<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIFTH THIRD BANCORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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OHIO 6711 31-0854434
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
FIFTH THIRD CENTER, CINCINNATI, OHIO 45263
(513) 579-5300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PAUL L. REYNOLDS, ESQ.
FIFTH THIRD BANCORP
FIFTH THIRD CENTER
CINCINNATI, OHIO 45263
(513)579-5300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES OF COMMUNICATIONS TO:
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RICHARD G. SCHMALZL, ESQ. K. SCOTT FIFE, ESQ.
GRAYDON, HEAD & RITCHEY HOUSLEY KANTARIAN & BRONSTEIN, P.C.
1900 FIFTH THIRD CENTER 1220 19TH STREET, NW
511 WALNUT STREET SUITE 700
CINCINNATI, OHIO 45202 WASHINGTON, DC 20036
(513) 651-3836 (FAX)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective and upon the effective time of the merger ("Merger") of Suburban
Bancorporation, Inc. ("Suburban Bancorp") with and into the Registrant pursuant
to the Affiliation Agreement described in the enclosed Proxy
Statement/Prospectus included as Part I of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
==========================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
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Common Stock, no par value....... 450,000 shares N/A $28,536,499.68 $8,647.42
==========================================================================================================
</TABLE>
(1) Represents the maximum number of shares of Registrant's Common Stock that
the Registrant expects would be issuable to Stockholders of Suburban
Bancorp, a savings and loan holding company owning all of the outstanding
common stock of Suburban Federal Savings Bank, in the event that certain
adjustments to the merger consideration would be required pursuant to the
Affiliation Agreement.
(2) Estimated solely for the purpose of computing the registration fee based
upon $17.9375, the average of the bid and asked price of the Common Stock,
$.01 par value of Suburban Bancorporation, Inc., as reported on the Nasdaq
National Market on May 14, 1997, in accordance with Rule 457(f)(1) of the
General Rules and Regulations under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
FIFTH THIRD BANCORP
Cross Reference Sheet Required by Item 501(b) of Regulation S-K
CAPTION IN PROXY STATEMENT/PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and Outside Front Cover Page of Proxy
Statement/ Prospectus -- Facing Page; Notice of Special Meeting
2. Inside Front and Outside Back Cover Pages of Proxy
Statement/Prospectus -- Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information -- Summary
of the Proxy Statement/Prospectus; General Information; Comparative Per Share Data
4. Terms of the Transaction -- Summary of the Proxy Statement/Prospectus;
Proposal -- Merger of Suburban Bancorp into Fifth Third; Description of Capital
Stock
5. Pro Forma Financial Information -- Not Applicable
6. Material Contracts with the Company Being Acquired -- Not Applicable
7. Additional Information Required for Reoffering by Persons and Parties Deemed to be
Underwriters -- Not Applicable
8. Interests of Named Experts and Counsel -- Legal Matters
9. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities -- Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants -- Fifth Third Bancorp; Selected
Historical Financial Data of Fifth Third; Description of Capital Stock
11. Incorporation of Certain Information by Reference -- Incorporation of Certain
Documents by Reference; Available Information; Description of Capital Stock
12. Information with Respect to S-2 or S-3 Registrants -- Not Applicable
13. Incorporation of Certain Information by Reference -- Not Applicable
14. Information With Respect to Registrants Other Than S-2 or S-3 Registrants -- Not
Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies -- Not Applicable
16. Information with Respect to S-2 or S-3 Companies -- Suburban Bancorporation, Inc.;
Selected Historical Financial Data of Suburban Bancorp; The Special Meeting;
Incorporation of Certain Documents by Reference; Available Information
17. Information with Respect to Companies Other Than S-2 or S-3 Companies -- Not
Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations Are to Be Solicited -- Summary
of the Proxy Statement/Prospectus; The Special Meeting; Proposal -- Merger of
Suburban Bancorp into Fifth Third; General Information; Suburban Bancorporation,
Inc.
19. Information if Proxies, Consents or Authorizations Are Not To Be Solicited or in an
Exchange Offer -- Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 16, 1997
PROXY STATEMENT FOR
SUBURBAN BANCORPORATION, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE , 1997
------------------------------
PROSPECTUS OF FIFTH THIRD BANCORP
450,000 SHARES
COMMON STOCK, NO PAR VALUE
------------------------------
This Proxy Statement/Prospectus is being furnished to the stockholders of
Suburban Bancorporation, Inc. of Cincinnati, Ohio ("Suburban Bancorp"), a
registered unitary savings and loan holding company under the Home Owners' Loan
Act in connection with the solicitation of proxies by the Board of Directors of
Suburban Bancorp for use at a Special Meeting of Stockholders to be held on June
, 1997 (the "Special Meeting").
At the Special Meeting, holders of shares of Suburban Bancorp's common
stock, $0.01 par value per share ("Suburban Bancorp Common Stock"), will be
asked to approve an Affiliation Agreement dated as of March 13, 1997 between
Fifth Third Bancorp ("Fifth Third") and Suburban Bancorp (the "Affiliation
Agreement") and the transactions contemplated hereby. Pursuant to the
Affiliation Agreement, Suburban Bancorp will merge into Fifth Third (the
"Merger"). At the time the Merger becomes effective (the "Effective Time"), each
share of Suburban Bancorp Common Stock will be converted by virtue of the Merger
into .24357 (the "Exchange Ratio") of a share of Fifth Third common stock, no
par value per share ("Fifth Third Common Stock"). The Exchange Ratio will be
adjusted so as to give the Suburban Bancorp stockholders the economic benefit of
any stock dividends, reclassifications, recapitalizations, split-ups, exchanges
of shares, distributions or combinations or subdivisions of Fifth Third Common
Stock effected before the Effective Time. No fractional shares will be issued.
Any stockholder otherwise entitled to receive a fractional share will receive
cash in lieu thereof based upon the Applicable Market Value Per Share of Fifth
Third Common Stock, as defined in the Affiliation Agreement attached hereto as
Annex A.
In the event of a substantial decline in the trading price of Fifth Third
Common Stock relative to a group of peer institutions under certain
circumstances as provided in the Affiliation Agreement, the Suburban Bancorp
Board of Directors may elect to terminate the Affiliation Agreement and the
Merger. If such an election were made, Fifth Third would have the option to
either (a) increase the Exchange Ratio or, (b) in lieu of adjusting the Exchange
Ratio, pay cash for each outstanding share of Suburban Bancorp Common Stock (in
addition to .24357 shares of Fifth Third Common Stock). If Fifth Third elects
either such alternative, the Affiliation Agreement will not terminate
notwithstanding the election of the Suburban Bancorp Board of Directors. For
additional information regarding the terms and conditions applicable to
termination of the Affiliation Agreement and the Merger and possible resulting
adjustments to the consideration to be paid to the Suburban Bancorp
stockholders, see "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Amendment; Waiver; Termination."
Under the rules and regulations of the Securities and Exchange Commission
(the "Commission"), the solicitation of Suburban Bancorp's stockholders to
approve the Merger constitutes an offering of Fifth Third Common Stock to be
issued in connection with the Merger. Accordingly, Fifth Third has filed with
the Commission a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to such offering, and this Proxy
Statement/Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission.
This Proxy Statement/Prospectus shall not constitute a prospectus for
public reoffering of the Fifth Third Common Stock issuable pursuant to the
Merger.
THE SECURITIES OF FIFTH THIRD TO BE ISSUED IN THE MERGER HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF FIFTH THIRD COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
The date of this Proxy Statement/Prospectus is May , 1997.
<PAGE> 4
AVAILABLE INFORMATION
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH,
WITH THE EXCEPTION OF THE 1996 ANNUAL REPORT TO STOCKHOLDERS FOR EACH OF FIFTH
THIRD AND SUBURBAN BANCORP, AND PART I OF THE MARCH 31, 1997 QUARTERLY REPORT ON
FORM 10-QSB OF SUBURBAN BANCORP, ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
SEE "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." THESE DOCUMENTS
(EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED THEREIN) ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM PAUL L. REYNOLDS, ASSISTANT
SECRETARY, FIFTH THIRD BANCORP, FIFTH THIRD CENTER, CINCINNATI, OHIO 45263
(TELEPHONE NUMBER: (513) 579-5300), AS RELATES TO FIFTH THIRD, AND FROM JOHN A.
BUCHHEID, SECRETARY, SUBURBAN BANCORP, INC., 10869 MONTGOMERY ROAD, CINCINNATI,
OHIO 45242 (TELEPHONE NUMBER: (513) 489-4888), AS RELATES TO SUBURBAN BANCORP.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
BY JUNE , 1997.
No person has been authorized to give any information or to make any
representation in connection with this offering other than those contained in
this Proxy Statement/Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by Fifth Third
or Suburban Bancorp. This Proxy Statement/Prospectus shall not constitute an
offer to sell or a solicitation of an offer to buy any securities in any
jurisdiction in which it would be unlawful to make such offer or solicitation.
Neither the delivery of this Proxy Statement/Prospectus at any time, nor any
offer or solicitation made hereunder, shall under any circumstances imply that
the information set forth herein or incorporated herein is correct as of any
time subsequent to its date.
Fifth Third and Suburban Bancorp are each subject to the information
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, file reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
filed by Fifth Third and Suburban Bancorp can be inspected and copied at Room
1024 of the Offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices in New York (7 World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511), and
copies of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Fifth Third and Suburban Bancorp each file its reports, proxy statements and
other information with the Commission electronically, and the Commission
maintains a website located at http://www.SEC.gov containing such information.
Fifth Third Common Stock and Suburban Bancorp Common Stock are traded on
the Nasdaq National Market tier of the Nasdaq Stock Market (the "Nasdaq National
Market") under the symbols "FITB" and "SBCN", respectively. Documents filed by
Fifth Third and Suburban Bancorp with the Commission also can be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
All information contained in this Proxy Statement/Prospectus with respect
to Suburban Bancorp was supplied by Suburban Bancorp and all information
contained or incorporated in this Proxy Statement/Prospectus with respect to
Fifth Third was supplied by Fifth Third.
Although neither Suburban Bancorp nor Fifth Third has any knowledge that
would indicate that any statements or information relating to the other party
contained herein is inaccurate or incomplete, neither Suburban Bancorp nor Fifth
Third can warrant the accuracy or completeness of such statements or information
as they relate to the other party.
2
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Fifth Third with the Commission
are hereby incorporated into this Proxy Statement/Prospectus by reference:
(a) Fifth Third's Annual Report on Form 10-K for the year ended December 31,
1996;
(b) Pages 1 and 15-38 of Fifth Third's 1996 Annual Report to Stockholders
(enclosed with this Proxy Statement/Prospectus); and
(c) Fifth Third's Proxy Statement dated February 7, 1997.
(d) Fifth Third's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; and
(e) Fifth Third's Current Report on Form 8-K dated March 20, 1997.
The following documents previously filed by Suburban Bancorp with the
Commission are hereby incorporated into this Proxy Statement/Prospectus by
reference:
(a) Suburban Bancorp's Annual Report on Form 10-KSB for the year ended June 30,
1996, including all documents incorporated by reference therein;
(b) Suburban Bancorp's Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 1996, December 31, 1996 and March 31, 1997;
(c) Suburban Bancorp's Current Report on Form 8-K dated March 13, 1997; and
(d) Suburban Bancorp's Proxy Statement dated September 11, 1996.
In addition, all subsequent documents filed with the Commission by Fifth
Third pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior
to the Effective Time are incorporated herein by reference. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein (or in any
other subsequently filed document which also is deemed to be incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement/Prospectus.
3
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION................................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................................... 3
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS............................................... 6
SELECTED HISTORICAL FINANCIAL DATA OF FIFTH THIRD....................................... 13
SELECTED HISTORICAL FINANCIAL DATA OF SUBURBAN BANCORP.................................. 15
COMPARATIVE MARKET PRICE AND DIVIDEND DATA.............................................. 17
COMPARATIVE PER SHARE DATA.............................................................. 18
THE SPECIAL MEETING..................................................................... 19
Purpose of the Special Meeting........................................................ 19
Voting and Revocability of Proxies.................................................... 19
Voting Securities and Beneficial Ownership............................................ 19
Miscellaneous......................................................................... 20
Stockholder Proposals................................................................. 21
PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD................................. 21
Terms and Conditions of the Proposed Merger........................................... 21
Background of the Merger.............................................................. 21
Reasons for the Merger and Recommendation of the Board of Directors of Suburban
Bancorp............................................................................ 23
Vote Required......................................................................... 24
Opinion of Financial Advisor to Suburban Bancorp...................................... 24
Effective Time........................................................................ 29
Conversion of Shares of Suburban Bancorp Common Stock................................. 29
Exchange Ratio........................................................................ 29
No Fractional Shares.................................................................. 29
Exchange of Certificates.............................................................. 29
Federal Income Tax Consequences....................................................... 30
Accounting Treatment.................................................................. 31
No Appraisal or Dissenters' Rights.................................................... 31
Conduct Pending Merger; Representations and Warranties................................ 31
Conditions to Closing................................................................. 32
Amendment; Waiver; Termination........................................................ 33
Effect on Suburban Bancorp Employees.................................................. 35
Employee Stock Ownership Plan......................................................... 35
Interests of Certain Persons in the Merger............................................ 37
Effects of Merger..................................................................... 38
RESALE OF FIFTH THIRD COMMON STOCK BY AFFILIATES........................................ 39
FIFTH THIRD BANCORP..................................................................... 39
Description of Business............................................................... 39
Recent Developments................................................................... 40
Capital Requirements for Fifth Third.................................................. 40
Bank Holding Companies in General..................................................... 41
Acquisitions of Savings Associations by Holding Companies............................. 41
Additional Information................................................................ 42
SUBURBAN BANCORPORATION, INC. .......................................................... 42
Description of Business............................................................... 42
Additional Information................................................................ 42
EFFECT OF GOVERNMENTAL POLICIES......................................................... 43
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4
<PAGE> 7
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DESCRIPTION OF CAPITAL STOCK AND COMPARATIVE RIGHTS OF STOCKHOLDERS..................... 43
Voting Rights......................................................................... 43
Dividends............................................................................. 44
Preemptive Rights..................................................................... 45
Rights Upon Liquidation............................................................... 45
Indemnification and Personal Liability of Directors and Officers...................... 45
Stockholders' Meetings; Quorum........................................................ 46
Subscription, Conversion, Redemption Rights; Stock Nonassessable...................... 46
Change of Control Provisions.......................................................... 46
CERTAIN BENEFICIAL OWNERS OF FIFTH THIRD COMMON STOCK................................... 49
FIFTH THIRD MANAGEMENT.................................................................. 50
LEGAL MATTERS........................................................................... 53
EXPERTS................................................................................. 53
ANNEXES:
Annex A: Affiliation Agreement dated as of March 13, 1997 between Fifth Third Bancorp and
Suburban Bancorporation, Inc. (excluding exhibits)
Annex B: Form of Fairness Opinion of Sandler O'Neill & Partners, L.P.
</TABLE>
5
<PAGE> 8
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus and the documents incorporated herein by
reference and/or enclosed herewith. This summary is not intended to be a summary
of all information relating to the Merger and is qualified in its entirety by
reference to the more detailed information contained elsewhere in this Proxy
Statement/Prospectus, including the Annexes hereto, and the documents
incorporated by reference in, and/or enclosed with, this Proxy
Statement/Prospectus.
PARTIES TO THE TRANSACTION:
FIFTH THIRD: Fifth Third is a registered multi-bank holding
company, incorporated under Ohio law, which
conducts its principal activities through its
banking and non-banking subsidiaries. Fifth Third's
10 subsidiary banks operate a general banking
business from 414 offices located throughout Ohio,
Indiana, Kentucky and Florida. At March 31, 1997,
on a consolidated basis, Fifth Third had
consolidated assets, deposits and stockholders'
equity of approximately $20.2 billion, $13.9
billion and $1.9 billion, respectively. Fifth Third
Common Stock is traded on the Nasdaq National
Market under the symbol "FITB". Fifth Third's
principal executive offices are located at Fifth
Third Center, Cincinnati, Ohio 45263, and its
telephone number is (513) 579-5300.
SUBURBAN BANCORPORATION: Suburban Bancorp is a registered unitary savings
and loan holding company incorporated under
Delaware law. Suburban Bancorp owns all of the
stock of Suburban Federal Savings Bank ("Suburban
Federal Bank") which is headquartered in
Cincinnati, Ohio. Suburban Federal Bank operates
its main office and six branch offices in Hamilton
County, Ohio. At March 31, 1997, Suburban Bancorp,
on a consolidated basis, had total assets, total
deposits and Stockholders' equity of approximately
$221.9 million, $133.3 million and $25.9 million,
respectively. Suburban Bancorp Common Stock is
traded on the Nasdaq National Market under the
symbol "SBCN". Suburban Bancorp's principal
executive offices are located at 10869 Montgomery
Road, Cincinnati, Ohio, and its telephone number is
(513) 489-4888.
SPECIAL MEETING OF SUBURBAN BANCORP STOCKHOLDERS:
TIME AND DATE: , Eastern Time, on June , 1997
PLACE: [ ]
PURPOSE: To consider and vote upon the Affiliation Agreement
which provides for the Merger of Suburban Bancorp
with and into Fifth Third. Pursuant to the
Affiliation Agreement, Suburban Bancorp's
stockholders will receive shares of Fifth Third
Common Stock in exchange for shares of Suburban
Bancorporation Common Stock and cash in lieu of any
fractional shares of Fifth Third Common Stock. A
copy of the Affiliation Agreement is attached
hereto as Annex A, and is incorporated herein by
reference. See "THE SPECIAL MEETING -- Purpose of
the Special Meeting" and "PROPOSAL -- MERGER OF
SUBURBAN BANCORP INTO FIFTH THIRD."
REQUIRED VOTE;
RECORD DATE: Approval of the Affiliation Agreement and the
Merger Agreement requires the affirmative vote of
holders of at least a majority of the
6
<PAGE> 9
shares of Suburban Bancorp Common Stock outstanding
as of the close of business on May , 1997 (the
"Record Date"). An abstention or failure to vote
has the same effect as voting against the proposal.
Accordingly, stockholders are urged to sign and
return their proxies. See "THE SPECIAL
MEETING -- Voting and Revocability of Proxies,"
"PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Vote Required."
BENEFICIAL OWNERSHIP
BY OFFICERS AND DIRECTORS: As of the close of business on May , 1997, the
executive officers and directors of Suburban
Bancorp and their affiliates (including directors
of Suburban Federal Bank) beneficially owned
shares, or approximately %, of Suburban
Bancorp Common Stock. These figures include options
for shares of stock which were exercisable on that
date or which will become exercisable. See "THE
SPECIAL MEETING -- Voting Securities and Beneficial
Ownership."
PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD:
REASONS FOR THE MERGER
AND RECOMMENDATION
OF THE BOARD OF DIRECTORS
OF SUBURBAN BANCORP: The Board of Directors of Suburban Bancorp
considered the terms of the Affiliation Agreement,
including the consideration to be received by
Suburban Bancorp's stockholders in the Merger, in
light of economic, financial, legal, social and
market factors and concluded that the Merger is in
the best interests of Suburban Bancorp and its
stockholders. The terms of the Affiliation
Agreement are the result of arms' length
negotiations between Suburban Bancorp and Fifth
Third, as well as consultations between Suburban
Bancorp and its financial advisor and special legal
counsel. See "PROPOSAL -- MERGER OF SUBURBAN
BANCORP INTO FIFTH THIRD -- Reasons for the Merger
and Recommendation of the Board of Directors of
Suburban Bancorp."
THE BOARD OF DIRECTORS OF SUBURBAN BANCORP
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF
SUBURBAN BANCORP VOTE FOR APPROVAL OF THE
AFFILIATION AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
OPINION OF FINANCIAL
ADVISOR TO SUBURBAN
BANCORP: Suburban Bancorp has retained Sandler O'Neill as
its financial advisor in connection with the Merger
and has requested that Sandler O'Neill render its
opinion with respect to the fairness from a
financial point of view of the consideration to be
paid by Fifth Third in connection with the Merger
to the holders of Suburban Bancorp Common Stock.
Sandler O'Neill rendered its opinion to Suburban
Bancorp's Board of Directors on March 13, 1997 to
the effect that the consideration to be paid by
Fifth Third in connection with the Merger was fair
from a financial point of view to the holders of
Suburban Bancorp Common Stock. The initial opinion
was updated and confirmed on May , 1997. The
updated opinion describes assumptions made and
matters considered by Sandler O'Neill and contains
limitations and qualifications. A copy of the
updated opinion of Sandler O'Neill is included
herein as Annex B, and the references thereto set
forth herein are qualified in their entirety by
reference thereto. See "PROPOSAL -- MERGER OF
SUBURBAN
7
<PAGE> 10
BANCORP INTO FIFTH THIRD -- Opinion of Financial
Advisor to Suburban Bancorp."
SUBURBAN BANCORP STOCKHOLDERS ARE URGED TO READ THE
FAIRNESS OPINION INCLUDED AS ANNEX B HEREIN IN ITS
ENTIRETY FOR DESCRIPTIONS OF PROCEDURES FOLLOWED,
FACTORS CONSIDERED AND ASSUMPTIONS MADE IN
RENDERING SUCH OPINION.
EFFECTIVE TIME: The Effective Time will, unless the parties agree
otherwise, occur on a Friday which is as soon as is
reasonably possible following the date that all of
the conditions precedent to the closing, including
receipt of all regulatory approvals and the
expiration of any applicable waiting periods, have
been fully met or effectively waived. The parties
anticipate that the Merger will be consummated in
mid-1997. Suburban Bancorp and Fifth Third each
will have the right to terminate the Affiliation
Agreement, among other reasons, if the Effective
Time does not occur on or before December 31, 1997,
subject to certain conditions. See "PROPOSAL --
MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD --
Effective Time."
TERMS OF THE MERGER:
CONVERSION OF SUBURBAN
BANCORPORATION
COMMON STOCK;
CONSIDERATION: Upon consummation of the Merger, each stockholder
of Suburban Bancorp will receive, for each share of
Suburban Bancorp Common Stock which he or she holds
at the Effective Time, .24357 of a share of Fifth
Third Common Stock (the "Exchange Ratio"). Based on
the closing price per share of Fifth Third Common
Stock on the Nasdaq National Market on May ,
1997, the value of .24357 of a share of Fifth Third
Common Stock was $ . The Exchange Ratio
will be adjusted so as to give the Suburban Bancorp
stockholders the economic benefit of any stock
dividends, reclassifications, recapitalizations,
split-ups, exchanges of shares, distributions or
combinations or subdivisions of Fifth Third Common
Stock effected before the Effective Time. In the
event of a substantial decline in the trading price
of Fifth Third Common Stock relative to a group of
peer institutions under certain circumstances as
provided in the Affiliation Agreement, the Suburban
Bancorp Board of Directors may elect to terminate
the Affiliation Agreement and the Merger. If such
an election were made, Fifth Third would have the
option to either (a) increase the Exchange Ratio
or, (b) in lieu of adjusting the Exchange Ratio,
pay cash for each outstanding share of Suburban
Bancorp Common Stock (in addition to .24357 shares
of Fifth Third Common Stock). See "SUMMARY OF THE
PROXY STATEMENT/PROSPECTUS -- Right to Terminate"
and "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO
FIFTH THIRD -- Conversion of Shares of Suburban
Bancorp Common Stock" and "-- Exchange Ratio."
THE VALUE OF THE FIFTH THIRD COMMON STOCK TO BE
RECEIVED BY SUBURBAN BANCORP STOCKHOLDERS WILL
DEPEND ON THE MARKET PRICE OF SHARES OF FIFTH THIRD
COMMON STOCK AT THE EFFECTIVE TIME OF THE MERGER.
THE MARKET PRICE OF FIFTH THIRD COMMON STOCK IS
SUBJECT TO CHANGE AT ALL TIMES BASED ON THE FUTURE
FINANCIAL CONDITION AND OPERATING RE-
8
<PAGE> 11
SULTS OF FIFTH THIRD, FUTURE MARKET CONDITIONS AND
OTHER FACTORS, AND THE MARKET PRICE OF FIFTH THIRD
COMMON STOCK AT THE EFFECTIVE TIME OF THE MERGER
MAY BE SUBSTANTIALLY HIGHER OR LOWER THAN RECENT
PRICES.
NO FRACTIONAL SHARES: No fractional shares will be issued in connection
with the Merger. Suburban Bancorp stockholders will
receive cash in lieu of any fractional shares which
they otherwise would be entitled to receive based
on the Applicable Market Value Per Share of Fifth
Third Common Stock, as defined in the Merger
Agreement. See "PROPOSAL -- MERGER OF SUBURBAN
BANCORP INTO FIFTH THIRD -- No Fractional Shares."
PROCEDURE FOR
EXCHANGE OF SHARES: Promptly after the Effective Time, Fifth Third will
mail to each stockholder of Suburban Bancorp a form
of transmittal letter and instructions for the
surrender of Suburban Bancorp Common Stock
certificates for certificates representing the
Shares of Fifth Third Common Stock to which such
stockholder is entitled. Certificates for shares of
Fifth Third Common Stock will be issued to
stockholders of Suburban Bancorp only after their
certificates for Suburban Bancorp Common Stock have
been surrendered in accordance with such
instructions. See "PROPOSAL -- MERGER OF SUBURBAN
BANCORP INTO FIFTH THIRD -- Exchange of
Certificates."
FEDERAL INCOME TAX
CONSEQUENCES: The Merger is conditioned, in part, upon receipt of
an opinion of Fifth Third's counsel to Fifth Third
and Suburban Bancorp with respect to certain tax
matters, including an opinion that no gain or loss
(other than with respect to cash received in lieu
of fractional shares) will be recognized by
Suburban Bancorp's stockholders upon the exchange
of their Suburban Bancorp Common Stock for Fifth
Third Common Stock. See "PROPOSAL -- MERGER OF
SUBURBAN BANCORP INTO FIFTH THIRD -- Federal Income
Tax Consequences." STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
CONSEQUENCES TO THEM OF THE MERGER UNDER FEDERAL,
STATE, LOCAL, FOREIGN AND ANY OTHER APPLICABLE TAX
LAWS.
ACCOUNTING: The Merger will be accounted for as a "purchase" as
such term is used under generally accepted
accounting principles. See "PROPOSAL -- MERGER OF
SUBURBAN BANCORP INTO FIFTH THIRD -- Accounting
Treatment."
NO APPRAISAL OR DISSENTERS'
RIGHTS: Pursuant to Section 262 of the Delaware General
Corporation Law ("Section 262"), because Suburban
Bancorp Common Stock is traded on the Nasdaq
National Market as of the Record Date, stockholders
of Suburban Bancorp will not have appraisal rights
or rights as dissenting stockholders in the Merger.
See "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO
FIFTH THIRD -- No Appraisal or Dissenters' Rights."
CONDITIONS OF CLOSING: The Merger is subject to several significant
conditions, including but not limited to, Suburban
Bancorp stockholder approval, and approval by the
9
<PAGE> 12
Board of Governors of the Federal Reserve System,
the Office of Thrift Supervision and the Ohio
Division of Financial Institutions, applications
for which have been filed. See "PROPOSAL -- MERGER
OF SUBURBAN BANCORP INTO FIFTH THIRD -- Conditions
to Closing."
RIGHT TO TERMINATE: The Affiliation Agreement and the Merger may be
terminated by a vote of a majority of the Suburban
Bancorp Board of Directors if, at any time during
the 10 day period commencing two days after the
Determination Date (as defined herein), both of the
following conditions are satisfied: (1) the product
of the Average Closing Price (as defined herein) of
Fifth Third Common Stock and .24357 is less than
the Book Value Per Share of Suburban Bancorp Common
Stock (as defined herein); AND (2) the number
obtained by dividing the Average Closing Price by
$80.00 is less than the number obtained by dividing
the Index Price (as defined herein) on the
Determination Date by the Index Price on February
13, 1997, and subtracting 0.10 from such quotient.
If the Suburban Bancorp Board of Directors elects
to terminate the Affiliation Agreement as described
in the preceding paragraph, Fifth Third will have
the option to either (a) increase the Exchange
Ratio such that the product of the Exchange Ratio
as so adjusted and the Average Closing Price equals
the Book Value Per Share of Suburban Bancorp Common
Stock, or (b) in lieu of adjusting the Exchange
Ratio, pay cash for each outstanding share of
Suburban Bancorp Common Stock (in addition to
.24357 shares of Fifth Third Common Stock) in an
amount equal to the difference between (x) the Book
Value Per Share of Suburban Bancorp Common Stock
and (y) the product obtained by multiplying the
Average Closing Price by .24357, provided that such
cash payment may not render impossible the
satisfaction of certain conditions set forth in the
Affiliation Agreement regarding the federal tax
aspects of the Merger. If Fifth Third elects either
of the above alternatives, the Affiliation
Agreement will not terminate notwithstanding the
election of the Suburban Bancorp Board of
Directors. See "PROPOSAL -- MERGER OF SUBURBAN
BANCORP INTO FIFTH THIRD -- Amendment; Waiver;
Termination."
Approval of the proposal will also authorize the
Suburban Bancorp Board of Directors to exercise its
discretion whether to proceed with the Merger in
the event that Suburban Bancorp has the right to
exercise its termination right if the two
conditions described above are not satisfied.
Suburban Bancorp expects that the Suburban Bancorp
Board of Directors would exercise such discretion
and decide whether to terminate the Affiliation
Agreement without a resolicitation of stockholders.
The Affiliation Agreement may also be terminated
and the Merger abandoned at any time prior to the
Effective Time by written notice of either Fifth
Third or Suburban Bancorp to the other upon a
material breach of the Affiliation Agreement; a
material and adverse change in the business or
financial condition of either Fifth Third or
Suburban Bancorp; the failure to close the Merger
by December 31, 1997; the mutual written consent of
Fifth Third and Suburban Bancorp; the failure of
the Suburban Bancorp stockholders to approve the
Affiliation Agreement; or the occurrence of any
event which renders impossible one or more
conditions to the obligations of the other party to
effect the Merger
10
<PAGE> 13
and non-compliance is not waived by the unaffected
party. See "PROPOSAL -- MERGER OF SUBURBAN BANCORP
INTO FIFTH THIRD -- Amendment; Waiver;
Termination."
EFFECT ON SUBURBAN BANCORP
EMPLOYEES; INTERESTS OF
CERTAIN PERSONS IN THE
MERGER: Fifth Third shall use its best efforts to employ at
Fifth Third or other Fifth Third subsidiaries or
affiliates as many of the employees of Suburban
Bancorp and Suburban Federal Bank who desire such
employment within the Fifth Third holding company
system as possible, to the extent of available
positions and consistent with Fifth Third's
standard staffing levels and personnel policies.
Each employee of Suburban Federal Bank who becomes
an employee of Fifth Third or its subsidiaries
subsequent to the Merger will be entitled to
participate in all employee benefit plans sponsored
by Fifth Third or its subsidiaries on the same
terms and to the same extent as similarly situated
employees of Fifth Third. If the Suburban Federal
Bank 401(k) Profit Sharing Plan is merged into the
Fifth Third Master Profit Sharing Plan, then
service taken into account under the Suburban
Federal Bank 401(k) Profit Sharing Plan shall count
as service taken into account for all purposes
under the Fifth Third Master Profit Sharing Plan,
otherwise such employees shall not receive past
service credit under the Master Profit Sharing
Plan. Suburban Federal Bank employees shall receive
past service credit under the Fifth Third Master
Retirement Plan for eligibility and vesting
purposes, but not for benefit accrual purposes. For
all other purposes other than the Master Profit
Sharing Plan and the Master Retirement Plan,
service to Suburban Bancorp and/or Suburban Federal
Bank shall be taken into account for purposes of
determining eligibility and vesting, if applicable,
of benefits.
It is not anticipated that Fifth Third will enter
into employment agreements with any officers of
Suburban Bancorp or Suburban Federal Bank in
connection with the transactions contemplated by
the Affiliation Agreement. In connection with the
Merger, each of the three officers of Suburban
Bancorp who have employment or severance agreements
with Suburban Bancorp or Suburban Federal Bank will
be terminated and receive, as of the Effective
Time, the severance or termination payments
provided in his respective agreement. The officers
and directors of Suburban Bancorp will be provided
certain directors' and officers' liability
insurance protection for five years following the
Effective Time, as long as such insurance may be
purchased on the terms specified in the Affiliation
Agreement. Also, Fifth Third has affirmatively
assumed the obligation to indemnify officers and
directors of Suburban Bancorp, Suburban Federal
Bank and their subsidiaries under specified
circumstances. See "PROPOSAL -- MERGER OF SUBURBAN
BANCORP INTO FIFTH THIRD -- Effect on Suburban
Bancorp Employees" and "--Interests of Certain
Persons in the Merger."
MERGER: Upon consummation of the Merger, Suburban Bancorp
will merge with and into Fifth Third and Suburban
Bancorp will cease to exist as a separate entity.
Fifth Third plans to, simultaneously with the
Merger, have Suburban Federal Bank merge with and
into Fifth Third's wholly owned subsidiary, The
Fifth Third Bank. See "PROPOSAL --
11
<PAGE> 14
MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD --
Effects of Merger."
SECURITIES INVOLVED: For a comparative analysis of Suburban Bancorp
Common Stock and Fifth Third Common Stock, see
"DESCRIPTION OF CAPITAL STOCK AND COMPARATIVE
RIGHTS OF STOCKHOLDERS."
COMPARATIVE MARKET PRICES: Fifth Third Common Stock and Suburban Bancorp
Common Stock are traded on the Nasdaq National
Market under the symbols "FITB" and "SBCN",
respectively. On March 12, 1997, the business day
immediately preceding the public announcement of
the execution of the Affiliation Agreement setting
forth the terms of the Merger, on March 31, 1997,
and on May , 1997, the most recent practicable
date prior to the printing of this Proxy
Statement/prospectus comparative market prices of
Suburban Bancorp Common Stock and Fifth Third
Common Stock were as follows:
<TABLE>
<CAPTION>
MARCH 12, 1997 MARCH 31, 1997 MAY , 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Suburban Bancorp Common Stock
(Closing sales price).................. $17.00 17.50
Fifth Third Common Stock
(Closing sales price).................. $87.94 77.50
</TABLE>
12
<PAGE> 15
SELECTED HISTORICAL FINANCIAL DATA OF FIFTH THIRD
The following table sets forth certain historical financial data concerning
Fifth Third for the five years ended December 31, 1996 and the three month
periods ended March 31, 1997 and 1996. All information for the years ended
December 31, 1996 is based on information contained in Fifth Third's 1996 Annual
Report to Stockholders. The Fifth Third Annual Report accompanies this Proxy
Statement/Prospectus, and all such financial information is incorporated herein
by reference and should be read in conjunction therewith. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- ------- ------- ------- ------- ------- -------
($000'S EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Net interest income....... $181,316 161,628 689,244 563,432 516,753 473,515 427,870
Provision for credit
losses............... 17,446 9,750 64,014 42,962 35,780 48,037 66,100
-------- ------- ------- ------- ------- ------- -------
Net interest income after
provision for credit
losses.................. 163,870 151,878 625,230 520,470 480,973 425,478 361,770
Other operating income.... 98,560 83,668 368,415 305,715 255,908 231,150 206,308
Operating expenses (1).... 120,975 117,239 493,330 395,617 371,545 352,720 316,315
-------- ------- ------- ------- ------- ------- -------
Income before income
taxes................... 141,455 118,307 500,315 430,568 365,336 303,908 251,763
Applicable income taxes... 46,959 39,167 165,256 142,883 120,877 97,673 79,742
-------- ------- ------- ------- ------- ------- -------
Net income................ $ 94,496 79,140 335,059 287,685 244,459 206,235 172,021
======== ======= ======= ======= ======= ======= =======
COMMON SHARE DATA:(a)
Net income per share...... $ .91 .79 3.22 2.91 2.53 2.19 1.84
Fully diluted net income
per share............... $ .89 .76 3.16 2.83 2.48 2.15 1.82
Cash dividends declared
per share............... $ .29 .26 1.10 .96 .80 .68 .60
Book value at period
end..................... $ 18.62 17.53 20.25 17.17 14.41 13.29 11.48
Average shares outstanding
(000's)................. 104,386 100,780 103,994 98,879 96,580 93,973 93,494
Average fully diluted
shares outstanding
(000's)................. 105,944 105,108 106,615 103,106 100,386 98,007 94,782
</TABLE>
- ---------------
(a) Share data has been adjusted for the three-for-two stock splits effected in
the form of stock dividends paid January 12, 1996 and April 15, 1992.
13
<PAGE> 16
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------------ --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- ---------- ---------- ----------
($000'S EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION AT
PERIOD END:
Securities............... $ 6,553,553 5,622,064 6,400,685 4,338,269 3,637,035 2,674,468 2,419,421
Loans and Leases......... $12,437,486 12,104,260 12,514,792 11,690,643 10,286,457 9,566,898 8,115,590
Assets................... $20,175,697 18,869,875 20,548,998 17,052,883 14,957,009 13,128,544 11,390,289
Deposits................. $13,922,516 13,709,298 14,374,656 12,485,780 10,630,878 9,477,306 8,447,812
Short-Term Borrowings.... $ 3,402,405 2,455,723 3,265,432 2,005,495 2,452,218 1,691,744 1,348,105
Long-Term Debt and
Convertible
Subordinated Notes..... $ 457,747 429,703 277,661 425,396 178,713 407,864 309,730
Stockholders' Equity..... $ 1,914,891 1,792,767 2,144,125 1,724,575 1,398,774 1,277,660 1,076,854
RATIOS:
PROFITABILITY RATIOS:
Return on average assets
(1).................... 1.88% 1.74 1.72 1.78 1.77 1.71 1.63
Return on average
stockholders'
equity (1)............. 18.7% 18.3 17.2 18.1 18.6 17.8 16.9
Net interest margin...... 4.07% 4.04 3.99 3.90 4.16 4.39 4.54
Overhead ratio (1) (2)... 41.6% 46.0 45.0 43.9 46.6 48.6 48.6
Other operating income to
total income (3)....... 35.1% 34.1 34.6 34.8 33.1 32.2 31.6
CAPITAL RATIOS:
Average stockholders'
equity to average
assets................. 10.04% 9.54 9.99 9.82 9.50 9.61 9.62
Tier 1 risk-adjusted
capital................ 11.59% 10.17 11.37 11.03 11.26 11.50 11.24
Total risk-adjusted
capital................ 14.30% 13.22 14.06 14.33 13.21 13.85 14.07
Tier 1-leverage.......... 9.23% 9.47 9.22 9.47 9.62 9.59 9.15
RATIO OF EARNINGS TO
FIXED CHARGES(4)
Including deposit
interest............... 1.77x 1.73 1.71 1.70 1.89 1.89 1.69
Excluding deposit
interest............... 3.63x 3.90 3.93 3.49 4.75 5.77 5.47
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEARS ENDED DECEMBER 31,
----------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
CREDIT QUALITY RATIOS:
Reserve for credit losses to nonperforming
assets....................................... 418.44% 452.12 531.48 436.06 570.50 362.84 155.53
Reserve for credit losses to loans and leases
outstanding.................................. 1.51% 1.50 1.50 1.52 1.52 1.51 1.50
Net charge-offs to average loans and leases
outstanding.................................. .56% .40 .49 .27 .18 .31 .64
Nonperforming assets to loans, leases and other
real estate owned............................ .36% .33 .28 .35 .27 .42 .96
</TABLE>
- ---------------
(1) Operating expenses for 1996 include the impact of the special SAIF
assessment of $16.6 million pretax ($10.8 million after tax or $.10 per
share). For comparability, excluding the impact of this assessment, return
on average assets, return on average equity and the overhead ratio would
have been 1.78%, 17.8% and 43.5%, respectively.
(2) Operating expenses divided by the sum of taxable equivalent net interest
income and other operating income.
(3) Other operating income excluding securities gains and losses as a percent of
net interest income and other operating income excluding securities gains
and losses.
(4) Earnings represent income before income taxes plus fixed charges. Fixed
charges include interest expense and the proportion deemed representative of
the interest factor of rental expense, net of income from subleases.
14
<PAGE> 17
SELECTED HISTORICAL FINANCIAL DATA OF
SUBURBAN BANCORP
The following table sets forth certain historical financial data concerning
Suburban Bancorp. This information is based on information contained in Suburban
Bancorp's 1996 Annual Report to Stockholders for the fiscal year ended June 30,
1996, and Quarterly Reports on Form 10-QSB for the nine month periods ended
March 31, 1997 and March 31, 1996, respectively, all of which are available on
request and are incorporated by reference in this Proxy Statement/Prospectus and
should be read in conjunction therewith.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEARS ENDED JUNE 30,
--------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ----- ----- ----- ----- ------
($000'S EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
- -------------------------
Net interest income before provision for
credit loss.............................. $4,674 4,314 5,858 6,262 5,755 5,679 5,081
Provision for credit losses................ 0 0 0 10 63 831 1,598
------ ----- ----- ----- ----- ----- -------
Net interest income after provision for
credit losses............................ 4,674 4,314 5,858 6,252 5,692 4,848 3,483
Other operating income..................... 595 415 540 494 704 905 516
Operating expenses......................... 4,377 3,975 5,011 4,314 4,217 3,656 5,487
------ ----- ----- ----- ----- ----- -------
Income (loss) before federal income tax
expense.................................. 892 754 1,387 2,432 2,179 2,097 (1,488)
Federal income tax expense................. 316 283 435 859 703 864 118
Cum. effect of change in acctg. prin....... 1,173
------ ----- ----- ----- ----- ----- -------
Net income................................. $ 576 471 952 1,573 2,649 1,233 (1,606)
====== ===== ===== ===== ===== ===== =======
COMMON SHARE DATA:
Net income per share....................... $ 0.40 0.33 0.67 1.07 1.76 N/A N/A
Cash dividends declared per share.......... $ 0.45 0.40 0.48 0.40 0.10 N/A N/A
Book value at period end................... $18.00 17.98 18.06 17.85 17.29 N/A N/A
Average shares outstanding (000's):........ 1,438 1,426 1,424 1,468 1,501 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEARS ENDED JUNE 30,
------------------ -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- ------- ------- ------- ------- ------- -------
($000'S EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION AT PERIOD
END:
Securities..................... $ 29,748 33,638 32,324 43,834 50,780 23,429 21,586
Loans and Leases............... $178,357 148,781 158,728 143,121 111,808 109,657 116,884
Assets......................... $221,926 197,136 202,057 196,507 181,162 150,670 155,729
Deposits....................... $133,349 126,210 119,691 125,495 119,573 122,247 135,132
Short-Term Borrowings.......... $ 31,125 12,716 19,137 7,679 2,633 686 425
Long-Term Debt................. $ 28,410 29,963 34,890 35,456 32,034 16,502 10,575
Stockholders' Equity........... $ 25,895 25,640 25,721 26,207 25,950 10,184 8,951
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEARS ENDED JUNE 30,
1997 1996 1996 1995 1994 1993 1992
-------- ------- ------- ------- ------- ------- -------
($000'S EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS:
PROFITABILITY RATIOS:
Return on average assets....... 0.36% 0.32 0.48 0.83 1.56 0.81 (1.03)
Return on average stockholders'
equity....................... 2.97% 2.37 3.62 5.96 11.25 12.62 (17.15)
Net interest margin............ 2.96% 2.97 3.01 3.39 3.65 3.92 3.45
Overhead ratio (1)............. 83.07% 84.08 78.32 62.71 63.62 58.40 68.55
Other operating income to total
income (2)................... 11.29% 11.11 10.18 7.33 10.40 13.75 9.22
CAPITAL RATIOS:
Average stockholders' equity to
average assets............... 12.00% 13.37 13.21 13.89 13.90 6.46 6.00
Tier 1 risk-adjusted capital... N/A N/A N/A N/A N/A N/A N/A
Total risk-adjusted capital.... 19.88% 20.91 20.75 20.07 20.62 11.31 9.64
Tier 1 -- leverage............. 10.31% 10.87 10.90 10.60 10.40 6.60 5.50
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEARS ENDED JUNE 30,
------------------ -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CREDIT QUALITY RATIOS:
Reserve for credit losses to
nonperforming assets......... 725.46% 4481.43 4482.86 828.57 862.33 390.68 8906.00
Reserve for credit losses to
loans and leases
outstanding.................. 1.73% 2.06 1.94 2.14 2.71 2.71 2.13
Net charge-offs to average
loans and leases
outstanding.................. 0.00% 0.00 0.00 0.00 0.01 0.28 0.08
Nonperforming assets to loans,
leases and other real estate
owned........................ 0.24% 0.26 0.17 0.39 1.21 3.49 3.87
</TABLE>
- ---------------
(1) Operating expenses divided by the sum of taxable equivalent net interest
income and other operating income.
(2) Other operating income excluding securities gains and losses as a percent of
net interest income and other operating income excluding securities gains
and losses.
16
<PAGE> 19
COMPARATIVE MARKET PRICE AND DIVIDEND DATA
Fifth Third Common Stock and Suburban Bancorp Common Stock are traded on
the Nasdaq National Market. The following table sets forth (in per share
amounts), for the quarterly periods indicated, the high and low closing sales
prices and the dividends declared during each quarterly period.
<TABLE>
<CAPTION>
FIFTH THIRD COMMON STOCK SUBURBAN BANCORP COMMON STOCK
------------------------------- -------------------------------
DIVIDENDS DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1995:
First Calendar Quarter.......... $35.17 $31.38 $ 0.233 $18.00 $15.75 $ 0.175
Second Calendar Quarter......... $38.25 $32.09 $ 0.233 $18.25 $16.50 $ 0.075
Third Calendar Quarter.......... $38.83 $36.33 $ 0.233 $18.25 $15.75 $ 0.075
Fourth Calendar Quarter......... $50.42 $37.75 $ 0.260 $18.50 $16.50 $ 0.100
1996:
First Calendar Quarter.......... $59.19 $43.75 $ 0.260 $18.50 $15.50 $ 0.150
Second Calendar Quarter......... $58.00 $50.13 $ 0.260 $17.00 $14.25 $ 0.150
Third Calendar Quarter.......... $58.13 $50.25 $ 0.290 $17.25 $14.25 $ 0.150
Fourth Calendar Quarter......... $73.75 $58.50 $ 0.290 $16.75 $14.25 $ 0.150
1997:
First Calendar Quarter.......... $88.50 $62.00 $ 0.290 $20.00 $15.25 $ 0.150
Second Calendar Quarter (through
May , 1997)................ $ $ -- $ $ --
</TABLE>
17
<PAGE> 20
COMPARATIVE PER SHARE DATA
The following table sets forth certain per-share information for both Fifth
Third and Suburban Bancorp at the dates indicated and for the periods then
ended. The equivalent values of such information are based on the Exchange Ratio
of .24357 shares of Fifth Third Common Stock for each share of Suburban Bancorp
Common Stock. Neither Suburban Bancorp nor Fifth Third can give any assurances
that the following table will accurately reflect figures and values applicable
at the date of consummation of the Merger.
<TABLE>
<CAPTION>
EQUIVALENT SHARES
BASIS-
.24357 SHARES OF
FIFTH
FIFTH THIRD SUBURBAN THIRD COMMON STOCK
------------------- BANCORPORATION ---------------------
FULLY -------------- FULLY
PRIMARY DILUTED ACTUAL PRIMARY DILUTED
------- ------- -------------- ------- -------
<S> <C> <C> <C> <C> <C>
NET INCOME PER SHARE
Twelve months ended December 31, 1996... $ 3.22 $3.16 $ 0.27 $0.78 $0.77
Three months ended March 31, 1997....... $ 0.91 $0.89 $ 0.32 $0.22 $0.22
DIVIDENDS DECLARED PER SHARE
Twelve months ended December 31, 1996... $ 1.10 -- $ 0.60 $0.27 --
Three months ended March 31, 1997....... $ 0.29 -- $ 0.15 $ .07 --
BOOK VALUE PER SHARE
At December 31, 1996.................... $ 20.25 -- $18.04 $4.93 --
At March 31, 1997....................... $ 18.62 -- $18.00 $4.54 --
</TABLE>
18
<PAGE> 21
THE SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to the stockholders of
Suburban Bancorporation, Inc. ("Suburban Bancorp") in connection with the
solicitation by the Board of Directors of Suburban Bancorp of proxies to be used
at a Special Meeting of Stockholders (the "Special Meeting") to be held on June
, 1997, at , Eastern Time, at , located at
, , Ohio, and at any
adjournments thereof. This Proxy Statement/Prospectus, the enclosed Fifth Third
1996 Annual Report to Stockholders, the enclosed Suburban Bancorp 1996 Annual
Report to Stockholders and the enclosed form of proxy are first being sent to
stockholders of Suburban Bancorp on or about May , 1997.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, stockholders of Suburban Bancorp will be asked to
approve an Affiliation Agreement dated as of March 13, 1997, between Fifth Third
Bancorp ("Fifth Third") and Suburban Bancorp (the "Affiliation Agreement"), and
the transactions contemplated thereby. Pursuant to the Affiliation Agreement,
Suburban Bancorp will merge into Fifth Third (the "Merger"). See
"PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD."
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Special Meeting and all adjournments thereof. Proxies may be revoked by
written notice to John A. Buchheid, Secretary of Suburban Bancorp, at the
address shown above, by filing a later dated proxy prior to a vote being taken
on a particular proposal at the Special Meeting or by attending the Special
Meeting and voting in person.
Proxies solicited by the Board of Directors of Suburban Bancorp will be
voted in accordance with the directions given therein. WHERE NO INSTRUCTIONS ARE
INDICATED, PROXIES WILL BE VOTED FOR APPROVAL OF THE AFFILIATION AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY. The proxy confers discretionary authority
on the persons named therein to vote with respect to matters incident to the
conduct of the Special Meeting. If any other business is presented at the
Special Meeting, proxies will be voted by those named therein in accordance with
the determination of a majority of the Board of Directors. Proxies marked as
abstentions will not be counted as votes cast. In addition, shares held in
street name which have been designated by brokers on proxy cards as not voted
will not be counted as votes cast. Proxies marked as abstentions or as broker no
votes, however, will be treated as shares present for purposes of determining
whether a quorum is present.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
Stockholders of record as of the close of business on May , 1997 (the
"record date") are entitled to one vote for each share then held. At the record
date, Suburban Bancorp had shares of common stock issued and
outstanding. The presence, in person or by proxy, of at least one-third of the
total number of shares of common stock outstanding and entitled to vote will be
necessary to constitute a quorum at the Special Meeting.
Persons and groups owning in excess of 5% of Suburban Bancorp's common
stock are required to file certain reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon
such reports and other information known by management, the following table sets
forth, at the record date, certain information as to the common stock
beneficially owned by persons
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<PAGE> 22
owning in excess of 5% of Suburban Bancorp's common stock, by each director of
Suburban Bancorp and by all directors and executive officers of Suburban Bancorp
as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED AT
OF BENEFICIAL OWNER , 1997 PERCENT OF CLASS
- ------------------------------------------------------- ---------------------- ----------------
<S> <C> <C>
5% OR MORE BENEFICIAL OWNERS
Suburban Bancorporation, Inc........................... 85,169(1) 5.77%
Employee Stock Ownership Plan ("ESOP")
10869 Montgomery Road
Cincinnati, Ohio 45242
MANAGEMENT
Robert A. Baron........................................ 30,392(2) 2.06%
R. Glen Mayfield....................................... 25,392(2) 1.72%
William V. Strauss..................................... 12,594(2) .85%
William K. Frary....................................... 10,892(2) .74%
Joseph H. Hutchison.................................... 68,759(2) 4.66%
Kenneth L. Kerr, Jr.................................... 41,942(2) 2.84%
All directors and executive officers as a group (12
persons)............................................. 285,690(3)(4) 19.37%
</TABLE>
- ---------------
(1) These shares are held in a suspense account for future allocation among
participating employees as the loan used to purchase the shares is repaid.
The ESOP trustees, currently Directors Kerr, Baron and Frary, vote all
allocated shares in accordance with instructions of the participants.
Unallocated shares and shares for which no instructions have been received
are voted by the ESOP trustees in the same ratio as participants direct the
voting of allocated shares. Excludes allocated shares held by ESOP. At the
record date, shares had been allocated to all employees who participate in
the ESOP and were still held in trust.
(2) Includes 9,125, 9,125, 9,125, 9,125, 20,289, and 9,125 shares which
Directors Baron, Mayfield, Strauss, Frary, Hutchison, and Kerr,
respectively, had a right to purchase pursuant to stock options within sixty
(60) day of the record date; includes 506, 506, 506, 506, 7,096, and 506
shares which Directors Baron, Mayfield, Strauss, Frary, Hutchison, and Kerr,
respectively, had a right to acquire under the management recognition plans
within sixty (60) days of the record date.
(3) Includes 110,766 shares which all directors and executive officers as a
group had a right to purchase pursuant to stock options within sixty (60)
days of the record date; includes 22,296 shares which all directors and
executive officers as a group had a right to acquire under the management
recognition plans within sixty (60) days of the record date.
(4) Excludes unallocated shares held by the ESOP (see Note (1) above).
MISCELLANEOUS
The cost of soliciting proxies will be borne by Suburban Bancorp, except
Fifth Third has agreed to pay all expenses of printing and mailing this Proxy
Statement/Prospectus. Suburban Bancorp will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of common stock. In addition to
solicitations by mail, directors, officers and regular employees of Suburban
Bancorp may solicit proxies personally or by telegraph or telephone without
additional compensation.
In addition, Suburban Bancorp has retained D.F. King & Co. to assist
Suburban Bancorp in distributing proxy materials and contacting record and
beneficial owners of Suburban Bancorp Common Stock, and Suburban Bancorp has
agreed to pay D.F. King & Co. a fee of $ plus out-of-pocket expenses up
to $ for its services to be rendered on behalf of Suburban Bancorp.
Copies of Suburban Bancorp's annual report to stockholders, including
financial statements, for the fiscal year ended June 30, 1996 and Suburban
Bancorp's quarterly report on Form 10-QSB (Part I only) accompany this Proxy
Statement/Prospectus. Any stockholder who does not receive copies of such
reports
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<PAGE> 23
may obtain copies by writing to the Secretary of Suburban Bancorp. Such annual
report is not to be treated as a part of the proxy solicitation material or as
having been incorporated herein by reference.
STOCKHOLDER PROPOSALS
Suburban Bancorp will hold an annual stockholder meeting in 1997 only if
the Merger is not consummated before the time of such meeting. If necessary, the
annual stockholder meeting is expected to be held no earlier than mid-October
1997.
In order to be eligible for inclusion in Suburban Bancorp's proxy materials
for the annual stockholder meeting, if any, a stockholder proposal to take
action at such meeting was required to have been received at Suburban Bancorp's
main office at 10869 Montgomery Road, Cincinnati, Ohio 45242, no later than May
14, 1997. Any such proposal shall be subject to the requirements of the proxy
rules adopted under the Exchange Act.
PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD
Pursuant to the Affiliation Agreement, each stockholder of Suburban Bancorp
will receive for each share of Suburban Bancorp Common Stock, $0.01 par value
per share ("Suburban Bancorp Common Stock"), which such stockholder holds at the
effective time of the Merger (the "Effective Time"), .24357 (the "Exchange
Ratio") of a share of Fifth Third Common Stock, no par value per share ("Fifth
Third Common Stock"). Based on the closing price per share of Fifth Third Common
Stock on the Nasdaq National Market on May , 1997, the value of .24357 of a
share of Fifth Third Common Stock was $ . The Exchange Ratio will be
adjusted so as to give the Suburban Bancorp stockholders the economic benefit of
any stock dividends, reclassifications, recapitalizations, split-ups, exchanges
of shares, distributions or combinations or subdivisions of Fifth Third Common
Stock effected before the Effective Time.
In the event of a substantial decline in the trading price of Fifth Third
Common Stock relative to a group of peer institutions under certain
circumstances as provided in the Affiliation Agreement, the Suburban Bancorp
Board of Directors may elect to terminate the Affiliation Agreement and the
Merger. If such an election were made, Fifth Third would have the option to
either (a) increase the Exchange Ratio or, (b) in lieu of adjusting the Exchange
Ratio, pay cash for each outstanding share of Suburban Bancorp Common Stock (in
addition to .24357 shares of Fifth Third Common Stock). If Fifth Third elects
either such alternative, the Affiliation Agreement will not terminate
notwithstanding the election of the Suburban Bancorp Board of Directors. For
additional information regarding the terms and conditions applicable to
termination of the Affiliation Agreement and the Merger and possible resulting
adjustments to the consideration to be paid to the Suburban Bancorp
stockholders, see "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Amendment; Waiver; Termination."
TERMS AND CONDITIONS OF THE PROPOSED MERGER
The following description contains, among other information, summaries of
certain provisions of the Affiliation Agreement and is qualified in its entirety
by reference to the full text thereof, a copy of which is appended as Annex A to
this Proxy Statement/Prospectus and is incorporated herein by reference.
BACKGROUND OF THE MERGER
From time to time since its initial public offering in September 1993,
Suburban Bancorp's Board of Directors and management have reviewed Suburban
Bancorp's strategic alternatives for enhancing profitability and maximizing
stockholder value, particularly in light of changes in the thrift industry in
recent years. The thrift industry has been subject to intensifying competition
from commercial banks, as well as from non-bank financial service providers.
Despite the competitive and economic pressures, however, in recent years
Suburban Bancorp has strengthened its capitalization and asset quality and
improved its profitability while paying regular cash dividends to its
stockholders and, when appropriate, repurchasing shares of its outstanding
stock.
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<PAGE> 24
In the Summer of 1995, Suburban Bancorp's Board of Directors and management
consulted with its financial advisors and special legal counsel with regard to
potential strategies to enhance stockholder value, including the implementation
of various business initiatives and the investigation of possible merger and
acquisition opportunities. In the Fall of 1995, Suburban Bancorp's financial
advisor, Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") contacted several
larger banks and thrifts regarding a possible merger or acquisition of Suburban
Bancorp. Of these institutions, a few requested and received an information
package, and, of those, two indicated possible interest in a business
combination with Suburban Bancorp. Through Sandler O'Neill, Suburban Bancorp
conducted separate preliminary discussions with these potential acquirors, but
neither institution made an acquisition offer, and both institutions eventually
elected to pursue other opportunities.
In January 1996, the Board of Directors and management consulted with
Sandler O'Neill regarding the results of its solicitation of potential acquirors
and Suburban Bancorp's resulting strategic alternatives, with a focus on
initiatives to strengthen Suburban Bancorp's business and profitability.
Subsequently, Suburban Bancorp's Board of Directors and management implemented
several business initiatives, including the elimination of an underperforming
branch office, the introduction of innovative new deposit programs and the
expansion of consumer lending, commercial real estate lending and commercial
business lending activities, in a concerted effort to improve profitability and
enhance stockholder value. At various times during this period, directors and
management had opportunities to discuss possible mergers or acquisitions of
Suburban Bancorp with other institutions, and, in each instance, Suburban
Bancorp's management or financial advisor pursued discussions with the other
institution, but no agreement was reached or offer made, and either the other
institution or Suburban Bancorp elected to pursue other opportunities.
In late December 1996, Robert L. Ernst, a Senior Vice President of Fifth
Third, contacted Suburban Bancorp's President and Chief Executive Officer,
Joseph F. Hutchison, regarding a possible merger of Suburban Bancorp with Fifth
Third. Mr. Hutchison indicated that he would be interested in meeting to discuss
Fifth Third's ideas, and, if the terms of a possible merger were sufficiently
compelling, he would be happy to present them to Suburban Bancorp's Board of
Directors for consideration. At that time, Suburban Bancorp was in separate
preliminary discussions with another institution (the "other institution")
regarding a possible merger, and Mr. Hutchison did not inform Fifth Third or the
other institution of each others' discussions with Suburban Bancorp.
When Mr. Hutchison met with Mr. Ernst in January 1997, they discussed the
compatibility of the businesses of Suburban Bancorp and Fifth Third, potential
financial characteristics of a combined entity, and general terms of a possible
stock-for-stock merger. After the meeting, Mr. Hutchison telephoned Suburban
Bancorp's directors to confirm their possible interest in a merger with Fifth
Third, and Suburban Bancorp and Fifth Third entered into a confidentiality
agreement. Thereafter, representatives of Fifth Third reviewed financial and
other information provided by Suburban Bancorp, and vice versa, and the
representatives held several meetings to resolve questions raised by such
investigations.
In February 1997, Suburban Bancorp received from Fifth Third and the other
institution written expressions of possible interest in a merger, and Suburban
Bancorp's Board of Directors held several meetings to consider and evaluate the
terms under discussion regarding a merger with Fifth Third or the other
institution. At separate meetings, Fifth Third and the other institution
presented to Suburban Bancorp's Board of Directors summaries of their respective
business practices and financial characteristics. The Board then consulted with
Sandler O'Neill regarding the relative merits of the terms under discussion with
Fifth Third and the other institution. Sandler O'Neill presented detailed
historical and pro forma information regarding the historical results of
operations, current financial condition and future business prospects of
Suburban Bancorp, Fifth Third and the other institution, as well as detailed
analyses of the value of Suburban Bancorp and the consideration assumed to be
received by stockholders of Suburban Bancorp in a merger with Fifth Third or the
other institution. Based on the information provided to Suburban Bancorp and
Sandler O'Neill by Fifth Third and the other institution, for purposes of
comparing the two possible mergers, it was assumed that, in a merger with Fifth
Third, Suburban Bancorp's stockholders would receive Fifth Third stock at a
fixed exchange ratio (possibly subject to increase in the event of a substantial
decrease in Fifth Third's stock price) and that, in a merger with the other
institution, Suburban Bancorp's stockholders would receive cash and/or
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<PAGE> 25
stock of the other institution (pursuant to their election, so long as the cash
totalled 49.9% of the aggregate consideration and stock totalled 51.1% of the
aggregate consideration) at an exchange ratio subject to increase or decrease in
the event of a substantial decrease or increase, respectively, in the
institution's stock price. Based on the terms under discussion, the current
market value of the Fifth Third stock assumed to be received for each share of
Suburban Bancorp stock in a merger with Fifth Third exceeded the current market
value of the cash or stock of the other institution assumed to be received for
each share of Suburban Bancorp stock in a merger with the other institution.
Moreover, the information regarding Fifth Third and the other institution
indicated that, relative to the other institution, Fifth Third was a
substantially larger and stronger banking organization, with superior resources,
operating results and business prospects, and Fifth Third Common Stock was a
more attractive form of consideration than cash or common stock of the other
institution. Following the presentation and an opportunity for discussion, the
Board determined that a merger with Fifth Third on the terms under discussion
would be in the best interests of Suburban Bancorp and its stockholders. As a
result, the Board authorized the negotiation of a merger agreement with Fifth
Third to be proposed for consideration by the Board and directed that the other
institution be informed that Suburban Bancorp had elected not to pursue a merger
with it at that time.
On March 13, 1997, Suburban Bancorp and its financial advisor and special
legal counsel completed the negotiation of the proposed affiliation agreement
with Fifth Third, and Suburban Bancorp's Board of Directors held a special
meeting with representatives of Suburban Bancorp's management, financial advisor
and special legal counsel for the purpose of considering the proposed agreement.
Suburban Bancorp's management reported in detail the course and results of its
discussions with Fifth Third and its observations and conclusions regarding the
compatibility of Suburban Bancorp and Fifth Third and the terms and conditions
of the proposed merger of Suburban Bancorp with Fifth Third. Sandler O'Neill
updated and confirmed its prior presentation regarding Suburban Bancorp and
Fifth Third and advised the Board that, on the basis of and subject to its
analyses, it was of the opinion that the ratio for the conversion of Suburban
Bancorp stock into Fifth Third stock under the proposed affiliation agreement
was fair to the stockholders of Suburban Bancorp from a financial point of view
(for additional information, see "Opinion of Financial Advisor to Suburban
Bancorp" below). Suburban Bancorp's special legal counsel discussed terms and
conditions of the proposed affiliation agreement and provided an overview of the
proposed merger and the process from the execution of the agreement through the
closing of the merger. Suburban Bancorp's management, financial advisor and
special legal counsel responded to questions and contributed to the Board's
evaluation of the proposed affiliation agreement. Upon the completion of its
deliberations, on March 13, 1997 the Board unanimously approved and adopted the
proposed affiliation agreement, the Affiliation Agreement was executed on behalf
of Suburban Bancorp and Fifth Third, and separate press releases were issued by
Suburban Bancorp and Fifth Third.
Subsequent to the execution of the Affiliation Agreement, Suburban Bancorp
received a letter from an institution expressing a possible interest in
acquiring Suburban Bancorp and Suburban Federal Bank, notwithstanding Suburban
Bancorp's announced Affiliation Agreement with Fifth Third. Suburban Bancorp
informed the institution that the Affiliation Agreement prohibits Suburban
Bancorp from discussing any acquisition or other transaction with any other
institution and that, since the letter was very preliminary in nature and did
not include information with respect to material terms such as structure, price
and conditions, Suburban was precluded under the Affiliation Agreement from
discussing its possible acquisition by the institution. Suburban Bancorp has not
received any further communication from the other institution.
Fifth Third's primary reason for consummating the Merger is to further a
long range commitment of realigning and expanding its branch system to better
meet and satisfy the needs of its customers, including those in Suburban
Bancorp's service area. Fifth Third's acquisition strategy has generally been to
fill in its markets along the interstate highways in Ohio, Kentucky and Indiana.
These acquisitions are designed to strengthen Fifth Third's ability to compete
in these markets by increasing their presence, consumer access and sales force.
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<PAGE> 26
REASONS FOR THE MERGER AND RECOMMENDATION OF THE BOARD OF DIRECTORS OF SUBURBAN
BANCORP
The Board of Directors of Suburban Bancorp considered the terms of the
Affiliation Agreement, including the consideration to be received by Suburban
Bancorp's stockholders in the Merger, in light of economic, financial, legal,
social and market factors and concluded that the Merger is in the best interests
of Suburban Bancorp and its stockholders. The terms of the Affiliation Agreement
are the result of arms' length negotiations between Suburban Bancorp and Fifth
Third, as well as consultations between Suburban Bancorp and its financial
advisor and special legal counsel. Among the factors considered by Suburban
Bancorp's Board of Directors were the historical operating results, current
financial condition, business and management and future financial and other
prospects of Suburban Bancorp and Fifth Third and the advice of Sandler O'Neill
as to the fairness to Suburban Bancorp's stockholders, from a financial point of
view, of the consideration to be received by them in the Merger. Also considered
were the relative size and geographic market areas of Suburban Bancorp and Fifth
Third, the employment policies of Fifth Third and Fifth Third's demonstrated
commitment to meeting the banking needs of the members of the communities it
serves. Suburban Bancorp's Board of Directors believes that the Merger will
afford Suburban Bancorp's stockholders the benefit of Fifth Third's
substantially larger market capitalization and more liquid market for its common
stock and will offer enhanced opportunities for Suburban Federal Bank and its
employees, as part of The Fifth Third Bank, to meet the needs of banking
customers and other members of the communities it serves. The Suburban Bancorp
Board of Directors further believes that Suburban Federal Bank, as part of The
Fifth Third Bank, will be in an enhanced competitive position with respect to
other financial institutions in its market area after the Merger.
THE BOARD OF DIRECTORS OF SUBURBAN BANCORP UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF SUBURBAN BANCORP VOTE FOR APPROVAL OF THE AFFILIATION AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY.
VOTE REQUIRED
The presence in person or by proxy of the holders of at least one-third of
the outstanding shares of Suburban Bancorp Common Stock will constitute a quorum
for the transaction of business at the Special Meeting.
APPROVAL OF THE MERGER REQUIRES THE AFFIRMATIVE VOTE OF AT LEAST A MAJORITY
OF THE OUTSTANDING SHARES OF SUBURBAN BANCORP COMMON STOCK ENTITLED TO VOTE.
Abstentions and broker non-votes will not be treated as votes cast and,
therefore, will have the same effect as a vote against the proposal.
It is expected that substantially all of the 174,274 shares of Suburban
Bancorp Common Stock (excluding shares underlying stock options) beneficially
owned by directors and executive officers of Suburban Bancorp and their
affiliates at the record date (11.8% of the total outstanding shares at that
date) will be voted for approval of the Affiliation Agreement and the
transactions contemplated thereby.
The Suburban Bancorp Board of Directors may elect to terminate the
Affiliation Agreement and the Merger if, at any time during the 10 day period
commencing two days after the Determination Date, both of the following
conditions are satisfied: (1) the product of the Average Closing Price of Fifth
Third Common Stock and .24357 is less than the Book Value Per Share of Suburban
Bancorp Common Stock; AND (2) the number obtained by dividing the Average
Closing Price by $80.00 is less than the number obtained by dividing the Index
Price on the Determination Date by the Index Price on February 13, 1997, and
subtracting 0.10 from such quotient.
Approval of the proposal will authorize the Suburban Bancorp Board of
Directors to exercise its discretion whether to proceed with the merger in the
event that Suburban Bancorp has the right to exercise its termination right if
the two conditions described above are not satisfied. Suburban Bancorp expects
that the Suburban Bancorp board of directors would exercise such discretion and
decide whether to elect to terminate the merger agreement without a
resolicitation of stockholders. Fifth Third may elect to override any such
election by either increasing the number of shares of Fifth Third Common Stock
issuable in the Merger or by paying cash in addition to the .24357 shares of
Fifth Third Common Stock otherwise payable for each share of
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<PAGE> 27
Suburban Bancorp Common Stock, all as described in more detail under
"PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD -- Amendment; Waiver;
Termination."
OPINION OF FINANCIAL ADVISOR TO SUBURBAN BANCORP
Sandler O'Neill has worked with Suburban Bancorp as its financial advisor,
and, has reviewed strategic opportunities for Suburban Bancorp from time to
time, since the fall of 1995. Pursuant to a letter agreement dated as of
February 14, 1997 (the "Sandler O'Neill Agreement"), Suburban Bancorp retained
Sandler O'Neill as an independent financial advisor in connection with strategic
planning and merger and acquisition transactions. Sandler O'Neill is a
nationally recognized investment banking firm whose principal business specialty
is banks and savings institutions and is regularly engaged in the valuation of
such businesses and their securities in connection with mergers and acquisitions
and other corporate transactions.
Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to Suburban Bancorp in connection with the Merger. In
connection therewith, at the March 13, 1997 meeting at which Suburban Bancorp's
Board of Directors approved and adopted the Affiliation Agreement, Sandler
O'Neill delivered a written opinion to Suburban Bancorp's Board of Directors
that, as of March 13, 1997, the consideration to be received by the holders of
shares of Suburban Bancorp Common Stock pursuant to the Affiliation Agreement
was fair, from a financial point of view, to such stockholders. On May , 1997,
Sandler O'Neill delivered another written opinion (the "Fairness Opinion") to
Suburban Bancorp's Board of Directors reaffirming that, as of such date, the
consideration to be received by the holders of shares of Suburban Bancorp Common
Stock pursuant to the Affiliation Agreement was fair, from a financial point of
view, to such stockholders. THE FULL TEXT OF THE FAIRNESS OPINION, WHICH SETS
FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX B
TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF SUCH OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO ANNEX B. HOLDERS OF SUBURBAN BANCORP COMMON STOCK ARE URGED TO READ
THE FAIRNESS OPINION IN ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF
THE PROPOSED MERGER. SANDLER O'NEILL'S FAIRNESS OPINION SHOULD NOT BE CONSTRUED
BY THE HOLDERS OF SHARES OF SUBURBAN BANCORP COMMON STOCK AS A RECOMMENDATION AS
TO HOW THEY SHOULD VOTE AT THE SPECIAL MEETING.
In connection with rendering the Fairness Opinion, Sandler O'Neill
performed a variety of financial analyses. The following is a summary of such
analyses, but does not purport to be a complete description of Sandler O'Neill's
analysis. The preparation of a fairness opinion is a complex process involving
subjective judgements and is not necessarily susceptible to a partial analysis
or summary description. Sandler O'Neill believes that its analyses must be
considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and processes underlying the Fairness
Opinion. In performing its analyses, Sandler O'Neill made numerous assumptions
with respect to industry performance, business and economic conditions and
various other matters, many of which cannot be predicted and are beyond the
control of Suburban Bancorp, Fifth Third and Sandler O'Neill. Any estimates
contained in Sandler O'Neill's analyses are not necessarily indicative of future
results or values, which may be significantly more or less favorable than such
estimates. Estimates on the values of companies do not purport to be appraisals
or necessarily reflect the prices at which companies or their securities may
actually be sold. Because such estimates are inherently subject to uncertainty,
neither Suburban Bancorp nor Sandler O'Neill assumes responsibility for their
accuracy.
Stock Trading History. Sandler O'Neill examined the history of the trading
prices and the volume of Suburban Bancorp Common Stock and Fifth Third Common
Stock, and the relationship between the movements in the prices of Suburban
Bancorp Common Stock and Fifth Third Common Stock, respectively, to movements in
certain stock indices, including the Standard & Poor's 500 Index, the Nasdaq
Banking Index and a composite group of publicly traded savings institutions (in
the case of Suburban Bancorp) and publicly traded commercial banks (in the case
of Fifth Third) in geographic proximity and of similar asset size.
Analysis of Selected Publicly Traded Companies. In preparing its
presentation, Sandler O'Neill used publicly available information to compare
selected financial and market trading information, including book value,
tangible book value, earnings, asset quality ratios, loan loss reserve levels,
profitability and capital
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<PAGE> 28
adequacy, for Suburban Bancorp and certain other institutions. The 13
publicly-traded regional savings institutions (the "Ohio Group") to which
Sandler O'Neill compared Suburban Bancorp were: Enterprise Federal Bancorp,
Fidelity Financial of Ohio, First Federal Bancorp, Inc., First Franklin
Corporation, Glenway Financial Corporation, Industrial Bancorp, Milton Federal
Financial Corp., OHSL Financial Corp., PVF Capital Corp., Potters Financial
Corp., Winton Financial Corp., and Wood Bancorp Corp., Sandler O'Neill also
compared Suburban Bancorp to a group of 10 publicly-traded savings institutions
which were considered to be highly-valued (the "Highly-Valued Group" ) by
investors because their price to tangible book value was greater than 145%. The
Highly-Valued Group institutions were: Coastal Financial Corp., First Citizens
Corporation, First Home Bancorp, Inc., Glacier Bancorp, Inc., Home Port Bancorp,
Inc., Ipswich Savings Bank, Lawrence Savings Bank, MetroWest Bank, PVF Capital
Corp., and Warren Bancorp, Inc. The analysis compared publicly available
year-end financial information as of and for the years ending June 30, 1991
through June 30, 1996, and for the nine months ended March 31, 1997. The
following comparisons are based upon the March 31, 1997 financial information.
The data described below with respect to the Ohio Group and the Highly-Valued
Group consists of the median data for such groups.
The total assets of Suburban Bancorp were approximately $222 million,
compared to approximately $230 million for the Ohio Group and approximately $354
million for the Highly-Valued Group. The annual growth rate of assets for
Suburban Bancorp was positive 12.57%, compared to a positive growth rate of
approximately 11.24% for the Ohio Group and approximately 10.11% for the
Highly-Valued Group. The total equity of Suburban Bancorp was approximately $26
million, compared to approximately $25 million for the Ohio Group and
approximately $28 million for the Highly-Valued Group. The tangible equity to
total assets ratio was 11.81% for Suburban Bancorp, compared to approximately
11.04% for the Ohio Group and approximately 11.67% for the Highly-Valued Group.
The net loans to assets ratio for Suburban Bancorp was approximately 80%,
compared to approximately 80% for the Ohio Group and approximately 75% for the
Highly-Valued Group. The cash and securities to total assets ratio was
approximately 18% for Suburban Bancorp, compared to approximately 18% for the
Ohio Group and approximately 22% for the Highly-Valued Group. Total deposits
were approximately $133 million for Suburban Bancorp, compared to approximately
$173 million for the Ohio Group and approximately $287 million for the
Highly-Valued Group. Suburban Bancorp had a gross loans to total deposits ratio
of approximately 136%, compared to approximately 106% for the Ohio Group and
approximately 94% for the Highly-Valued Group. The total borrowings to total
asset ratio for Suburban Bancorp was approximately 27%, compared to
approximately 11% for the Ohio Group and approximately 13% for the Highly-Valued
Group. The ratio of non-performing loans to total assets for Suburban Bancorp
was 0.19%, compared to approximately 0.18% for the Ohio Group and approximately
0.53% for the Highly-Valued Group. The ratio of non-performing assets to total
assets for Suburban Bancorp was 0.19%, compared to approximately 0.20% for the
Ohio Group and approximately 0.53% for the Highly-Valued Group. The ratio of
loan loss reserves to gross loans for Suburban Bancorp was 1.73%, compared to
approximately 0.50% for the Ohio Group and approximately 1.38% for the
Highly-Valued Group. The net interest margin of Suburban Bancorp was 3.00%,
compared to approximately 3.34% for the Ohio Group and 4.08% for the
Highly-Valued Group. The ratio of non-interest income to average assets for
Suburban Bancorp was 0.31%, compared to approximately 0.30% for the Ohio Group
and approximately 0.72% for the Highly-Valued Group. The ratio of non-interest
expense to average assets was 2.15% for Suburban Bancorp, compared to
approximately 2.15% for the Ohio Group and approximately 2.58% for the
Highly-Valued Group. The efficiency ratio of Suburban Bancorp was 67.3%,
compared to approximately 60.9% for the Ohio Group and approximately 57.8% for
the Highly-Valued Group. The overhead ratio of Suburban Bancorp was 64.2%,
compared to approximately 59.2% for the Ohio Group and approximately 53.1% for
the Highly-Valued Group. The return on average assets for Suburban Bancorp was
0.85%, compared to approximately 0.92% for the Ohio Group and approximately
1.42% for the Highly-Valued Group. The return on average equity for Suburban
Bancorp was 7.22%, compared to approximately 7.91% for the Ohio Group and
approximately 17.94% for the Highly-Valued Group. The price to tangible book
value for Suburban Bancorp was 99%, compared to approximately 108% for the Ohio
Group and approximately 168% for the Highly-Valued Group. The price to earnings
per share multiple for Suburban Bancorp was 13.9x, compared to approximately
13.9x for the Ohio Group and 9.8x for the Highly-Valued Group.
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Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for
Fifth Third and certain other institutions. The 14 publicly-traded commercial
banks (the "Peer Group") to which Sandler O'Neill compared Fifth Third were:
AmSouth Bancorp., Crestar Financial Corporation, First of America Bank Corp.,
First Security Corporation, Firstar Corp., Huntington Bancshares Inc., Marshall
& Ilsley Corp., Mercantile Bancorporation Inc., Northern Trust Corp., Regions
Financial Corp., SouthTrust Corp., Southern National Corporation, Summit
Bancorp, and Union Planters Corporation. Sandler O'Neill also compared Fifth
Third to a group of 15 publicly-traded commercial banks which were considered to
be highly-valued (the "Highly-Valued Bank Group") by investors because their
price to tangible book value was greater than 225%. The Highly-Valued Group
institutions were: Comerica Incorporated, Compass Bancshares Inc., First Bank
System Inc., First Empire State Corporation, First Security Corporation, Firstar
Corp., Huntington Bancshares Inc., Marshall & Ilsley Corp., Northern Trust
Corp., Old Kent Financial Corporation, Regions Financial Corp., SouthTrust
Corp., Southern National Corporation, State Street Boston Corp., and U.S.
Bancorp. The analysis compared publicly available year end financial information
as of and for the years ending December 31, 1991 through December 31, 1996. The
following comparisons are based upon the March 31, 1997 financial information.
The data described below with respect to the Peer Group and the Highly-Valued
Bank Group consists of the median data for such groups.
The total assets of Fifth Third were approximately $20.5 billion, compared
to $20.3 billion for the Peer Group and $20.7 billion, for the Highly-Valued
Bank Group. The annual growth rate of assets for Fifth Third was positive
26.92%, compared to a positive growth rate of approximately 6.92% for the Peer
Group and approximately 8.41% for the Highly-Valued Bank Group. The total equity
of Fifth Third was approximately $1.915 billion, compared to approximately $1593
billion for the Peer Group and approximately $1593 billion for the Highly-Valued
Bank Group. The tangible equity to total assets ratio was 8.093% for Fifth
Third, compared to approximately 7.25% for the Peer Group and approximately
6.70% for the Highly-Valued Bank Group. The net loans to total assets ratio for
Fifth Third was approximately 60.67%, compared to approximately 66.59% for the
Peer Group and approximately 67.65% for the Highly-Valued Bank Group. The cash
and securities to total assets ratio was approximately 35.16% for Fifth Third,
compared to approximately 27.97% for the Peer Group and approximately 26.88% for
the Highly-Valued Bank Group. Total deposits were approximately $13.922 billion
for Fifth Third, compared to approximately $14.911 billion for the Peer Group
and approximately $15.213 billion for the Highly-Valued Bank Group. Fifth Third
had a gross loans to total deposits ratio of approximately 89.27%, compared to
approximately 89.87% for the Peer Group and approximately 96.98% for the
Highly-Valued Bank Group. The total borrowings to total assets ratio for Fifth
Third was approximately 19.14%, compared to approximately 16.85% for the Peer
Group and approximately 21.70% for the Highly-Valued Bank Group. The total
non-performing loans to total assets ratio for Fifth Third was 0.20%, compared
to approximately 0.40% for the Peer Group and approximately 0.33% for the
Highly-Valued Bank Group. The non-performing assets to total assets ratio for
Fifth Third was 0.122%, compared to approximately 0.47% for the Peer Group and
approximately 0.38% for the Highly-Valued Bank Group. The ratio of loan loss
reserves to gross loans for Fifth Third was 1.51%, compared to approximately
1.51% for the Peer Group and approximately 1.50% for the Highly-Valued Bank
Group. The net interest margin of Fifth Third was 3.99%, compared to
approximately 4.31% for the Peer Group and approximately 4.43% for the
Highly-Valued Bank Group. The ratio of non-interest income to average assets for
Fifth Third was 1.89%, compared to approximately 1.59% for the Peer Group and
approximately 1.59% for the Highly-Valued Bank Group. The ratio of non-interest
expense to average assets was 2.40% for Fifth Third, compared to approximately
3.17% for the Peer Group and approximately 3.24% for the Highly-Valued Bank
Group. The efficiency ratio of Fifth Third was 40.69%, compared to approximately
55.85% for the Peer Group and approximately 55.85% for the Highly-Valued Bank
Group. The overhead ratio of Fifth Third was 10.75%, compared to approximately
38.13% for the Peer Group and approximately 38.06% for the Highly-Valued Bank
Group. The return on average assets for Fifth Third was 1.75%, compared to
approximately 1.33% for the Peer Group and approximately 1.31% for the
Highly-Valued Bank Group. The return on average equity for Fifth Third was
17.34%, compared to approximately 15.94% for the Peer Group and approximately
17.41% for the Highly-Valued Bank Group. The price to tangible book value for
Fifth Third was 480.4%, compared to approximately 261.38% for the Peer Group and
approximately 287.29% for the Highly-Valued Bank Group.
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The price to earnings per share multiple for Fifth Third was 23.18x, compared to
approximately 15.28x for the Peer Group and approximately 14.97x for the
Highly-Valued Bank Group.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed 21
transactions announced from January 1, 1996 to May 9, 1997, involving public
savings institutions nationwide as targets with transaction values over $15
million ("All Transactions"), 21 transactions announced from January 1, 1996, to
May 9, 1997, involving midwestern (Illinois, Indiana, Iowa, Kentucky, Michigan,
Missouri, Ohio, and Wisconsin) public savings institutions as targets with
transaction values over $15 million ("Regional Transactions"), and 24
highly-capitalized public savings institution deals nationwide, where the
tangible equity-to-asset ratio exceeded 10%, announced from January 1, 1996, to
May 9, 1997, with transaction values over $15 million ("Highly-Capitalized").
Sandler O'Neill reviewed the ratios of price to earnings, price to book value,
price to tangible book value, price to deposits, price to assets, and deposit
premium paid in each such transaction and computed high, low, mean, and median
ratios and premiums for the respective groups of transaction. Based upon the
median multiples for All Transactions, Sandler O'Neill derived an imputed range
of values per share of Suburban Bancorp Common Stock of $22.06 to $32.29. Based
upon the median multiples for Regional Transactions, Sandler O'Neill derived an
imputed range of values per share of Suburban Bancorp Common Stock of $21.86 to
$26.51. Based upon the median multiples for Highly-Capitalized Transactions,
Sandler O'Neill derived an imputed range of values per share of Suburban Bancorp
Common Stock of $22.89 to $31.37.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of Suburban Bancorp through 2001 under various circumstances,
assuming Suburban Bancorp performed in accordance with information regarding
potential future earnings provided by its management and certain variations
thereof (including variation with respect to the levels of assets, net interest
spread, non-interest income, non-interest expense and dividend payout ratio). To
approximate the terminal value of Suburban Bancorp Common Stock at the end of
the five-year period, Sandler O'Neill applied price to earnings multiples
ranging from 8x to 17x and applied multiples of book value ranging from 100.0%
to 190.0%. The dividend income streams and terminal values were then discounted
to present values using different discount rates (ranging from 9.0% to 14.0%)
chosen to reflect different assumptions regarding required rates of return of
holders of prospective buyers of Suburban Bancorp Common Stock. This analysis,
assuming the current dividend payout ratio, indicated an imputed range of values
per share of Suburban Bancorp Common Stock between $5.89 and $14.28 when
applying the price to earnings multiples, and an imputed range of values per
share of Suburban Bancorp Common Stock between $11.90 and $27.16 when applying
multiples of book value. In connection with its analysis, Sandler O'Neill
extensively used sensitivity analyses to estimate the effects changes in the
underlying assumptions could have on the resulting present value.
In connection with rendering the Fairness Opinion, Sandler O'Neill
reviewed, among other things: (i) the Affiliation Agreement and exhibits
thereto; (ii) a draft of this Proxy Statement/Prospectus; (iii) the audited
consolidated financial statements and management's discussion and analysis of
the condition and results of operations of Fifth Third contained in its annual
report to stockholders for the year ended December 31, 1996; (iv) the audited
consolidated financial statements and management's discussion and analysis of
the financial condition and results of operations of Suburban Bancorp contained
in its annual report to stockholders for the year ended June 30, 1996 and the
unaudited consolidated financial statements and management's discussion and
analysis of the financial condition and results of operations of Suburban
Bancorp for the interim periods ended September 30, 1996, December 31, 1996 and
March 31, 1997; (v) certain financial analyses and other information regarding
Suburban Bancorp provided by management of Suburban Bancorp and comments of
senior management of Suburban Bancorp regarding Suburban Bancorp's past and
current business operations, results thereof, financial condition and future
prospects, including potential future limitations on growth and profitability of
Suburban Bancorp; (vi) comments of senior management of Fifth Third regarding
Fifth Third's past and current business operations, results thereof, financial
condition and future prospects; (vii) information regarding estimated pro forma
effects of the Merger on Fifth Third; (viii) historical reported price and
trading activity for Fifth Third Common Stock and Suburban Bancorp Common Stock,
including a comparison of certain financial and stock market information for
Fifth Third and Suburban Bancorp with
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similar information for certain other companies the securities of which are
publicly traded; (ix) financial terms of recent business combinations in the
savings institution and banking industries; (x) the current market environment
generally and the banking environment in particular; and (xi) such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as Sandler O'Neill considered relevant.
In performing its review, Sandler O'Neill assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with
Sandler O'Neill (relying, where relevant, on the analyses and estimates of Fifth
Third and Suburban Bancorp), and Sandler O'Neill did not make an independent
evaluation or appraisal of the specific assets, the collateral securing assets
or the liabilities of Fifth Third or Suburban Bancorp or any of their
subsidiaries, or the collectibility of any such assets. With respect to the
information regarding potential future financial performance provided by each
company's management, Sandler O'Neill assumed that they have been reasonably
prepared on bases reflecting reasonable estimates and judgments of the
respective managements of the respective future financial performances of Fifth
Third and Suburban Bancorp and that such performances will be achieved. Sandler
O'Neill also assumed the following: (i) that there has been no material change
in Fifth Third's or Suburban Bancorp's assets, financial condition, results of
operations, business or prospects since the date of the last financial
statements noted above and (ii) that Fifth Third will remain as a going concern
for all periods relevant to our analyses and that the conditions precedent in
the Affiliation Agreement are not waived.
Under the Sandler O'Neill Agreement, Suburban Bancorp has agreed to pay
Sandler O'Neill a transaction fee in connection with the Merger, a substantial
portion of which is contingent upon the consummation of the Merger. Under the
terms of the Sandler O'Neill Agreement, Suburban Bancorp has agreed to pay
Sandler O'Neill a transaction fee equal to $225,000, of which 75% is payable on
the day of closing of the transaction. Suburban Bancorp has also agreed to
reimburse Sandler O'Neill for its reasonable out-of-pocket expenses incurred in
connection with its engagement and to indemnify Sandler O'Neill and its
affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
EFFECTIVE TIME
The Effective Time of the Merger will, unless the parties agree otherwise,
occur on a Friday which is as soon as is reasonably possible following the date
that all conditions precedent contained in the Affiliation Agreement have been
met or waived, including the expiration of all applicable waiting periods. It is
anticipated that the Merger will be consummated in mid-1997, although no
assurance can be given in this regard. Suburban Bancorp and Fifth Third each
will have the right, but not the obligation, to terminate the Affiliation
Agreement if the Effective Time does not occur on or before December 31, 1997,
subject to certain conditions.
In connection with the Merger, Fifth Third and Suburban Bancorp will also
merge Suburban Federal Bank with and into The Fifth Third Bank, a wholly owned
subsidiary of Fifth Third.
CONVERSION OF SHARES OF SUBURBAN BANCORP COMMON STOCK
Each share of Suburban Bancorp Common Stock (excluding treasury shares)
which is issued and outstanding immediately prior to the Effective Time will be
converted at the Effective Time into Fifth Third Common Stock and cash in lieu
of any fractional shares of Fifth Third Common Stock. See "Exchange Ratio"
below.
EXCHANGE RATIO
At the Effective Time, each of the shares of Suburban Bancorp Common Stock
(excluding treasury shares) then issued and outstanding will be converted by
virtue of the Merger and without further action into .24357 of a share of Fifth
Third Common Stock (the "Exchange Ratio"). Based on the closing price per share
of Fifth Third Common Stock on the Nasdaq National Market on May , 1997, the
value of .24357 of a
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share of Fifth Third Common Stock was $ . Under certain circumstances,
the Exchange Ratio may be raised in the event of a substantial decline in the
trading price of Fifth Third Common Stock relative to a group of peer
institutions. See "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Amendment; Waiver; Termination." The Exchange Ratio will also be
adjusted so as to give the Suburban Bancorp stockholders the economic benefit of
any stock dividends, reclassifications, recapitalizations, split-ups, exchanges
of shares, distributions or combinations or subdivisions of Fifth Third Common
Stock effected before the Effective Time. Certificates representing shares of
Fifth Third Common Stock will be distributed to Suburban Bancorp stockholders
upon the surrender of their certificates for shares of Suburban Bancorp Common
Stock to Fifth Third.
THE VALUE OF THE FIFTH THIRD COMMON STOCK TO BE RECEIVED BY SUBURBAN
BANCORP STOCKHOLDERS WILL DEPEND ON THE MARKET PRICE OF SHARES OF FIFTH THIRD
COMMON STOCK AT THE EFFECTIVE TIME OF THE MERGER. THE MARKET PRICE OF FIFTH
THIRD COMMON STOCK IS SUBJECT TO CHANGE AT ALL TIMES BASED ON THE FUTURE
FINANCIAL CONDITION AND OPERATING RESULTS OF FIFTH THIRD, FUTURE MARKET
CONDITIONS AND OTHER FACTORS. ON MARCH 13, 1997, THE DATE SUBURBAN BANCORP AND
FIFTH THIRD ENTERED THE AFFILIATION AGREEMENT, FIFTH THIRD'S COMMON STOCK CLOSED
AT $84.75. BETWEEN MARCH 13 AND MAY , 1997, FIFTH THIRD'S COMMON STOCK TRADED
AS HIGH AS $ AND AS LOW AS $70.25. ON MAY , 1997, FIFTH THIRD'S COMMON
STOCK CLOSED AT $ . . THE MARKET PRICE OF FIFTH THIRD COMMON STOCK AT THE
EFFECTIVE TIME OF THE MERGER MAY BE SUBSTANTIALLY HIGHER OR LOWER THAN RECENT
PRICES.
NO FRACTIONAL SHARES
Only whole shares of Fifth Third Common Stock will be issued in connection
with the Merger. In lieu of fractional shares, each stockholder of Suburban
Bancorp Common Stock otherwise entitled to a fractional share of Fifth Third
Common Stock will be paid therefor in cash in an amount equal to the amount of
such fraction multiplied by the Applicable Market Value Per Share of Fifth Third
Common Stock, as defined in the Affiliation Agreement attached hereto as Annex
A. No such stockholder will be entitled to dividends, voting rights or other
rights in respect of any such fractional share.
EXCHANGE OF CERTIFICATES
After the Effective Time, holders of certificates previously representing
shares of Suburban Bancorp Common Stock will cease to have any rights as
stockholders of Suburban Bancorp and their sole rights will pertain to the
shares of Fifth Third Common Stock into which their shares of Suburban Bancorp
Common Stock will have been converted pursuant to the Merger Agreement. As soon
as practicable after the Effective Time, Fifth Third will send to each former
Suburban Bancorp stockholder a letter of transmittal for use in submitting to
Fifth Third, acting as Exchange Agent (the "Exchange Agent"), certificates (or
with instructions for handling lost Suburban Bancorp stock certificates)
formerly representing shares of Suburban Bancorp Common Stock to be exchanged
for certificates representing Fifth Third Common Stock (and, to the extent
applicable, cash in lieu of fractional shares of Fifth Third Common Stock) which
the former stockholders of Suburban Bancorp are entitled to receive as a result
of the Merger. Stockholders who become holders of Fifth Third Common Stock in
the Merger will not be entitled to receive any dividends or other distributions
which may be payable to holders of record of Fifth Third Common Stock following
the Effective Time until they have surrendered and exchanged their certificates
evidencing ownership of shares of Suburban Bancorp Common Stock. Any dividends
payable on Fifth Third Common Stock after the Effective Time will be paid to the
Exchange Agent and, upon receipt of the certificates representing shares of
Suburban Bancorp Common Stock, the Exchange Agent will forward to Suburban
Bancorp stockholders (i) certificates representing their shares of Fifth Third
Common Stock, (ii) dividends declared thereon subsequent to the Effective Time
(without interest) and (iii) the cash value of any fractional shares (without
interest). SUBURBAN BANCORP'S STOCKHOLDERS ARE REQUESTED NOT TO SUBMIT STOCK
CERTIFICATES UNTIL THEY HAVE RECEIVED WRITTEN INSTRUCTIONS TO DO SO.
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At the Effective Time, the stock transfer books of Suburban Bancorp will be
closed and no transfer of Suburban Bancorp Common Stock will thereafter be made
on such books. If a certificate formerly representing shares of Suburban Bancorp
Common Stock is presented to Suburban Bancorp or Fifth Third, it will be
forwarded to the Exchange Agent for cancellation and exchange for a certificate
representing shares of Fifth Third Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
Fifth Third and Suburban Bancorp will receive an opinion from Fifth Third's
tax counsel, Graydon, Head & Ritchey, that for Federal income tax purposes: (i)
the Merger will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), and
Fifth Third and Suburban Bancorp will each be a party to such reorganization
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by Suburban Bancorp as a result of the Merger; (iii) no gain or loss
will be recognized by Fifth Third as a result of the Merger; (iv) no gain or
loss will be recognized by a stockholder of Suburban Bancorp who receives solely
Fifth Third Common Stock in exchange for shares of Suburban Common Stock
pursuant to the terms of the Affiliation Agreement (disregarding for this
purpose any cash received for any fractional share interest in Fifth Third
Common Stock to which the stockholder may be entitled); (v) the aggregate tax
basis of the Fifth Third Common Stock received by a Suburban Bancorp stockholder
who receives solely Fifth Third Common Stock in exchange for shares of Suburban
Common Stock pursuant to the terms of the Affiliation Agreement will be, in each
instance, the same as the aggregate Federal income tax basis of the Suburban
Bancorp Common stock surrendered in exchange therefor (disregarding for this
purpose any cash received in lieu of a fractional share interest); (vi) the
holding period of the Fifth Third Common Stock received (including any
fractional share deemed received) by a Suburban Bancorp stockholder will
include, in each case, the period during which the Suburban Bancorp Common Stock
surrendered in exchange therefor was held, provided that the Suburban Bancorp
Common Stock was held as a capital asset by such stockholder on the date of the
exchange; and (vii) a stockholder of Suburban Bancorp Common Stock who receives
cash in lieu of a fractional share of Fifth Third Common Stock will be deemed to
have received such fractional share of Fifth Third Common Stock and then as
having received such cash in redemption of such fractional share subject to the
provisions of Section 302 of the Code.
In rendering its opinion, Graydon, Head & Ritchey will rely upon
representations contained in letters from Fifth Third and Suburban Bancorp
delivered for purposes of the opinion, and upon letters from certain
stockholders of Suburban Bancorp which contain, among other things,
representations that, as of the Effective Time, each such stockholder (i) is not
bound by any agreement, understanding or contract to sell, transfer or otherwise
dispose of the Fifth Third Common Stock to be received by such stockholder
pursuant to the Affiliation Agreement and (ii) has no current plan or intention
to sell, transfer or otherwise dispose of the Fifth Third Common Stock to be
received pursuant to the Affiliation Agreement. The opinion of tax counsel will
also be based on the assumption that the Merger will be consummated in
accordance with the provisions of the Affiliation Agreement, that the Merger
will qualify as a statutory merger under state law and that the representations
made by Fifth Third, Suburban Bancorp and certain stockholders of Suburban
Bancorp are accurate.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR DESCRIPTION OF ALL POTENTIAL TAX EFFECTS OF THE MERGER. THE
FOREGOING DISCUSSION, FOR EXAMPLE, DOES NOT ADDRESS THE TAX CONSEQUENCES TO
SUBURBAN BANCORP STOCKHOLDERS IN THE EVENT FIFTH THIRD WOULD PAY A PORTION OF
THE MERGER CONSIDERATION IN CASH AS DESCRIBED UNDER "PROPOSAL -- MERGER OF
SUBURBAN BANCORP INTO FIFTH THIRD -- AMENDMENT; WAIVER; TERMINATION." IN
ADDITION, THE DISCUSSION DOES NOT ADDRESS ALL OF THE TAX CONSEQUENCES THAT MAY
BE RELEVANT TO PARTICULAR TAXPAYERS IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES
(FOR EXAMPLE, INDIVIDUALS WHO RECEIVE FIFTH THIRD COMMON STOCK IN EXCHANGE FOR
SUBURBAN COMMON STOCK ACQUIRED AS A RESULT OF THE EXERCISE OF EMPLOYEE STOCK
OPTIONS OR OTHERWISE AS COMPENSATION) OR TO TAXPAYERS SUBJECT TO SPECIAL
TREATMENT UNDER THE CODE (FOR EXAMPLE, INSURANCE COMPANIES, FINANCIAL
INSTITUTIONS, DEALERS IN SECURITIES, TAX-EXEMPT ORGANIZATIONS, FOREIGN
CORPORATIONS, FOREIGN PARTNERSHIPS, OR OTHER FOREIGN ENTITIES AND INDIVIDUALS
WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES).
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NO INFORMATION IS PROVIDED HEREIN WITH RESPECT TO THE TAX CONSEQUENCES, IF
ANY, OF THE MERGER UNDER APPLICABLE STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS.
THE FOREGOING DISCUSSION IS BASED UPON THE PROVISIONS OF THE CODE, APPLICABLE
TREASURY REGULATIONS THEREUNDER, INTERNAL REVENUE SERVICE RULINGS, AND JUDICIAL
DECISIONS AS IN EFFECT AS OF THE DATE HEREOF. THERE CAN BE NO ASSURANCE THAT
FUTURE LEGISLATIVE, ADMINISTRATIVE, OR JUDICIAL CHANGES OR INTERPRETATIONS WILL
NOT AFFECT THE ACCURACY OF THE STATEMENTS OR CONCLUSIONS SET FORTH HEREIN. ANY
SUCH CHANGE COULD APPLY RETROACTIVELY AND COULD AFFECT THE ACCURACY OF SUCH
DISCUSSION. NO RULINGS HAVE BEEN OR WILL BE SOUGHT FROM THE INTERNAL REVENUE
SERVICE CONCERNING THE TAX CONSEQUENCES OF THE MERGER.
EACH STOCKHOLDER OF SUBURBAN BANCORP IS URGED TO CONSULT SUCH STOCKHOLDER'S
OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE
MERGER, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS.
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" as such term is used under
generally accepted accounting principles. Accordingly, from and after the
Effective Time, Suburban Bancorp's consolidated results of operations will be
included in Fifth Third's consolidated results of operations. For purposes of
preparing Fifth Third's consolidated financial statements, Fifth Third will
establish a new accounting basis for Suburban Bancorp's assets and liabilities
based upon the fair market values thereof and Fifth Third's purchase price,
including the costs of acquisition.
NO APPRAISAL OR DISSENTERS' RIGHTS
Because Suburban Bancorp Common Stock was registered on the Nasdaq National
Market on the Record Date, holders of Suburban Bancorp Common Stock will not
have appraisal rights or dissenters' rights in connection with the Merger.
CONDUCT PENDING MERGER; REPRESENTATIONS AND WARRANTIES
Suburban Bancorp has agreed, among other things, that prior to the
Effective Time it will carry on its business in the ordinary course. Suburban
Bancorp also has agreed to give Fifth Third and Fifth Third's representatives
reasonable access during business hours to its facilities and personnel.
Suburban Bancorp further has agreed that, without Fifth Third's prior written
consent, it will not, among other things: make any changes in its capital or
corporate structures; issue any additional shares of Suburban Bancorp Common
Stock or any other equity securities, except upon exercise of any stock options
granted prior to the date of the Affiliation Agreement; issue as borrower any
long term debt (other than the incurrence or renewal of FHLB advances in an
aggregate not to exceed 30% of Suburban Bancorp's consolidated assets) or
convertible or other securities of any kind, or right to acquire any of its
securities; or make any material changes in its method of business operations.
Suburban Bancorp also has agreed not to make or become obligated to make any
capital expenditures in excess of $5,000 (except for the proposed addition of a
drive-in facility to Suburban Federal Bank's Hartwell offices), nor make or
renew any agreement for services to be provided to Suburban Bancorp or permit
the automatic renewal of any such agreement, except any agreement for services
having a term of not more than three months or requiring the expenditure of not
more than $5,000. Suburban Bancorp additionally has agreed not to: declare or
pay any cash dividends on its stock other than normal and customary cash
dividends paid in amounts and at times Suburban Bancorp historically has paid
them; pay any stock dividends or make any other distributions on its stock; and
provide any increases in employee salaries or benefits other than in the
ordinary course of business.
In addition, Suburban Bancorp agreed in the Affiliation Agreement that,
except with the prior approval of Fifth Third, Suburban Bancorp will not, and
will not permit its representatives to, directly or indirectly, subject to the
exercise by the Suburban Bancorp Board of Directors of their fiduciary duties,
initiate, solicit, negotiate with, encourage discussions with, provide
information to, or agree to a transaction with, any corporation, partnership,
person or other entity or group concerning any merger of either Suburban Bancorp
or Suburban Federal Bank or any sale of substantial assets, sale of shares of
capital stock (or securities convertible or exchangeable into or otherwise
evidencing, or any agreement or instrument evidencing, the right to acquire
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capital stock) or similar transaction involving Suburban Bancorp or Suburban
Federal Bank. Suburban Bancorp also agreed in the Affiliation Agreement, subject
to the exercise by the Suburban Bancorp Board of Directors of their fiduciary
duties, promptly to communicate to Fifth Third the terms of any proposal which
it may receive in respect of any such transaction and any request by or
indication of interest on the part of any third party with respect to initiation
of any such transaction or discussions with respect thereto.
Fifth Third and Suburban Bancorp have made numerous representations and
warranties to each other with respect to financial and other matters. These
include, without limitation, representations and warranties to the effect that
both Fifth Third and Suburban Bancorp have the corporate power and authorization
to enter into the proposed transaction, that each will have provided the other
with financial statements and that Fifth Third has enough authorized Fifth Third
Common Stock with which to accomplish the proposed transaction. No
representations or warranties made by either Suburban Bancorp or Fifth Third
will survive beyond the Effective Time. Thereafter, neither Suburban Bancorp,
Fifth Third, nor any officer or director of either of them will have any
liability or obligation with respect to such representations or warranties, with
the exception of any misrepresentations, breaches of warranties or violations of
covenants that were made with intent to defraud.
CONDITIONS TO CLOSING
The Affiliation Agreement must be approved by the affirmative vote of
holders of at least a majority of the outstanding shares of Suburban Bancorp
Common Stock entitled to vote. The Merger also must be approved in writing by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), the Office of Thrift Supervision ("OTS") and the Ohio Division of
Financial Institutions, applications for which have been filed, and must comply
with any applicable waiting periods. No assurance can be given that the required
governmental approvals will be forthcoming.
The obligations of Suburban Bancorp and Fifth Third to consummate the
Merger also are subject to receipt of an opinion of counsel to Fifth Third with
respect to certain tax matters. See "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO
FIFTH THIRD -- Federal Income Tax Consequences."
Fifth Third's and Suburban Bancorp's obligations to consummate the Merger
are subject to additional conditions set forth in the Affiliation Agreement,
including, but not limited to, the absence at the Effective Time of any material
actions, proceedings or investigations of any kind pending or threatened with
respect to the transactions contemplated by the Affiliation Agreement and both
institutions having performed all of the obligations required of them under the
Affiliation Agreement.
Fifth Third's obligation to consummate the Merger is further subject to
conditions set forth in the Affiliation Agreement, including but not limited to,
the continuing truth and accuracy in all material respects of all of the
representations and warranties of Suburban Bancorp, Suburban Bancorp's
performance of all of the obligations required of it under the Affiliation
Agreement in all material respects, delivery by Suburban Bancorp's counsel of a
certain legal opinion addressed to Fifth Third, the aggregate amount of
consolidated stockholders' equity of Suburban Bancorp immediately prior to the
Effective Time, as shown by and reflected on its books and records of accounts
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied, being not less than $25,721,000, the separate
shareholders' equity of Suburban Federal Bank, immediately prior to the
Effective Time, as shown by and reflected in its books and records of accounts
on a separate basis in accordance with generally accepted accounting principles,
consistently applied, being not less than that reflected in Suburban Federal
Bank's June 30, 1996 Thrift Financial Report, the total issued and outstanding
shares of Suburban Bancorp Common Stock not exceeding 1,590,885 shares and all
options to purchase Suburban Bancorp Common Stock being exercised and fully paid
and there being no outstanding options to purchase Suburban Bancorp Common Stock
and the termination of any stock option plan or arrangement. Certain
extraordinary events identified in the Affiliation Agreement are excluded
expressly by the Affiliation Agreement from affecting these latter calculations.
Suburban Bancorp's obligation to consummate the Merger is further subject
to conditions set forth in the Affiliation Agreement, including but not limited
to, the continuing truth and accuracy in all material respects of Fifth Third's
representations and warranties, Fifth Third's performance of all of the
obligations required of
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it under the Affiliation Agreement in all material respects, delivery by counsel
employed by The Fifth Third Bank of a certain legal opinion addressed to
Suburban Bancorp, registration by Fifth Third of the shares of Fifth Third
Common Stock to be issued to Suburban Bancorp stockholders and listing of those
shares on the Nasdaq National Market.
AMENDMENT; WAIVER; TERMINATION
The Affiliation Agreement may be amended, modified or supplemented by the
written agreement of each of the parties, upon the authorization of each
company's respective Board of Directors at any time before or after approval of
the Merger by Suburban Bancorp stockholders, without further approval of
Suburban Bancorp's stockholders, except that no amendment, modification or
supplement may be effected without Suburban Bancorp stockholder approval if to
do so would change in any manner adverse to such stockholders the consideration
provided pursuant to the Affiliation Agreement.
The Affiliation Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time by written notice delivered by Fifth Third to
Suburban Bancorp or by Suburban Bancorp to Fifth Third in the following
instances: (1) by Fifth Third or Suburban Bancorp, if there has been a material
misrepresentation, a material breach of warranty or a material failure to comply
with any covenant on the part of the other party with respect to the
representations, warranties and covenants set forth in the Affiliation Agreement
and such misrepresentation, breach or failure to comply has not been cured
within thirty (30) days after notice, provided the party in default has no right
to terminate for its own default; (2) by Fifth Third or Suburban Bancorp, in
each case taken as a whole, if the business or assets or financial condition of
the other party have materially and adversely changed from that in existence at
December 31, 1996, other than changes attributable to or resulting from any
change in law, regulation or generally accepted accounting principles, changes
in interest rates, economic, financial or market conditions affecting the
banking or thrift industry generally or changes that may occur as a consequence
of actions or inactions that either party is expressly obligated to take under
the Affiliation Agreement; (3) by Fifth Third or Suburban Bancorp, if the Merger
has not been consummated by December 31, 1997, provided the terminating party is
not in material breach or default of any representation, warranty or covenant
contained in the Affiliation Agreement on the date of such termination; (4) by
the mutual written consent of Fifth Third and Suburban Bancorp; (5)
automatically if Suburban Bancorp Stockholders fail to approve the Affiliation
Agreement; or (6) by Fifth Third or Suburban Bancorp, if any event occurs which
renders impossible of satisfaction in any material respect one or more of the
conditions to the obligations of the other party to effect the Merger, and
non-compliance is not waived by the unaffected party.
The Affiliation Agreement and the Merger also may be terminated by a vote
of a majority of the Suburban Bancorp Board of Directors if, at any time during
the 10 day period commencing two days after the later of (a) the date of the
Special Meeting or (b) the date the last governmental approval required to
consummate the Merger has been received and all governmental waiting periods
have expired (the "Determination Date"), both of the following conditions are
satisfied: (1) the product of the 20 trading day average closing price of Fifth
Third Common Stock as reported on the Nasdaq National Market ending on the
Determination Date (the "Average Closing Price") and .24357 is less than the
consolidated stockholders' equity of Suburban Bancorp as of February 28, 1997,
determined in accordance with generally accepted accounting principles and on a
consistent basis with prior periods, divided by the number of issued and
outstanding shares of Suburban Bancorp Common Stock as of the date of
calculation ("Book Value Per Share of Suburban Bancorp Common Stock," which
amount was $18.21); and (2) the number obtained by dividing the Average Closing
Price by $80.00 is less than the number obtained by dividing the Index Price on
the Determination Date by the Index Price on February 13, 1997 (which price was
$49.89533), and subtracting 0.10 from such quotient. For purposes of the
Affiliation Agreement, Index Price is defined to mean the weighted average of
the closing prices for the common stock of the following 11 bank holding
companies: First Chicago NBD Corporation, First of America Bank Corp.,
Huntington Bancshares, Inc., KeyCorp, Mercantile Bancorporation Inc., National
City Corporation, Old Kent Financial Corporation, Banc One Corporation, PNC Bank
Corp., Provident Bancorp, Inc., and Star Banc Corporation.
If the Suburban Bancorp Board of Directors elects to terminate the
Affiliation Agreement as described in the preceding paragraph, Fifth Third will
have the option to either (a) increase the Exchange Ratio such that
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the product of the Exchange Ratio as so adjusted and the Average Closing Price
equals the Book Value Per Share of Suburban Bancorp Common Stock as of February
28, 1997, or, (b) in lieu of adjusting the Exchange Ratio, pay cash for each
outstanding share of Suburban Bancorp Common Stock (in addition to .24357 shares
of Fifth Third Common Stock) in an amount equal to the difference between (x)
the Book Value Per Share of Suburban Bancorp Common Stock and (y) the product
obtained by multiplying the Average Closing Price by .24357, provided that such
cash payment may not be made if such payment would make it impossible to satisfy
certain conditions set forth in the Affiliation Agreement regarding the federal
tax aspects of the Merger. If Fifth Third elects either of the above
alternatives, the Affiliation Agreement will not terminate notwithstanding the
election of the Suburban Bancorp Board of Directors.
Illustration of Termination Provisions and Potential Adjustments to Merger
Consideration. If, and only if, as of the Determination Date, assuming no other
events occur that would cause an adjustment in the Exchange Ratio the Average
Closing Price of Fifth Third Common Stock is less than $74.76290 and the Index
Price is greater than $51.61852, then the Suburban Bancorp Board of Directors
will have the right to terminate the Affiliation Agreement pursuant to the above
provisions. As of the close of business on May 8, 1997, the Average Closing
Price was $74.43750 and the Index Price was $48.67358. If the Average Closing
Price of Fifth Third Common Stock is above $74.76290 and/or the Index Price is
below $51.61852 through the Determination Date, the Suburban Bancorp Board of
Directors will have no right to terminate the Affiliation Agreement and the
merger consideration would remain fixed at .24357 share of Fifth Third Common
Stock for each share of Suburban Bancorp Common Stock.
If however, the Average Closing Price is below $74.76290, for example to
$70.00, and the Index Price rises above $51.61852, for example to $52.00, then
the Suburban Bancorp Board of Directors would have the right to terminate the
Affiliation Agreement because both of the above tests would be met. If the
Suburban Bancorp Board of Directors elected to exercise its discretion to
terminate, Fifth Third would then have the right to override such termination by
either (A) increasing the Exchange Ratio or (B) paying cash in an amount equal
to the value of the increase in the Exchange Ratio plus .24375 shares of Fifth
Third Common Stock for each share of Suburban Bancorp Common Stock. For purposes
of this example, if Fifth Third elected Alternative A, then the Exchange Ratio
would increase to .26014. If Fifth Third elected Alternative B, then Fifth Third
would pay $1.16 in cash plus .24357 share of Fifth Third Common Stock for each
share of Suburban Bancorp Common Stock. Assuming that the maximum of 1,590,885
shares of Suburban Bancorp Common Stock are outstanding as of the Effective
Time, Fifth Third could elect to issue 413,852 shares of Fifth Third Common
Stock (an increase of 26,361 shares) under Alternative A, or to pay an
additional $1,845,427 in cash plus 387,491 shares of Fifth Third Common Stock
under Alternative B, provided that any such cash payment may not be made if such
payment would make it impossible to satisfy certain conditions set forth in the
Affiliation Agreement regarding the federal tax aspects of the Merger.
The determinations of whether the above tests are met, whether to terminate
the Affiliation Agreement and whether to override any such termination are all
subject to market conditions at the Determination Date and accordingly, such
determinations cannot be made until after the date of this Proxy
Statement/Prospectus. If the above tests are met, there can be no assurances as
to whether the Suburban Bancorp Board of Directors will exercise its right to
terminate the Affiliation Agreement or, if so, whether Fifth Third will override
such termination or as to which alternative Fifth Third would elect.
EFFECT ON SUBURBAN BANCORP EMPLOYEES
Fifth Third is obligated to use its best efforts to employ at Fifth Third
or other Fifth Third subsidiaries or affiliates as many of the employees of
Suburban Bancorp and Suburban Federal Bank who desire employment within the
Fifth Third holding company system as possible, to the extent of available
positions and consistent with Fifth Third's standard staffing levels and
personnel policies. In this regard, upon consummation of the Merger, Fifth Third
Bank will operate Suburban Federal Bank's main office and two of its other
existing offices as branches of Fifth Third Bank. All other Suburban Federal
Bank offices will be closed because their service areas overlap service areas of
existing branches of Fifth Third Bank. In addition, Fifth Third Bank currently
has numerous other existing bank branches in the Cincinnati area.
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Participation in Benefit Plans. Each employee of Suburban Federal Bank who
becomes an employee of Fifth Third or its subsidiaries subsequent to the Merger
will be entitled to participate in all employee benefit plans sponsored by Fifth
Third or its subsidiaries on the same terms and to the same extent as similarly
situated employees of Fifth Third. If the Suburban Federal Bank 401(k) Profit
Sharing Plan is merged into the Fifth Third Master Profit Sharing Plan, then
service taken into account under the Suburban Federal Bank 401(k) Profit Sharing
Plan shall count as service taken into account for all purposes under the Fifth
Third Master Profit Sharing Plan, otherwise such employees shall not receive
past service credit under the Master Profit Sharing Plan. Suburban Federal Bank
employees shall receive past service credit under the Fifth Third Master
Retirement Plan for eligibility and vesting purposes, but not for benefit
accrual purposes. For all other purposes other than the Master Profit Sharing
Plan and the Master Retirement Plan, service to Suburban Bancorp and/or Suburban
Federal Bank shall be taken into account for purposes of determining eligibility
and vesting, if applicable, of benefits. Continuing employees will not be
subject to any exclusion or penalty for pre-existing conditions that were
covered under Suburban Bancorp Bank's medical plan immediately prior to the
Effective Time or any waiting period relating to coverage under Fifth Third's
medical plan.
Severance Pay. Those employees who do not have an employment agreement or
severance agreement and who are not to be employed by Fifth Third or who are
terminated or voluntarily resign after being notified that, as a condition of
employment, such employee must work at a location more than 30 miles from such
employee's former location of employment or that such employee's salary will be
decreased, in any case and in both cases, within six months after the Effective
Time, and who sign and deliver a termination and release agreement in the form
acceptable to Fifth Third and Suburban Bancorp, shall be entitled to severance
pay equal to, in the case of senior officers (Vice President and above,
including the Secretary and Treasurer of Suburban Federal Bank), 12 weeks pay;
in the case of all other employees, one week's pay for each year of service up
with a minimum of four weeks pay and a maximum of eight week's pay (for these
purposes, if there has been a break in an employee's period of employment, the
prior period shall be added to the current period of employment). In addition,
Suburban Bancorp may pay up to $55,000 in additional severance benefits to
certain officers and employees as Suburban Bancorp may determine in consultation
with Fifth Third. Fifth Third will provide prior notice to Suburban Bancorp such
that employees terminated by Suburban Bancorp can be given appropriate advance
notice of termination. Fifth Third will provide limited out placement services
and assistance to these employees. Nothing contained in the Affiliation
Agreement shall be construed or interpreted to limit or modify in any way Fifth
Third's at will employment policy.
EMPLOYEE STOCK OWNERSHIP PLAN
The Affiliation Agreement provides that since Fifth Third does not
currently have an employee stock ownership plan ("ESOP") for its employees,
Suburban Bancorp's ESOP may be terminated by Fifth Third, or other action taken,
upon the completion of the actions and events described below in this section.
Suburban Bancorp is required by the Affiliation Agreement to develop a
written description and timetable which shall be provided to and approved by
Fifth Third and its counsel, setting forth all actions necessary to: (i) make
contributions to the Suburban Bancorp, Inc. Employee Stock Ownership Plan
("ESOP") and/or to have the ESOP sell unallocated shares under the ESOP to fully
repay the ESOP's existing loan, all in compliance with the applicable
requirements of ERISA and the Internal Revenue Code, including Code Sections 415
(as interpreted by the IRS in Private Letter Rulings 9648054 and 9426048) and
404; (ii) amend the ESOP to authorize the sale of unallocated shares to repay
the loan, to provide for the allocation of gain on the sale of unallocated
shares in a manner that complies with the position of the IRS in Private Letter
Rulings 9648054 and 9426048 and to make such other changes as may be necessary
to implement the termination; (iii) terminate the ESOP; and (iv) submit the ESOP
to the Internal Revenue Service for a determination letter that the ESOP, as so
amended and terminated, continues to be a qualified retirement plan and employee
stock ownership plan under Sections 401(a) and 4975(e)(7) of the Code. Upon
development and approval by Fifth Third of said written description and
timetable, Suburban Bancorp shall take such actions as described therein as are
approved by Fifth Third.
Distribution of the shares and any other assets of the ESOP (i) shall not
occur until after the receipt of the foregoing IRS determination letter and (ii)
shall occur prior to the Effective Time only with the express
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written consent of Fifth Third, which shall not be unreasonably withheld. In
connection with the development of the written description and timetables
referred to above and resolution of the ESOP, Fifth Third and Suburban Bancorp
have agreed they intend that, to the extent not prohibited by applicable law,
the ESOP shall be maintained through the date of its final termination for the
exclusive benefit of individuals who had become ESOP participants on or before
the Effective Time. In furtherance of this intention, such timetable and plan
shall include provisions that: (a) Suburban Bancorp may make contributions to
the ESOP for the plan year ending June 30, 1997 in the amount accrued in the
ordinary course through February 28, 1997; (b) Suburban Bancorp may make
contributions to the ESOP for the plan year ending June 30, 1997, in the amount
accrued and to be accrued in the ordinary course from March 1, 1997, through
June 30, 1997, but in no event greater than $42,000 and in no event may any
amount be contributed that would create or increase an amount in the ESOP
suspense account which, under the written description and timetable referred to
above (assuming termination of the ESOP on June 30, 1998) may not be allocated
within the limits of Code section 415 (as interpreted by the IRS in Private
Letter Rulings 9648054 and 9426048); (c) that no interest shall accrue on the
existing ESOP loan after June 30, 1997; and, (d) that the ESOP shall terminate
no later than June 30, 1998 if at that time there would be no amount in the ESOP
suspense account which may not be allocated within the limits of Code section
415 (as interpreted by the IRS in Private Letter Rulings 9648054 and 9426048).
If, upon development of the written description and timetable referred to
above, Suburban Bancorp and Fifth Third agree in good faith that allocation of
all or any shares of stock held in the ESOP's suspense account would violate the
Code's section 415 limitations as interpreted by the IRS in private letter
rulings 9648054 and 9426048, Suburban Bancorp shall apply to the IRS for
approval (either through an IRS determination letter or other means reasonably
acceptable to Fifth Third) of a transaction (the "Transaction") whereby the
excess shares (or cash value thereof) (i.e., those shares remaining after fully
utilizing the section 415 limits as interpreted by the IRS in private rulings
9648054 and 9426048) either revert to Fifth Third or are transferred to an
employee benefit plan of Fifth Third. If and only if the IRS approves such a
Transaction, or Fifth Third otherwise proceeds with the Transaction without IRS
approval, Fifth Third will thereafter pay (out of its corporate assets and not
plan assets) an equivalent amount (determined using the fair market value of the
transferred plan assets at the time of the transfer), reduced by expenses
incurred, to individuals who were ESOP participants on the Effective Time and
who shall divide such payment pro rata based on their relative ESOP account
balances on June 30, 1997. Suburban Bancorp and Fifth Third further agreed in
the Affiliation Agreement that counsel selected by Suburban Bancorp shall be
responsible, before and after the Effective Time, both for securing a
determination letter from the Internal Revenue Service ("IRS") that the Suburban
Bancorp ESOP, is tax-qualified for periods through its termination date and a
determination letter or other acceptable IRS approval effectuating the purposes
of this paragraph, all subject to the prior review and approval (which approval
will not be unreasonably withheld) of Fifth Third and its counsel of the filings
with the IRS and notice and opportunity to comment by Fifth Third with respect
to any other actions; provided that after the Effective Time Fifth Third may
remove such counsel if such counsel fails to carry out the directions of the
parties in interest.
At April 7, 1997, there were 63 participants in Suburban Bancorp's ESOP. At
that date, based on the projected ESOP share allocation and loan balance at June
30, 1997, it was estimated that the increase in value of additional or
accelerated ESOP allocations to be made as a result of the Merger for Suburban
Bancorp's executive officers would be approximately as follows: John A.
Buchheid, $62,260, Christopher L. Henn, $60,750, Joseph F. Hutchison, $53,550,
and the four other executive officers, up to $25,000 each.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Shares of Suburban Bancorp Common Stock held by or for the benefit of
directors and executive officers of Suburban Bancorp will be converted into
Fifth Third Common Stock under the Affiliation Agreement on the same basis as
shares held by other stockholders of Suburban Bancorp (for additional
information, see "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Conversion of Shares of Suburban Bancorp", and ESOP and other plan
benefits for directors and executive officers will be paid in accordance with
the Affiliation Agreement on the bases set forth in "PROPOSAL -- MERGER OF
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SUBURBAN BANCORP INTO FIFTH THIRD -- Effect on Suburban Bancorp Employees" and
"PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH THIRD -- Employee Stock
Ownership Plan" above. In addition, directors and executive officers of Suburban
Bancorp may be deemed to have the following interests in the Merger that are
different from, or in addition to, those of employees or stockholders of
Suburban Bancorp.
Severance Payments. It is not anticipated that Fifth Third will enter into
employment agreements with any officer of Suburban Bancorp or Suburban Federal
Bank in connection with the transactions contemplated by the Affiliation
Agreement. Certain executive officers of Suburban Bancorp are parties to
agreements with Suburban Bancorp and Suburban Federal Bank that provide for
severance payments upon the occurrence of certain events, including termination
of their respective employment under such agreements following a change in
control of Suburban Bancorp. As a condition to receiving these severance
payments each of these officers will sign a termination and release agreement.
At April 7, 1997, based on the terms of the Affiliation Agreement, and with
respect to each executive officer of Suburban Bancorp his or her credited years
of service or estimated amount payable under any employment or severance
agreement, it was estimated that the severance amounts payable to Suburban
Bancorp's executive officers in the event of the termination of their employment
a result of the Merger would be approximately as follows: John A. Buchheid,
$213,000, Christopher L. Henn, $228,000, Joseph F. Hutchison, $548,000 and the
four other executive officers, up to $21,500 each. In addition, Suburban Bancorp
may pay a portion of $55,000 in additional severance benefits to one or more
executive officers as Suburban Bancorp may determine in consultation with Fifth
Third.
In no event will any of these officers receive any payment that would be
considered an "Excess Parachute Payment" under Section 280G of the Internal
Revenue Code of 1986, as amended. See "PROPOSAL -- MERGER OF SUBURBAN BANCORP
INTO FIFTH THIRD -- Effect on Suburban Bancorp Employees."
Stock Options. One of the conditions to Fifth Third's obligations under
the Affiliation Agreement is that all options to purchase Suburban Bancorp
Common Stock held by Suburban Bancorp's directors and executive officers shall
have been exercised and fully paid prior to the closing date of the Merger. All
outstanding stock options to acquire Suburban Bancorp Common Stock were fully
vested prior to the execution of the Affiliation Agreement and, therefore, there
has been no acceleration of the vesting of any such stock options.
Suburban Bancorp is also obligated to use its best efforts to have all
other options to acquire Suburban Bancorp Common Stock be exercised and fully
paid prior to the Effective Time. Subject to normal credit evaluation and
standard loan guidelines, Fifth Third has agreed that one of its subsidiary
banks will provide financing to qualified option holders to allow them to fully
exercise all outstanding options as set forth in the Affiliation Agreement. If
all options have been so exercised, then Suburban Bancorp will terminate its
stock option plan. If all options have not been so exercised, then Suburban
Bancorp will amend its stock option plan to the extent necessary to permit the
cancellation or termination at the Effective Time of each unexercised option,
and each holder of an option that has been so canceled or terminated will
receive at Fifth Third's discretion, cash or Fifth Third Common Stock according
to the formula set forth in the Affiliation Agreement.
Based on the closing price of Suburban Bancorp Common Stock immediately
before the execution and announcement of the Affiliation Agreement ($17.00 on
March 13, 1997), and the recent closing price of Fifth Third Common Stock
($79.00 on May 12, 1997), it was estimated that the aggregate increase in the
net value (market price less exercise price of all option shares) of the
Suburban Bancorp stock options held by Suburban Bancorp's directors and
executive officers, excluding the value of all such options immediately before
the execution of the Affiliation Agreement, would be approximately as follows:
John A. Buchheid, $22,970, Christopher L. Henn, $22,970, Joseph F. Hutchison,
$45,390, the five other directors, $20,380 each, and three other executive
officers, up to $11,340 each.
Suburban Bancorp's Management Recognition Plans. Effective upon Suburban
Bancorp's initial public offering on September 30, 1993, Suburban Bancorp
granted to its directors and employees awards of shares of
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Suburban Bancorp Common Stock pursuant to Suburban Bancorp's Management
Recognition Plans ("MRPs"). The MRPs and the awards were approved by Suburban
Bancorp's stockholders at the 1993 annual stockholder meeting. Under the
provisions of the MRPs, each MRP award vested 20% on each anniversary of the
grant date through September 30, 1996, and the remaining unvested 40% of each
award will vest upon the consummation of the Merger. Based on the closing price
of Suburban Bancorp common stock immediately before the execution and
announcement of the Affiliation Agreement ($17.00 on March 13, 1997), and the
recent closing price of Fifth Third common stock ($79.00 on May 12, 1997), it
was estimated that the aggregate increase in the value of the shares subject to
Suburban Bancorp restricted stock awards held by Suburban Bancorp's directors
and executive officers, excluding the value of all vested shares immediately
before the execution of the Affiliation Agreement, but including the full value
of all unvested shares that will vest upon the consummation of the Merger, would
be approximately as follows: John A. Buchheid, $83,030, Christopher L. Henn,
$83,030, Joseph F. Hutchison, $160,370, the five other directors, $11,440 each,
and three other executive officers, up to $42,940 each.
Indemnification and Liability Insurance. The Affiliation Agreement
provides that all provisions for indemnification and limitation of liability now
existing in favor of the directors or officers of Suburban Bancorp, Suburban
Federal Bank or any of their subsidiaries, arising under applicable Delaware and
Federal law and under the Suburban Bancorp Certificate of Incorporation and
Bylaws, or under the Suburban Federal Bank Charter and Bylaws, shall survive the
Merger, shall be assumed by Fifth Third and shall continue in full force and
effect with respect to acts or omissions occurring on or prior to the Effective
Time. The Affiliation Agreement further provides that Fifth Third's assumption
of such indemnification obligations shall continue for a period of five years
after the Effective Time, or in the case of claims asserted prior to the fifth
anniversary of the Effective Time, until such matters are finally resolved.
Fifth Third also shall purchase and keep in force for a five-year period $25
million of directors' and officers' liability insurance to provide coverage for
acts or omissions of the type currently covered by Suburban Bancorp's existing
directors' and officers' liability insurance for acts or omissions occurring at
or prior to the Effective Time, but only to the extent such insurance may be
purchased or kept in full force on commercially reasonable terms, taking into
account the cost thereof and the benefits provided thereby. Fifth Third has
agreed that all rights to indemnification existing in favor of officers and
directors and employees of Fifth Third affiliates shall be accorded to officers
and directors and employees of Suburban Bancorp who become affiliated with any
Fifth Third affiliate in such capacities after the Effective Time and that such
indemnification will relate to covered actions or inactions only after the
Effective Time. See also "DESCRIPTION OF CAPITAL STOCK AND COMPARATIVE RIGHTS OF
STOCKHOLDERS -- Indemnification and Personal Liability of Directors and
Officers."
EFFECTS OF MERGER
Upon consummation of the Merger, Suburban Bancorp will merge with and into
Fifth Third and Suburban Bancorp will cease to exist as a separate entity. In a
related transaction, Fifth Third and Suburban Bancorp plan to, simultaneously
with the Merger, have Suburban Federal Bank merge with and into The Fifth Third
Bank, a wholly owned subsidiary of Fifth Third.
The Board of Directors of Fifth Third and The Fifth Third Bank after the
Merger is consummated will consist of all of the members of such Boards of
Directors who are in office at the Effective Time, each of whom will continue to
serve as directors for the term for which such directors were elected, subject
to the applicable Code of Regulations and in accordance with law. The officers
of Fifth Third and The Fifth Third Bank after the Merger is consummated will be
those officers who are in office at the Effective Time, subject to the
applicable Code of Regulations and in accordance with law.
RESALE OF FIFTH THIRD COMMON STOCK BY AFFILIATES
No restrictions on the sale, pledge, transfer or other disposition of the
shares of Fifth Third Common Stock issued pursuant to the Merger will be imposed
solely as a result of the Merger, other than restrictions on the transfer of
such shares issued to any Suburban Bancorp stockholders who may be deemed to be
an "affiliate" of Fifth Third or Suburban Bancorp for purposes of Rule 145
promulgated under the Securities Act
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of 1933, as amended (the "Securities Act"). Directors, executive officers or
holders of 10% or more of the outstanding shares of Suburban Bancorp Common
Stock may be deemed to be affiliates of Suburban Bancorp for purposes of Rule
145. Affiliates may not sell, pledge, transfer or otherwise dispose of the
shares of Fifth Third Common Stock issued to them in exchange for their shares
of Suburban Bancorp Common Stock, unless the requirements of Rule 145 are
satisfied or the sale, pledge, transfer or disposition is otherwise in
compliance with the Securities Act and the rules and regulations promulgated
thereunder. Generally, under Rule 145, an affiliate of Suburban Bancorp will be
permitted to sell, pledge, transfer or otherwise dispose of his or her shares of
Fifth Third Common Stock received pursuant to the Merger if one of the following
is satisfied:
(1) The shares are sold in "brokers' transactions" or in transactions
directly with a "market maker," the affiliate does not solicit or
arrange for the solicitation of purchase orders or make any payments in
connection with the sale to anyone other than the broker or market
maker and the number of shares sold, together with all other sales of
Fifth Third Common Stock by such affiliate within the preceding three
months, does not exceed one percent of the outstanding shares of Fifth
Third Common Stock; or
(2) The affiliate is not an affiliate of Fifth Third and has been the
beneficial owner of Fifth Third Common Stock for at least one year, and
there is publicly available certain information regarding Fifth Third.
Share certificates for Fifth Third Common Stock issued to affiliates of
Suburban Bancorp will bear a legend as follows:
The shares of stock evidenced by this certificate are subject to
restrictions on transfer and may only be transferred after the Issuer has
received an opinion from its counsel that the transfer will be in
compliance with the requirements of Rule 145(d) promulgated under the
Securities Act of 1933 or pursuant to an exemption from registration under
such Act, or pursuant to a registration statement under such Act. The
Issuer will mail a copy of Rule 145(d) to the stockholder without charge
within five (5) days after written request therefor.
The foregoing is only a general statement of the restrictions on the
disposition of the shares of Fifth Third Common Stock to be issued in the
Merger. Accordingly, those stockholders of Suburban Bancorp who may be
affiliates of Suburban Bancorp should confer with legal counsel with respect to
the resale restrictions.
FIFTH THIRD BANCORP
DESCRIPTION OF BUSINESS
Fifth Third is an Ohio corporation organized in 1975 as a bank holding
company registered under the Bank Holding Company Act of 1956, as amended (the
"Bank Holding Company Act"), and subject to regulation by the Federal Reserve
Board. Fifth Third, with its principal office located in Cincinnati, is a multi-
bank holding company that owns all of the outstanding stock of 10 commercial
banks with 414 offices in Ohio, Kentucky, Indiana and Florida. Those banks are:
The Fifth Third Bank, The Fifth Third Bank of Columbus, The Fifth Third Bank of
Northwestern Ohio, N.A., The Fifth Third Bank of Southern Ohio, The Fifth Third
Bank of Western Ohio, Fifth Third Bank of Northeastern Ohio, Fifth Third Bank of
Florida, Fifth Third Bank of Northern Kentucky, Inc., Fifth Third Bank of
Kentucky, Inc., and The Fifth Third Bank of Central Indiana.
At March 31, 1997, Fifth Third, its affiliated banks and other subsidiaries
had consolidated total assets of approximately $20.2 billion, consolidated total
deposits of approximately $13.9 billion and consolidated total stockholders'
equity of approximately $1.9 billion.
Fifth Third, through its subsidiaries, engages primarily in commercial,
retail and trust banking, investment services and leasing activities and also
provides credit life, accident and health insurance, discount brokerage services
and property management for its properties. Those subsidiaries consist of The
Fifth Third Company, Fifth Third Securities, Inc., The Fifth Third Leasing
Company, Midwest Payment Systems, Inc.
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("MPS") and Fifth Third International Company. Fifth Third's affiliates provide
a full range of financial products and services to the retail, commercial,
financial, governmental, educational and medical sectors, including a wide
variety of checking, savings and money market accounts, and credit products such
as credit cards, installment loans, mortgage loans and leasing. Each of the
banking affiliates has deposit insurance provided by the Federal Deposit
Insurance Corporation ("FDIC") through the Bank Insurance Fund ("BIF").
Fifth Third, through its banking subsidiaries, operates for itself and
other financial institutions a proprietary automated teller machine ("ATM")
network, Jeanie(R). The Jeanie system participates in a shared ATM network
called "Money Station(R)," which includes several Ohio bank holding companies
and over 1,000 ATM's. The "Money Station" network participates in another shared
ATM network called "PLUS System(R)," which is a nationwide network with over
17,000 participating ATM's. The Fifth Third Bank, through its wholly owned
subsidiary, MPS, also provides electronic switch services for several regional
banks and bank holding companies in Ohio, Kentucky and Illinois.
Fifth Third is a corporate entity legally separate and distinct from its
affiliates. The principal source of Fifth Third's income is dividends from its
affiliates. There are certain regulatory restrictions as to the extent to which
the affiliates can pay dividends or otherwise supply funds to Fifth Third. See
"DESCRIPTION OF CAPITAL STOCK AND COMPARATIVE RIGHTS OF STOCKHOLDERS."
RECENT DEVELOPMENTS
In March 1997, Fifth Third Capital Trust I, a Fifth Third affiliate, issued
200,000 of its 8.136% Capital Securities, Series A, which represented beneficial
interests in the Trust, in a public offering. Net proceeds to Fifth Third were
approximately $197.6 million. The sole asset of the Trust is $206,186,000 in
aggregate principal amount of Fifth Third's 8.136% Junior Subordinated
Deferrable Interest Debentures, Series A. Fifth Third has further guaranteed the
obligations of the Trust under the Capital Securities.
CAPITAL REQUIREMENTS FOR FIFTH THIRD
The Federal Reserve Board, the Office of the Comptroller of the Currency
and the FDIC maintain guidelines to implement risk-based capital requirements
for state member banks and bank holding companies. The guidelines provide for a
systematic analytical framework that makes regulatory capital requirements more
sensitive to differences in risk profiles among banking organizations, takes
off-balance sheet exposures into explicit account in assessing capital adequacy
and minimizes disincentives to holding liquid, low-risk assets.
Under the guidelines, banking organizations are required to have capital
equivalent to 8 percent of assets, weighted by risk. Banking organizations must
have at least 4 percent Tier 1 capital, which consists of core capital elements
including common Stockholders' equity, retained earnings and perpetual preferred
stock, to weighted risk assets. The other half of required capital (Tier 2) can
include, among other supplementary capital elements, limited-life preferred
stock and subordinated debt and loan loss reserves up to certain limits.
Under Federal Reserve Board policy, a holding company is expected to act as
a source of financial strength to each subsidiary bank and to commit resources
to support each of its subsidiaries. This support may be required at times when,
absent such Board policy, the holding company may not find itself able to
provide it.
Fifth Third, and each of its subsidiary banks, is in compliance with both
the current leverage ratios and the final risk-based capital standards. As of
March 31, 1997, Fifth Third had a leverage ratio of 9.23%, its Tier 1 risk-based
capital ratio was 11.59% and its total risk-based capital ratio was 14.30%.
BANK HOLDING COMPANIES IN GENERAL
Bank holding companies and banks are extensively regulated under both
federal and state law. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions.
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As a bank holding company, Fifth Third is registered with and subject to
regulation by the Federal Reserve Board. A bank holding company is required to
file with the Federal Reserve Board an annual report and such additional
information as the Federal Reserve Board may require pursuant to the Bank
Holding Company Act.
The Federal Reserve Board also may make examinations of a holding company
and each of its subsidiaries. The Bank Holding Company Act requires each bank
holding company to obtain the prior approval of the Federal Reserve Board before
it may acquire substantially all of the assets of any bank, or before it may
acquire ownership or control of any voting shares of any bank if, after such
acquisition, it would own or control directly or indirectly, more than 5% of the
voting shares of such bank.
The Bank Holding Company Act also restricts the types of businesses and
operations in which a bank holding company and its subsidiaries (other than bank
subsidiaries) may engage. Generally, permissible activities are limited to
banking and activities found by the Federal Reserve Board to be so closely
related to banking as to be a proper incident thereto.
The operations of the subsidiary banks of Fifth Third are subject to
requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon, and limitations on the types of investments that may be made and the
types of services which may be offered. Various consumer laws and regulations
also affect the operations of these banking subsidiaries.
National banks are subject to the supervision of and are regularly examined
by the Comptroller of the Currency. In addition, national banks may be members
of the Federal Reserve System and their deposits are insured by the FDIC and, as
such, may be subject to regulation and examination by each agency. State
chartered banking corporations are subject to federal and state regulation of
their business and activities, including, in the case of banks chartered in
Ohio, by the Ohio Division of Financial Institutions, in the case of banks
chartered in Kentucky, by the Kentucky Department of Financial Institutions, and
in the case of banks chartered in Indiana, by the Indiana Department of
Financial Institutions.
ACQUISITIONS OF SAVINGS ASSOCIATIONS BY HOLDING COMPANIES
Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843) ("BHC
Act") prohibits bank holding companies from acquiring or retaining shares of any
company that is not a bank or is not engaging in any activity other than
managing and controlling banks, except under certain circumstances. The primary
exception permits bank holding companies to conduct activities and acquire
companies solely in activities the Federal Reserve Board has determined in to be
closely related to banking and a proper incident thereto. Section 346 of the
Reigle Community Development and Regulatory Improvement Act of 1994 ("Section
346") amends amended Section 4 of the BHC Act to establish a new notice
procedure for obtaining Federal Reserve Board approval under Section 4(a)(2) and
4(c)(8) of the BHC Act. Under Section 346, a proposal requiring Federal Reserve
Board approval under Section 4(a)(2) or 4(c)(8) may be consummated 60 days after
providing the Federal Reserve Board with complete written notice of the
proposal, unless the notice period is extended as provided in the statute.
Section 346 also permits proposals to be consummated at any time during this
notice period if approved by the Federal Reserve Board during this period. This
interim rule replaced the application procedures of Section 4(c)(8) of the BHC
Act with a new notice procedure and streamlined the procedures for obtaining
Federal Reserve Board approval for nonbanking proposals in several respects. The
interim rule contemplates action by the Federal Reserve Board on nonbanking
proposals involving listed activities (including the acquisition of a thrift or
thrift assets) within 30 days after a notice containing all of the information
required by the rule has been received by the Federal Reserve Board. In
approving the activities contained in such a notice, the Federal Reserve Board
is precluded from opposing any restrictions on transactions between the bank
holding company and the acquired savings association, except as required by
Section 23A or 23B of the Federal Reserve Act or any other applicable law.
Section 18(c) of the Federal Deposit Insurance Act ("FDI Act") (12 U.S.C.
1828(c)) authorizes the Federal Reserve Board to approve the application of a
bank to effect a merger, consolidation, acquisition of assets or assumption of
deposit liabilities, and, incident thereto, to establish a branch or branches
pursuant to
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Section 9 of the Federal Reserve Act (12 U.S.C. 321) and Section 5(d)(3) of the
FDI Act (12 U.S.C. 1815(d)(3)) authorizes the Federal Reserve Board to approve
the application of a bank to effect a merger, consolidation or acquisition of
assets or assumption of deposit liabilities of a savings association by a bank
that is insured by the BIF.
ADDITIONAL INFORMATION
For more detailed information about Fifth Third, reference is made to the
Fifth Third Annual Report on Form 10-K for the year ended December 31, 1996,
which is incorporated herein by reference, the Fifth Third Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, which is incorporated herein by
reference, and to the Fifth Third Annual Report to Stockholders which
accompanies this Proxy Statement/Prospectus. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SUBURBAN BANCORPORATION, INC.
DESCRIPTION OF BUSINESS
Suburban Bancorp is primarily engaged in planning and coordinating the
business activities of Suburban Federal Bank. Suburban Federal Bank services the
greater Cincinnati metropolitan area with its main office located in Montgomery,
Ohio and six branch offices located in Hamilton County. While Suburban Federal
Bank's market area consists of all of Hamilton County, the southern areas of
Butler and Warren Counties and the western area of Clermont County, Ohio,
Suburban Federal Bank accepts loan applications from all of Butler, Warren and
Clermont Counties in Ohio, as well as the northern areas of Kentucky proximate
to the greater Cincinnati area. Suburban Federal Bank is principally engaged in
the business of accepting deposits from the general public and originating and
purchasing permanent loans which are secured by first mortgages on one-to-four
family residential properties located in its market area. The Suburban Federal
Bank also makes residential construction loans, multi-family residential loans,
and consumer loans. In the past, however, Suburban Federal Bank more actively
invested in multi-family and commercial real estate loans, and a substantial
amount of such loans remain in Suburban Federal Bank's portfolio.
ADDITIONAL INFORMATION
For more detailed information about Suburban Bancorp, reference is made to
the Suburban Bancorp annual report to stockholders for the fiscal year ended
June 30, 1996 and quarterly report on Form 10-QSB (Part I only) for the quarter
ended March 31, 1997, which accompany this Proxy Statement/Prospectus, and the
Suburban Bancorp annual report on Form 10-KSB for the year ended June 30, 1996
and quarterly reports on Form 10-QSB for the quarters ended September 30, 1996,
December 31, 1996 and March 31, 1997, which are incorporated herein by
reference, and the consolidated financial statements and management's discussion
and analysis of financial condition and results of operations portions thereof.
See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
EFFECT OF GOVERNMENTAL POLICIES
The earnings of both Suburban Bancorp and Fifth Third and its subsidiaries
are affected not only by domestic and foreign economic conditions, but also by
the monetary and fiscal policies of the United States and its agencies,
particularly the Federal Reserve Board, foreign governments and other official
agencies. The Federal Reserve Board can and does implement national monetary
policy, such as the curbing of inflation and combating of recession, by its open
market operations in United States Government securities, control of the
discount rate applicable to borrowings and the establishment of reserve
requirements against deposits and certain liabilities of depository
institutions. The actions of the Federal Reserve Board influence the growth of
bank loans, investments and deposits and affect interest rates charged on loans
or paid on deposits. The nature and impact of future changes in monetary and
fiscal policies are not predictable.
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From time to time various proposals are made in the United States Congress
and in state legislatures and before various regulatory authorities that would
alter the powers or the existing regulatory framework for banks, bank holding
companies, savings banks and other financial institutions. It is impossible to
predict whether any of the proposals will be adopted and the impact, if any, of
such adoption on the business of Suburban Bancorp or Fifth Third and its
subsidiaries.
DESCRIPTION OF CAPITAL STOCK AND
COMPARATIVE RIGHTS OF STOCKHOLDERS
Fifth Third is authorized to issue 300,000,000 shares of Fifth Third Common
Stock, no par value, and 500,000 shares of preferred stock, no par value ("Fifth
Third Preferred Stock"). As of March 31, 1997, Fifth Third had outstanding
102,848,617 shares of Fifth Third Common Stock and no shares of Fifth Third
Preferred Stock. Pursuant to Article Fourth of Fifth Third's Second Amended
Articles of Incorporation, as amended, the Board of Directors of Fifth Third
may, without further action of the Stockholders, (a) divide into one or more new
series the authorized shares of Fifth Third Preferred Stock which have not
previously been designated, (b) fix the number of shares constituting any such
new series, and (c) fix the dividend rates, payment dates, whether dividend
rights shall be cumulative or non-cumulative, conversion rights, redemption
rights (including sinking fund provisions) and liquidation preferences. Except
as otherwise provided by law, holders of any series of Fifth Third Preferred
Stock shall not be entitled to vote on any matter.
Suburban Bancorp is authorized to issue 12,000,000 shares of Suburban
Bancorp Common Stock, and 3,000,000 shares of serial preferred stock, $0.01 par
value per share ("Suburban Bancorp Preferred Stock"). As of March 31, 1997,
Suburban Bancorp had outstanding shares of Suburban Bancorp Common
Stock, and options to purchase a total of shares of Suburban Bancorp
Common Stock, and no shares of Suburban Bancorp Preferred Stock. The Board of
Directors of Suburban Bancorp may, pursuant to Article VII of its Certificate of
Incorporation, (a) provide for the specific terms of Suburban Bancorp Preferred
Stock to be issued in series, and (b) state the rights, preferences, limitations
and relative, participating, optional or other special rights of the shares of
each such series, and the qualifications, limitations or restrictions thereof.
Set forth below is a description of Fifth Third Common Stock and Suburban
Bancorp Common Stock. This description and analysis are brief summaries of
relevant provisions of the Articles of Incorporation and Code of Regulations of
Fifth Third and of the Certificate of Incorporation and Bylaws of Suburban
Bancorp and are qualified in their entirety by reference to such documents.
VOTING RIGHTS
Holders of both Fifth Third Common Stock and Suburban Bancorp Common Stock
are entitled to one vote per share on all matters submitted to a vote of
Stockholders.
The Code of Regulations of Fifth Third and the Certificate of Incorporation
of Suburban Bancorp provide for the division of their respective Boards of
Directors into three classes of approximately equal size. Directors of each
Board of Directors are elected for three-year terms, and the terms of office of
approximately one-third of the members of the classified Board of Directors
expire each year. This classification of Fifth Third's Board may make it more
difficult for a stockholder to acquire control of Fifth Third and remove
management by means of a hostile takeover.
Fifth Third's Second Amended Articles of Incorporation, as amended,
contains another potential anti-takeover device. As stated above, Fifth Third is
authorized to issue 500,000 shares of Fifth Third Preferred Stock, and its Board
of Directors may designate various characteristics and rights of such stock,
including conversion rights. Accordingly, as an anti-takeover measure, Fifth
Third's Board of Directors may authorize the conversion of shares of Fifth Third
Preferred Stock into any number of shares of Fifth Third Common Stock and thus
dilute the outstanding shares of Fifth Third Common Stock.
The holders of Fifth Third Common Stock have the right to vote cumulatively
in the election of directors. Under applicable Ohio law, unless a corporation's
articles of incorporation are amended to provide that no
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stockholder of the corporation may cumulate his or her voting power, each
stockholder has the right to vote cumulatively in the election of directors of
such corporation if (i) written notice is given by any Stockholder of such
corporation to the President, a Vice President or the Secretary of such
corporation, not less than forty-eight hours before the time fixed for holding
the meeting at which directors are to be elected, indicating that such
stockholder desires that voting for the election of directors be cumulative, and
(ii) announcement of the giving of such notice is made upon the convening of the
meeting by the Chairman or the Secretary or by or on behalf of the stockholder
giving such notice. In such event, each stockholder will be entitled to cumulate
such voting power as he or she possesses and to give one nominee as many votes
as the number of directors to be elected multiplied by the number of his or her
shares, or to distribute such votes on the same principle among two or more
candidates, as each stockholder sees fit.
Pursuant to Suburban Bancorp's Certificate of Incorporation, the
stockholders of Suburban Bancorp do not have the right to vote cumulatively in
the election of directors.
Generally actions required to be taken by Suburban Bancorp stockholders
under Delaware law require the affirmative vote of holders of a majority of the
shares of Suburban Bancorp entitled to vote. Suburban Bancorp's Certificate of
Incorporation does contain a super majority voting provision requiring the
affirmative vote of at least 80% of the outstanding shares entitled to vote and
a majority of the outstanding shares held by disinterested persons, with respect
to certain business combinations with "related persons" (generally defined to
include a person who beneficially owns 10% or more of the outstanding shares of
the Suburban Bancorp Common Stock). The Certificate of Incorporation of Suburban
Bancorp also requires approval by 80% of all of the outstanding shares entitled
to vote to amend certain provisions of the Certificate of Incorporation. With
respect to Fifth Third, no vote of its stockholders is required to approve the
Merger. Generally actions required to be taken by Fifth Third Stockholders
require the affirmative vote of the holders of a majority of the shares of Fifth
Third entitled to vote, except for certain actions which by statute require a
two-thirds vote.
DIVIDENDS
Holders of Fifth Third Common Stock and Suburban Bancorp Common Stock are
each entitled to dividends as and when declared by the respective Boards of
Directors of each institution out of funds legally available for the payment of
dividends. Fifth Third and Suburban Bancorp have, in the past, declared and paid
dividends on a quarterly basis, and intend to continue to do so in the immediate
future in such amounts as their respective Boards of Directors shall determine.
Most of the revenues of Fifth Third and Suburban Bancorp available for
payment of dividends derive from amounts paid to each such corporation by its
respective subsidiaries. Under applicable banking law, the total of all
dividends declared in any calendar year by a national bank or a state-chartered
bank may not, without the approval of the Comptroller of the Currency, the
Federal Reserve Board, or the FDIC, as the case may be, exceed the aggregate of
such bank's net profits (as defined) and retained net profits for the preceding
two years. Under the law applicable to federally chartered savings associations,
the amount of dividends which a savings association may make without the
approval of the OTS depends upon the amount of capital possessed by such savings
association. Savings associations which, like Suburban Federal Bank, have
capital immediately prior to, and on a pro forma basis after giving effect to, a
proposed dividend that is equal to or greater than the amount of their fully
phased-in capital requirements, are authorized to pay dividends during a
calendar year up to the greater of 100% of their net income during the calendar
year plus the amount that would reduce by one-half their surplus capital or 75%
of net income during the most recent four quarters (minus dividends previously
paid over that period).
The affiliates of Fifth Third include both state and nationally chartered
banks. Under the applicable regulatory limitations, during the year 1997, the
affiliates of Fifth Third could declare aggregate dividends limited to their
1997 eligible net profits, as defined, and $121,967,000, the retained 1996 and
1995 net income, without the approval of their respective regulators. The
Comptroller of the Currency, banking authorities of the States of Ohio, Indiana
and Kentucky, the principal regulators of such affiliates, have the statutory
authority to prohibit a depository institution under their supervision from
engaging in what, in their opinion, constitutes an unsafe or unsound practice in
conducting its banking or savings association business. The
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payment of dividends could, depending upon the financial condition of
affiliates, be deemed to constitute such an unsafe or unsound practice. Neither
Suburban Bancorp nor any affiliate of Fifth Third has ever been prohibited from
declaring dividends or restricted in paying any dividends declared.
If, in the opinion of the applicable regulatory authority, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such bank cease and desist from the
practice. The Federal Reserve Board has similar authority with respect to bank
holding companies. In addition, the Federal Reserve Board, the Comptroller of
the Currency and the FDIC have issued policy statements which provide that
insured banks and bank holding companies should generally only pay dividends out
of current operating earnings. Finally, the regulatory authorities have
established guidelines with respect to the maintenance of appropriate levels of
capital by a bank, bank holding company, savings association or savings and loan
holding company under their jurisdiction. Compliance with the standards set
forth in such guidelines could limit the amount of dividends which Fifth Third
and Suburban Bancorp, and their respective affiliates, may pay.
PREEMPTIVE RIGHTS
The Certificate of Incorporation of Suburban Bancorp provides that the
holders of capital stock of Suburban Bancorp are not entitled to preemptive
rights with respect to any shares or other securities of Suburban Bancorp that
may be issued. Stockholders of Fifth Third also have no preemptive rights.
RIGHTS UPON LIQUIDATION
In the event of any liquidation, dissolution or winding up of Suburban
Bancorp, the holders of Suburban Bancorp Common Stock would be entitled to
receive, after payment or provision for payment of all debts and liabilities of
Suburban Bancorp (including the payment of all fees, taxes and other expenses
incidental thereto), the remaining assets of Suburban Bancorp available for
distribution. If Suburban Bancorp Preferred Stock is issued, the holders thereof
may have priority over the holders of Suburban Bancorp Common Stock in the event
of liquidation or dissolution. With respect to Fifth Third, Fifth Third
Stockholders have identical rights on liquidation, dissolution or winding up,
subject to identical considerations in the event of any issuance of Fifth Third
Preferred Stock.
INDEMNIFICATION AND PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Fifth Third's Code of Regulations provides for the indemnification of each
director and officer of the corporation, to the fullest extent permitted by Ohio
law, against all expenses and liabilities reasonably incurred by or imposed on
him or her in connection with any proceeding or threatened proceeding in which
he or she may become involved by reason of his or her being or having been a
director or officer. Suburban Bancorp's Certificate of Incorporation also
provides for the indemnification of each director and officer of the corporation
to the fullest extent permitted by Delaware law. Suburban Bancorp has also
entered into indemnification agreements with each of its directors. Such
agreements provide the Suburban Bancorp directors with specific contractual
assurance that the indemnification protection provided by the Certificate of
Incorporation and Bylaws will be available to the directors notwithstanding any
amendment or revocation of such governing documents, any change in the
composition of the Suburban Bancorp Board of Directors or any acquisition
transaction relating to the Company. Fifth Third does not have indemnification
agreements with its directors or executive officers.
Under Delaware law, subject to certain exceptions, a director is protected
from monetary liability for breaches of his or her duty of care. Delaware law
provides for such a limitation on director liability if the certificate of
incorporation contains a provision to that effect. The Suburban Bancorp
Certificate of Incorporation contains such a provision. Such a provision does
not, however, eliminate or limit director liability for a breach of the
director's duty of loyalty to the corporation or its shareholders or for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, for willful or negligent conduct in paying dividends or
repurchasing stock out of other than legally available funds, or for any
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transaction from which the director derived an improper personal benefit. The
grant of indemnification in the context of a derivative or other comparable suit
may have a circular effect, inasmuch as any damages recovered in such action
will be offset by the cost of indemnification. If the Merger is consummated,
Fifth Third will assume all such obligations of Suburban Bancorp for the
indemnification of its officers and directors.
STOCKHOLDERS' MEETINGS; QUORUM
Special meetings of Fifth Third's stockholders may be called at any time by
the Board of Directors or by the stockholders of Fifth Third upon the written
application of the holders of at least 25% of all Fifth Third capital stock
entitled to vote on the matters to be considered at the meeting. Such
applications must set forth the purpose or purposes of the meeting. Special
meetings of Suburban Bancorp's stockholders may be called at any time by the
Board of Directors or by a committee of the Board of Directors which has been
duly designated by the Board of Directors and whose powers and authorities as
provided in a resolution of the Board of Directors or in the Bylaws of Suburban
Bancorp, include the power and authority to call such a meeting.
The presence in person or by proxy of the holders of a majority of the
aggregate number of the outstanding shares of any class or series of capital
stock voting at a meeting constitutes a quorum under the Code of Regulations of
Fifth Third. The Bylaws of Suburban Bancorp provide that the presence in person
or by proxy of the holders of one-third of the aggregate number of outstanding
shares constitutes a quorum for a meeting.
SUBSCRIPTION, CONVERSION, REDEMPTION RIGHTS; STOCK NONASSESSABLE
Neither Fifth Third Common Stock nor Suburban Bancorp Common Stock has
subscription or conversion rights, and there are no mandatory redemption
provisions applicable thereto. Shares of Fifth Third Common Stock issued to
stockholders of Suburban Bancorp pursuant to the Affiliation Agreement will be
validly issued, fully paid and non-assessable, and will not, upon such issuance,
be subject to preemptive rights of any stockholder of Fifth Third.
CHANGE OF CONTROL PROVISIONS
The Articles of Incorporation and Code of Regulations of Fifth Third and
the Certificate of Incorporation and Bylaws of Suburban Bancorp contain various
provisions which could make more difficult a change in control of each
corporation or discourage a tender offer or other plan to restructure each
corporation. Under Fifth Third's Second Amended Articles of Incorporation, as
amended, Fifth Third's Board of Directors has the authority to issue 500,000
shares of Fifth Third Preferred Stock and to fix the designations, powers,
preferences and rights of such shares and the qualifications, limitations or
restrictions applicable thereto. Suburban Bancorp's Certificate of Incorporation
grants Suburban Bancorp's Board of Directors the authority to issue 3,000,000
shares of Suburban Bancorp Preferred Stock and to fix the designations, powers,
preferences and rights of such shares and the qualifications, limitations or
restrictions applicable thereto. Suburban Bancorp's Certificate of Incorporation
also contains a super majority voting provision discussed under "Voting Rights"
above, which may discourage the acquisition of the beneficial ownership,
directly or indirectly, of more than 10% of Suburban Bancorp Common Stock.
Chapter 1704 of the Ohio Revised Code prohibits an "Issuing Public
Corporation" from engaging in a "Chapter 1704 Transaction" with an "Interested
Shareholder" for a period of three years following the date on which the person
become an Interested Shareholder unless, prior to such date, the directors of
the Issuing Public Corporation approve either the Chapter 1704 Transaction or
the acquisition of shares pursuant to which such person became an Interested
Shareholder. Fifth Third is an Issuing Public Corporation for purposes of the
statute. An Interested Shareholder is any person who is the beneficial owner of
a sufficient number of shares to allow such person, directly or indirectly,
alone or with others, including affiliates and associates, to exercise or direct
the exercise of 10% of the voting power of the Issuing Public Corporation in the
election of directors.
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A Chapter 1704 Transaction includes any merger, consolidation, combination,
or majority share acquisition between or involving an Issuing Public Corporation
and an Interested Shareholder or an affiliate or associate of an Interested
Shareholder. A Chapter 1704 Transaction also includes certain transfers of
property, dividends, and issuance or transfers of shares, from or by an Issuing
Public Corporation or a subsidiary of an Issuing Public Corporation to, with, or
for the benefit of an Interested Shareholder or an affiliate or associate of an
Interested Shareholder unless such transaction is in the ordinary course of
business of the Issuing Public Corporation on terms no more favorable to the
Interested Shareholder than those acceptable to third parties as demonstrated by
contemporaneous transactions. Finally, Chapter 1704 Transactions include certain
transactions which (a) increase the proportionate share ownership of an
Interested Shareholder, (b) result in the adoption of a plan or proposal for the
dissolution, winding up of the affairs, or liquidation of the Issuing Public
Corporation if such plan is proposed by or on behalf of the Interested
Shareholder, or (c) pledge or extend the credit or financial resources of the
Issuing Public Corporation to or for the benefit of the Interested Shareholder.
After the initial three-year moratorium has expired, an Issuing Public
Corporation may engage in a Chapter 1704 Transaction if (a) the acquisition of
shares pursuant to which the person became an Interested Shareholder received
the prior approval of the board of directors of the Issuing Public corporation,
(b) the Chapter 1704 Transaction is approved by the affirmative vote of the
holders of shares representing at least two-thirds of the voting power of the
Issuing Public Corporation and by the holders of shares representing at least a
majority of voting shares which are not beneficially owned by an Interested
Shareholder or an affiliate or associate of an Interested Shareholder, or (c)
the Chapter 1704 Transaction meets certain statutory tests designed to ensure
that it be economically fair to all shareholders.
Ohio law prevents a person, under certain circumstances, from purchasing
large amounts of shares of stock of a corporation without shareholder approval.
Under Section 1701.831 of the Ohio Revised Code, unless the articles or
regulations otherwise provide, any "control share acquisition" of an Issuing
Public Corporation can only be made with the prior approval of the corporation's
shareholders. A control share acquisition is defined as any acquisition,
directly or indirectly (by tender offer, open market purchase, private
transaction or otherwise) of shares of a corporation which, when added to all
other shares of that corporation owned by the acquiring person, would entitle
that person to exercise specified levels of voting power when electing
directors. Specifically, unless the provisions of Section 1701.831 have been
satisfied, a person may not purchase additional shares of a corporation if that
purchase would result in such person holding more than 20%, 33 1/3% or 50% of
the voting power. These percentages reflect the Ohio legislature's view that
each such acquisition of shares which results in a person's voting power
exceeding these levels involves an increase in the ability of that person to
control a corporation. These levels of voting power are considered so great that
the transaction involved should be considered and approved or rejected by
shareholders.
Delaware's anti-takeover provisions are embodied in Section 203 of the
Delaware General Corporation law ("Section 203"). Section 203 provides that
certain "business combinations" between a Delaware corporation whose stock
generally is publicly traded or held of record by more than 2,000 shareholders
and an "interested stockholder" are prohibited for a three-year period following
the date that such stockholder became an interested stockholder, unless (i) the
corporation has elected in its certificate of incorporation not to be governed
by Section 203, (ii) the business combination was approved by the Board of
Directors of the corporation before the other party to the business combination
became an interested stockholder, (iii) upon consummation of the transaction
that made it an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the commencement
of the transaction (excluding voting stock owned by directors who are also
officers or held in employee benefit plans in which the employees do not have a
confidential right to tender or vote stock held by the plan) or (iv) the
business combination was approved by the Board of Directors of the corporation
and ratified by two-thirds of the voting stock which the interested stockholder
did not own. The three-year prohibition also does not apply to certain business
combinations proposed by an interested stockholder following the announcement or
notification of certain extraordinary transactions involving the corporation and
a person who had not been an interested stockholder during the previous three
years or who became an interest stockholder with the approval of the majority of
the corporation's directors.
48
<PAGE> 51
The term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an interested stockholder,
transactions with an interested stockholder involving the assets or stock of the
corporation or its majority-owned subsidiaries and transaction which increase an
interested stockholder's percentage ownership of stock. The term "interested
stockholder" is defined generally as a stockholder who, together with affiliates
and associates, owns (or, within three years prior, did own) 15% or more of a
Delaware corporations' voting stock. Section 203 could prohibit or delay a
merger, takeover or other change in control of the Company and therefore could
discourage attempts to acquire the Company. The Suburban Bancorp Certificate of
Incorporation does not contain a provision electing not to be governed by the
Section 203.
CERTAIN BENEFICIAL OWNERS OF FIFTH THIRD COMMON STOCK
The following table shows those persons known to Fifth Third to be the
beneficial owners of more than 5% of Fifth Third Common Stock at December 31,
1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF OWNERSHIP OF CLASS
- ---------------------------------------------------------------- ----------------- --------
<S> <C> <C>
Cincinnati Financial Corporation................................ 21,337,017(1) 20.03
6200 South Gilmore Fairfield, Ohio 45014
Fifth Third Bancorp............................................. 8,425,765(2) 7.91
Subsidiary Banks Fifth Third Center Cincinnati, Ohio 45263
The Western-Southern Life Insurance Company..................... 6,797,677(3) 6.38
400 Broadway Cincinnati, Ohio 45202
Ruane, Cunniff & Co............................................. 7,093,857 6.66
767 Fifth Avenue, Suite 4701 New York, New York 10153
</TABLE>
- ---------------
(1) Cincinnati Financial Corporation owns 16,350,000 shares of Fifth Third
Common Stock. Cincinnati Insurance Company, a subsidiary of Cincinnati
Financial Corporation, owns 4,043,000 shares. Cincinnati Casualty Company,
another subsidiary, owns 500,000 shares. Cincinnati Life Insurance Company,
another subsidiary of Cincinnati Financial, owns 307,000 shares. In
addition, Mr. John J. Schiff, Jr., a director of Fifth Third and Chairman
and a director of Cincinnati Financial Corporation, individually
beneficially owns 108,247 shares and Mr. Robert B. Morgan, a director of
Fifth Third, who is President and a director of Cincinnati Financial
Corporation and Cincinnati Insurance individually beneficially owns 22,000
shares. Also affiliated is a trust in which John J. Schiff, Jr. and Thomas
R. Schiff are trustees which owns 6,750 shares.
(2) There are ten wholly owned bank subsidiaries of Fifth Third, which are
beneficial owners of 4,757,715 shares of Fifth Third Common Stock. The banks
hold these shares in a fiduciary capacity under numerous trust
relationships, none of which relates to more than 5% of the shares, and have
sole or shared voting power, and sole or shared investment decision over
these shares. The banks also hold shares in a non-discretionary capacity,
and disclaim any beneficial interest in all shares held in these capacities.
(3) The Western-Southern Life Insurance Company owns 997,082 shares of Fifth
Third Common Stock. Waslic Delaware Company, II, a subsidiary of The
Western-Southern Life Insurance Company, owns 5,777,775 shares. In addition,
Mr. John F. Barrett, a director, President and Chief Executive Officer of
The Western-Southern Life Insurance Company, and a director of Fifth Third,
individually beneficially owns 22,820 shares.
Fifth Third, its directors, executive officers and their affiliates owned
no shares of Suburban Bancorp Common Stock outstanding on December 31, 1996.
49
<PAGE> 52
FIFTH THIRD MANAGEMENT
The names and ages of the Directors and certain executive officers of Fifth
Third, their current positions and offices held with Fifth Third, their business
experience during the past five years and certain other information, together
with their beneficial ownership of Fifth Third Common Stock at December 31,
1996, are as follows:
<TABLE>
<CAPTION>
SHARES OF FIFTH THIRD COMMON
STOCK BENEFICIALLY OWNED
AT DECEMBER 31, 1996(3)(7)
NAME, AGE AND PRINCIPAL OCCUPATION ----------------------------
DURING PAST FIVE YEARS; DIRECTOR OF FIFTH NUMBER OF PERCENT
OTHER DIRECTORSHIPS(1) THIRD SINCE(2) SHARES OWNED OF CLASS
- --------------------------------------------------- ------------------ ------------- ---------
<S> <C> <C> <C>
DIRECTORS
John F. Barrett, 47, President, Chief Executive
Officer and Director of The Western-Southern Life
Insurance Company since March, 1994. Formerly,
President and Chief Operating Officer, The
Western-Southern Life Insurance Company. Director
of Cincinnati Bell Inc.(4)....................... 1988 22,820 .0214
Milton C. Boesel, Jr., 68, Counsel, Ritter,
Robinson, McCready & James, Attorneys at Law,
Toledo, Ohio, formerly Ritter, Boesel &
Robinson. ....................................... 1989 15,152 .0142
Gerald V. Dirvin, 59, Retired April, 1994 as
Executive Vice President and Director, The
Procter & Gamble Company, manufacturers of
household and consumer products. Director of
Cintas Corporation and Northern Telecom Ltd. .... 1989 14,025 .0132
Thomas B. Donnell, 50, Chairman, The Fifth Third
Bank of Northwestern Ohio, National Association
(Toledo, Ohio). ................................. 1984 217,084 .2038
Richard T. Farmer, 62, Chairman and Director,
Cintas Corporation, a service company that
designs, manufactures and implements corporate
identity uniform programs, since August 1995.
Formerly, Mr. Farmer was Chairman, CEO and
Director of Cintas Corporation. Director of
Safety-Kleen Corp. .............................. 1982 43,733 .0410
John D. Geary, 70, Retired as President, Midland
Enterprises Inc., a company engaged in inland
waterway transportation.(5)...................... 1977 32,682 .0307
Ivan W. Gorr, 67, Retired in October, 1994 as
Chairman and Chief Executive Officer, Cooper Tire
& Rubber Company, a manufacturer of tires and
rubber products. Director of Amcast Industrial
Corporation, Arvin Industries, Inc., Cooper Tire
& Rubber Company, OHM Corporation, and
Borg-Warner Automotive, Inc. Corporation. ....... 1991 9,528 .0089
Joseph H. Head, Jr., 64, Chairman, Chief Executive
Officer and Director, Atkins & Pearce, Inc.,
manufacturer of industrial textiles. Director of
Baldwin Piano & Organ, Co. ...................... 1987 68,533 .0643
Joan R. Herschede, 57, President and Chief
Executive Officer of The Frank Herschede Company,
an investment holding company. .................. 1991 9,825 .0092
</TABLE>
50
<PAGE> 53
<TABLE>
<CAPTION>
SHARES OF FIFTH THIRD COMMON
STOCK BENEFICIALLY OWNED
NAME, AGE AND PRINCIPAL OCCUPATION AT DECEMBER 31, 1996(3)(7)
DURING PAST FIVE YEARS; DIRECTOR OF FIFTH NUMBER OF PERCENT
OTHER DIRECTORSHIPS(1) THIRD SINCE(2) SHARES OWNED OF CLASS
- --------------------------------------------------- ---- ------ -----
<S> <C> <C> <C>
William G. Kagler, 64, Retired Chairman of Skyline
Chili, Inc., a restaurant and frozen food product
manufacturer, since October, 1995. Formerly, Mr.
Kagler was Chairman of the Executive Committee
since November, 1994, and was Chairman, Chief
Executive Officer and Director of Skyline Chili,
Inc. since November, 1992 and President, Kagler &
Associates, Inc., a consulting firm serving the
food industry. Previously, Mr. Kagler was
President, Chief Executive Officer and Director
of Skyline Chili, Inc. Director of The Union
Central Life Insurance Company, The Ryland Group,
Inc. and Grand Union Company. ................... 1983 23,466 .0220
William J. Keating, 69, Retired Chairman and
Publisher, The Cincinnati Enquirer, a regional
newspaper. Director of The Midland Co. .......... 1980 65,173 .0612
James D. Kiggen, 64, Chairman and Chief Executive
Officer and Director, Xtek, Inc., manufacturer of
hardened steel parts, since November, 1995.
Formerly, Mr. Kiggen was Chairman, President, CEO
and Director of Xtek, Inc. Director of Cincinnati
Bell, Inc., United States Playing Card Co., and
R.A. Jones & Co., Inc. .......................... 1982 36,414 .0342
Robert B. Morgan, 62, President, Chief Executive
Officer and Director of Cincinnati Financial
Corporation and Cincinnati Insurance Company. ... 1986 22,020 .0207
Michael H. Norris, 60, Retired as President and
Director, The Deerfield Manufacturing Co., a
fabricator of sheet metal stampings, deep drawn
parts and assemblies, and retired as Group Vice
President and Director of the Ralph J. Stolle
Company, since January, 1994. ................... 1985 24,130 .0226
James E. Rogers, 49, Vice Chairman, President,
Chief Executive Officer and Director of CINergy
Corp, CINergy Services, CG&E and PSI Energy,
since December 1995, and Mr. Rogers was Vice
Chairman, President and Chief Operating Officer
since October, 1994. Formerly, Mr. Rogers was
Chairman, President and Chief Executive Officer
of PSI Energy, Inc. Director of Bankers Life
Holding Company, and Duke Realty Investments,
Inc. ............................................ 1995 2,400 .0023
Brian H. Rowe, 65, Chairman Emeritus, GE Aircraft
Engines, General Electric Company since February,
1995. Previously, Mr. Rowe was Chairman from
September, 1993, and was President and Chief
Executive Officer, GE Aircraft Engines, General
Electric Company. Director of Atlas Air, Inc.,
B/E Aerospace, Cincinnati Bell, Inc., Canadian
Marconi Company, Steward & Stevenson Services,
Inc., and Textron, Inc. ......................... 1980 22,886 .0215
George A. Schaefer, Jr., 51, President and Chief
Executive Officer of Fifth Third Bancorp and The
Fifth Third Bank. Director of Anthem Insurance
Companies, Inc. ................................. 1988 437,923 .4110
John J. Schiff, Jr., 53, Retired as Chairman of
John J. & Thomas R. Schiff & Co., Inc., an
insurance agency in December, 1996. Chairman and
Director of Cincinnati Financial Corporation and
Cincinnati Insurance Company. Director of CINergy
Corp., Standard Register Co., and Cincinnati
Bengals. ........................................ 1983 108,247 .1016
</TABLE>
51
<PAGE> 54
<TABLE>
<CAPTION>
SHARES OF FIFTH THIRD COMMON
STOCK BENEFICIALLY OWNED
NAME, AGE AND PRINCIPAL OCCUPATION AT DECEMBER 31, 1996(3)(7)
DURING PAST FIVE YEARS; DIRECTOR OF FIFTH NUMBER OF PERCENT
OTHER DIRECTORSHIPS(1) THIRD SINCE(2) SHARES OWNED OF CLASS
- --------------------------------------------------- ---- ------ -----
<S> <C> <C> <C>
Dennis J. Sullivan, Jr., 64, Executive Counselor of
Dan Pinger Public Relations, Inc., a public
relations agency, since February, 1993. Formerly,
Executive Vice President, Chief Financial Officer
and Director of Cincinnati Bell, Inc. and
Cincinnati Bell Telephone Company. Director of
Anthem Insurance Companies, Inc.,and Access
Corporation. .................................... 1984 31,476 .0295
Dudley S. Taft, 56, President and Director, Taft
Broadcasting Company, owner and operator of
television broadcasting stations. Director of
CINergy Corp., The Union Central Life Insurance
Company, United States Playing Card Co., and The
Tribune Company. ................................ 1981 31,159 .0292
EXECUTIVE OFFICERS
George W. Landry, 56, Executive Vice President of
Fifth Third and The Fifth Third Bank. ........... -- 185,202 .1749
Stephen J. Schrantz, 48, Executive Vice President
of Fifth Third and The Fifth Third Bank. ........ -- 137,127 .1295
Michael D. Baker, 46, Executive Vice President of
Fifth Third since August, 1995. Previously, Mr.
Baker was Senior Vice President of Fifth Third
since March, 1993. .............................. -- 90,788 .0857
P. Michael Brumm, 49, Executive Vice President and
Chief Executive Officer of Fifth Third since
August, 1995. Previously, Mr. Brumm was Senior
Vice President and CFO of the Company and Fifth
Third. .......................................... -- 56,744 .0842
Robert P. Niehaus, 50, Executive Vice President of
Fifth Third since August, 1995, and Senior Vice
President of The Fifth Third Bank. Previously,
Mr. Niehaus was Senior Vice President of Fifth
Third since March, 1993, and Senior Vice
President of Fifth Third Bank. .................. -- 63,187 .0938
Michael K. Keating, 41, Executive Vice President,
of Fifth Third since August, 1995 and Secretary
of the Company and the Bank since January, 1994.
Previously, Mr. Keating was Senior Vice President
and General Counsel of the Company since March,
1993, and Senior Vice President and Counsel of
Fifth Third. Mr. Keating is a son of Mr. William
J. Keating, Director. ........................... -- 54,150 .0511
All Directors and Executive Officers as a Group (26
persons)(6)...................................... -- 1,825,874 1.7138
</TABLE>
- ---------------
(1) Unless otherwise indicated, the director or officer has had the same
principal occupation for the past five years. Biographical information given
as of December 31, 1994.
(2) On April 15, 1975, the Board of Directors of The Fifth Third Bank became the
Board of Directors of Fifth Third pursuant to an Agreement and Plan of
Reorganization under which Fifth Third acquired The Fifth Third Bank.
Service on the Board of The Fifth Third Bank prior to April 15, 1975 is
reflected in the dates shown above. All of the Directors are also directors
of The Fifth Third Bank, except for Messrs. Boesel, Donnell and Gorr, who
are members of the Board of Directors of The Fifth Third Bank of
Northwestern Ohio, N.A.
(3) As reported to Fifth Third by the persons listed as of the date stated.
Includes shares held in the name of spouses, minor children, certain
relatives, trusts, estates and certain affiliated companies as to which
beneficial ownership may be disclaimed.
(4) Messrs. Morgan and Schiff, Jr. are officers and directors of Cincinnati
Financial Corporation, and Mr. Barrett is an officer and director of The
Western-Southern Life Insurance Company, whose holdings
52
<PAGE> 55
of shares of Fifth Third Common Stock with their affiliates are more fully
set forth above under the caption "CERTAIN BENEFICIAL OWNERS OF FIFTH THIRD
COMMON STOCK."
(5) Mr. Geary retired as a director of Fifth Third Bancorp in March 1997. The
vacancy created by his resignation has been filled by Dr. Mitchel
Livingston.
(6) Shares of Fifth Third Common Stock held by The Fifth Third Bank in its
fiduciary capacity, as set forth above under the caption "CERTAIN BENEFICIAL
OWNERS OF FIFTH THIRD COMMON STOCK," are not included in these totals.
(7) The amounts shown represent the total shares owned outright by such
individuals together with shares which are issuable upon the exercise of all
stock options which are currently exercisable. Specifically, the following
individuals have the right to acquire the shares indicated after their
names, upon the exercise of such stock options: Mr. Baker, 38,625; Mr.
Barrett, 12,938; Mr. Boesel, 7,875; Mr. Brumm, 36,000; Mr. Dirvin, 12,938;
Mr. Donnell, 14,251; Mr. Farmer, 12,938; Mr. Gorr, 7,875; Mr. Head, 20,533;
Mr. Kagler, 4,500; Mr. M. Keating, 29,625; Mr. W. Keating, 4,500; Mr.
Kiggen, 12,938; Mr. Landry, 185,202; Mr. Morgan, 12,938; Mr. Niehaus,
34,500; Mr. Norris, 4,500; Mr. Rowe, 12,938; Mr. Schaefer, 240,000; Mr.
Schrantz, 89,625; and Mr. Taft, 4,500.
LEGAL MATTERS
Certain legal matters will be passed upon for Suburban Bancorp by Housley
Kantarian & Bronstein, P.C., Washington, D.C. Counsel employed by The Fifth
Third Bank has rendered his opinion that the shares of Fifth Third Common Stock
to be issued to the stockholders of Suburban Bancorp in connection with the
Merger have been duly authorized and, if issued pursuant to the Affiliation
Agreement, will be validly issued, fully paid and non-assessable under the
current laws of the State of Ohio. Graydon, Head & Ritchey, Cincinnati, Ohio,
will render its opinion to Fifth Third and Suburban Bancorp with respect to
certain federal income tax consequences of the Merger. At March 31, 1997,
attorneys at Graydon, Head & Ritchey who are participating in matters relating
to the Merger beneficially owned 1,602 shares of Fifth Third Common Stock.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from Fifth Third Bancorp's Annual Report on Form 10-K for the year
ended December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements incorporated in this prospectus by
reference from Suburban Bancorporation, Inc.'s Annual Report on Form 10-KSB for
the year ended June 30, 1996 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report (which report expresses an
unqualified opinion and includes an explanatory paragraph referring to a change
in the method of accounting for income taxes in 1994), which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
53
<PAGE> 56
ANNEX A
AFFILIATION AGREEMENT DATED AS OF MARCH 13, 1997
BETWEEN
FIFTH THIRD BANCORP
AND
SUBURBAN BANCORPORATION
<PAGE> 57
ANNEX A
AFFILIATION AGREEMENT
This Affiliation Agreement ("Affiliation Agreement") dated as of March 13,
1997 is entered into by and between FIFTH THIRD BANCORP, a corporation organized
and existing under the corporation laws of the State of Ohio with its principal
office located in Cincinnati, Hamilton County, Ohio ("Fifth Third"), and
SUBURBAN BANCORPORATION, INC., a corporation organized and existing under the
corporation laws of the State of Delaware, with its principal office located in
Cincinnati, Hamilton County, Ohio ("Suburban Bancorp").
W I T N E S S E T H:
WHEREAS, Fifth Third is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, and Suburban Bancorp is a unitary
savings and loan holding company under Section 10 of the Home Owners Loan Act,
as amended ("HOLA"), and Fifth Third and Suburban Bancorp desire to effect a
merger under the authority and provisions of the corporation laws of the States
of Ohio and Delaware pursuant to which at the Effective Time (as herein defined
in Section IX) Suburban Bancorp will be merged into Fifth Third, with Fifth
Third to be and become the surviving corporation (the "Merger");
WHEREAS, Suburban Bancorp owns all of the outstanding stock of Suburban
Federal Savings Bank ("Thrift Subsidiary") which, at the Effective Time, will be
merged with and into Fifth Third's wholly-owned subsidiary The Fifth Third Bank
("Fifth Third Bank") with Fifth Third Bank to become the surviving corporation
(the "Subsidiary Merger"); and,
WHEREAS, under the terms of this Agreement each of the issued and
outstanding shares of the Common stock, $.01 par value per share, of Suburban
Bancorp which are issued and outstanding (excluding any treasury shares and
preferred shares) immediately prior to the Effective Time will at the Effective
Time be cancelled and extinguished and in substitution therefor such Suburban
Bancorp shares will, at the Effective Time, be converted into shares of the
Common Stock, without par value, of Fifth Third ("Fifth Third Common Stock"),
all as more fully provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
Fifth Third and Suburban Bancorp, agree together as follows:
I. MODE OF EFFECTUATING CONVERSION OF SHARES
A. At the Effective Time (as defined in Article IX), all of the shares of
Fifth Third Common Stock that are issued and outstanding or held by Fifth Third
as treasury shares immediately prior to the Effective Time will remain unchanged
and will remain outstanding or as treasury shares, as the case may be, of the
Surviving Corporation. Any stock options, subscription rights, warrants or other
securities outstanding immediately prior to the Effective Time, entitling the
holders to subscribe for purchase of any shares of the capital stock of any
class of Fifth Third, and any securities outstanding at such time that are
convertible into shares of the capital stock of any class of Fifth Third will
remain unchanged and will remain outstanding, with the holders thereof entitled
to subscribe for, purchase or convert their securities into the number of shares
of the class of capital stock of Fifth Third to which they are entitled under
the terms of the governing documents.
B. Each of the shares of the Common Stock, $.01 par value per share, of
Suburban Bancorp ("Suburban Bancorp Common Stock") that is issued and
outstanding immediately prior to the Effective Time will, when the Merger
becomes effective, be converted by virtue of the Merger and without further
action, into .24357 shares of Fifth Third Common Stock (the "Exchange Ratio"),
subject to adjustment as provided in Section VIII.A.7. herein. All issued and
outstanding shares of the Preferred Stock of Suburban Bancorp, if any, shall be
cancelled at the Effective Time.
C. At the Effective Time, all of the shares of Suburban Bancorp Common
Stock, whether issued or unissued (including treasury shares), will be cancelled
and extinguished and the holders of certificates for shares thereof shall cease
to have any rights as shareholders of Suburban Bancorp, except as aforesaid,
their
A-1
<PAGE> 58
sole rights as shareholders shall pertain to the Fifth Third Common Stock and
cash in lieu of fractional shares, if any (as described in the immediately
succeeding paragraph), into which their Suburban Bancorp Common Stock shall have
been converted by virtue of the Merger.
D. After the Effective Time, each holder of a certificate or certificates
for shares of Suburban Bancorp Common Stock, upon surrender of the same duly
transmitted to Fifth Third Trust Department, as Exchange Agent (or in lieu of
surrendering such certificates in the case of lost, stolen, destroyed or mislaid
certificates, upon execution of such documentation as may be reasonably required
by Fifth Third), shall be entitled to receive in exchange therefor a certificate
or certificates representing the number of whole shares of Fifth Third Common
Stock into which such holder's shares of Suburban Bancorp Common Stock shall
have been converted by the Merger, plus a cash payment for any fraction of a
share to which the holder is entitled, in lieu of such fraction of a share,
equal in amount to the product resulting from multiplying such fraction by the
per share closing price of Fifth Third Common Stock as reported on the NASDAQ
National Market System on the date the Merger becomes effective (the "Applicable
Market Value Per Share of Fifth Third Common Stock"). Within seven (7) business
days after the Effective Time, the Exchange Agent will send a notice and
transmittal form to each Suburban Bancorp shareholder of record at the Effective
Time advising such shareholder of the effectiveness of the Merger and the
procedures for surrendering to the Exchange Agent outstanding certificates
formerly evidencing Suburban Bancorp Common Stock in exchange for new
certificates of Fifth Third Common Stock. Until so surrendered, each outstanding
certificate that prior to the Effective Time represented shares of Suburban
Bancorp Common Stock shall be deemed for all corporate purposes to evidence
ownership of the number of full shares of Fifth Third Common Stock into which
the same shall have been converted; provided, however, that dividends or
distributions otherwise payable with respect to shares of Fifth Third Common
Stock into which Suburban Bancorp Common Stock shall have been so converted
shall be paid with respect to such shares only when the certificate or
certificates evidencing shares of Suburban Bancorp Common Stock shall have been
so surrendered (or in lieu of surrendering such certificates in the case of
lost, stolen, destroyed or mislaid certificates, upon execution of such
documentation as may be reasonably required by Fifth Third) and thereupon any
such dividends and distributions shall be paid, without interest, to the holder
entitled thereto subject however to the operation of any applicable escheat or
similar laws relating to unclaimed funds.
E. The exchange ratio referred to in Paragraph B of this Article I shall be
adjusted so as to give the Suburban Bancorp shareholders the economic benefit of
any stock dividends, reclassifications, recapitalizations, split-ups, exchanges
of shares, distributions or combinations or subdivisions of Fifth Third Common
Stock effected between the date of this Agreement and the Effective Time. In the
event between the date of this Agreement and the Effective Time, Fifth Third has
engaged in either the distribution of any of its assets (other than a cash
dividend), or caused the distribution of capital stock in a company which holds
any asset(s) previously held by Fifth Third or in any affiliate thereof, to the
Fifth Third shareholders, then the Exchange Ratio shall be increased in such
amount so that the equivalent fair market value of such transaction shall also
be distributed to the Suburban Bancorp shareholders, as of the Effective Time.
F. When all necessary documents have been filed and recorded in accordance
with the laws of the States of Ohio and Delaware, and the Merger becomes
effective, the separate existence of Suburban Bancorp shall cease and Suburban
Bancorp shall be merged into Fifth Third (which will be the "Surviving
Corporation"), and which shall continue its corporate existence under the laws
of the State of Ohio under the name "Fifth Third Bancorp".
G. The Second Amended Articles of Incorporation, as amended, of Fifth Third
of record with the Secretary of State of Ohio as of the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation, until further
amended as provided by law.
H. The Directors of Fifth Third who are in office at the Effective Time
shall be the directors of the Surviving Corporation, each of whom shall continue
to serve as a Director for the term for which he was elected, subject to the
Regulations of the Surviving Corporation and in accordance with law. The
officers of Fifth Third who are in office at the time the Merger becomes
effective shall be the officers of the Surviving Corporation, subject to the
Regulations of the Surviving Corporation and in accordance with law.
A-2
<PAGE> 59
I. The Regulations of Fifth Third at the Effective Time shall be the
Regulations of the Surviving Corporation, until amended as provided therein and
in accordance with law.
J. At the Effective Time, the effect of the Merger shall be as provided by
the applicable provisions of the laws of Ohio and Delaware. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time: the
separate existence of Suburban Bancorp shall cease; Fifth Third shall possess
all assets and property of every description, and every interest therein,
wherever located, and the rights, privileges, immunities, powers, franchises and
authority, of a public as well as a private nature, of each of Fifth Third and
Suburban Bancorp, and all obligations owing by or due each of Fifth Third and
Suburban Bancorp shall be vested in, and become the obligations of, Fifth Third,
without further act or deed, including, without limitation, any liability to
Dissenting Shareholders under Section 262 of the Delaware Corporation laws; and
all rights of creditors of each Fifth Third and Suburban Bancorp shall be
preserved unimpaired, and all liens upon the property of each of Fifth Third and
Suburban Bancorp shall be preserved unimpaired, on only the property affected by
such liens immediately prior to the Effective Time.
K. From time to time as and when requested by the Surviving Corporation, or
by its successors or assigns, the officers and Directors of Suburban Bancorp in
office at the Effective Time shall execute and deliver such instruments and
shall take or causes to be taken such further or other action as shall be
necessary in order to vest or perfect in the Surviving Corporation or to confirm
of record or otherwise, title to, and possession of, all the assets, property,
interests, rights, privileges, immunities, powers, franchises and authority of
Suburban Bancorp and otherwise to carry out the purposes of this Agreement.
L. This Agreement shall be filed (only if necessary) and recorded along
with Articles or a Certificate of Merger in accordance with the requirements of
the laws of the States of Ohio and Delaware. This Agreement shall not be filed
with the Secretary of the State of Ohio until, but shall be filed promptly
after, all of the conditions precedent to consummating the Merger as contained
in Article VI of this Agreement shall have been fully met or effectively waived.
II. REPRESENTATIONS AND WARRANTIES OF SUBURBAN BANCORP.
Suburban Bancorp represents and warrants to Fifth Third that as of the date
hereof or as of the indicated date, as appropriate, and except as otherwise
disclosed in Schedule 1 hereto delivered by Suburban Bancorp to Fifth Third
prior to the execution of this Agreement by Fifth Third:
A. Suburban Bancorp (i) is duly incorporated, validly existing and in good
standing as a corporation under the corporation laws of the State of Delaware
and is a registered unitary savings and loan holding company under the HOLA;
(ii) is duly authorized to conduct the business in which it is engaged; (iii)
has 12,000,000 shares, $.01 par value per share, of Suburban Bancorp Common
Stock and 3,000,000 shares, $.01 par value per share, of Preferred Stock
("Suburban Bancorp Preferred Stock") authorized pursuant to its Certificate of
Incorporation, which are the total number of shares Suburban Bancorp is
authorized to have outstanding; (iv) has no outstanding securities of any kind,
nor any outstanding options, warrants or other rights entitling another person
to acquire any securities of Suburban Bancorp of any kind, other than (a)
1,474,932 shares of Suburban Bancorp Common Stock, which presently are
authorized, duly issued and outstanding and fully paid and nonassessable, and
(b) options to purchase a total of 115,953 shares of Suburban Bancorp Common
Stock which were granted to and are currently held by the employees, officers
and Directors of Suburban Bancorp and/or Thrift Subsidiary; and (v) owns of
record and beneficially free and clear of all liens and encumbrances, all of the
100,000 outstanding shares of the capital stock of the Thrift Subsidiary, $1.00
par value per share. Suburban Bancorp has no direct or indirect subsidiaries
other than Thrift Subsidiary, Suburban Financial Services, Inc., and Northside
Partners Ltd. Partnership.
B. Thrift Subsidiary is duly incorporated, validly existing and in good
standing as a Federal Savings bank under the laws of the United States, and has
all the requisite power and authority to conduct the banking business as now
conducted by it; and Thrift Subsidiary does not have any outstanding securities
of any kind, nor any outstanding options, warrants or other rights entitling
another person to acquire any securities of any of the Thrift Subsidiary of any
kind, other than 100,000 shares of the capital stock, $1.00 par value per share,
of all of the Thrift Subsidiary owned of record and beneficially by Suburban
Bancorp.
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C. Suburban Bancorp has previously furnished to Fifth Third its audited,
consolidated balance sheets, statements of operations, statements of
stockholders' equity and cash flows as at June 30, 1996, and for the year then
ended, together with the opinions of its independent certified public
accountants associated therewith. Suburban Bancorp also has previously furnished
to Fifth Third the Thrift Financial Reports as filed with OTS of the Thrift
Subsidiary as at June 30, 1994, 1995 and 1996. Suburban Bancorp also has
furnished to Fifth Third (i) its unaudited, consolidated financial statements as
at December 31, 1996, and for the six months then ended, and (ii) the Thrift
Financial Reports as filed with the OTS of the Thrift Subsidiary for the
quarters ended December 31, 1996 and September 30, 1996. Such audited
consolidated financial statements of Suburban Bancorp fairly present the
consolidated financial condition of Suburban Bancorp as of the date thereof, and
for the years or periods covered thereby in conformity with generally accepted
accounting principles, consistently applied (except as stated therein and except
for the omission of notes to unaudited statements and year-end adjustments to
interim results). There are no material liabilities, obligations or indebtedness
of Suburban Bancorp or the Thrift Subsidiary required to be disclosed in the
financial statements so furnished other than the liabilities, obligations or
indebtedness disclosed in such financial statements (including footnotes).
Suburban Bancorp shall furnish Fifth Third with unaudited, consolidated
financial statements as at January 31, 1997, and for the month then ended as
soon as practicable, and shall continue to furnish such financial information
for subsequent monthly and quarterly periods to Fifth Third as soon as
practicable until the Closing Date. In the event that the Closing Date does not
occur before June 30, 1997, Suburban Bancorp shall furnish Fifth Third with its
audited, consolidated financial statements as at June 30, 1997 and for the year
then ended as soon as they are reasonably available.
D. Suburban Bancorp and the Thrift Subsidiary have good and marketable
title to all of the material properties and assets reflected in its separate
statement of financial condition as at June 30, 1996, and which are still owned
by each and each has good and marketable title to all material properties and
assets acquired by it after such date and still owned by it, subject to (i) any
liens and encumbrances that do not materially adversely impair the use of the
property, (ii) statutory liens for taxes not yet due and payable and (iii) minor
defects and irregularities in title that do not materially adversely impair the
use of the property.
E. Except as disclosed in Schedule 1 and for events relating to the
business environment in general: (i) since June 30, 1996, to the date hereof
there have been no material adverse changes in the financial condition,
operations or business of Suburban Bancorp and the Thrift Subsidiary on a
consolidated or separate basis; (ii) Suburban Bancorp is not aware of any events
which have occurred since June 30, 1996 to the date hereof or which as of the
date hereof are reasonably certain to occur in the future and which reasonably
can be expected to result in any material adverse change in the financial
condition, operations or business of Suburban Bancorp and the Thrift Subsidiary
on a consolidated or separate basis, excluding in each instance matters (which
shall include but not be limited to changes in general economic condition,
changes in interest rates, changes in laws or regulations or changes in
generally accepted accounting principles) of general application to the thrift
or banking industry; and (iii) since June 30, 1996, to the date hereof there
have been no material changes in the methods of business operations of Suburban
Bancorp and the Thrift Subsidiary.
F. Except as disclosed in Schedule 1, there are no actions, suits,
proceedings, investigations or assessments of any kind pending, or to the best
knowledge of Suburban Bancorp, threatened against Suburban Bancorp or the Thrift
Subsidiary which reasonably can be expected to result in any material adverse
change in the financial condition, operations or business of Suburban Bancorp
and the Thrift Subsidiary on a consolidated or separate basis.
G. Except as disclosed in Schedule 1, since June 30, 1996, to the date
hereof Suburban Bancorp and the Thrift Subsidiary each has been operated in the
ordinary course of business, has not made any changes in its respective capital
or corporate structures, nor any material changes in its methods of business
operations and has not provided any increases in employee salaries or benefits
other than in the ordinary course of business. Except as disclosed in Schedule
1, since June 30, 1996, to the date hereof Suburban Bancorp has not declared or
paid any dividends nor made any distributions of any other kind to its
shareholders.
H. Except as disclosed in Schedule 1, Suburban Bancorp and the Thrift
Subsidiary have timely filed all federal, state and local tax returns required
to be filed (after giving effect to all extensions) by them,
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respectively, and have paid or provided for all tax liabilities shown to be due
thereon or which have been assessed against them, respectively. All tax returns
filed by Suburban Bancorp or the Thrift Subsidiary through the date hereof
constitute complete and accurate representations of the tax liabilities of
Suburban Bancorp and the Thrift Subsidiary for such years and accurately set
forth all items (to the extent required to be included or reflected in such
returns) relevant to its future tax liabilities, including the tax basis of its
properties and assets in all material respects.
I. Except as disclosed in Schedule 1, neither Suburban Bancorp nor the
Thrift Subsidiary is a party to (i) any written employment contracts or written
contracts of any other kind with any of its officers, Directors or employees or
(ii) any material contract, lease or agreement of any other kind which is not
assignable as a result of the merger provided for herein without the consent of
another party, except for contracts, leases or agreements which do not have
terms extending beyond six months from the date of this Agreement or contracts,
leases or agreements (excluding contracts, leases and agreements pursuant to
which credit has been extended by the Thrift Subsidiary) which do not require
the annual expenditure of more than $5,000.00 thereunder.
J. Except as disclosed in Schedule 1, since June 30, 1996, to the date
hereof the Thrift Subsidiary has not incurred any unusual or extraordinary loan
losses which are material to Suburban Bancorp and the Thrift Subsidiary on a
consolidated basis; to the best knowledge of Suburban Bancorp and in light of
the Thrift Subsidiary's historical loan loss experience and its management's
analysis of the quality and performance of its loan portfolio, as of December
31, 1996, its reserve for loan losses was, in the opinion of Suburban Bancorp,
adequate to absorb all known and reasonably anticipated losses as of such date.
K. Except as disclosed in Schedule 1 and except for dealings with and
obligations to Sandler, O'Neill & Partners, L.P., neither Suburban Bancorp nor
the Thrift Subsidiary has, directly or indirectly, dealt with any broker or
finder in connection with this transaction and neither has incurred or will
incur any obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement.
L. 1. The Directors of Suburban Bancorp, by resolution adopted by the
unanimous vote of all Directors present at a meeting duly called and held in
accordance with applicable law, have duly approved this Agreement, and have
directed that this Agreement be submitted to a vote of Suburban Bancorp's
shareholders at the annual or a special meeting of the shareholders to be called
for that purpose, all in accordance with and as required by law and in
accordance with the Certificate of Incorporation and Bylaws of Suburban Bancorp.
2. Suburban Bancorp has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder and thereunder subject
to certain required regulatory and shareholder approvals. This Agreement, when
executed and delivered, will have been duly authorized and will constitute valid
and binding obligations of Suburban Bancorp, enforceable in accordance with
their respective terms, except to the extent that (i) enforceability thereof may
be limited by insolvency, reorganization, liquidation, bankruptcy, readjustment
of debt or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) the availability of certain
remedies may be precluded by general principals of equity, subject, however, to
the receipt of requisite regulatory approvals and the approval of Suburban
Bancorp's shareholders.
3. Except as disclosed in Schedule 1, neither the execution of this
Agreement, nor the consummation of the transactions contemplated hereby and
thereby, (i) conflicts with, results in a breach of, violates or constitutes a
default under, Suburban Bancorp's Certificate of Incorporation or Bylaws or, to
the best knowledge of Suburban Bancorp, any federal, state or local law,
statute, ordinance, rule, regulation or court or administrative order, or any
agreement, arrangement, or commitment, to which Suburban Bancorp or the Thrift
Subsidiary is subject or bound; (ii) to the best knowledge of Suburban Bancorp,
results in the creation of or gives any person the right to create any material
lien, charge, encumbrance, or security agreement or any other material rights of
others or other material adverse interest upon any material right, property or
asset belonging to Suburban Bancorp or the Thrift Subsidiary; (iii) except as
disclosed in Schedule 1, terminates or gives any person the right to terminate,
amend, abandon, or refuse to perform any material agreement, arrangement or
commitment to which Suburban Bancorp or the Thrift Subsidiary is a party or by
which Suburban Bancorp's or the Thrift Subsidiary's rights, properties or assets
are subject or bound; or (iv) to the
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best knowledge of Suburban Bancorp, accelerates or modifies, or gives any party
thereto the right to accelerate or modify, the time within which, or the terms
according to which, Suburban Bancorp or the Thrift Subsidiary is to perform any
duties or obligations or receive any rights or benefits under any material
agreements, arrangements or commitments. For purposes of subparagraphs (iii) and
(iv) immediately preceding, material agreements, arrangements or commitments
exclude agreements, arrangements or commitments having a term expiring less than
six months from the date of this Agreement or which do not require the
expenditure of more than $5,000 (but shall include all agreements, arrangements
or commitments pursuant to which credit has been extended by the Thrift
Subsidiary).
M. Complete and accurate copies of the (i) Certificate of Incorporation and
Bylaws of Suburban Bancorp and (ii) the Charter and Bylaws of the Thrift
Subsidiary in force as of the date hereof have been delivered to Fifth Third.
N. To the best knowledge of Suburban Bancorp and except as disclosed in
Schedule 1, neither Suburban Bancorp nor the Thrift Subsidiary nor any employee,
officer or Director of any of them has knowingly engaged in any activity or
knowingly omitted to take any action which, in any material way, has resulted or
could result in the violation of (i) any local, state or federal law (including
without limitation the Bank Secrecy Act, the Community Reinvestment Act,
applicable consumer protection and disclosure laws and regulations, including
without limitation, Truth in Lending, Truth in Savings and similar disclosure
laws and regulations, and equal employment and employment discrimination laws
and regulations) or (ii) any regulation, order, injunction or decree of any
court or governmental body, the violation of either of which could reasonably be
expected to have a material adverse effect on the financial condition of
Suburban Bancorp and the Thrift Subsidiary. To the best knowledge of Suburban
Bancorp and except as disclosed in Schedule 1, the Thrift Subsidiary possesses
all licenses, franchises, permits and other governmental authorizations
necessary for the continued conduct of its business without material
interference or interruption.
O. To the best knowledge of Suburban Bancorp and except as disclosed in
Schedule 1, neither this Agreement nor the Agreement of Merger nor any report,
statement, list, certificate or other information furnished by Suburban Bancorp
or the Thrift Subsidiary to Fifth Third or its agents in connection with this
Agreement or any of the transactions contemplated hereby (including, without
limitation, any information which has been or shall be supplied with respect to
their business operations and financial condition for inclusion in the proxy
statement/prospectus and registration statement relating to the merger) contains
or shall contain (or, in the case of information relating to the proxy
statement/prospectus, at the time it is mailed, in the case of the registration
statement, at the time it becomes effective and in the case of the proxy
statement/prospectus and the registration statement, at the time the annual or
special meeting of shareholders of Suburban Bancorp is held to consider the
adoption of this Agreement and the Agreement of Merger) an untrue statement of
material fact or omits or shall omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they are made, not misleading.
P. Except as disclosed in Schedule 1, there are no actions, proceedings or
investigations pending before any environmental regulatory body, with respect to
or threatened against or affecting Suburban Bancorp or the Thrift Subsidiary in
respect to any "facility" owned, leased or operated by any of them (but
excluding any "facility" as to which sole interest of Suburban Bancorp or the
Thrift Subsidiary is that of a lienholder or mortgagee, but including any
"facility" to which title has been taken pursuant to mortgage foreclosure or
similar proceedings and including any "facility" in which Suburban Bancorp or
the Thrift Subsidiary ever participated in the financial management of such
facility to a degree sufficient to influence, or have the ability to influence,
the facility's treatment of hazardous waste) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or under any Federal, state, local or municipal statue, ordinance or
regulation in respect thereof, in connection with any release of any toxic or
"hazardous substance", pollutant or contaminant into the "environment" which, if
adversely determined, (a) would require the payment by Suburban Bancorp or the
Thrift Subsidiary and/or require Suburban Bancorp or the Thrift Subsidiary to
incur expenses of more than $5,000 (whether or not covered by insurance) or (b)
would otherwise have a material adverse effect on Suburban Bancorp or the Thrift
Subsidiary, nor, to the best knowledge of Suburban Bancorp after reasonable
inquiry, is there any reasonable basis for the institution of any such actions
or proceedings or investigations which is probable of assertion, nor are there
any
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such actions or proceedings or investigations in which Suburban Bancorp or the
Thrift Subsidiary is a plaintiff or complainant. Neither Suburban Bancorp nor
the Thrift Subsidiary is liable in any material respect under any applicable law
for any release by either of them or for any release by any other "person" of a
hazardous substance caused by the spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
hazardous wastes or other chemical substances, pollutants or contaminants into
the environment, nor is Suburban Bancorp or the Thrift Subsidiary liable for any
material costs (as a result of the acts or omissions of Suburban Bancorp or the
Thrift Subsidiary or, to the best knowledge of Suburban Bancorp, as a result of
the acts or omissions of any other "person") of any remedial action including,
without limitation, costs arising out of security fencing, alternative water
supplies, temporary evacuation and housing and other emergency assistance
undertaken by any environmental regulatory body having jurisdiction over
Suburban Bancorp or the Thrift Subsidiary to prevent or minimize any actual or
threatened release by Suburban Bancorp or the Thrift Subsidiary of any hazardous
wastes or other chemical substances, pollutants and contaminants into the
environment which would endanger the public health or the environment. All terms
contained in quotation marks in this paragraph and the paragraph immediately
following shall have the meaning ascribed to such terms, and defined in, CERCLA.
Except as disclosed in Schedule 1, to the best knowledge of Suburban
Bancorp each "facility" owned, leased or operated by Suburban Bancorp or the
Thrift Subsidiary (but excluding any "facility" as to which the sole interest of
Suburban Bancorp or the Thrift Subsidiary is that of a lienholder or mortgagee,
but including any "facility" to which title has been taken pursuant to mortgage
foreclosure or similar proceedings and including any "facility" in which
Suburban Bancorp or the Thrift Subsidiary ever participated in the financial
management of such facility to a degree sufficient to influence, or have the
ability to influence, the facility's treatment of hazardous waste) is, in all
material respects, in compliance with all applicable Federal, state, local or
municipal statutes, ordinances, laws and regulations and all orders, rulings or
other decisions of any court, administrative agency or other governmental
authority relating to the protection of the environment, except to the extent a
failure to comply would not have a material adverse effect on the business,
operations and financial condition of Suburban Bancorp and the Thrift Subsidiary
taken as a whole.
Q. 1. Benefit Plans. Schedule 1 lists the name and a short description of
each Benefit Plan (as herein defined), together with an indication of its
funding status (e.g., trust, insured or general company assets). For purposes
hereof, the term "Benefit Plan" shall mean any plan, program, arrangement or
system of employee or director benefits maintained by Suburban Bancorp or the
Thrift Subsidiary for the benefit of employees, former employees or Directors of
Suburban Bancorp or the Thrift Subsidiary and shall include (a) any qualified
retirement plan such as a pension, profit sharing, stock bonus plan or employee
stock ownership plan ("ESOP"), (b) any plan, program or arrangement providing
deferred compensation, bonus deferral or incentive benefits, whether funded
through trust or otherwise, and (c) any welfare plan, program or policy
providing vacation, severance, salary continuation, supplemental unemployment,
disability, life, health coverage, retiree health, Voluntary Employees'
Beneficiary Association, medical expense reimbursement or dependent care
assistance benefits, in any such foregoing case without regard to whether the
Benefit Plan constitutes an employee benefit plan under Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
number of employees covered under such Benefit Plan.
2. Plan Documents, Reports and Filings. Except as disclosed on Schedule
1, Suburban Bancorp or the Thrift Subsidiary has provided true, complete and
correct copies of all plan documents, if any, comprising each Benefit Plan,
together with, when applicable, (a) the most recent summary plan description,
(b) the most recent actuarial and financial reports and the most recent annual
reports filed with any governmental agency and (c) all Internal Revenue Service
("IRS") or other governmental agency rulings and determination letters or any
open requests for IRS rulings or letters with respect to Benefit Plans.
3. Qualified Retirement Plan Compliance. With respect to each Benefit
Plan which is an employee pension benefit plan (as defined in section 3(2) of
ERISA) other than any such plan that meets the "top-hat" exception under section
201(1) of ERISA (a "Qualified Benefit Plan"), except as disclosed on Schedule 1:
(a) the IRS has issued a determination letter which determined that such
Qualified Benefit Plan satisfied the requirements of section 401(a) of the
Internal Revenue Code of 1986, as amended through the date hereof (the "Code"),
as amended by all of the laws referred to in Section 1 of Revenue Procedure
93-39, such
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determination letter has not been revoked or threatened to be revoked by the
IRS, and the scope of such determination letter is complete and does not exclude
consideration of any of the requirements or matters referred to in sections 4.02
through 4.04 of Revenue Procedure 93-39; (b) to the best knowledge of Suburban
Bancorp, such Qualified Benefit Plan is in material compliance with all
qualification requirements of Section 401(a) of the Code; (c) to the best
knowledge of Suburban Bancorp, such Qualified Benefit Plan is in substantial
compliance with all notice, reporting and disclosure requirements of ERISA and
the Code; (d) any Qualified Benefit Plan which is an ESOP as defined in Section
4975(e)(7) of the Code (an "ESOP Qualified Benefit Plan") is in material
compliance with the applicable qualification requirements of Section 409 of the
Code; and (e) any previously terminated Qualified Benefit Plan was terminated in
material compliance with the requirements of ERISA and the Code, has received a
favorable determination letter therefor, and the liabilities of such Qualified
Benefit Plan and the requirements of the Pension Benefit Guaranty Corporation
("PBGC") were fully satisfied.
4. Welfare Plan Compliance. With respect to each Benefit Plan which is an
employee welfare benefit plan (as defined in Section 3(1) of ERISA) (a "Welfare
Benefit Plan"), except as noted on Schedule 1: (a) such Welfare Benefit Plan, if
it is intended to provide favorable tax benefits to plan participants, has been,
to the best knowledge of Suburban Bancorp, in compliance with applicable Code
provisions; (b) such Welfare Benefit Plan has been, to the best knowledge of
Suburban Bancorp, operated in substantial compliance with all applicable notice,
reporting and disclosure requirements of ERISA and the Code; and (c) such
Welfare Benefit Plan, if a group health plan subject to the requirements of
Section 4980B of the Code ("COBRA"), has been, to the best knowledge of Suburban
Bancorp, operated in substantial compliance with such COBRA requirements.
5. Prohibited Transactions. To the best knowledge of Suburban Bancorp, no
prohibited transaction under Section 406 of ERISA and not exempt under Section
408 of ERISA has occurred with respect to any Benefit Plan which would result,
with respect to any person, in (a) the imposition, directly or indirectly, of a
material excise tax under Section 4975 of the Code or (b) material fiduciary
liability under Section 409 of ERISA.
6. Lawsuits or Claims. No material actions, suits or claims (other than
routine claims of benefits) are pending or, to the best knowledge of Suburban
Bancorp, threatened against any Benefit Plan or against Suburban Bancorp or the
Thrift Subsidiary with respect to any Benefit Plan.
7. Disclosure of Unfunded Liabilities. All material Unfunded Liabilities
with respect to each Benefit Plan have been recorded and disclosed on the most
recent financial statement of Suburban Bancorp and the Thrift Subsidiary or, if
not, in Schedule 1. For purposes hereof, the term "Unfunded Liabilities" shall
mean any amounts properly accrued to date under generally accepted accounting
principles in effect as of the date of this Agreement (GAAP), or amounts not yet
accrued for GAAP purposes but for which an obligation (which has legally accrued
and cannot legally be eliminated and which is subject to reasonable estimate)
exists for payment in the future which is attributable to any Benefit Plan,
including but not limited to (a) severance pay benefits, (b) deferred
compensation or unpaid bonuses, (c) any liabilities on account of the change in
control which will result from this Agreement, including any potential 20%
excise tax under Section 4999 of the Code relating to excess parachute payments
under Section 280G of the Code, (d) any unpaid pension contributions for the
current plan year or any accumulated funding deficiency under Section 412 of the
Code and related penalties under Section 4971 of the Code, including unpaid
pension contributions or funding deficiencies owed by members of a controlled
group of corporations which includes Suburban Bancorp or the Thrift Subsidiary
and for which Suburban Bancorp or the Thrift Subsidiary is liable under
applicable law, (e) any authorized but unpaid profit sharing contributions or
contributions under Section 401(k) and Section 401(m) of the Code, (f) retiree
health benefit coverage and (g) unpaid premiums for contributions required under
any group health plan to maintain such plan's coverage through the Effective
Time.
8. Defined Benefit Pension Plan Liabilities. Suburban Bancorp and the
Thrift Subsidiary (or any pension plan maintained by any of them) have not
incurred any material liability to the PBGC or the IRS with respect to any
Benefit Plan which is a defined benefit pension plan, except for the payment of
PBGC premiums pursuant to Section 4007 of ERISA, all of which if due prior to
the date of this Agreement have
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been fully paid, and no PBGC reportable event under Section 4043 of ERISA has
occurred with respect to any such pension plan. Except as otherwise disclosed in
Schedule 1, the benefit liabilities, as defined in Section 4001(a)(16) of ERISA,
of each Benefit Plan subject to Title IV of ERISA, using the actuarial
assumptions that would be used by the PBGC in the event of termination of such
plan, do not exceed the fair market value of the assets of such plan. Neither
Suburban Bancorp, the Thrift Subsidiary nor any controlled group member of
Suburban Bancorp or the Thrift Subsidiary participates in, or has incurred any
liability under Sections 4201, 4063 or 4064 of ERISA for a complete or partial
withdrawal from a multiple employer plan or a multi-employer plan (as defined in
Section 3(37) of ERISA).
9. Independent Trustee. Suburban Bancorp and the Thrift Subsidiaries (a)
have not incurred any asserted or, to the best knowledge of Suburban Bancorp,
unasserted material liability for breach of duties assumed in connection with
acting as an independent trustee of any employee pension plan (as defined in
Section 3(2) of ERISA) which is intended to be qualified under Section 401(a) of
the Code and which is maintained by an employer unrelated in ownership to
Suburban Bancorp or the Thrift Subsidiary, (b) have not authorized nor knowingly
participated in a material prohibited transaction under Section 406 of ERISA and
not exempt under Section 408 of ERISA and (c) have not received notice of any
material actions, suits or claims (other than routine claims for benefits)
pending or threatened against the unrelated employer or against them.
10. Retiree Benefits. Except as listed on Schedule 1 and identified as
"Retiree Liability", Suburban Bancorp and Thrift Subsidiary have no obligation
to provide medical benefits, or life insurance benefits to or with respect to
retirees, former employees or any of their relatives.
11. Right to Amend and Terminate. Except as listed on Schedule 1,
Suburban Bancorp or Thrift Subsidiary has all power and authority necessary to
amend or terminate each Benefit Plan without incurring any penalty or liability
provided that, in the case of an employee pension benefit plan (as defined in
section 3(2) of ERISA), benefits accrued as of the date of amendment or
termination are not reduced.
12. Material. For purposes of this Paragraph Q as a whole, the term
"material" in connection with a liability shall mean a liability or loss, taxes,
penalties, interest and related legal fees in the total amount of $5,000 or
more, with such determination being made on the basis of the aggregate affected
participants of a Benefit Plan and not with respect to any single participant.
R. The investment portfolios of Suburban Bancorp and the Thrift Subsidiary
consist of securities in marketable form. Except as disclosed in Schedule 1,
since June 30, 1996 to the date hereof neither Suburban Bancorp nor the Thrift
Subsidiary has incurred any unusual or extraordinary losses in its investment
portfolio, and, except for matters of general application to the thrift or
banking industry (including, but not limited to, changes in laws or regulations
or generally accepted accounting principles) or for events relating to the
business environment in general, including market fluctuations and changes in
interest rates, Suburban Bancorp is not aware of any events which are reasonably
certain to occur in the future and which reasonably can be expected to result in
any material adverse change in the quality or performance of Suburban Bancorp's
and the Thrift Subsidiary's investment portfolio on a consolidated basis.
S. Except as disclosed in Schedule 1, there are no actions, suits, claims,
proceedings, investigations or assessments of any kind pending, or to the best
knowledge of Suburban Bancorp, threatened against any of the Directors or
officers of Suburban Bancorp or the Thrift Subsidiary in their capacities as
such, and no Director or officer of Suburban Bancorp or the Thrift Subsidiary
currently is being indemnified or seeking to be indemnified by either Suburban
Bancorp or the Thrift Subsidiary pursuant to applicable law or Suburban
Bancorp's Articles of Incorporation or Bylaws or the Thrift Subsidiary's Charter
or Bylaws.
T. Schedule 1 sets forth, among other things, exceptions to Suburban
Bancorp's representations and warranties in this Section II. While Suburban
Bancorp has used its best efforts to identify in Schedule 1 the particular
representation or warranty to which each such exception relates, each such
exception shall be deemed disclosed for purposes of all representations and
warranties in this Section II. The mere inclusion of an exception in Schedule 1
shall not be deemed an admission by Suburban Bancorp that such exception
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represents a material fact, event or circumstances or would result in a material
adverse effect to Suburban Bancorp.
U. All representations and warranties contained in this Section II shall
expire at the Effective Time, and, thereafter, neither Suburban Bancorp nor the
Thrift Subsidiary nor any officer or director of either of them shall have any
liability or obligations with respect thereto.
III. REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD
Fifth Third represents and warrants to Suburban Bancorp that as of the date
hereof or as of the indicated date, as appropriate:
A. Fifth Third is duly incorporated, validly existing and in good standing
as a corporation under the corporation laws of the State of Ohio, is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended, and is duly authorized to conduct the business in which it is engaged,
and The Fifth Third Bank is duly incorporated, validly existing and in good
standing as a corporation under the laws of the State of Ohio and is duly
authorized to conduct the business in which it is engaged.
B. Pursuant to Fifth Third's Second Amended Articles of Incorporation, as
amended, the total number of shares of capital stock it is authorized to have
outstanding is 300,500,000 of which 300,000,000 shares are classified as Common
Stock without par value ("Fifth Third Common Stock") and 500,000 shares are
classified as Preferred Stock without par value. As of the close of business on
February 28, 1997, 105,881,698 shares of Fifth Third Common Stock were issued
and outstanding and 2,271,962 shares were held in its treasury. As of the date
of this Agreement, no shares of its Preferred Stock have been issued. Fifth
Third does not have outstanding any stock options, subscription rights, warrants
or other securities entitling the holders to subscribe for or purchase any
shares of its capital stock other than options granted and to be granted to
employees and Directors under its stock option plans. At February 28, 1997,
3,626,824 shares of Fifth Third Common Stock were reserved for issuance in
connection with outstanding options granted under it stock option plans and
427,064 shares were reserved for issuance under options to be granted in the
future.
C. All shares of Fifth Third Common Stock to be received by the
shareholders of Suburban Bancorp as a result of the merger pursuant to the terms
of this Agreement and the Agreement of Merger shall be, upon transfer or
issuance, validly issued, fully paid and non-assessable, and will not, upon such
transfer or issuance, be subject to the preemptive rights of any shareholder of
Fifth Third.
D. Fifth Third has furnished to Suburban Bancorp its consolidated financial
statements as at December 31, 1994, December 31, 1995 and December 31, 1996 and
for the respective years then ended together with the opinions of its
independent public accountants associated therewith. Such consolidated financial
statements fairly present the consolidated financial condition of Fifth Third as
of their respective dates and for the respective periods covered thereby in
conformity with generally accepted accounting principles consistently followed
throughout the periods covered thereby. Neither Fifth Third nor any significant
subsidiaries of Fifth Third have any material liabilities, obligations or
indebtedness required to be disclosed in such financial statements other than
the liabilities, obligations and indebtedness disclosed in such financial
statements (including footnotes). Fifth Third will furnish to Suburban Bancorp
its unaudited consolidated financial statements as at March 31, 1997 and for the
three (3) months then ended a soon as such statements publicly are available,
and shall continue to furnish information for subsequent calendar quarter
periods to Suburban Bancorp as soon as such becomes publicly available until the
Closing Date.
E. Except for events relating to the business environment in general: (i)
since December 31, 1996, to the date hereof there have been no material adverse
changes in the consolidated financial condition, operations or business of Fifth
Third; (ii) the chief executive officer and the chief financial officer of Fifth
Third are not aware of any events which have occurred since December 31, 1996,
or which are reasonably certain to occur in the future and which reasonably can
be expected to result in any material adverse change in the consolidated
financial condition, operations or business of Fifth Third; and (iii) since
December 31, 1996, to the date hereof there have been no material changes in the
methods of business operations of Fifth Third and its subsidiaries.
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F. 1. The Executive Committee of the Board of Directors of Fifth Third, by
resolution adopted by the members present at a meeting duly called and held, at
which meeting a quorum was at all times present and acting, has approved this
Agreement, including reserving for issuance to Suburban Bancorp shareholders in
accordance with this Agreement, a sufficient number of shares of Fifth Third
Common Stock. Approval and adoption of this Agreement by the shareholders of
Fifth Third is not required under Ohio law or under the Second Amended Articles
of Incorporation, as amended, or Code of Regulations of Fifth Third.
2. Fifth Third has corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder and thereunder subject to
certain required regulatory approvals. This Agreement, when executed and
delivered, will have been duly authorized and will the constitute valid and
binding obligation of Fifth Third, enforceable in accordance with its terms,
except to the extent that (i) enforceability thereof may be limited by
insolvency, reorganization, liquidation, bankruptcy, readjustment of debt or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of certain remedies may be
precluded by general principles of equity, subject, however, to the receipt of
requisite regulatory approvals.
3. Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby and thereby, does or will (i) conflict with,
result in a breach of, violate or constitute a default, under Fifth Third's
Second Amended Articles of Incorporation, as amended, or Code of Regulations or,
to the best knowledge of its chief executive officer and chief financial
officer, any federal, foreign, state or local law, statute, ordinance, rule,
regulation or court or administrative order, or any agreement, arrangement, or
commitment to which Fifth Third is subject or bound; (ii) to the best knowledge
of the chief executive officer and chief financial officer of Fifth Third,
result in the creation of or give any person the right to create any material
lien, charge, encumbrance, security agreement or any other material rights of
others or other material adverse interest upon any material right, property or
asset belonging to Fifth Third or any of its subsidiaries other than such rights
as may be given the shareholders of Suburban Bancorp pursuant to the provisions
of Sections 1701.84 and 1701.85 of the Ohio Revised Code; (iii) terminate or
give any person the right to terminate, amend, abandon, or refuse to perform any
material agreement, arrangement or commitment to which Fifth Third is a party or
by which Fifth Third's rights, properties or assets are subject or bound; or
(iv) accelerate or modify, or give any party thereto the right to accelerate or
modify, the time within which, or the terms according to which, Fifth Third is
to perform any duties or obligations or receive any rights or benefits under any
material agreement, arrangements or commitments.
G. Complete and accurate copies of (i) the Second Amended Articles of
Incorporation, as amended, and (ii) the Code of Regulations of Fifth Third in
force as of the date hereof have been delivered to Suburban Bancorp.
H. To the best knowledge of the chief executive officer and chief financial
officer of Fifth Third, neither Fifth Third nor any of its subsidiaries has
knowingly engaged in any activity or omitted to take any action which, in any
material way, has resulted or could result in the violation of (i) any local,
state or federal law or (ii) any regulation, order, injunction or decree of any
court or governmental body, the violation of either or which could reasonably be
expected to have a material adverse effect on the financial condition Fifth
Third and its subsidiaries taken as a whole. To the best knowledge of the chief
executive officer and chief financial officer of Fifth Third, Fifth Third and
its subsidiaries possess all licenses, franchise, permits and other governmental
authorizations necessary for the continued conduct of their businesses without
material interference or interruption.
I. 1. To the best knowledge of the chief executive officer and chief
financial officer of Fifth Third, neither this Agreement nor any report,
statement, list, certificate or other information furnished or to be furnished
by Fifth Third to Suburban Bancorp or its agents in connection with this
Agreement or any of the transactions contemplated hereby (including, without
limitation, any information which has been or shall be supplied with respect to
its business operations and financial condition for inclusion in the proxy
statement/prospectus and registration statement relating to the merger) contains
or shall contain (in the case of information relating to the proxy
statement/prospectus, at the time it is mailed, and, in the case of the
registration statement, at the time it becomes effective and, in the case of the
proxy statement/prospectus and
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the registration statement, at the time the annual or special meeting of
shareholders of Suburban Bancorp is held to consider the adoption of this
Agreement and the Agreement of Merger) an untrue statement of a material fact or
omits or shall omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
2. Fifth Third has furnished to Suburban Bancorp or its agents true and
complete copies (including all exhibits and all documents incorporated by
reference) of the following documents as filed by Fifth Third with the SEC:
a. Fifth Third's Annual Report on Form 10-K for the year ended
December 31, 1996;
b. any Current Report on Form 8-K with respect to any event occurring
after December 31, 1996 and prior to the date of this Agreement;
c. any report filed by Fifth Third to amend or modify any of the
reports described above; and
d. all proxy statements prepared in connection with meetings of Fifth
Third's shareholders held or to be held subsequent to December 31, 1996.
The information set forth in the documents described in this subsection 2
(including all exhibits thereto and all documents incorporated therein by
reference) did not, as of the dates on which such reports were filed with the
SEC, (a) contain any untrue statement of a material fact, (b) omit any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, or (c) omit any material exhibit required to be filed therewith.
Prior to the date hereof no event has occurred subsequent to December 31, 1996
which Fifth Third is required to describe in a Current Report on Form 8-K other
than the Current Reports heretofore furnished by Fifth Third to Suburban
Bancorp. Fifth Third timely shall furnish Suburban Bancorp with copies of all
reports filed by Fifth Third with the SEC subsequent to the date of this
Agreement and until the Closing Date.
J. There are no actions, suits, proceedings, investigations or assessments
of any kind pending or, to the best knowledge of the chief executive officer and
chief financial officer of Fifth Third, threatened against Fifth Third or any
Fifth Third subsidiary, which reasonably can be expected to result in any
material adverse change in the consolidated financial condition, operations or
business of Fifth Third.
K. Since December 31, 1996 to the date hereof, none of Fifth Third's
banking subsidiaries and thrift subsidiaries has incurred any unusual or
extraordinary loan losses which would be material to Fifth Third on a
consolidated basis; and to the best knowledge and belief of the chief executive
officer and chief financial officer of Fifth Third, and in the light of such
banking subsidiaries' and thrift subsidiary's historical loan loss experience
and their managements' analysis of the quality and performance of their
respective loan portfolios, as of December 31, 1996, their consolidated reserves
for loan losses are adequate to absorb all known and reasonably anticipated
losses as of such date.
L. Fifth Third and its subsidiaries have filed all federal, state and local
tax returns required to be filed (after giving effect to all extensions) by
them, respectively, and have paid or provided for all tax liabilities shown to
be due thereon or which have been assessed against them, respectively.
M. Fifth Third has not, directly or indirectly, dealt with any broker or
finder in connection with this transaction and has not incurred and will not
incur any obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement and the
Agreement of Merger.
N. Fifth Third has no unfunded liabilities with respect to any Benefit Plan
(as such term is defined in subparagraph Q.1. of Section II hereof, but applied
to Fifth Third, its subsidiaries and affiliates) that are material, either
individually or in the aggregate, to Fifth Third on a consolidated basis and
that have not been recorded and disclosed as required by generally accepted
accounting principles (GAAP) in the most recent year-end, audited financial
statements of Fifth Third supplied to Suburban Bancorp pursuant to Paragraph D
of Section III hereof.
O. The investment portfolios of Fifth Third and its subsidiaries and
affiliates consist of securities in marketable form. Since December 31, 1996, to
the date hereof Fifth Third and its affiliates, on a consolidated
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basis, have not incurred any unusual or extraordinary losses in their respective
investment portfolios, and, except for events relating to the business
environment in general, including market fluctuations, the management of Fifth
third is not aware of any events which are reasonably certain to occur in the
future and which reasonably can be expected to result in any material adverse
change in the quality or performance of the investment portfolios of Fifth Third
and its affiliates on a consolidated basis.
P. As of the date hereof, Fifth Third is not aware of the existence of any
factor that would materially delay or materially hinder issuance of any of the
required regulatory approvals necessary to consummate the Merger or the other
transactions contemplated hereby.
Q. All representations and warranties contained in this Section III shall
expire at the Effective Time, and thereafter, neither Fifth Third nor any
officer or Director of Fifth Third shall have any further liability or
obligation with respect thereto, except for any misrepresentations, breaches of
warranties or violations of covenants that were made with intent to defraud.
IV. OBLIGATIONS OF SUBURBAN BANCORP BETWEEN THE DATE OF THIS AGREEMENT AND THE
EFFECTIVE TIME
A. Suburban Bancorp, in consultation with Fifth Third, will take all
actions necessary to call and hold its annual or a special meeting of its
shareholders as soon as practicable after the Fifth Third registration statement
relating to this transaction has been declared effective by the SEC and under
all applicable state securities laws for the purpose of approving and adopting
this Agreement and any other documents or actions necessary to the consummation
of the Merger provided for herein pursuant to law. The Board of Directors of
Suburban Bancorp intends to inform the shareholders of Suburban Bancorp in the
proxy materials relating to the annual or special meeting that all Directors of
Suburban Bancorp presently intend to vote all shares of Suburban Bancorp Common
Stock which they own of record in favor of approving this Agreement and any such
other necessary documents or actions, and all Directors will recommend approval
of this Agreement to the other shareholders of Suburban Bancorp, subject only to
such Directors' fiduciary obligations, receipt of an updated fairness opinion
from Sandler, O'Neill Investment Banking Group dated as of date immediately
prior to the date of the Proxy Statement, and their review of Fifth Third's
registration statement to be filed with the SEC as set forth in Section V
herein, and their reasonable satisfaction with the information set forth
therein.
B. (i) Consistent with generally accepted accounting principles, Suburban
Bancorp agrees that on or before the Effective Time based on a review of the
Thrift Subsidiary's loan losses, current classified assets and commercial,
multi-family and residential mortgage loans and investment portfolio, Suburban
Bancorp will work with Fifth Third with the goal of establishing collection
procedures, internal valuation reviews, credit policies and practices and
general valuation allowances which are consistent with the guidelines used
within the Fifth Third holding company system, provided that no adjustment to
general valuation allowances or reserves shall be made until immediately prior
to the Effective Time and all conditions precedent to the obligations of the
parties hereto have either been satisfied or waived as confirmed by such parties
in writing. Fifth Third shall provide such assistance and direction to Suburban
Bancorp as is necessary in conforming to such polices, practices, procedures and
asset dispositions which are mutually agreeable between the date of this
Agreement until the Effective Time; and (ii) from the date of this Agreement
until the Effective Time, Suburban Bancorp and the Thrift Subsidiary each will
be operated in the ordinary course of business, and neither of them will,
without the prior written consent of Fifth Third, which consent shall not be
unreasonably withheld: make any changes in its capital or corporate structures;
issue any additional shares of its Common Stock other than pursuant to the
exercise of options granted prior to the date hereof; issue any other equity
securities, other than pursuant to the exercise of options granted prior to the
date hereof; or, issue as borrower any long term debt (other than the incurrence
or renewal of FHLB advances in an aggregate amount not to exceed thirty percent
(30%) of Suburban Bancorp's consolidated assets provided that Suburban Bancorp
will consult with and consider alternative advances from Fifth Third prior to
such incurrence or renewal) or convertible or other securities of any kind, or
right to acquire any of its securities; make any material changes in its method
of business operations; make, enter into any agreement to make, or become
obligated to make, any capital expenditures in excess of $5,000, except that
this restriction does not apply to the proposed addition of a drive-in facility
to the Hartwell offices; make, enter into or renew any agreement for services to
be provided to Suburban Bancorp or the Thrift Subsidiary or permit the automatic
renewal of any such
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agreement, except any agreement for services having a term of not more than
three months or requiring the expenditure of not more than $5,000 (for this
purpose the phrase "permit the automatic renewal" includes the failure to send a
notice of termination of such contract if such failure would constitute a
renewal) and except that any employment or severance agreement which is subject
to renewal by the end of September of each year may be renewed in the ordinary
course; open for business any branch office which has been approved by the
appropriate regulatory authorities but not yet opened or apply to the
appropriate regulatory authorities to establish a new branch office or expand
any existing branch office; acquire, become obligated to acquire, or enter into
any agreement to acquire, any banking or non-banking company or any branch
offices of any such companies; declare or pay any cash dividends on its own
stock other than normal and customary cash dividends ($0.15) per quarter paid in
such amounts and at such times as Suburban Bancorp historically has done on its
Common stock, provided this covenant shall only apply to Suburban Bancorp and
provided further that notwithstanding anything to the contrary herein, Fifth
Third and Suburban Bancorp shall cooperate in selecting the Effective Time to
ensure that the holders of Suburban Bancorp Common Stock do not become entitled
to receive both a dividend in respect of their Suburban Bancorp Common Stock and
a dividend in respect of the Fifth Third Common Stock or fail to be entitled to
receive any dividend with respect to any quarterly period or portion thereof in
which the Effective Time occurs; pay any stock dividends or make any other
distributions on its stock other than cash dividends as described in the
immediately preceding clause; change or otherwise amend any Benefit Plans other
than as required by law or as contemplated herein; and provide any increases in
employee salaries or benefits other than in the ordinary course of business,
other than ordinary and customary bonuses which have historically been paid
(including, but not limited to, bonuses in conformance with Suburban Bancorp's
and the Thrift Subsidiary management incentive compensation plan) which may be
paid in June and for which Suburban Bancorp has accrued a sufficient amount
(provided that if the Effective Time occurs before June 30, 1997, such bonuses
shall be paid to the extent accrued on a pro rata basis through the Effective
Time), or as described in Schedule 1. Suburban Bancorp agrees that it will not
sell or otherwise dispose of or encumber any of the shares of the capital stock
of the Thrift Subsidiary which are now owned by it.
V. COOPERATION AND OTHER OBLIGATIONS AND OTHER COVENANTS
A. Fifth Third will, prepare and cause to be filed at its expense such
applications and other documents with the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Ohio Division of
Banks, the Office of Thrift Supervision, and any other governmental agencies as
are required to secure the requisite approval of such agencies to the
consummation of the transactions provided for in this Agreement, and the parties
shall cooperate in the preparation of an appropriate registration statement,
including the prospectus, proxy statement, and such other documents necessary to
comply with all federal and state securities laws relating to the registration
and issuance of the shares of Fifth Third Common Stock to be issued to the
shareholders of Suburban Bancorp in this transaction (the expenses thereof,
other than accounting, legal, investment banking, financial consulting and
associated expenses of Suburban Bancorp and its affiliates, to be paid by Fifth
Third), and any other laws applicable to the transactions provided for in this
Agreement. Fifth Third shall use all reasonable efforts to file all such
applications within sixty (60) days of the date of this Agreement and to secure
all such approvals. Suburban Bancorp agrees that it will, as promptly as
practicable after request and at its own expense, provide Fifth Third with all
information and documents concerning Suburban Bancorp and Thrift Subsidiary, as
shall be required in connection with preparing such applications, registration
statements and other documents and in connection with securing such approvals.
Prior to filing any such applications or other documents with the applicable
governmental agencies, Fifth Third shall provide, at least five (5) days prior
to the filing date, copies thereof to Suburban Bancorp. Suburban Bancorp shall
have the right to review and comment on the proxy statement included in the
registration statement in an appropriate manner prior to its filing. Fifth Third
agrees that it will, as promptly as practicable after request and at its own
expense, provide Suburban Bancorp with all information and documents concerning
Fifth Third and its subsidiaries as shall be required in connection with
preparing such applications, registration statements and other documents which
are to be prepared and filed by Suburban Bancorp and in connection with
approvals required to be obtained by Suburban Bancorp hereunder. Prior to
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filing any such applications, statements or other documents with the applicable
governmental agency, Suburban Bancorp shall provide, at least five (5) days
prior to the filing date, copies thereof to Fifth Third.
B. Each of the parties hereto agrees to use its best efforts and to
cooperate with the other party in all reasonable respects in order to carry out
and consummate the transactions contemplated by this Agreement at the earliest
practicable time including, without limitation, the filing of applications,
notices and other documents with, and obtaining approval from, appropriate
governmental regulatory agencies.
C. Suburban Bancorp agrees to permit Fifth Third, its officers, employees,
accountants, agents and attorneys, and Fifth Third agrees to permit Suburban
Bancorp, its officers, employees, accountants, agents and attorneys, to have
reasonable access during business hours to their respective books, records and
properties, and those of the Thrift Subsidiary and The Fifth Third Bank as well,
for the purpose of making a detailed examination, or updating and amplifying
prior examinations, of the financial condition, assets, liabilities, legal
compliance, affairs and the conduct of the business of Suburban Bancorp and the
Thrift Subsidiary or Fifth Third or The Fifth Third Bank, as the case may be,
prior to the Effective Time, and also to permit the monitoring of the foregoing
on an ongoing basis (such rights of examination and monitoring to be subject to
the confidentiality obligations set forth in such Paragraph VII.D. hereof);
provided, however, that any such examination by Fifth Third or Suburban Bancorp
shall not relieve Fifth Third or Suburban Bancorp from any responsibility or
liability for any material misrepresentation or material breach of warranty
hereunder discovered in the course of or subsequently to such examination and
prior to the Effective Time.
D. The directors and certain senior officers (those who have written
employment or severance agreements with Suburban Bancorp or the Thrift
Subsidiary) of Suburban Bancorp shall have exercised and fully paid prior to the
Effective Time each option held by such person to acquire Suburban Bancorp
Common Stock. Suburban Bancorp shall use its best efforts to have options to
acquire Suburban Bancorp Common Stock held by any other person to have been
exercised and fully paid. If all options have been exercised prior to the
Effective Time Suburban Bancorp shall terminate its Stock Option Plan. If all
options have not been exercised prior to the Effective Time, Suburban Bancorp
shall amend its Stock Option Plan to the extent necessary to permit the
cancellation or termination at the Effective Time of each option (whether or not
currently exercisable) to purchase Suburban Bancorp Common Stock outstanding on
the Effective Time and each holder of such a stock option which shall have been
so cancelled or terminated shall receive in payment therefor, at Fifth Third's
discretion, cash or Fifth Third Common Stock in an amount determined by
multiplying the number of shares of Suburban Bancorp Common Stock subject to the
option by such holder by an amount equal to the difference between (x) the
Applicable Market Value of Fifth Third Common Stock multiplied by the Exchange
Ratio, as may be adjusted and (y) the per share exercise price of such option;
provided, that if Fifth Third elects pursuant to Section VII.A.7. herein not to
adjust the Exchange Ratio but to pay cash in lieu thereof the value of such cash
payment shall be added to the cash or value of Fifth Third Common Stock to be
paid hereunder.
E. (1) Suburban Bancorp shall develop a written description and timetable
which shall be provided to and approved by Fifth Third and its counsel, setting
forth all actions necessary to: (i) make contributions to the Suburban Bancorp,
Inc. Employee Stock Ownership Plan ("ESOP") and/or to have the ESOP sell
unallocated shares under the ESOP to fully repay the ESOP's existing loan, all
in compliance with the applicable requirements of ERISA and the Internal Revenue
Code, including Code Sections 415 (as interpreted by the IRS in Private Letter
Rulings 9648054 and 9426048) and 404; (ii) amend the ESOP to authorize the sale
of unallocated shares to repay the loan, to provide for the allocation of gain
on the sale of unallocated shares in a manner that complies with the position of
the IRS in Private Letter Rulings 9648054 and 9426048 and to make such other
changes as may be necessary to implement the termination; (iii) terminate the
ESOP; and (iv) submit the ESOP to the Internal Revenue Service for a
determination letter that the ESOP, as so amended and terminated, continues to
be a qualified retirement plan and employee stock ownership plan under Sections
401(a) and 4975(e)(7) of the Code. Upon development and approval by Fifth Third
of said written description and timetable, Suburban Bancorp shall take such
actions as described therein as are approved by Fifth Third. Distribution of the
shares and any other assets of the ESOP shall (i) not occur until after the
receipt of the foregoing IRS determination letter and (ii) occur prior to the
Effective Time only with the express written consent of Fifth Third, which shall
not be unreasonably withheld.
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In connection with the development of the written description and timetables
referred to above and resolution of the ESOP, the parties agree they intend
that, to the extent not prohibited by applicable law, the ESOP shall be
maintained through the date of its final termination for the exclusive benefit
of individuals who had become ESOP participants on or before the Effective Time.
In furtherance of this intention, such timetable and plan shall include
provisions: (a) that Suburban Bancorp may make contributions to the ESOP for the
plan year ending June 30, 1997 in the amount accrued in the ordinary course
through February 28, 1997; (b) That Suburban may make contributions to the ESOP
for the plan year ending June 30, 1997, in the amount accrued and to be accrued
in the ordinary course from March 1, 1997, through June 30, 1997, but in no
event greater than $42,000 and in no event may any amount be contributed that
would create or increase an amount in the ESOP suspense account which, under the
written description and timetable referred to above (assuming termination of the
ESOP on June 30, 1998) may not be allocated within the limits of Code section
415 (as interpreted by the IRS in Private Letter Rulings 9648054 and 9426048);
(c) that no interest shall accrue on the existing ESOP loan after June 30, 1997;
and, (d) that the ESOP shall terminate no later than June 30, 1998 if at that
time there would be no amount in the ESOP suspense account which may not be
allocated within the limits of Code section 415 (as interpreted by the IRS in
Private Letter Rulings 9648054 and 9426048). If, upon development of the written
description and timetable referred to above, the parties agree in good faith
that allocation of all or any shares of stock held in the ESOP's suspense
account would violate the Code's section 415 limitations as interpreted by the
IRS in private letter rulings 9648054 and 9426048, Suburban Bancorp shall apply
to the IRS for approval (either through an IRS determination letter or other
means reasonably acceptable to Fifth Third) of a transaction (the "Transaction")
whereby the excess shares (or cash value thereof) (i.e., those shares remaining
after fully utilizing the section 415 limits as interpreted by the IRS in
private rulings 9648054 and 9426048) either revert to Fifth Third or are
transferred to an employee benefit plan of Fifth Third. If and only if the IRS
approves such a Transaction, or Fifth Third otherwise proceeds with the
Transaction without IRS approval, Fifth Third will thereafter pay (out of its
corporate assets and not plan assets) an equivalent amount (determined using the
fair market value of the transferred plan assets at the time of the transfer),
reduced by expenses incurred, to individuals who were ESOP participants on the
Effective Time and who shall divide such payment pro rata based on their
relative ESOP account balances on June 30, 1997. The parties further agree that
counsel selected by Suburban Bancorp shall be responsible, before and after the
Effective Time, both for securing a determination letter from the Internal
Revenue Service ("IRS") that the Suburban Bancorp ESOP, is tax-qualified for
periods through its termination date and a determination letter or other
acceptable IRS approval effectuating the purposes of this paragraph, all subject
to the prior review and approval (which approval will not be unreasonably
withheld) of Fifth Third and its counsel of the filings with the IRS and notice
and opportunity to comment by Fifth Third with respect to any other actions;
provided that after the Effective Time Fifth Third may remove such counsel if
such counsel fails to carry out the directions of the parties in interest.
(2) Except as provided in (1) above, Suburban Bancorp or Thrift Subsidiary
shall take all actions necessary to freeze the Qualified Benefit Plans as of a
date at least thirty (30) days preceding the Effective Time such that no further
contributions (including employee 401(k) contributions) shall be made under the
Qualified Benefit Plans.
(3) If Fifth Third so requests, Suburban Bancorp or the Thrift Subsidiary
shall develop a plan and timetable for terminating any or all of the Qualified
Benefit Plans other than the ESOP, and, with the advance written approval of
Fifth Third, shall proceed with the implementation of said termination plan and
timetable.
(4) Except as provided in (1) above, Suburban Bancorp and Thrift
Subsidiary, without the advance written consent of Fifth Third shall not (1)
adopt any amendments to the Qualified Benefit Plans after the date of this
Agreement; or (2) make any distributions from the Qualified Benefit Plans after
the date of this Agreement; or (3) make any contributions to the Qualified
Benefit Plans (except 401(k) employee contributions) after the date of this
Agreement.
(5) Suburban Bancorp or Thrift Subsidiary shall provide to Fifth Third at
least sixty (60) days prior to the Effective Time, documentation reasonably
satisfactory to Fifth Third demonstrating that the requirements of Sections 404,
412, 415, 416, 401(k) and (m) of the Code have been satisfied by all of its
Qualified Benefit
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Plans or that the violation of any such requirement is adequately addressed in
the VCR application referred to in (9) below.
(6) With respect to any Benefit Plan that provides for vesting of benefits,
there shall be no discretionary acceleration of vesting without Fifth Third's
consent whether or not such discretionary acceleration of vesting is provided
under the terms of the Benefit Plan; provided that a Benefit Plan which pursuant
to its terms provides for an acceleration of vesting upon a change of control of
Suburban Bancorp shall not be deemed to involve a discretionary acceleration of
vesting and vesting thereunder shall accelerate as of the Effective Time.
(7) With respect to the operational problems previously identified with
respect to the Suburban ESOP and 401(k) Plan, the parties shall use their best
efforts to proceed with the actions described in the written description and
timetable that is appended hereto as Appendix V.E.9. Subsequent to the date of
this Agreement, Suburban Bancorp and Thrift Subsidiary shall take no actions
regarding said operational problems without the advance written consent of Fifth
Third, which consent shall not be unreasonably withheld.
(8) Suburban Bancorp or Thrift Subsidiary shall have provided to Fifth
Third at least sixty (60) days prior to the Effective Time any and all
documentation Fifth Third shall have reasonably requested in writing to
demonstrate that there is no material potential liability under the terminated
or merged "Retirement Income Plan".
VI. CONDITIONS PRECEDENT TO CLOSING
A. Conditions to the Obligations of Each of the Parties:
The obligation of each of the parties hereto to consummate the transactions
provided for herein is subject to the fulfillment on or prior to the Effective
Time of each of the following conditions:
1. The shareholders of Suburban Bancorp shall have duly approved and
adopted this Agreement in accordance with and as required by law and in
accordance with its Certificate of Incorporation and Bylaws.
2. All necessary governmental and regulatory orders, consents,
clearances and approvals and requirements shall have been secured and
satisfied for the consummation of such transactions, including without
limitation, those of the Federal Reserve System, the Ohio Division of
Banks, the Office of Thrift Supervision and the Federal Deposit Insurance
Corporation to the extent required.
3. Graydon, Head & Ritchey, counsel for Fifth Third, or other counsel
reasonably acceptable to Fifth Third and Suburban Bancorp, shall have
delivered an opinion as to certain federal tax aspects of the transaction
addressed to Fifth Third and Suburban Bancorp, in substantially the form
appended hereto as Appendix A.
4. Prior to or at the Effective Time, no material investigation by any
state or federal agency shall have been threatened or instituted seeking to
enjoin or prohibit, or enjoining or prohibiting, the transactions
contemplated hereby and no material governmental action or proceeding shall
have been threatened or instituted before any court or government body or
authority, seeking to enjoin or prohibit, or enjoining or prohibiting, the
transactions contemplated hereby other than investigations, actions and
proceedings which have been withdrawn prior to or at the Effective Time
without material adverse effect to Fifth Third or Suburban Bancorp and
other than regularly-scheduled regulatory examinations.
5. Any waiting period mandated by law in respect of the final approval
by any applicable Federal regulator(s) of the transaction contemplated
herein shall have expired.
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B. Conditions to the Obligations of Fifth Third:
The obligation of Fifth Third to consummate the transactions provided for
herein is subject to the fulfillment at or prior to the Effective Time of each
of the following conditions unless waived by Fifth Third in a writing delivered
to Suburban Bancorp which specifically refers to the condition or conditions
being waived:
1. All of the representations and warranties of Suburban Bancorp set
forth in Section II of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and at and as of the
Closing Date (as hereinafter defined) as if each such representation and
warranty was given on and as of the Closing Date, except (i) for any such
representations and warranties made as of a specified date, which shall be
true and correct in all material respects as of such date and (ii) for
breaches of representations and warranties which would not have, or would
not reasonably be expected to have, a material adverse effect on the
business or operations of Suburban Bancorp or the Thrift Subsidiary taken
as a whole.
2. Suburban Bancorp shall have performed all of the obligations
required of it under the terms of this Agreement in all material respects,
except for breaches of obligations which would not have, or would not
reasonably be expected to have, any material adverse effect on the business
or operations of Suburban Bancorp and the Thrift Subsidiary taken as a
whole.
3. Housley, Kantarian & Bronstein, P.C., counsel for Suburban Bancorp
and the Thrift Subsidiary, shall have delivered an opinion addressed to
Fifth Third in substantially the form appended hereto as Appendix B.
4. The aggregate amount of consolidated shareholders' equity
(including Common Stock, Additional Paid-In Capital and Retained Earnings
and excluding Treasury Stock) of Suburban Bancorp immediately prior to the
Effective Time, as shown by and reflected in its books and records of
accounts on a consolidated basis in accordance with generally accepted
principles, consistently applied, shall not be less than $25,721,000. The
separate shareholders' equity of Thrift Subsidiary immediately prior to the
Effective Time, as shown by and reflected in its books and records of
accounts on a separate basis in accordance with generally accepted
accounting principles, consistently applied, shall not be less than such
shareholders' equity as reflected in Thrift Subsidiary's June 30, 1996
Thrift Financial Report. For purposes of this subparagraph 4 to Section
VI.B., (A) any expenses or accruals after the date hereof relating to (i)
the adjustments contemplated by Section IV.B.(i) herein, (ii) termination
or funding of any of Suburban Bancorp's or the Thrift Subsidiary's Benefit
Plans, as contemplated herein, (iii) acceleration of vesting under any of
the Suburban Bancorp or the Thrift Subsidiary Benefit Plans, (iv) expenses
associated with the Merger or (v) market value adjustments to the
investment portfolio of Suburban Bancorp and the Thrift Subsidiary shall be
excluded for purposes of calculation of Suburban Bancorp's and the Thrift
Subsidiary's shareholders' equity as contemplated herein, and (B) the
amount of the special assessment imposed by the FDIC, pursuant to the
Deposit Insurance Funds Act of 1996, on Thrift Subsidiary as of September
30, 1996, and paid thereafter shall be added back to the shareholders'
equity of Suburban Bancorp and the Thrift Subsidiary for purposes of
determining each of their shareholders' equity as of immediately prior to
the Effective Time.
5. Fifth Third's independent certified public accountants shall have
reviewed the unaudited consolidated financial statements of Suburban
Bancorp as at the end of the month immediately preceding the Effective
Time, as well as the unaudited separate financial statements of the Thrift
Subsidiary as of the same date, performed such other auditing procedures as
may be requested by Fifth Third and reported in good faith that they are
not aware of any material modifications which would have a material adverse
effect on the financial condition of Suburban Bancorp or the Thrift
Subsidiary that should be made in order for such financial statements to
(i) be in conformity with generally accepted accounting principles,
consistently applied, excluding the presentation of footnotes, and (ii)
accurately state the financial condition and results of operations of
Suburban Bancorp and each of the Thrift Subsidiary, and such modifications,
in either case, would have a material adverse effect on the financial
condition of Suburban Bancorp or any of the Thrift Subsidiary.
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6. The receipt of a certificate from Suburban Bancorp and each of the
Thrift Subsidiary, executed by the chief executive officer and chief
financial officer of each, dated the Closing Date, certifying to their best
knowledge and belief that: (i) all of the representations and warranties
set forth in Section II hereof were true and correct as of the date of this
Agreement and as of the Closing Date in all material respects, except (y)
for any such representations and warranties made as of a specified date,
which shall be true and correct in all material respects as of such date
and (z) for breaches of representations and warranties which would not
have, or would not reasonably be expected to have, a material adverse
effect on the business or operations of Suburban Bancorp and the Thrift
Subsidiary taken as a whole; and (ii) it has met and fully complied in all
material respects with all of the obligations required of it under the
terms of this Agreement and the Agreement of Merger, except for breaches of
obligations which would not have, or would not reasonably be expected to
have, any material adverse effect on the business or operations of Suburban
Bancorp and the Thrift Subsidiary taken as a whole.
7. The total issued and outstanding shares of Suburban Bancorp Common
Stock shall not exceed 1,590,885 shares and all options to purchase
Suburban Bancorp Common Stock shall have been exercised and fully paid
prior to the Closing Date or arrangements regarding the outstanding stock
options under the Suburban Bancorp Stock Option Plan have been made as
provided in Section V.D. of this Agreement.
C. Conditions to the Obligations of Suburban Bancorp:
The obligation of Suburban Bancorp to consummate the transactions provided
for herein and in the Agreement of Merger is subject to the fulfillment at or
prior to the Effective Time of each of the following conditions unless waived by
Suburban Bancorp in a writing delivered to Fifth Third which specifically refers
to the condition or conditions being waived:
1. All of the representations and warranties of Fifth Third set forth
in Section III of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and at and as of the Closing Date
as if each such representation and warranty was given on and as of the
Closing Date, except (i) for any such representations and warranties made
as of a specified date, which shall be true and correct in all material
respects as of such date and (ii) for breaches of representations and
warranties which would not have, or would not reasonably be expected to
have, a material adverse effect on the consolidated business or operations
of Fifth Third.
2. Fifth Third shall have performed all of the obligations required of
it under the terms of this Agreement and the Agreement of Merger in all
material respects, except for breaches of obligations which would not have,
or would not reasonably be expected to have, any material adverse effect on
the consolidated business or operations of Fifth Third.
3. Paul L. Reynolds, counsel for Fifth Third, shall have delivered an
opinion addressed to Suburban Bancorp in substantially the form appended
hereto as Appendix C.
4. The receipt of a certificate from Fifth Third, executed by its
chief executive officer and chief financial officer, dated the Closing
Date, certifying to their best knowledge and belief that: (i) all of the
representations and warranties set forth in Section III were true and
correct as of the date of this Agreement and as of the Closing Date, except
(y) for any such representations and warranties made as of a specified
date, which shall be true and correct in all material respects as of such
date and (z) for breaches of representations and warranties which would not
have, or would not reasonably be expected to have, a material adverse
effect on the consolidated business or operations of Fifth Third; and, (ii)
Fifth Third has met and fully complied in all material respects with all of
the obligations required of it under the terms of this Agreement and the
Agreement of Merger, except for breaches of obligations which would not
have, or would not reasonably be expected to have, any material adverse
effect on the business or operations of Fifth Third.
5. Fifth Third shall have registered its shares of Common Stock to be
issued to the Suburban Bancorp shareholders hereunder and pursuant to the
Agreement of Merger with the SEC pursuant to the Securities Act of 1933, as
amended, and with all applicable state securities authorities. The
registration
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statement with respect thereto shall have been declared effective by the
SEC and all applicable state securities authorities and no stop order shall
have been issued. The shares of Fifth Third Common Stock to be issued to
the Suburban Bancorp shareholder hereunder shall have been authorized for
trading on the National Market System of the National Association of
Securities Dealers upon official notice of issuance.
6. Fifth Third's Trust Department, as the Exchange Agent, will
acknowledge in writing to Suburban Bancorp that it is in receipt of (i)
certificates representing a whole number of shares of Fifth Third Common
Stock to be issued to the shareholders of Suburban Bancorp pursuant to this
Agreement, and (ii) sufficient cash to be paid to the Suburban Bancorp
shareholders for fractional shares, and such cash as may be payable if
Fifth Third elects the cash payment procedure set forth in Section
VIII.A.7. herein.
VII. ADDITIONAL COVENANTS
A. The Thrift Subsidiary shall be merged with and into Fifth Third Bank, to
be effective the Effective Time. The parties hereto agree to cooperate with one
another to effect such merger. Upon consummation of any merger of the Thrift
Subsidiary, the separate corporate existence of the Thrift Subsidiary shall
cease by operation of law.
B. 1. Fifth Third shall use its best efforts to employ at Fifth Third or
other Fifth Third subsidiaries or affiliates as many of the Suburban Bancorp and
Thrift Subsidiary employees who desire employment within the Fifth Third holding
company system as possible, to the extent of available positions and consistent
with Fifth Third's standard staffing levels and personnel policies; provided
that such continuing employees will not be subject to any exclusion or penalty
for pre-existing conditions that were covered under the Thrift Subsidiary's
medical plan immediately prior to the Effective Time or any waiting period
relating to coverage under Fifth Third's medical plan. Each employee of Suburban
Bancorp and the Thrift Subsidiary who becomes an employee of Fifth Third or any
of its subsidiaries or affiliates at or immediately subsequent to the Merger
shall be entitled to participate in all employee benefit plans sponsored by
Fifth Third or its subsidiaries or affiliates on the same terms and to the same
extent as similarly situated employees. If the Suburban Federal Savings Bank
401(k) Profit Sharing Plan is merged into the Fifth Third Bancorp Master Profit
Sharing Plan, then upon said merger, service taken into account under the
Suburban Federal Savings Bank 401(k) Profit Sharing Plan shall count as service
taken into account for all purposes under the Fifth Third Bancorp Master Profit
Sharing Plan, otherwise such employees shall not receive past service credit
under the Master Profit Sharing Plan. Employees shall receive past service
credit under the Fifth Third Bancorp Master Retirement Plan for eligibility and
vesting purposes but not for benefit accrual purposes. For all other purposes
other than the qualified benefit plans discussed above, prior service with
Suburban Bancorp or Thrift Subsidiary shall be taken into account for purposes
of determining eligibility and vesting, if applicable, of benefits.
2. Those employees who do not have an employment or severance agreement and
who are not to be employed by Fifth Third or who are terminated or voluntarily
resign after being notified that, as a condition of employment, such employee
must work at a location more than thirty (30) miles from such employee's former
location of employment or that such employee's salary will be decreased, in any
case and in both cases, within six months after the Effective Time, and who sign
and deliver a termination and release agreement in the form attached as Appendix
VII.B.2 hereto, shall be entitled to severance pay equal to, in the case of
senior officers (vice president and above, including the Secretary and Treasurer
of the Thrift Subsidiary) of Suburban Bancorp or the Thrift Subsidiary, twelve
(12) week's pay; in the case of all other employees, one (1) week of pay for
each year of service with a minimum of four (4) weeks and a maximum of eight (8)
weeks pay; for those purposes, if there has been a break in an employee's period
of employment, the prior period shall be added to the current period of
employment. Suburban Bancorp may, in addition, pay up to $55,000.00 in
additional severance benefits to certain employees of Suburban Bancorp or Thrift
Subsidiary as the executive officers of Suburban Bancorp, in consultation with
Fifth Third, may determine. Fifth Third shall provide sufficient notification to
Suburban Bancorp of those employees it will not be hiring in order that such
employees terminated by Suburban Bancorp can be given appropriate notice of
termination in advance of the effectiveness thereof and Fifth Third shall
provide limited out placement services and assistance to such
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employees through Fifth Third's Human Resources Department. Nothing contained in
this Paragraph VII.B.2 shall be construed or interpreted to limit or modify in
any way Fifth Third's at will employment policy.
3. Any officer of Suburban Bancorp or the Thrift Subsidiary who has an
employment or severance agreement with Suburban Bancorp or the Thrift Subsidiary
(each a "Contract Officer") shall receive as of the Effective Time, the
severance or termination payments provided for in their respective employment
agreements ("Contract Payments") as their sole severance payments from Suburban
Bancorp and Fifth Third in connection with the Merger. As a condition to
receiving their Contract Payments each Contract Officer shall sign and deliver
to Fifth Third a termination and release agreement. All such agreements shall be
in the form attached hereto as Appendix VII.B.3. Notwithstanding the foregoing
or any other provision of this Agreement, in no event shall any Contract Officer
receive any payment that would be considered an "Excess Parachute Payment"
pursuant to Section 280(G) of the Code.
4. Fifth Third agrees to honor the obligations, in effect on the Effective
Time, of Suburban Bancorp and the Thrift Subsidiary under the Director
Retirement Plans that is described in the schedules provided under Section II.Q.
hereof. Notwithstanding the foregoing, on or before the Effective Time, Suburban
Bancorp and the Thrift Subsidiary may (following prior consultation with and
review by Fifth Third of the proposed actions) contribute to a grantor trust
associated with the Directors Retirement Plan amounts projected by the Thrift
Subsidiary to be sufficient to enable the trust to satisfy the obligations,
after the Effective Time, of Suburban Bancorp and the Thrift Subsidiary under
the Nonqualified plans. The trustee of said trust shall be a financial
institution selected by Suburban Bancorp (subject to Fifth Third's approval
which shall not be unreasonably withheld); provided that all expenses of the
administration of such trust will be paid from the assets of the Director
Retirement Plan.
5. Subject to normal credit evaluation and standard loan guidelines, a
Fifth Third subsidiary bank will provide financing to qualified option holders
to allow them to fully exercise all outstanding options as set forth herein.
C. (i) From and after the Effective Time, Fifth Third shall assume the
obligations of Suburban Bancorp and Thrift Subsidiary or any of their
subsidiaries arising under applicable Delaware and Federal law in existence as
of the date hereof or as amended prior to the Effective Time and under the
Suburban Bancorp Certificate of Incorporation and Bylaws or Thrift Subsidiary
Charter or Bylaws as in effect on the date hereof to indemnify , defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who become, prior to the Effective Time, an officer or director of
Suburban Bancorp, Thrift Subsidiary, or any of their subsidiaries (the
"Indemnified Parties") against losses, claims, damages, costs, expenses
(including reasonable attorneys' fees), liabilities or judgements or amounts
that are paid in settlement (which settlement shall require the prior written
consent of Fifth Third) of or in connection with any claim, action, suit,
proceeding or investigation (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of Suburban Bancorp, the Thrift Subsidiary or any of their
subsidiaries if such Claim pertains to any matter or fact arising, existing or
occurring prior to the Effective Time (including, without limitation, the merger
and the transactions contemplated by this Agreement), regardless of whether such
Claim is asserted or claimed prior to, at or after the Effective Time. Fifth
Third shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the full extent permitted by law and
under the Suburban Bancorp Certificate of Incorporation or Bylaws or Thrift
Subsidiary's Charter or Bylaws. Fifth Third's assumption of the indemnification
obligations of Suburban Bancorp, Thrift Subsidiary or any of their subsidiaries
as provided herein shall continue for a period of five years after the Effective
Time or, in the case of claims asserted prior to the fifth anniversary of the
Effective Time until such matters are finally resolved. Any Indemnified Party
wishing to claim indemnification under this provision, upon learning of any
Claim shall notify Fifth Third (but the failure to so notify Fifth Third shall
not relieve Fifth Third from any liability which Fifth Third may have under this
section except to the extent Fifth Third is materially prejudiced thereby).
Notwithstanding the foregoing, the Indemnified Parties as a group may retain
only one law firm to represent them with resect to each matter under this
section unless there is, under applicable standards of professional conduct, a
conflict on any one significant issue between the positions of any two or more
Indemnified parties.
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(ii) From and after the Effective Time, the directors, officers and
employees of Suburban Bancorp and its subsidiaries who become directors,
officers or employees of Fifth Third or any of its subsidiaries, except for the
indemnifications rights set forth in subparagraph (i) above, shall have
indemnification rights with prospective application only. The prospective
indemnification rights shall consist of such rights to which directors, officers
or employees of Fifth Third or the subsidiary by which such person is employed
are entitled under the provisions of the Articles of Incorporation of Fifth
Third or similar governing documents of Fifth Third or its applicable
subsidiaries, as in effect from time to time after the Effective Time, as
applicable, and provisions of applicable law as in effect form time to time
after the Effective Time.
(iii) The obligations of Fifth Third provided under this Section VII.C. are
intended to benefit, and be enforceable against Fifth Third directly by, the
Indemnified parties, and shall be binding on all respective successors of Fifth
Third.
(iv) Fifth Third shall also purchase and keep in force for a five year
period, a policy of directors' and officers' liability insurance in the amount
of $25 million to provide coverage for acts or omissions of the type currently
covered by Suburban Bancorp's existing directors' and officers' liability
insurance for acts or omission occurring on or prior to the Effective Time, but
only to the extent such insurance may be purchased or kept in full force on
commercially reasonable terms taking into account the cost thereof and the
benefits provided thereby. It is agreed that such costs shall be commercially
reasonable so long as they do not exceed 200% of the costs currently paid for
such coverage by Suburban Bancorp.
D. Fifth Third will not disclose to others, shall not use in respect of its
(or any of its subsidiaries) business operations, and will hold in confidence
any non-public, confidential information disclosed to it by Suburban Bancorp
concerning Suburban Bancorp or the Thrift Subsidiary. Suburban Bancorp will not
disclose to others, shall not use in respect of its (or any of its subsidiaries)
business operations, and will hold in confidence any non-public, confidential
information disclosed to it concerning Fifth Third or any of its affiliates. In
the event the Merger is not completed, all non-public financial statements,
documents and materials, and all copies thereof, shall be returned to Suburban
Bancorp or Fifth Third, as the case may be, and shall not be used by Fifth Third
or Suburban Bancorp, as the case may be, in any way detrimental to Suburban
Bancorp or Fifth Third.
E. All notices under this Agreement or under the Agreement of Merger shall
be in wiring and shall be sufficient in all respects if delivered in person or
mailed by certified mail, return receipt requested, with postage prepaid and
addressed, if to Suburban Bancorp to Mr. Joseph F. Hutchison, President and
Chief Executive Officer, Suburban Bancorp Bancorporation, Inc., 10869 Montgomery
Road, Cincinnati, Ohio 45242, with a copy to Housley, Kantarian & Bronstein,
P.C., 1220 19th Street, N.W., Suite 700, Washington, D.C. 20036, Attention:
Harry K. Kantarian, Esq.; if to Fifth Third, to Mr. George A. Schaefer, Jr.,
President and Chief Executive Officer, Fifth Third Bancorp, 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, with a copy to Paul L. Reynolds, Esq., Vice
President and General Counsel, Fifth Third Bank, Legal Division, 38 Fountain
Square Plaza, 2nd Floor, Cincinnati, Ohio 45263. Such notices shall be deemed to
be received when delivered in person or when deposited in the mail by certified
mail, return receipt requested with postage prepaid.
F. This Agreement, together with the written instruments specifically
referred to herein and such other written agreements delivered by Fifth Third or
Suburban Bancorp to each other pursuant hereto constitute the entire agreement
between the parties with regard to the transactions contemplated herein and
supersede any prior agreements, whether oral or in writing, including that
certain letter from Fifth Third to Suburban Bancorporation, Inc., dated February
13, 1997. This Agreement may be hereafter amended only by a written instrument
executed by each of the parties pursuant to Section X hereof.
G. During the period from the date of this Agreement to the Effective Time,
except with the prior approval of Fifth Third, Suburban Bancorp shall not, and
shall not permit its representatives to, directly or indirectly, subject to the
exercise by the Directors of Suburban Bancorp of their fiduciary duties,
initiate, solicit, negotiation with, encourage discussions with, provide
information to, or agree to a transaction with, any corporation, partnership,
person or other entity or group concerning any merger of either Suburban Bancorp
or the Thrift Subsidiary or any sale of substantial assets, sale of shares of
capital stock (or securities convertible
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or exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing, the right to acquire capital stock) or similar transaction involving
Suburban Bancorp or the Thrift Subsidiary (any such transaction being referred
to herein as an "Acquisition Transaction"). Subject to the exercise by the
Directors of Suburban Bancorp of their fiduciary duties, Suburban Bancorp
promptly shall communicate to Fifth Third the terms of any proposal which it may
receive in respect of an Acquisition Transaction and any request by or
indication of interest on the part of any third party with respect to initiation
of any Acquisition Transaction or discussions with respect thereto.
H. Fifth Third and Suburban Bancorp shall each indemnify and hold the other
harmless for any claim, liability or expense (including reasonable attorneys'
fees) arising from a misstatement or omission in the applications submitted to
regulatory agencies for approval of the transaction contemplated by this
Agreement relating to the indemnifying party which is based or made in reliance
upon any representation, warranty, or covenant of such party in this Agreement
or any certification, document, or other information furnished or to be
furnished by such party pursuant to this Agreement. From and after Closing Date,
this subsection shall be of no further force or effect.
I. Upon the request of Fifth Third and at the sole option of Fifth Third,
Suburban Bancorp and the Thrift Subsidiary shall execute and deliver to Midwest
Payment Systems, Inc. ("MPS") an agreement to convert all electronic funds
transfer ("EFT") related services to MPS and the Jeanie(R) system. Such
Agreement shall provide that MPS will be the exclusive provider of such services
to Suburban Bancorp and the Thrift Subsidiary for a period of five (5) years
from the date such agreements are executed. Fifth Third agrees that the cost of
the conversion of Suburban Bancorp and the Thrift Subsidiary to EFT provided by
MPS and conversion to the Jeanie(R) system (including, without limitation, the
cost of all card reissue, signage and penalties relating to terminating its
current EFT relationships) will be paid by Fifth Third. Fifth Third further
agrees that the costs and fees to Suburban Bancorp and the Bank Subsidiaries for
the Jeanie(R) service shall not exceed those charged by the current EFT service
provider of Suburban Bancorp and the Thrift Subsidiary, subject to any increases
in such costs and fees which would otherwise be permitted under their current
EFT processing agreements. In the event this Agreement is terminated pursuant to
Section VIII hereof for any reason except a material breach or default by
Suburban Bancorp, and if, in such instance, Suburban Bancorp desires to convert
to another provider of EFT services, Fifth Third shall pay all costs and
expenses associated with such conversion, provided, however, such costs and
expenses are reasonable when compared to costs and expenses ordinarily charged
in the EFT services industry. In no event shall Suburban Bancorp or the Thrift
Subsidiary be required to take any actions pursuant to this Paragraph I or
otherwise under this Agreement or the Agreement of merger that are contrary to
any applicable law, regulation, rule or order or which constitute a breach of
the fiduciary duties of the directors of Suburban Bancorp or the Thrift
Subsidiary.
J. [INTENTIONALLY LEFT BLANK.]
K. Fifth Third and Suburban Bancorp shall agree with each other as to the
form and substance of any press release related to this Agreement and the
Agreement of Merger or the transactions contemplated hereby and thereby, and
shall consult with each other as to the form and substance of other public
disclosures related thereto, provided, however, that nothing contained herein
shall prohibit either party from making any disclosure which its counsel deems
required by law.
L. Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated by this Agreement and the
Agreement of Merger, including, without limitation, fees, costs and expenses of
its own financial consultants, investment bankers, accountants and counsel,
without reduction or modification in the number of shares of Fifth Third Common
Stock to be issued hereunder. The expenses of printing and mailing the
prospectus/proxy statement shall be paid by Fifth Third.
M. 1. Between the date hereof and the Closing Date, Suburban Bancorp shall
promptly advise Fifth Third in writing of any fact that, if existing or known at
the date hereof, would have been required to be set forth or disclosed in or
pursuant to this Agreement or of any fact that, if existing or known at the date
hereof, would have made any of the representations contained herein untrue to
any material extent, and which in each case, would be likely to have a material
adverse effect on Suburban Bancorp and its subsidiaries, taken as a whole.
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2. Between the date hereof and the Closing Date, Fifth Third shall promptly
advise Suburban Bancorp in writing of any fact that, if existing or known at the
date hereof, would have been required to be set forth or disclosed in or
pursuant to this Agreement or of any fact that, if existing or known at the date
hereof, would have made any of the representations contained herein untrue to
any material extent, and which in each case, would be likely to have a material
adverse effect on Suburban Bancorp and its subsidiaries, taken as a whole.
VIII. TERMINATION
A. This Agreement may be terminated at any time prior to the Effective Time
by written notice delivered by Fifth Third to Suburban Bancorp or by Suburban
Bancorp to Fifth Third in the following instances:
1. By Fifth Third or Suburban Bancorp, if there has been to the extent
contemplated in Section VI.B.1. and 2. and Section VI.C.1. and 2. herein, a
material misrepresentation, a material breach of warranty or a material
failure to comply with any covenant on the part of the other party with
respect to the representations, warranties, and covenants set forth herein
and such misrepresentations, breach or failure to comply has not been cured
(if capable of cure) within thirty (30) days after receipt of written
notice, provided, the party in default shall have no right to terminate for
its own default.
2. By Fifth Third or Suburban Bancorp, in each case taken as a whole,
if the business or assets or financial condition of the other party shall
have materially and adversely changed from that in existence at December
31, 1996, other than any such change attributable to or resulting from any
change in law, regulation or generally accepted accounting principles,
changes in interest rates, economic, financial or market conditions
affecting the banking or thrift industry generally or changes that may
occur as a consequence of actions or inactions that either party hereto is
expressly obligated to take under this Agreement.
3. By Fifth Third or Suburban Bancorp, if the merger transaction
contemplated herein has not been consummated by December 31, 1997, provided
the terminating party is not in material breach or default of any
representations, warranty or covenant contained herein on the date of such
termination.
4. By the mutual written consent of Fifth Third and Suburban Bancorp.
5. By Fifth Third if any event occurs which renders impossible of
satisfaction in any material respect one or more of the conditions to the
obligations of Fifth Third to effect the Merger set forth in Sections VI.A.
and B. herein and non-compliance is not waived by Fifth Third.
6. By Suburban Bancorp if any event occurs which renders impossible of
satisfaction in any material respect one or more of the conditions of the
obligations of Suburban Bancorp to effect the Merger as set forth in
Sections VI.A. and C. herein and non-compliance is not waived by Suburban
Bancorp.
7. By Suburban Bancorp if it determines by a vote of the majority of
the members of its Board of Directors at any time during the ten (10) day
period commencing two (2) days after the Determination Date if both of the
following conditions are satisfied:
(i) the product of (x) the Average Closing Price of Fifth Third
Common Stock and (y) the Exchange Ratio of .24357, is less than the Book
Value Per Share of the Suburban Bancorp Common Stock; and,
(ii) (x) the number obtained by dividing the Average Closing Price
by the Starting Price shall be less than (y) the number obtained by
dividing the Index Price on the Determination Date by the Index Price on
the Starting Date and subtracting 0.10 from the quotient in this clause
(ii)(y);
If Suburban Bancorp elects to terminate this Agreement pursuant to this
Section VII.A.7., it shall give notice to Fifth Third by the end of the ten (10)
day period referenced at the beginning of this Section VII.A.7., provided such
notice may be withdrawn at any time. If such notice is given, Fifth Third will
have the option to elect to increase the Exchange Ratio such that the product of
the Exchange Ratio as so adjusted and the Average Closing Price equals the Book
Value Per Share of the Suburban Bancorp Common Stock (the
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<PAGE> 81
"Adjusted Exchange Ratio") in which event this Agreement will not terminate. If
Fifth Third elects to increase the Exchange Ratio it will notify Suburban
Bancorp in writing within five (5) days of the date that Suburban Bancorp elects
to terminate the Agreement. Fifth Third will have the further option in lieu of
adjusting the Exchange Ratio, to pay cash (if in doing so it does not render
impossible of satisfaction the condition precedent set forth in Section VI.A.3.
herein) to the Suburban Bancorp shareholders for each outstanding share of
Suburban Bancorp Common Stock (in addition to .24357 shares of Fifth Third
Common Stock) in an amount equal to the difference between the (x) the Book
Value Per Share of the Suburban Bancorp Common Stock and (y) the product
obtained by multiplying the Average Closing Price of Fifth Third Common Stock by
.24357.
For purposes of this Paragraph VIII.A., the following terms shall have the
meaning indicated:
"Average Closing Price" shall mean the average of the per share closing
prices of the Fifth Third Common Stock as reported on the NASDAQ National
Market System for the 20 consecutive full trading days ending on the
Determination Date as reported The Wall Street Journal, expressed in
decimal figures carried to five figures.
"Book Value Per Share of the Suburban Bancorp Common Stock" shall mean the
consolidated shareholders' equity of Suburban Bancorp as of February 28,
1997, determined in conformity with generally accepted accounting
principles and on a consistent basis with prior periods, divided by the
number of issued and outstanding shares of Suburban Bancorp Common Stock as
of the date of calculation of shareholders' equity.
"Determination Date" shall mean the date which is the later of (i) the date
of the Suburban Bancorp shareholder meeting held to vote on the Merger and
(ii) the date the last governmental approval required to consummate the
Merger has been received and all governmental waiting periods before the
Merger can be consummated shall have expired.
"Index Group" means the 11 bank holding companies listed below, the common
stock of all of which shall be publicly traded and as to which there shall
not have been a publicly announced proposal since the Starting Date and
before the Determination Date for any such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. In the event
that any such company is removed from the Index Group, the weights (which
shall be determined based upon the number of outstanding shares of common
stock) shall be redistributed proportionately for purposes of determining
the Index Price. The eleven (11) bank holding companies and the weights
attributed to them are as follows:
<TABLE>
<CAPTION>
MARKET WEIGHTED
BANK HOLDING COMPANY CAPITALIZATION FACTOR
---------------------------------------------------------- -------------- -------------
($ MILLION)
<S> <C> <C>
First Chicago NBD Corporation............................. 19,181 20.12%
First of America Bank Corp................................ 3,756 3.94%
Huntington Bancshares Inc................................. 4,104 4.30%
KeyCorp................................................... 12,318 12.92%
Mercantile Bancorporation Inc............................. 3,357 3.52%
National City Corporation................................. 11,132 11.67%
Old Kent Financial Corporation............................ 2,259 2.37%
Banc One Corporation...................................... 19,446 20.39%
PNC Bank Corp............................................. 14,785 15.51%
Provident Bancorp Inc..................................... 1,465 1.54%
Star Banc Corporation..................................... 3,547 3.72%
------ ------
95,349 100.0%
</TABLE>
"Index Price," on a given date, means the weighted average (weighted in
accordance with the Weighing Factors above, which were calculated with
reference to the market capitalizations listed above) of the closing prices
on such date of the common stock of the companies comprising the Index
Group.
A-25
<PAGE> 82
"Starting Date" means February 13, 1997.
"Starting Price" means $80.00 per share.
If Fifth Third or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting Date
and the Determination Date, the prices for the common stock of such company
shall be appropriately adjusted for the purposes of applying this Paragraph
VIII.A.7.
B. If Suburban Bancorp shareholders, acting at a meeting held for the
purpose of voting upon this Agreement and the Agreement of Merger, fail to
approve such agreements in the manner required by law, then this Agreement and
the Agreement of Merger shall be deemed to be automatically terminated.
C. Upon termination as provided in this Section, this Agreement and the
Agreement of Merger, except for the provisions of Paragraphs D, H, K and L of
Section VII hereof shall be void and of no further force or effect, and, except
as provided in Paragraph H of Section VII hereof, neither party hereto not in
material breach or default of its representations, warranties and covenants
hereunder shall have any liability of any kind to the other party including but
not limited to liability for expenses incurred by the other party in connection
with this transaction; provided that no such termination shall relieve a
breaching party from liability for any uncured willful breach of a covenant,
undertaking, representation or warranty giving rise to such termination.
IX. CLOSING AND EFFECTIVE TIME
The consummation of the transactions contemplated by this Agreement shall
take place at a closing to be held at the offices of Fifth Third in Cincinnati,
Ohio on a Friday which is as soon as is reasonably possible following the date
that all of the conditions precedent to closing set forth in Section VI hereof,
including the waiting period required by any banking or bank holding company
regulatory agency after its approval of the Merger is issued before the
transaction may be consummated, have been fully met or effectively waived (the
"Closing Date"). Pursuant to the filing of articles or a certificate of merger
(which shall be acceptable to Suburban Bancorp and Fifth Third) with the
Secretaries of the States of Ohio and Delaware in accordance with law and this
Agreement, the Merger provided for herein shall become effective at the close of
business on said day (the "Effective Time"). By mutual agreement of the parties,
the closing may be held at any other time or place or on any other date and the
effectiveness of the Merger (and the Effective Time) may be changed by such
mutual agreement. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for agreements of the parties which by their
terms are intended to be performed after the Effective Time.
X. AMENDMENT
This Agreement may be amended, modified or supplemented by the written
agreement of Suburban Bancorp and Fifth Third upon the authorization of each
company's respective Board of Directors at any time before or after approval of
the Merger and this Agreement by the shareholders of Suburban Bancorp, but after
any such approval by the shareholders of Suburban Bancorp no amendment shall be
made (without further shareholder approval) which changes in any manner adverse
to such shareholders the consideration to be provided to such shareholders
pursuant to this Agreement and the Agreement of Merger.
XI. GENERAL
This Agreement was made in the State of Ohio and shall be interpreted under
the laws of the United States and the State of Ohio. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns but except
as specifically set forth herein or as contemplated in Sections V.D., V.E.1,
VII.B.2, VII.B.3, VII.B.4 and VII.B.5 none of the provisions hereof shall be
binding upon and inure to the benefit of any other person, firm or corporation
whomsoever. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or transferred by operation of law or
otherwise by any party hereto without the prior written consent of the other
party hereto; provided, however, that the merger or consolidation of Fifth Third
shall not
A-26
<PAGE> 83
be deemed an assignment hereunder if Fifth Third is the surviving corporation in
such merger or consolidation and its Common Stock shall thereafter continue to
be publicly traded and issuable to Suburban Bancorp shareholders pursuant to the
terms of this Agreement.
XII. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original for all purposes but such counterparts taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Affiliation
Agreement as of the date hereinabove set forth.
FIFTH THIRD BANCORP
(SEAL) By: /s/ ROBERT P. NIEHAUS
------------------------------------
Robert P. Niehaus
Executive Vice President
Attest: /s/ PAUL L. REYNOLDS
----------------------------------
Paul L. Reynolds
Assistant Secretary
SUBURBAN BANCORPORATION, INC.
(SEAL) By: /s/ JOSEPH F. HUTCHINSON
------------------------------------
Name: Joseph F. Hutchinson
Title: President
Attest: /s/ JOHN A. BUCHHEID
----------------------------------
Name: John A. Buchheid
Title: Secretary
A-27
<PAGE> 84
APPENDIX A
, 1997
THE FOLLOWING OPINION IS INTENDED TO BE RENDERED UPON THE CLOSING OF THE
TRANSACTION DESCRIBED THEREIN IN SUBSTANTIALLY THE FORM PRESENTED, ASSUMING NO
CHANGES IN THE FACTS OR THE LAW UPON WHICH SUCH OPINION IS BASED, AND SUBJECT TO
RECEIPT, REVIEW AND APPROVAL OF FINAL DOCUMENTS.
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Suburban Bancorporation, Inc.
10869 Montgomery Road
Cincinnati, Ohio 45242
Dear Sirs:
As counsel for Fifth Third Bancorp, we have been requested to render our
opinion with respect to certain Federal income tax consequences of the merger of
Suburban Bancorporation, Inc. ("Suburban") with and into Fifth Third Bancorp
("Fifth Third"), as more fully described in the Affiliation Agreement, dated as
of , 1997, between Fifth Third and Suburban (the "Affiliation
Agreement").
We have reviewed the terms of the proposed transaction as set forth in the
Affiliation Agreement and have received representations from certain executive
officers of Fifth Third and Suburban relating to various factual matters
relevant to the opinions expressed herein. Our opinion is based on the
Affiliation Agreement, the facts set forth in such representations and on our
analysis of the applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, Internal Revenue Service Rulings,
and judicial decisions interpreting the Code as in effect on the date hereof. We
have not independently verified the factual matters set forth in the
representations.
Based upon and subject to the foregoing, our opinion is as follows:
1. The merger of Suburban with and into Fifth Third will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Code and,
for purposes thereof, Fifth Third and Suburban will each qualify as a
"party to a reorganization" within the meaning of Section 368(b) of the
Code;
2. No gain or loss will be recognized by Suburban as a consequence of
the merger;
3. No gain or loss will be recognized by Fifth Third on the receipt by
Fifth Third of substantially all the assets of Suburban and the assumption
by Fifth Third of Suburban's liabilities;
4. No gain or loss will be recognized by the shareholders of Suburban
who receive solely Fifth Third Common Stock in exchange for shares of
Suburban Common Stock pursuant to the Affiliation Agreement (disregarding
for this purpose any cash received for any fractional share interest in
Fifth Third Common Stock to which they may be entitled);
5. The tax basis of Fifth Third Common Stock received by Suburban
shareholders in the merger will be, in each instance, the same as the
federal income tax basis of the Suburban Common Stock surrendered in
exchange therefor disregarding for this purpose any cash received in lieu
of a fractional share interest and increased by the amount of cash received
that was treated as a dividend (if any);
6. The holding period of Fifth Third Common Stock (including any
fractional share) received by a Suburban shareholder will include, in each
case, the period during which the Suburban Common Stock surrendered in
exchange therefor was held, provided that the Suburban Common Stock was
held as a capital asset by such shareholder on the date of the exchange;
and
<PAGE> 85
7. Holders of Suburban Common Stock who receive cash in lieu of
fractional shares of Fifth Third Common Stock will be treated as having
received such fractional share of Fifth Third Common Stock and then as
having received such cash in redemption of such fractional share subject to
the provisions of Section 302 of the Code.
We consent to the filing of the form of this opinion as an exhibit to the
Registration Statement filed in connection with the merger.
Very truly yours,
By:
------------------------------------
<PAGE> 86
APPENDIX B
[SUBSTANTIVE PROVISIONS OF LEGAL OPINION TO BE PROVIDED BY
HOUSLEY, KANTARIAN & BRONSTEIN, P.C., MAY BE ISSUED IN ABA OPINION ACCORD
FORMAT]
, 1997
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Gentlemen:
[INTRODUCTORY PARAGRAPH TO BE INCLUDED]
We are of the opinion that:
1. Suburban Bancorporation, Inc. ("Suburban") is duly incorporated, validly
existing and in good standing as a corporation under the corporate laws of
the State of Delaware and has all the requisite corporate power and authority
to consummate the Merger.
2. Suburban is a registered savings and loan holding company under the Home
Owners' Loan Act, 12 U.S.C. sec.sec.1467a et seq. , as amended, and has all
requisite corporate power and authority to conduct the business in which it
is engaged as such business is described in Suburban's Annual Report on Form
10-K for the year ended June 30, 1996.
3. Suburban Federal Savings Bank ("Thrift Subsidiary") is duly incorporated and
validly existing as a federal savings bank organized and existing under the
laws of the United States and has all the requisite corporate power and
authority to conduct the savings bank business in which it is engaged as such
business is described in Suburban's Annual Report on Form 10-K for the year
ended June 30, 1996.
4. The Affiliation Agreement and the Merger have been duly approved and adopted
by the Board of Directors and shareholders of Suburban as required by law and
by the Certificate of Incorporation and Bylaws of Suburban.
5. The Affiliation Agreement has been duly executed and delivered by Suburban
and (assuming due approval and execution thereof by Fifth Third) constitutes
the valid and binding obligation of Suburban enforceable against Suburban in
accordance with their respective terms, except to the extent that (i)
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance of other laws relating to
or from time to time affecting the enforcement of creditors' rights generally
or the rights of creditors of savings and loan holding companies, the
accounts of whose subsidiaries are insured by the Federal Deposit Insurance
Corporation and (ii) the availability of certain remedies may be precluded by
general principles of equity.
6. The execution, delivery and performance of the Affiliation Agreement does not
violate (i) the Certificate of Incorporation or Bylaws of Suburban, or (ii)
the Federal Stock Charter or Bylaws of Thrift Subsidiary.
7. All issued and outstanding shares of the capital stock of Suburban have been
duly authorized and validly issued (assuming the receipt of proper
consideration therefor) and are nonassessable. To our actual knowledge,
Suburban owns of record all of the outstanding shares of the capital
stock of Thrift Subsidiary.
<PAGE> 87
8. To our actual knowledge, all approvals required to be obtained by Suburban or
Thrift Subsidiary in connection with the Merger provided for in the
Affiliation Agreement have been obtained from the appropriate regulatory
authorities.
Very truly yours,
<PAGE> 88
APPENDIX C
Paul L. Reynolds
Counsel
, 1997
Suburban Bancorporation, Inc.
10869 Montgomery Road
Cincinnati, Ohio 45242
Gentlemen:
The undersigned has acted as counsel to Fifth Third Bancorp in connection
with the transactions provided for in the Affiliation Agreement dated as of
, 1997, ("Affiliation Agreement") by and between Fifth Third Bancorp
("Fifth Third") and Suburban Bancorporation, Inc. ("Suburban"). This opinion is
rendered to you pursuant to paragraph 3 of Section VI.C. of the Affiliation
Agreement.
I have examined and are familiar with originals or copies, certified or
otherwise, identified to our satisfaction, of such statutes, regulations,
documents, corporate records, and certificates of public officials and corporate
officers as we have deemed necessary for the purposes of this opinion, including
but not limited to the following: (a) the Second Amended Articles of
Incorporation of Fifth Third, as amended; (b) the Code of Regulations, as
amended, of Fifth Third; and, (c) the record of all actions taken by the Board
of Directors and Executive Committee of the Board of Directors of Fifth Third in
connection with any matters covered by this opinion.
I have made such examination of Ohio and Federal law as I deem relevant for
the purposes of this opinion, but I have not made any review of the laws of any
state other than Ohio. Accordingly, I express no opinion as to the laws of any
state or jurisdiction other than the United States of America and the State of
Ohio.
Based upon and subject to the foregoing, I am of the opinion that:
1. Fifth Third is duly incorporated, validly existing and in good standing as a
corporation under the laws of Ohio, and has all the requisite power and
authority to consummate the transactions provided for in the Affiliation
Agreement and the Agreement of Merger. Fifth Third is a registered bank
holding company under the Bank Holding Company Act of 1956, as amended, 12
U.S.C. sec.1841 et seq., and has all requisite corporate power and authority
to conduct the business in which it is engaged and as now conducted by it.
2. The Affiliation Agreement and the transactions provided for therein have been
duly approved by the Directors of Fifth Third, and no action is required to
be taken by the shareholders of Fifth Third to authorize, approve or adopt
the Affiliation Agreement or the transactions provided for therein.
3. The Affiliation Agreement has been duly executed and delivered by Fifth Third
and constitutes the valid and binding obligation of Fifth Third enforceable
against Fifth Third in accordance with its respective terms, except to the
extent that (i) enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance or other laws relating to or
from time to time affecting the enforcement of creditors' rights generally or
the rights of creditors of bank holding companies, the accounts of whose
subsidiaries are insured by the Federal Deposit Insurance Corporation and
(ii) the availability of certain remedies may be precluded by general
principles of equity.
4. Fifth Third has taken all necessary and required corporate action to
authorize the issuance or transfer of the shares of its Common Stock to be
received by holders of the Common Stock of Suburban as a result of the merger
of Suburban with and into Fifth Third and, when so issued or transferred,
such shares will be legally and validly issued and outstanding, fully paid
and nonassessable and will not upon such transfer or issuance be subject to
the preemptive rights of any shareholder of Fifth Third, and such shares have
been registered under the Securities Act of 1933, as amended.
5. The registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, Registration No. 33-64871 (the
"Registration Statement"), by Fifth Third to register
<PAGE> 89
the shares of Common Stock of Fifth Third being offered to the shareholders
of Suburban in the merger provided for in the Affiliation Agreement and the
Agreement of Merger has been declared effective and no stop order has been
issued and no proceeding for the purpose has been initiated or, to my best
knowledge, contemplated or threatened by the Securities and Exchange
Commission.
6. The Registration Statement and the Proxy Statement/Prospectus included
therein at the time it became effective complied as to form with the
Securities Act of 1993, as amended, and the rules and regulations thereunder.
7. All necessary approvals for the transactions provided for in the Affiliation
Agreement and the Agreement of Merger have been obtained from the appropriate
regulatory authorities.
Very truly yours,
FIFTH THIRD BANCORP
Paul L. Reynolds
Counsel
<PAGE> 90
ANNEX B
FORM OF FAIRNESS OPINION OF
SANDLER O'NEILL & PARTNERS, L.P.
<PAGE> 91
ANNEX B
SANDLER O'NEILL CORPORATE
STRATEGIES Telephone: 212-466-7700
Division of Sandler O'Neill &
Partners, L.P. 800-655-6855
Two World Trade Center, 104th
Floor Facsimile: 212-466-7711
New York, New York 10048
SANDLER O'NEILL
May , 1997
Board of Directors
Suburban Bancorporation, Inc.
10869 Montgomery Road
Cincinnati, Ohio 45242
Gentlemen:
Fifth Third Bancorp ("Fifth Third") has proposed to exchange .24357 shares
(the "Exchange Ratio") of common stock, without par value, of Fifth Third (the
"Fifth Third Shares"), for each outstanding share of Suburban Bancorporation
Inc. ("Suburban") common stock, par value $.01 per share (the "Suburban
Shares"). The Exchange Ratio is subject to possible adjustment as set forth in
the Affiliation Agreement dated as of March 13, 1997 (the "Agreement"). The
Agreement between Suburban and Fifth Third provides for Suburban to be merged
with and into Fifth Third (the "Merger") and more fully sets forth the terms and
conditions of the Merger. You have requested our opinion as to the fairness,
from a financial point of view, of the Exchange Ratio to the holders of Suburban
Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions.
In connection with this opinion we have reviewed, among other things: (i)
the Agreement and exhibits thereto; (ii) Fifth Third's audited consolidated
financial statements and management's discussion and analysis of the financial
condition and results of operations contained in its annual report to
shareholders for the year ended December 31, 1996 and in its unaudited quarterly
financial statements for the quarters ended March 31, 1996, June 30, 1996, and
September 30, 1996; (iii) Suburban's audited consolidated financial statements
and management's discussion and analysis of the financial condition and results
of operations contained in its annual report to shareholders for the year ended
June 30, 1996 and in its unaudited quarterly financial statements for the
quarters ended September 30, 1996, December 31, 1996 and March 31, 1997; (iv)
certain financial analyses and forecasts of Suburban prepared by and reviewed
with management of Suburban and the views of senior management of Suburban
regarding Suburban's past and current business operations, results thereof,
financial condition and future prospects; (v) views of senior management of
Fifth Third regarding Fifth Third's past and current business operations,
results thereof, financial condition and future prospects; (vi) the historical
reported price and trading activity for Fifth Third's and Suburban's common
stock, including a comparison of certain financial and stock market information
for Fifth Third and Suburban with similar information for certain other
companies the securities of which are publicly traded; (vii) the financial terms
of recent business combinations in the savings institution and banking
industries; (viii) the current market environment generally and the banking
environment in particular; and (ix) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as we
considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with us,
and we did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities of Fifth Third or
Suburban or any of their subsidiaries, or the collectibility of any such assets.
With respect to Suburban's financial projections as reviewed with Suburban's
SANDLER O'NEILL & PARTNERS, L.P., IS A LIMITED PARTNERSHIP,
THE SOLE GENERAL PARTNER OF WHICH IS SANDLER O'NEIL & PARTNERS CORP.,
A NEW YORK CORPORATION.
<PAGE> 92
Board of Directors
Suburban Bancorporation, Inc.
May , 1997
Page 2 SANDLER O'NEILL
management, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of Suburban and that such performances will be achieved. We have also
assumed that there has been no material change in Fifth Third's or Suburban's
assets, financial condition, results of operations, business or prospects since
the date of the last financial statements noted above.
Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof. Events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We have not undertaken to reaffirm
or revise this opinion or otherwise comment upon events occurring after the date
hereof.
We have acted as Suburban's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger.
In the ordinary course of our business, we may actively trade the equity
securities of Fifth Third and Suburban for our own account and for the accounts
of our customers and, accordingly, may at any time hold a long or short position
in such securities.
Our opinion is directed to the Board of Directors of Suburban and does not
constitute a recommendation to any stockholder of Suburban as to how such
stockholder should vote at the special meeting of stockholders to consider and
vote upon the Merger. Our opinion is not to be quoted or referred to, in whole
or in part, in a registration statement, prospectus, proxy statement or in any
other document, nor shall this opinion be used for any other purposes, without
Sandler O'Neill's prior written consent.
Based upon and subject to the foregoing, it is our opinion that the
Exchange Ratio is fair, from a financial point of view, to the holders of
Suburban Shares.
Very truly yours,
Sandler O'Neill & Partners, L.P.
<PAGE> 93
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1701.13(E) of the Ohio Revised Code provides that a corporation may
indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
other than an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful. Section 1701.13(E)(2)
further specifies that a corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a partnership, joint
venture, trust, or other enterprise, against expenses, including attorney's
fees, actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of (a) any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent, that the court of common pleas or
the court in which such action or suit was brought determines, upon application,
that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court of common pleas or such other court
shall deem proper, and (b) any action or suit in which the only liability
asserted against a director is pursuant to Section 1701.95 of the Ohio Revised
Code concerning unlawful loans, dividends and distribution of assets. In
addition, Section 1701.13(E) requires a corporation to pay any expenses,
including attorney's fees, of a director in defending an action, suit, or
proceeding referred to above as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, upon receipt of an undertaking
by or on behalf of the director in which he agrees to both (i) repay such amount
if it is proved by clear and convincing evidence that his action or failure to
act involved an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard for the best
interests of the corporation and (ii) reasonably cooperate with the corporation
concerning the action, suit, or proceeding. The indemnification provided by
Section 1701.13(E) shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under the Second Amended Articles
of Incorporation or Code of Regulations of Fifth Third.
The Code of Regulations of Fifth Third provides that Fifth Third shall
indemnify each director and each officer of Fifth Third, and each person
employed by Fifth Third who serves at the written request of the President of
Fifth Third as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, to the full extent
permitted by Ohio law. Fifth Third may indemnify assistant officers, employees
and others by action of the Board of Directors to the extent permitted by Ohio
law.
Fifth Third carries directors' and officers' liability insurance coverage
which insures its directors and officers and the directors and officers of its
subsidiaries in certain circumstances.
II-1
<PAGE> 94
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE NUMBER IN SEQUENTIAL
DOCUMENT EXHIBIT NUMBERING SYSTEM
- ----------------------------------------------------------- ------- -------------------------
<S> <C> <C>
Affiliation Agreement (excluding exhibits) and related
Agreement of Merger, as amended and restated, both dated
as of August 28, 1995, by and between Fifth Third Bancorp
and Suburban Bancorp, Inc. (set forth in Annex A and
Annex B to the Proxy Statement/Prospectus included in
this Registration Statement)............................. 2
Seconded Amended Articles of Incorporation of Fifth Third
Bancorp, as amended...................................... 3.1 Incorporated by
Reference(1)
Code of Regulations of Fifth Third Bancorp, as amended..... 3.2 Incorporated by
Reference(1)
Form of Opinion of counsel employed by Fifth Third Bancorp
as to the legality of the securities being issued........ 5
Form of opinion of Graydon, Head & Ritchey as to tax
matters.................................................. 8
Fifth Third Bancorp 1982 Stock Option Plan................. 10.1 Incorporated by
Reference(2)
Fifth Third Bancorp 1987 Stock Option Plan................. 10.2 Incorporated by
Reference(3)
Fifth Third Bancorp Unfunded Deferred Compensation Plan for
Non-Employee Directors................................... 10.3 Incorporated by
Reference
Fifth Third Bancorp Nonqualified Deferred Compensation
Plan..................................................... 10.4 Incorporated by
Reference(5)
Fifth Third Bancorp 1990 Stock Option Plan................. 10.5 Incorporated by
Reference(6)
1996 Annual Report to Stockholders of Fifth Third
Bancorp.................................................. 13.1 Incorporated by
Reference
Quarterly Report to Stockholders of Fifth Third Bancorp for
the quarter ended March 31, 1997......................... 13.2 Incorporated by
Reference
Subsidiaries of Fifth Third Bancorp........................ 21 Incorporated by
Reference (7)
Consent of Deloitte & Touche LLP (with respect to Fifth
Third Bancorp)........................................... 23.1
Consent of Deloitte & Touche LLP (with respect to Suburban
Bancorp, Inc.)........................................... 23.2
Consent of Sandler O'Neill & Partners, L.P................. 23.3 Included in Annex B
Consent of Graydon, Head & Ritchey......................... 23.4 Included in Exhibit 8.1
Consent of counsel employed by Fifth Third Bancorp......... 23.5 Included in Exhibit 5.1
A power of attorney where various individuals authorize the
signing of their names to any and all amendments to this
Registration Statement and other documents submitted in
connection herewith is contained on the first page of the
signature pages following Part II of this Registration
Statement................................................ 24
Form of Fairness Opinion of Sandler O'Neill & Partners,
L.P. (set forth in Annex B to the Proxy
Statement/Prospectus included in this Registration
Statement)............................................... 99.1
Form of Proxy Card......................................... 99.2
</TABLE>
II-2
<PAGE> 95
<TABLE>
<CAPTION>
PAGE NUMBER IN SEQUENTIAL
DOCUMENT EXHIBIT NUMBERING SYSTEM
- ----------------------------------------------------------- ------- -------------------------
<S> <C> <C>
Form of Letter to Suburban Bancorp Stockholders............ 99.3
Form of Notice of Special Meeting of Suburban Bancorp
Stockholders............................................. 99.4
</TABLE>
- ---------------
(1) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-4, Registration No. 33-63966, which is
effective.
(2) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-2, Registration No. 2-98550, which is
effective.
(3) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-2, Registration No. 33-13252, which is
effective.
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
filed for the year ended December 31, 1985.
(5) Filed with the Securities and Exchange Commission as Exhibit 10.4 to a
Registration Statement on Form S-4, Registration No. 33-21139, declared
effective April 20, 1988.
(6) Filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form S-8, Registration No. 33-34075, which is
effective.
(7) Incorporated by reference to the Registrant's Annual Report on Form 10-K
filed for the year ended December 31, 1994.
UNDERTAKINGS
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other Items of the applicable form.
(3). The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
II-3
<PAGE> 96
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(5) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(6) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(7) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
II-4
<PAGE> 97
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-4, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on May 12, 1997.
FIFTH THIRD BANCORP
/s/ George A. Schaefer, Jr.
--------------------------------------
By: George A. Schaefer, Jr.
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints GEORGE A. SCHAEFER, JR. his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign and
execute on behalf of the undersigned any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
with any such amendments, as fully to all intents and purposes as he might or
could do in person, and does hereby ratify and confirm all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ George A. Schaefer, Jr. Date: May 12, 1997
- ---------------------------------------------
George A. Schaefer, Jr.
President and Chief Executive Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ P. Michael Brumm Date: May 12, 1997
- ---------------------------------------------
P. Michael Brumm
Executive Vice President and Chief Financial
Officer
DIRECTORS OF THE COMPANY:
/s/ John F. Barrett Date: May 12, 1997
- ---------------------------------------------
John F. Barrett
/s/ Milton C. Boesel, Jr. Date: May 12, 1997
- ---------------------------------------------
Milton C. Boesel, Jr.
Date: May , 1997
- ---------------------------------------------
Gerald V. Dirvin
Date: May , 1997
- ---------------------------------------------
Thomas B. Donnell
</TABLE>
II-5
<PAGE> 98
<TABLE>
<S> <C>
- --------------------------------------------- Date: May , 1997
Richard T. Farmer
/s/ MITCHEL LIVINGSTON Date: May 12, 1997
- ---------------------------------------------
Mitchel Livingston
Date: May , 1997
- ---------------------------------------------
Ivan W. Gorr
/s/ JOSEPH H. HEAD, JR. Date: May 12, 1997
- ---------------------------------------------
Joseph H. Head, Jr.
Date: May , 1997
- ---------------------------------------------
Joan R. Herschede
Date: May , 1997
- ---------------------------------------------
William G. Kagler
/s/ WILLIAM J. KEATING Date: May 12, 1997
- ---------------------------------------------
William J. Keating
Date: May , 1997
- ---------------------------------------------
James D. Kiggen
/s/ ROBERT B. MORGAN Date: May 12, 1997
- ---------------------------------------------
Robert B. Morgan
Date: May , 1997
- ---------------------------------------------
Michael H. Norris
/s/ JAMES E. ROGERS Date: May 12, 1997
- ---------------------------------------------
James E. Rogers
/s/ BRIAN H. ROWE Date: May 12, 1997
- ---------------------------------------------
Brian H. Rowe
/s/ GEORGE A. SCHAEFER, JR. Date: May 12, 1997
- ---------------------------------------------
George A. Schaefer, Jr.
/s/ JOHN J. SCHIFF, JR. Date: May 12, 1997
- ---------------------------------------------
John J. Schiff, Jr.
/s/ DENNIS J. SULLIVAN, JR. Date: May 12, 1997
- ---------------------------------------------
Dennis J. Sullivan, Jr.
/s/ DUDLEY S. TAFT Date: May 12, 1997
- ---------------------------------------------
Dudley S. Taft
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5.1
FIFTH THIRD BANCORP
May 15, 1997
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
RE: Issuance of 450,000 Shares of Common Stock of Fifth Third Bancorp
Pursuant to Registration Statement on Form S-4 (File No.
_____________) filed with the Securities and Exchange Commission
Gentlemen:
I have acted as counsel to Fifth Third Bancorp, an Ohio corporation
("Company"), in connection with the issuance of up to 450,000 Shares of Common
Stock pursuant to the merger of Suburban Bancorporation, Inc. with and into the
Company (the "Merger"), as set forth in the Form S-4 Registration Statement
(File No. _______________), as amended (the "Registration Statement"), filed by
the Company with the Securities and Exchange Commission.
As counsel for the Company I have made such legal and factual
examinations and inquiries as I deem advisable for the purpose of rendering
this opinion. In addition, I have examined such documents and materials,
including the Certificate of Incorporation, Bylaws, and other corporate records
of the Company, as I have deemed necessary for the purpose of this opinion.
On the basis of the foregoing, I express the opinion that the 450,000
Shares of Common Stock of the Company registered for issuance pursuant to the
Registration Statement, or such lesser number of Shares as may be actually
issued by the Company in connection with the Merger and/or the acquisition,
currently are validly authorized and, when issued as contemplated by the
Registration Statement, will be legally issued, fully paid and nonassessable
shares of Common Stock of the Company.
I hereby consent to the filing of this opinion as part of the
above-referenced Registration Statement and amendments thereto and to the
reference to me in the Prospectus Information Statement under the caption "Legal
Matters."
Very truly yours,
FIFTH THIRD BANCORP
By__________________________________
Paul L. Reynolds, Counsel
<PAGE> 1
EXHIBIT 8.1
May __, 1997
Fifth Third Bancorp
Fifth Third Center
Cincinnati, Ohio 45263
Suburban Bancorporation, Inc.
10869 Montgomery Road
Cincinnati, Ohio 45242
Re: Proxy Statement of Suburban Bancorporation, Inc.
and Prospectus of Fifth Third Bancorp
------------------------------------------------
Dear Sirs:
We have acted as counsel to Fifth Third Bancorp in connection with the
Registration Statement on Form S-4, relating to the registration of 450,000
shares of Fifth Third Bancorp to be issued in the Merger pursuant to the
Affiliation Agreement. Unless otherwise indicated, defined terms used herein
shall have the same meaning as in the Proxy Statement/Prospectus.
We hereby confirm that the opinions that we are required to give as a
condition to the consummation of the Merger of Suburban Bancorporation, Inc.
into Fifth Third Bancorp, as described in the Proxy Statement/Prospectus in the
first paragraph under the heading "Certain Federal Income Tax Consequences"
constitute our opinions with respect to certain material federal income tax
consequences of the Merger, subject to the assumptions described therein and
assuming that we receive the representations referred to therein and in the
Affiliation Agreement.
We hereby consent to the filing with the Securities and Exchange
Commission of this opinion as an exhibit to the Registration Statement and to
the reference to this firm in the Proxy Statement/Prospectus constituting part
of the Registration Statement.
Very truly yours,
GRAYDON, HEAD & RITCHEY
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Fifth Third Bancorp on Form S-4 of our report dated January 15, 1997,
incorporated by reference in the Annual Report on Form 10-K of Fifth Third
Bancorp for the year ended December 31, 1996 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
Deloitte & Touche LLP
Cincinnati, Ohio
May 15, 1997
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Fifth Third Bancorp on Form S-4 of our report dated August 9, 1996 (which report
expresses an unqualified opinion and includes an explanatory paragraph referring
to a change in the method of accounting for income taxes in 1994) on the
consolidated financial statements of Suburban Bancorporation, Inc. and
subsidiaries for the year ended June 30, 1996 included in the Annual Report on
Form 10-KSB of Suburban Bancorporation, Inc. and subsidiaries for the year
ended June 30, 1996 and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Cincinnati, Ohio
May 15, 1997
<PAGE> 1
Exhibit 99.2
REVOCABLE PROXY
SUBURBAN BANCORPORATION, INC.
CINCINNATI, OHIO
SPECIAL MEETING OF STOCKHOLDERS
__________ __, 1997
The undersigned hereby appoints Directors _________, _________ and
_________, with full powers of substitution, to act as proxies for the
undersigned, to vote all shares of common stock of Suburban Bancorporation, Inc.
which the undersigned is entitled to vote at the special meeting of
stockholders, to be held at the __________________ at __________________ in
Cincinnati, Ohio on _________, _________ __, 1997 at 11:00 A.M., and at any
and all adjournments thereof, as follows:
1. Proposal to Approve Affiliation Agreement FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal to approve an Affiliation
Agreement dated as of March 13, 1997
between Fifth Third Bancorp ("Fifth
Third") and Suburban Bancorp (the
"Affiliation Agreement") and the
transactions contemplated thereby.
Pursuant to the Affiliation Agreement,
Suburban Bancorp will merge into Fifth
Third (the "Merger"). At the time the
Merger becomes effective (the "Effective
Time"), each share of common stock,
$0.01 par value per share, of Suburban
Bancorp (the "Suburban Bancorp Common
Stock") will be converted by virtue of
the Merger into .24357 (the "Exchange
Ratio") of a share of common stock,
without par value, of Fifth Third
("Fifth Third Common Stock"). The
Exchange Ratio is subject to adjustment,
and consummation of the Merger is
subject to various conditions, as set
forth in the Affiliation Agreement
attached as part of the accompanying
Proxy Statement/Prospectus.
The Board of Directors recommends a vote "FOR" Approval of the Affiliation
Agreement and the transactions contemplated thereby.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSITION STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE SPECIAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH RESPECT TO MATTERS
INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING.
<PAGE> 2
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should she undersigned the present and elect to vote at the special meeting
or at any adjournments thereof and after notification to the Secretary of the
Company at the special meeting of the stockholder's decision to terminate this
proxy, then the power, of audit attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
exception of this proxy of notice of the special meeting, a proxy statement/
prospectus dated _________ __, 1997 and copies of the Company's annual
report to stockholders for the year ended June 30, 1996 and Part I of the
Company's quarterly report on Form 10-QSB for the quarter ended March 31, 1997.
PLEASE COMPLETE, DATE, SIGN AND
MAIL THIS PROXY PROMPTLY IN THE
ACCOMPANYING POSTAGE PREPAID
ENVELOPE.
Dated:______________________, 1997
NUMBER OF SHARES
__________________________________
PRINT NAME OF STOCKHOLDER
__________________________________
SIGNATURE OF STOCKHOLDER
__________________________________
PRINT NAME OF STOCKHOLDER
__________________________________
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name
appears on the envelope in which
this card was entitled. When
signing as attorney, executor,
trustee or guardian, please give
your full title. If shares are held
jointly, each holder should sign.
<PAGE> 1
SUBURBAN BANCORPORATION, INC.
10869 MONTGOMERY ROAD
CINCINNATI, OHIO 41071
May , 1997
Dear Stockholder:
On behalf of the Board of Directors, we cordially invite you to attend a
Special Meeting of Stockholders (the "Special Meeting") of Suburban
Bancorporation, Inc. ("Suburban Bancorp"), which will be held at ,
Eastern Time, on June , 1997, at .
At the Special Meeting, stockholders will be asked to approve an
Affiliation Agreement dated as of March 13, 1997 between Fifth Third Bancorp
("Fifth Third") and Suburban Bancorp (the "Affiliation Agreement") and the
transactions contemplated thereby. Pursuant to the Affiliation Agreement,
Suburban Bancorp will merge into Fifth Third (the "Merger"). Consummation of the
Merger is subject to various conditions, including the receipt of stockholder
approval and all required regulatory approvals.
At the time the Merger becomes effective (the "Effective Time"), each share
of common stock, $0.01 par value per share, of Suburban Bancorp (the "Suburban
Bancorp Common Stock") will be converted by virtue of the Merger into .24357
(the "Exchange Ratio") of a share of common stock, without par value, of Fifth
Third ("Fifth Third Common Stock"). Based on the closing price per share of
Fifth Third Common Stock on the Nasdaq National Market on May , 1997, the
value of .24357 of a share of Fifth Third Common Stock was $ . The
actual value of the Fifth Third Common Stock to be received by Suburban Bancorp
stockholders will depend on the market price of Fifth Third Common Stock when
the Merger is consummated. The market price of Fifth Third Common Stock is
subject to change at all times based on the future financial condition and
operating results of Fifth Third, future market conditions and other factors,
and the market price of Fifth Third Common Stock at the effective time of the
Merger may be substantially higher or lower than recent prices. The Exchange
Ratio will be adjusted so as to give Suburban Bancorp stockholders the economic
benefit of any stock dividends, reclassifications, recapitalizations, split-ups,
exchanges of shares, distributions or combinations or subdivisions of Fifth
Third Common Stock effected before the Effective Time. Only whole shares of
Fifth Third Common Stock will be issued. Any stockholder otherwise entitled to
receive a fractional share will receive cash in lieu of such fractional share
equal in amount to the product of such fraction and the per share closing price
of Fifth Third Common Stock on the date the Merger becomes effective.
In the event of a substantial decline in the trading price of Fifth Third
Common Stock relative to a group of peer institutions under certain
circumstances as provided in the Affiliation Agreement, the Suburban Bancorp
Board of Directors may elect to terminate the Affiliation Agreement and the
Merger. If such an election were made, Fifth Third would have the option to
either (a) increase the Exchange Ratio or, (b) in lieu of adjusting the Exchange
Ratio, pay cash for each outstanding share of Suburban Bancorp Common Stock (in
addition to .24357 shares of Fifth Third Common Stock). If Fifth Third elects
either such alternative, the Affiliation Agreement will not terminate
notwithstanding the election of the Suburban Bancorp Board of Directors. For
additional information regarding the terms and conditions applicable to
termination of the Affiliation Agreement and the Merger and possible resulting
adjustments to the consideration to be paid to the Suburban Bancorp
stockholders, see "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Amendment; Waiver; Termination" in the accompanying Proxy
Statement/Prospectus.
The consideration to be received by Suburban Bancorp stockholders in the
Merger was negotiated under the direction of your Board of Directors in light of
various factors, including Suburban Federal Bank's recent operating results,
current financial condition and future prospects. Sandler O'Neill & Partners,
L.P., a financial advisor to Suburban Bancorp, has advised your Board of
Directors that in its opinion the consideration to be received by Suburban
Bancorp stockholders in the Merger is fair to them from a financial point of
view.
<PAGE> 2
The proposed Merger is discussed in detail in the accompanying Proxy
Statement/Prospectus, as well as in the Affiliation Agreement which is appended
thereto as Annex A.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS THAT
YOU VOTE "FOR" THE PROPOSAL. APPROVAL OF THE PROPOSAL WILL ALSO AUTHORIZE THE
BOARD OF DIRECTORS TO EXERCISE ITS DISCRETION WHETHER TO PROCEED WITH THE MERGER
IN THE EVENT THAT SUBURBAN BANCORP HAS THE RIGHT TO EXERCISE ITS TERMINATION
RIGHT AS DESCRIBED ABOVE. SUBURBAN BANCORP EXPECTS THAT THE SUBURBAN BANCORP
BOARD OF DIRECTORS WOULD EXERCISE SUCH DISCRETION AND DECIDE WHETHER TO
TERMINATE THE AFFILIATION AGREEMENT WITHOUT A RESOLICITATION OF STOCKHOLDERS.
THE AFFILIATION AGREEMENT MUST BE APPROVED BY THE AFFIRMATIVE VOTE OF AT LEAST A
MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF SUBURBAN BANCORP COMMON STOCK
ENTITLED TO VOTE. AN ABSTENTION OR FAILURE TO VOTE HAS THE SAME EFFECT AS A VOTE
AGAINST THE PROPOSALS. IT IS, THEREFORE, IMPORTANT THAT YOU VOTE.
Your vote is very important, regardless of the number of shares you own.
Please sign and return the proxy card in the postage-paid return envelope
provided for your convenience. This will not prevent you from voting in person,
but will assure that your vote is counted if you are unable to attend the
Special Meeting.
Please vote and return your proxy today.
Sincerely,
Joseph F. Hutchison
President and Chief Executive Officer
IMPORTANT: If your Suburban Bancorp shares are held in the name of a brokerage
firm or nominee, only they can execute a proxy on your behalf. To assure that
your shares are voted, we urge you to telephone today the individual responsible
for your account at your brokerage firm and obtain instructions on how to direct
him or her to execute a proxy.
If you have any questions or need any help in voting your shares, please
telephone John A. Buchheid, Secretary, at Suburban Bancorp, (513) 489-4888.
2
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SUBURBAN BANCORPORATION, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE , 1997
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders ("Special
Meeting") of Suburban Bancorporation, Inc. ("Suburban Bancorp") will be held on
June , 1997, at , Eastern Time, at .
A Proxy Statement/Prospectus and Proxy Card for the Special Meeting are
enclosed herewith. The Special Meeting is for the purpose of considering and
voting upon the following matters:
1. A proposal to approve an Affiliation Agreement dated as of March 13,
1997 between Fifth Third Bancorp ("Fifth Third") and Suburban Bancorp (the
"Affiliation Agreement") and the transactions contemplated thereby. Pursuant to
the Affiliation Agreement, Suburban Bancorp will merge into Fifth Third (the
"Merger"). At the time the Merger becomes effective (the "Effective Time"), each
share of common stock, $0.01 par value per share, of Suburban Bancorp (the
"Suburban Bancorp Common Stock") will be converted by virtue of the Merger into
.24357 (the "Exchange Ratio") of a share of common stock, without par value, of
Fifth Third ("Fifth Third Common Stock"). The Exchange Ratio is subject to
adjustment in the event of changes in Fifth Third's capitalization, and
consummation of the Merger is subject to various conditions, including the
receipt of stockholder approval and all required regulatory approvals, as set
forth in the Affiliation Agreement. The Exchange Ratio also will be adjusted so
as to give Suburban Bancorp stockholders the economic benefit of any stock
dividends, reclassifications, recapitalizations, split-ups, exchanges of shares,
distributions or combinations or subdivisions of Fifth Third Common Stock
effected before the Effective Time.
In the event of a substantial decline in the trading price of Fifth Third
Common Stock relative to a group of peer institutions under certain
circumstances as provided in the Affiliation Agreement, the Suburban Bancorp
Board of Directors may elect to terminate the Affiliation Agreement and the
Merger. If such an election were made, Fifth Third would have the option to
either (a) increase the Exchange Ratio or, (b) in lieu of adjusting the Exchange
Ratio, pay cash for each outstanding share of Suburban Bancorp Common Stock (in
addition to .24357 shares of Fifth Third Common Stock). If Fifth Third elects
either such alternative, the Affiliation Agreement will not terminate
notwithstanding the election of the Suburban Bancorp Board of Directors. For
additional information regarding the terms and conditions applicable to
termination of the Affiliation Agreement and the Merger and possible resulting
adjustments to the consideration to be paid to the Suburban Bancorp
stockholders, see "PROPOSAL -- MERGER OF SUBURBAN BANCORP INTO FIFTH
THIRD -- Amendment; Waiver; Termination" in the accompanying Proxy
Statement/Prospectus.
2. Such other business as may properly come before the Special Meeting or
any adjournments thereof. The Board of Directors is not aware of any other
business to come before the Special Meeting.
Pursuant to the Bylaws of Suburban Bancorp, the Board of Directors has
fixed May , 1997 as the record date for the determination of Stockholders
entitled to receive notice of, and to vote at, the Special Meeting and any
adjournments thereof. Any action may be taken on any of the foregoing proposals
at the meeting on the date specified above, or on any date or dates less than 30
days later to which, by original or later adjournment, the meeting may be
adjourned. Only holders of record of Suburban Bancorp Common Stock at the close
of business on such date will be entitled to vote at the Special Meeting or any
adjournments thereof.
THE AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE ISSUED AND OUTSTANDING
SHARES OF SUBURBAN BANCORP COMMON STOCK ENTITLED TO VOTE IS REQUIRED TO APPROVE
THE AFFILIATION AGREEMENT. IN THE EVENT THERE ARE NOT SUFFICIENT VOTES TO
APPROVE ANY ONE OR MORE OF THE FOREGOING PROPOSALS AT THE TIME OF THE MEETING,
THE MEETING MAY BE ADJOURNED BY A MAJORITY OF THE VOTES CAST IN ORDER TO PERMIT
FURTHER SOLICITATION OF PROXIES BY SUBURBAN BANCORP.
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APPROVAL OF THE PROPOSAL WILL ALSO AUTHORIZE THE BOARD OF DIRECTORS TO
EXERCISE ITS DISCRETION WHETHER TO PROCEED WITH THE MERGER IN THE EVENT THAT
SUBURBAN BANCORP HAS THE RIGHT TO EXERCISE ITS TERMINATION RIGHT AS DESCRIBED
ABOVE. SUBURBAN BANCORP EXPECTS THAT THE SUBURBAN BANCORP BOARD OF DIRECTORS
WOULD EXERCISE SUCH DISCRETION AND DECIDE WHETHER TO TERMINATE THE AFFILIATION
AGREEMENT WITHOUT A RESOLICITATION OF STOCKHOLDERS.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. EACH
STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE SPECIAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY A STOCKHOLDER MAY BE REVOKED
BEFORE IT IS EXERCISED BY SUBMITTING A LATER DATED PROXY, BY ATTENDING THE
SPECIAL MEETING AND VOTING IN PERSON OR BY GIVING NOTICE OF REVOCATION TO
SUBURBAN BANCORP IN A WRITING ADDRESSED TO AND RECEIVED BY THE SECRETARY OF
SUBURBAN BANCORP BEFORE THE SPECIAL MEETING.
By Order of the Board of Directors
Joseph F. Hutchison, President
and Chief Executive Officer
Cincinnati, Ohio
May , 1997
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