,610,145 228,238 44,788 1,404,117 6,287,288 357,575 275,004 6,854,056
1987 3,865,255 368,234 31,700 1,222,676 5,487,865 327,996 240,697 6,001,774
1986 3,181,583 421,937 29,818 1,191,845 4,825,183 283,904 253,338 5,317,156
1985 2,761,173 407,751 30,225 1,114,115 4,313,264 241,622 225,969 4,744,506
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
AVERAGE DEPOSITS AND SHORT-TERM BORROWINGS ($000'S)
- ---------------------------------------------------------------------------------------------------------------------------
Deposits
------------------------------------------------------------------------------
Certificates- Short-
Interest Money Other $100,000 Foreign Term
Year Demand Checking Savings Market Time and Over Ofice Total Borrowings Total
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $1,414,048 1,512,670 $698,756 $1,582,863 $3,923,418 $336,521 $529,434 $9,997,710 $1,967,819 $11,965,529
1993 1,268,371 1,326,759 656,868 1,493,802 3,531,301 441,882 242,245 8,961,228 1,365,070 10,326,298
1992 1,070,387 1,097,918 539,997 1,440,309 3,275,879 490,293 48,200 7,962,983 1,229,664 9,192,647
1991 892,906 830,723 438,708 1,277,134 3,087,476 876,369 13,079 7,416,395 913,608 8,330,003
1990 826,426 719,378 451,571 1,183,786 2,851,996 935,769 2,313 6,971,239 655,942 7,627,181
1989 821,388 605,081 458,849 1,094,001 2,280,222 889,802 5,596 6,154,939 676,627 6,831,566
1988 786,610 547,988 443,267 1,037,427 1,875,876 668,786 7,507 5,367,461 593,035 5,960,496
1987 733,928 476,873 415,816 963,542 1,562,196 497,977 3,130 4,653,462 550,262 5,203,724
1986 664,827 375,040 334,989 872,743 1,508,733 346,774 3,851 4,106,957 492,845 4,599,802
1985 594,894 269,089 313,689 737,389 1,492,215 266,887 3,914 3,678,077 466,100 4,144,177
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
INCOME
- ---------------------------------------------------------------------------------------------------------------------------
Per Share(c)
--------------------------------
Originally
Other Reported Dividends
Interest Interest Operating Operating Net Net Dividends Net Paid as % of
Year Income(b) Expense(b) Income(b) Expense(b) Income(b) Income Declared Income Net Income
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $922,301 $405,548 $255,908 $371,545 $244,459 $3.80 $1.20 $3.80 30.5%
1993 812,914 339,399 231,150 352,720 206,235 3.29 1.02 3.28 29.7
1992 787,240 359,370 206,308 316,315 172,021 2.76 .90 2.75 30.6
1991 829,628 466,381 189,002 282,844 142,954 2.31 .78 2.33 32.3
1990 822,593 504,950 141,490 246,588 121,026 1.97 .68 2.05 33.1
1989 756,749 460,376 129,580 226,205 113,337 1.86 .60 1.86 30.1
1988 610,819 353,053 110,850 196,736 97,816 1.64 .52 1.75 31.1
1987 510,437 289,577 98,017 179,977 88,716 1.51 .45 1/3 1.52 28.9
1986 473,705 281,278 88,511 164,906 77,346 1.37 .39 1.29 27.0
1985 459,148 293,512 73,944 144,511 62,075 1.13 .32 2/3 1.11 28.4
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
MISCELLANEOUS AT DECEMBER 31
- ----------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
-------------------------------------------------------------------------------
Number of Reserve
Shares of Stock Common Capital Retained Unrealized Per for Credit
Year Outstanding(c) Stock(b)(d) Surplus(b) Earnings(b) Gains/(Losses) Total(b) Share Losses(b)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 64,709,304 $143,655 $272,999 $1,030,338 $(48,218) $1,398,774 $21.62 $155,918
1993 64,099,139 142,300 260,150 862,785 12,425 1,277,660 19.93 144,537
1992 62,528,422 138,442 218,391 720,021 -- 1,076,854 17.22 121,452
1991 62,072,146 93,480 203,607 647,604 -- 944,691 15.22 97,319
1990 61,777,316 93,426 199,884 552,015 -- 845,325 13.68 90,242
1989 61,409,179 92,881 197,136 472,266 -- 762,283 12.41 85,664
1988 60,344,158 62,866 187,051 419,514 -- 669,431 11.09 73,008
1987 58,786,259 61,329 169,706 352,363 -- 583,398 9.92 60,776
1986 58,626,859 42,776 145,976 308,663 -- 497,415 8.48 49,587
1985 55,080,379 28,958 108,181 264,996 -- 402,135 7.30 41,708
============================================================================================================================
<FN>
(a) Federal funds loaned and interest bearing deposits in banks are combined in other short-term investments in the Consolidated
Financial Statements.
(b) Thousands of dollars.
(c) Number of shares outstanding and per share data reflect stock splits in 1992, 1990, 1987, 1986 and 1985.
(d) Includes $404,000 of treasury stock in 1992 and 1991.
</TABLE>
36
<PAGE> 26
APPENDIX A
In accordance with Rule 304 of Regulation S-T, the following graphic material
was omitted from this electronic exhibit and is more fully described on page 29
of Exhibit 13:
Certain graphs contained on page 29 of the 1994 Annual Report to
Stockholders have been omitted from this electronic exhibit and are
described in tabular form on page 29 of this Exhibit 13.
EXHIBIT 21
Fifth Third Bancorp Subsidiaries
Jurisdiction
of
Name Incorporation
- ---- -------------
The Fifth Third Bank Ohio
The Fifth Third Company Ohio
The Fifth Third Leasing Company Ohio
Fifth Third Securities, Inc. Ohio
Midwest Payment Systems, Inc. Ohio
Fifth Third Kentucky Bank Holding Company Kentucky
Fifth Third Bank of Kentucky, Inc. Kentucky
The Fifth Third Savings Bank of Western Kentucky, FSB Federal
The Fifth Third Bank of Columbus Ohio
The Fifth Third Bank of Northwestern Ohio,
National Association Federal
The Fifth Third Bank of Southern Ohio Ohio
The Fifth Third Bank of Western Ohio Ohio
Fifth Third Bank of Northern Kentucky, Inc. Kentucky
The Fifth Third Bank of Central Indiana Indiana
The Fifth Third Bank of Southeastern Indiana Indiana
Fifth Third Trust Co. & Savings Bank, FSB Federal
Fifth Third Community Development Company Ohio
Fifth Third Investment Company Ohio
Fountain Square Insurance Company Arizona
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No. 33-
34075, 33-13252, 2-98550, 33-20888, 33-30690, 33-60474, 33-51679, 33-55223, and
33-55553, of Fifth Third Bancorp on Form S-8 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 this Annual Report on Form 10-K of
Fifth Third Bancorp for the year ended December 31, 1994.
/s/Deloitte & Touche LLP
February 21, 1995
Cincinnati, Ohio
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 695,009
<INT-BEARING-DEPOSITS> 11,280
<FED-FUNDS-SOLD> 12,485
<TRADING-ASSETS> 0
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<SHORT-TERM> 2,452,218
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<INTEREST-INCOME-NET> 516,753
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