SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OLD KENT FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------------
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INFORMATION CONCERNING PARTICIPANTS
Old Kent Financial Corporation (the "Company") and certain other
persons named below may be deemed to be participants in the solicitation of
proxies of the Company's shareholders to approve the proposed merger
transaction between the Company and Fifth Third Bancorp, an Ohio corporation.
The participants in this solicitation may include the directors of the
Company: William P. Crawford, Richard M. DeVos, Jr., James P. Hackett, Erina
Hanka, Michael J. Jandernoa, Kevin T. Kabat, Fred P. Keller, John P. Keller,
Hendrik G. Meijer, Percy A. Pierre, Marilyn J. Schlack, Peter F. Secchia, David
J. Wagner, Margaret Sellers Walker and Robert H. Warrington. As of the date of
this communication, none of the foregoing persons individually beneficially owns
in excess of 1% of the Company's outstanding common stock. Additional
information about the directors of the Company is included in the Company's
proxy statement for its 2000 Annual Meeting of Shareholders dated February
28, 2000. Information will also be included in a joint proxy
statement/prospectus to be filed by the Company and Fifth Third Bancorp in
connection with the proposed merger. Investors will be able to obtain these
documents free of charge at the SEC's web site (www.sec.gov) or by contacting
Old Kent Financial Corporation, 111 Lyon Street N.W., Grand Rapids, Michigan
49503, Attention: Albert T. Potas, Senior Vice President (Investor
Relations), telephone (616) 771-1931.
INVESTORS SHOULD READ THE JOINT PROXY STATEMENT-PROSPECTUS CAREFULLY
WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS.
<PAGE>
The following is a press release issued by the Company and Fifth Third
Bancorp on November 20, 2000:
<PAGE>
CONTACT: Fifth Third FOR IMMEDIATE RELEASE
Neal E. Arnold (Analysts) November 20, 2000
(513) 579-4356
Roberta R. Jennings (Media)
(513) 579-4153
Old Kent
Albert T. Potas (Analysts)
(616) 771-1931
Larry S. Magnesen (Media)
(616) 771-5278
FIFTH THIRD & OLD KENT TO MERGE
- Expands Fifth Third's Presence To 3rd in Michigan and 5th in Chicago
- Immediately Accretive to EPS, Before Cost Savings and Revenue Enhancement
Opportunities
- Maintains Historically Superior Fifth Third Operating Ratios, Balance
Sheet Strength
- Provides Substantial Revenue Expansion Potential With Old Kent's One
Million Customers
- Low-Risk Integration
Fifth Third Bancorp (NASDAQ: FITB) and Old Kent (NYSE: OK) announced today
the signing of a definitive agreement in which Fifth Third will merge with Old
Kent, headquartered in Grand Rapids, Michigan. Old Kent is a financial holding
company with a 41-year history of consecutive annual increases in earnings per
share and dividends. With assets of $22.5 billion, it operates over 300 banking
offices in Michigan, Illinois and Indiana, as well as Old Kent Mortgage Company.
Fifth Third continues its profitable growth in the Midwest. The combined
company will have $69.1 billion in assets, $43.8 billion in deposits and over
980 banking locations, primarily in Ohio, Kentucky, Indiana, Michigan and
Illinois. Fifth Third will be the second largest banking franchise, based on
deposits, in these attractive Midwestern states.
Fifth Third President & CEO George A. Schaefer, Jr. states, "We strongly
believe that we have seized a unique opportunity to merge with one of the
strongest, highest quality franchises in the Midwest. David Wagner and his
management team have built a strong franchise that we've long admired, and one
with which we are confident we can grow revenues in historical Fifth Third
fashion."
Schaefer continues, "Old Kent's financial strength, stable credit quality
and concentration in attractive Midwestern cities provides the best platform for
us to proceed with our Michigan and Chicago expansion strategies. Having
successfully completed the integration of CNB Bancshares earlier this year, in
August we announced our intent to acquire Ottawa Financial Corporation in
Holland, Michigan. The Old Kent and Ottawa transactions are consistent with
<PAGE>
our steady growth pattern and position us for continued growth and service to
Chicago and Michigan-area customers."
Fifth Third will exchange, on a tax-free basis, 0.74 shares of its common
stock for each share of Old Kent common stock. Based on Fifth Third's November
17, 2000 closing price of $48.06, the transaction is valued at approximately
$4.9 billion. The transaction is expected to be approximately 11 percent
accretive to Fifth Third's 2001 earnings per share (based on IBES estimates). In
addition, the transaction will significantly exceed Fifth Third's internal rate
of return goals. Management of the combined company expects to achieve cost
savings of 20 percent of Old Kent's total operating expenses, with these savings
being phased in 25 percent in 2001, 75 percent in 2002 and 100 percent by 2003.
Fifth Third expects to incur merger-related charges of approximately $235
million, after tax. The transaction is expected to be completed in the second
quarter of 2001 and accounted for as a pooling of interests.
Old Kent Chairman, President & CEO David Wagner remarked, "We are
extremely excited about this opportunity to team up with Fifth Third for a
number of reasons. In Fifth Third, with its outstanding performance record, we
have found a partner with whom we can continue to deliver upon our commitment to
create long-term shareholder value. A great deal of time and money has been
spent to build the franchise we have today, and this merger provides us with the
opportunity to continue to build upon the success of the past."
"Merging with Fifth Third gives us the competitive edge we need to
continue to serve the financial needs of both individuals and businesses. Their
size, stability and overall market presence will enhance the types of products
we offer and significantly expand our presence throughout our primary five state
operating region. Old Kent and Fifth Third are two of the most consistently
profitable and growing banks in the Midwest, and we're excited to create such a
strong banking franchise in the attractive growth markets of Michigan and
Illinois."
Wagner continued, "In addition, we believe that Fifth Third's operating
philosophy will benefit our employees, our customers and the communities in
which we operate. Employees and customers alike will be well served by Fifth
Third's long-standing practice of operating with local decision-makers, local
employees and a local Board of Directors."
"Both Old Kent and Fifth Third firmly believe that building stronger
communities builds stronger banks. We have a long history of community
development in our markets, and so does Fifth Third. BLITZ, Fifth Third's
community development program, is funding $9 billion in Building, Lending,
Investments and Technology Zones initiatives throughout our seven-state region,
and we are committed to furthering this aggressive pledge."
Continuing its commitment to growth through strong decentralized
management, Fifth Third will establish Fifth Third Bank, Michigan with three
main banks in Grand Rapids, Detroit and Traverse City. David J. Wagner will
serve as Chairman & CEO of Fifth Third Bank, Michigan and remain in Grand
Rapids. He will become one of three new directors added to Fifth Third Bancorp's
Board of Directors as a result of this transaction. Kevin T. Kabat of Old Kent
will be President, Fifth Third Bank in Grand Rapids; Bradlee F. Stamper,
currently Fifth Third President & CEO in Northern Indiana, will lead Fifth Third
Bank, Chicago; and Robert H. Warrington will serve as President of the Fifth
Third Mortgage Company.
<PAGE>
Following the merger, Fifth Third will continue to be one of the nation's
most solid, highest performing financial institutions, with a diversified source
of income. On a pro forma basis, net income sources will consist of:
retail/community banking, 44 percent; corporate banking, 29 percent;
investment/insurance, 9 percent; data processing, 7 percent; and mortgage
banking, 5 percent. On a pro forma basis for the twelve months ended September
30, 2000, including the effect of anticipated cost savings, the combined company
had return on assets of 1.93 percent; return on average equity of 21.8 percent;
and an efficiency ratio of 42.9 percent.
Due diligence on the transaction has been completed by both parties and
completion of the transaction is subject to normal regulatory approvals and
approval of Fifth Third and Old Kent shareholders. Old Kent has granted Fifth
Third an option to purchase 19.9 percent of its common shares under certain
circumstances.
Fifth Third was advised in this transaction by the investment bank of
Salomon Smith Barney Inc. and the law firm of Cleary, Gottlieb, Steen &
Hamilton. Old Kent was advised by the investment bank of Merrill Lynch and the
law firm of Wachtell, Lipton, Rosen & Katz.
Fifth Third and Old Kent will host a conference call to discuss this
transaction at 9:30 a.m. (Eastern Standard Time) on November 20, 2000.
Investors, analysts and other interested parties may dial into the conference
call at 800-593-7038 for domestic access and 847-619-6820 for international
access. In addition, a slide presentation containing information related to the
transaction is available on Fifth Third's website, at
http://www.53.com/investor/. A replay of the conference call will be available
until November 30, 2000, by dialing 888-843-8954 (passcode: 3163633) for
domestic access and 847-619-6820 (passcode: 6306523043) for international
access.
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. The company has $44 billion in assets,
operates 14 affiliates with 640 full-service Banking Centers, including 117 Bank
Mart(R) locations open seven days a week inside select grocery stores and 1,400
Jeanie(R) ATMs in Ohio, Kentucky, Indiana, Florida, Arizona, Michigan and
Illinois. A leader in e-commerce, Fifth Third was named #1 e-business innovator
by PC WEEK. The financial strength of Fifth Third's affiliate banks continues to
be recognized by rating agencies with deposit ratings of AA- and Aa2 from
Standard & Poor's and Moody's, respectively. Additionally, Fifth Third Bancorp
continues to maintain the highest short-term ratings available at A-1+ and
Prime-1, and was recently recognized by Moody's with one of the highest senior
debt ratings for any U.S. bank holding company. Fifth Third operates four main
businesses: Retail, Commercial, Investment Advisors and Midwest Payment Systems,
the Bank's data processing subsidiary. Investor information and press releases
can be viewed at http://www.53.com; press releases are also available by fax at
no charge by calling 800-758-5804, identification number 281775. The company's
common stock is traded in the over-the-counter market through the NASDAQ
National Market System under the symbol "FITB."
* * * * *
THIS DOCUMENT CONTAINS OR MAY CONTAIN FORWARD-LOOKING STATEMENTS ABOUT
FIFTH THIRD BANCORP, OLD KENT AND THE COMBINED COMPANY WHICH WE BELIEVE ARE
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THIS
DOCUMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE
FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE
PERFORMANCE AND BUSINESS OF
<PAGE>
FIFTH THIRD BANCORP, INCLUDING STATEMENTS PRECEDED BY, FOLLOWED BY OR THAT
INCLUDE THE WORDS "BELIEVES," "EXPECTS," "ANTICIPATES" OR SIMILAR EXPRESSIONS.
THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. THERE
ARE A NUMBER OF IMPORTANT FACTORS THAT COULD CAUSE FUTURE RESULTS TO DIFFER
MATERIALLY FROM HISTORICAL PERFORMANCE AND THESE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO: (1)
COMPETITIVE PRESSURES AMONG DEPOSITORY INSTITUTIONS INCREASE SIGNIFICANTLY; (2)
CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE INTEREST MARGINS; (3) PREPAYMENT
SPEEDS, LOAN SALE VOLUMES, CHARGE-OFFS AND LOAN LOSS PROVISIONS; (4) GENERAL
ECONOMIC CONDITIONS, EITHER NATIONAL OR IN THE STATES IN WHICH FIFTH THIRD
BANCORP DOES BUSINESS, ARE LESS FAVORABLE THAN EXPECTED; (5) LEGISLATIVE OR
REGULATORY CHANGES ADVERSELY AFFECT THE BUSINESSES IN WHICH FIFTH THIRD BANCORP
IS ENGAGED; AND (6) CHANGES IN THE SECURITIES MARKETS. FURTHER INFORMATION ON
OTHER FACTORS WHICH COULD EFFECT THE FINANCIAL RESULTS OF FIFTH THIRD BANCORP
AFTER THE MERGER ARE INCLUDED IN FIFTH THIRD BANCORP'S AND OLD KENT'S FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE DOCUMENTS ARE AVAILABLE FREE
OF CHARGE AT THE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV AND/OR FROM FIFTH
THIRD BANCORP OR OLD KENT.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY
STATEMENT/PROSPECTUS REGARDING THE TRANSACTIONS REFERENCED IN THIS DOCUMENT WHEN
IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. THE PROXY
STATEMENT/PROSPECTUS WILL BE FILED WITH THE COMMISSION BY FIFTH THIRD BANCORP
AND OLD KENT. SECURITY HOLDERS MAY RECEIVE A FREE COPY OF THE PROXY
STATEMENT/PROSPECTUS (WHEN AVAILABLE) AND OTHER RELATED DOCUMENTS FILED BY FIFTH
THIRD BANCORP AND OLD KENT AT THE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV
AND/OR FROM FIFTH THIRD BANCORP OR OLD KENT.
OLD KENT AND ITS EXECUTIVE OFFICERS AND DIRECTORS MAY BE DEEMED TO BE
PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM STOCKHOLDERS OF OLD KENT WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT. INFORMATION
REGARDING SUCH OFFICERS AND DIRECTORS IS INCLUDED IN OLD KENT'S PROXY STATEMENT
FOR ITS 2000 ANNUAL MEETING OF SHAREHOLDERS FILED WITH THE COMMISSION ON
FEBRUARY 25, 2000. THIS DOCUMENT IS AVAILABLE FREE OF CHARGE AT THE COMMISSION'S
WEBSITE AT HTTP://WWW.SEC.GOV AND/OR FROM OLD KENT.
FIFTH THIRD BANCORP AND ITS EXECUTIVE OFFICERS AND DIRECTORS MAY BE DEEMED
TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM STOCKHOLDERS OF FIFTH
THIRD BANCORP WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT. INFORMATION REGARDING SUCH OFFICERS AND DIRECTORS IS INCLUDED IN
FIFTH THIRD BANCORP'S PROXY STATEMENT FOR ITS 2000 ANNUAL MEETING OF
SHAREHOLDERS FILED WITH THE COMMISSION ON FEBRUARY 9, 2000. THIS DOCUMENT IS
AVAILABLE FREE OF CHARGE AT THE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV
AND/OR FROM FIFTH THIRD BANCORP.
# # #
<PAGE>
The following is a joint presentation given by officers of the Company and Fifth
Third Bancorp to analysts and investors on November 20, 2000:
<PAGE>
FIFTH THIRD BANCORP
[FIFTH THIRD BANK LOGO]
----------------------------------------
ACQUISITION OF
OLD KENT FINANCIAL CORPORATION
[OLD KENT LOGO]
NOVEMBER 20, 2000
<PAGE>
Forward-Looking Statement
--------------------------------------------------------------------------------
This document contains forward-looking statements about Fifth Third Bancorp
("Fifth Third" or "FITB"), Old Kent Financial Corporation ("Old Kent" or "OK")
and the combined company which we believe are within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are made in
connection to the financial condition, results of operations, plans, objectives,
future performance and business of Fifth Third and/or the combined company.
These forward-looking statements involve certain risks and uncertainties. There
are a number of important factors that could cause future results to differ
materially from historical performance and these forward-looking statements.
Factors that might cause such a difference include, but are not limited to:
(1) competitive pressures among depository institutions increase significantly;
(2) changes in the interest rate environment reduce interest margins;
(3) prepayment speeds, loan sale volumes, charge-offs and loan loss provisions;
(4) general economic conditions, either national or in the states in which Fifth
Third and Old Kent do business, are less favorable than expected;
(5) legislative or regulatory changes adversely affect the business in which
Fifth Third and Old Kent are engaged; and (6) changes in the securities markets.
Further information on other factors which could effect the financial results of
Fifth Third after the merger are included in Fifth Third's and Old Kent's
filings with the SEC. These documents are available free of charge at the SEC's
website at http://www.sec.gov and/or from Fifth Third or Old Kent.
2
<PAGE>
Disclosure
--------------------------------------------------------------------------------
Investors and security holders are advised to read the proxy
statement/prospectus regarding the transactions referenced in this document when
it becomes available, because it will contain important information. The proxy
statement/prospectus will be filed with the Securities and Exchange Commission
by Fifth Third and Old Kent. Security holders may receive a free copy of the
proxy statement/prospectus (when available) and other related documents filed by
Fifth Third and Old Kent at the Securities and Exchange Commission's website at
http://www.sec.gov and/or from Fifth Third or Old Kent.
Old Kent and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of Old Kent with
respect to the transactions contemplated by the merger agreement. Information
regarding such officers and directors is included in Old Kent's proxy statement
for its 2000 Annual Meeting of shareholders filed with the Commission on
February 25, 2000. This document is available free of charge at the Commission's
website at http://www.sec.gov and/or from Old Kent.
Fifth Third and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of Fifth Third
with respect to the transactions contemplated by the merger agreement.
Information regarding such officers and directors is included in Fifth Third's
proxy statement for its 2000 Annual Meeting of shareholders filed with the
Commission on February 9, 2000. This document is available free of charge at the
Commission's website at http://www.sec.gov and/or from Fifth Third.
3
<PAGE>
--------------------------------------------------------------------------------
TRANSACTION SUMMARY
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4
<PAGE>
Transaction Summary
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Exchange Ratio: 0.74 FIFTH THIRD SHARES PER OLD KENT SHARE
Price per Old Kent Share: $ 35.57 (1)
Transaction Structure: Pooling-of-interests
Tax-free exchange
19.9% Lock-up
Transaction Value: $4.9 billion (2)
Board Representation: 3 Additional Directors to Fifth Third
Bancorp Board
Expected Closing: Second Quarter 2001
Expected Restructuring Charges: $235 million, after-tax
Due Diligence: Completed (including credit, operations and
mortgage)
Required Approvals: Regulatory
Fifth Third Shareholders
Old Kent Shareholders
Management: Significant roles for Old Kent Management
(1) Based on FITB closing price of $48.0625 on November 17, 2000.
(2) Based on 138.3 million average fully diluted shares outstanding for 3Q00.
5
<PAGE>
Transaction Summary
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Transaction Rationale
- Completely consistent with stated strategies
- Expansion into Michigan and Chicago has been a priority
- Acquire significant market share (top 5 position) in 2 new markets
- #2 deposit market share in key MSAs within the 5 states we serve
- Excellent growth opportunity in the highly populated midwestern MSAs
- Attractive Old Kent Trust & Commercial banking platform in new markets
- Management accretive
Financially Attractive
- Immediately accretive, before synergies
- High IRR transaction
- Maintains high net income and revenue growth rates
- No diminution of superior performance measures
- Disciplined pricing
Minimal Risk
- Consistency in credit culture & operating philosophies
- Extremely conservative synergies assumptions - $ and timing
6
<PAGE>
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TRANSACTION RATIONALE
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7
<PAGE>
Transaction Rationale
--------------------------------------------------------------------------------
- Expansion into attractive Michigan & Chicago markets
- Combined franchise achieves a leading position in Michigan
- ranks #3 at 9.4% share with $10.6 billion in deposits
- Michigan is 10th largest deposit market in US, with
$126 billion
- Adds a very strong Chicago franchise
- ranks #5 at 3.6% share with $5.9 billion in deposits
- Enhances Fifth Third's position in Illinois
- ranks #5 at 3.1% share with $6.7 billion in deposits
- Illinois is 4th largest deposit market in US, with $224 billion
- Adds over 1 million customers to Fifth Third franchise
- Incremental franchise area has 16 million potential customers for
Fifth Third
- Achieves in one transaction what would otherwise require several
transactions
N.B. Source: SNL Branch Migration Datasource as of June 30, 1999.
8
<PAGE>
Extension of Franchise
--------------------------------------------------------------------------------
[Graphic depicting the location
of Fifth Third and Old Kent Franchises]
Dollars in billions.
LARGEST MSAS OF
PRO FORMA FRANCHISE
COMBINED COMPANY
-----------------------------------------
RANK DEPOSITS MK. SHARE BRANCHES
-----------------------------------------
Chicago 5 $5,870 3.6% 75
Cincinnati OH-KY-IN 1 5,700 22.1 115
Grand Rapids-Muskegon- 1 4,604 40.0 86
Holland MI
Dayton-Springfield OH 1 2,466 25.3 51
Columbus OH 3 2,420 11.5 62
Cleveland-Lorain-Elyria OH 6 2,075 4.5 62
Toledo OH 1 1,848 26.0 34
Detroit MI 8 1,689 2.8 60
Evansville-Henderson IN-KY 2 1,448 33.6 31
Indianapolis IN 3 1,437 7.3 52
Source: SNL Branch Migration Database as of June 30, 1999.
NB -combined FITB / OK data pre-divestiture (if required).
9
<PAGE>
Unique Consolidation Opportunity
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- ACHIEVES IN ONE TRANSACTION WHAT WOULD OTHERWISE REQUIRE SEVERAL TRANSACTIONS
- ADDS SIGNIFICANT TRUST AND COMMERCIAL BANKING BUSINESSES THAT MAY NOT BE
FULLY DEVELOPED IN OTHER POTENTIAL ACQUISITION OPPORTUNITIES
MICHIGAN MARKET
SHARE
--------------------------------------
1 BANK ONE CORP. 15.9%
2 COMERICA INC. 14.2
--------------------------------------
| 3 FITB / OK 9.4 |
--------------------------------------
4 NATIONAL CITY CORP. 8.9
5 ABN AMRO 8.2
6 MICHIGAN NATIONAL 7.2
7 HUNTINGTON BANCSHARES 4.2
8 CITIZENS BANKING CORP. 3.5
9 CHARTER ONE FINANCIAL 3.2
10 CHEMICAL FINANCIAL 3.2
CHICAGO MSA MARKET
SHARE
--------------------------------------
1 BANK ONE CORP. 17.5 %
2 ABN AMRO 14.4
3 BANK OF MONTREAL 5.1
4 NORTHERN TRUST CORP. 5.1
--------------------------------------
| 5 FITB / OK 3.6 |
--------------------------------------
6 CITIGROUP INC. 2.6
7 CHARTER ONE FINANCIAL 2.3
8 FIRST MIDWEST BANCORP 2.1
9 BANK OF AMERICA CORP. 2.1
10 MAF BANCORP INC. 1.8
Source: SNL Branch Migration Database as of June 30, 1999.
NB -combined FITB / OK data pre-divestiture (if required).
10
<PAGE>
Significant Presence and Upside for Growth
--------------------------------------------------------------------------------
- Only 1 out of 16 possible households is a Fifth Third customer
- Best major-MSA concentration
- Familiar Fifth Third competitors
- Fragmented market
INDIANA
Population 5.9 million
National Rank 14th
DEPOSITS BRANCHES MARKET SHARE
-----------------------------------
1. Bank One Corp $12,333 219 17.5%
2. National City Corp. 7,053 202 10.0
------------------------------------------------------------
3. FITB / OK 5,386 162 7.7
------------------------------------------------------------
4 Old National Bancorp 4,270 104 6.1
5. 1st Source Corp. 2,182 44 3.1
OHIO
Population 11.2 million
National Rank 7th
DEPOSITS BRANCHES MARKET SHARE
-----------------------------------
1. Key Corp $18,953 225 12.1%
------------------------------------------------------------
2. Fifth Third 16,408 378 10.5
------------------------------------------------------------
3. National City Corp. 15,624 349 10.0
4. Bank One Corp. 15,168 276 9.7
5. US Bancorp 9,034 307 5.8
ILLINOIS
Population 12.1 million
National Rank 5th
DEPOSITS BRANCHES MARKET SHARE
-----------------------------------
1. Bank One Corp $30,166 244 13.8%
2. ABN AMRO 23,260 122 10.6
3. Bank of Montreal 15,813 134 7.2
4. Northern Trust Corp. 8,285 17 3.8
------------------------------------------------------------
5. FITB / OK 6,718 94 3.1
------------------------------------------------------------
KENTUCKY
Population 4.0 million
National Rank 25th
DEPOSITS BRANCHES MARKET SHARE
-----------------------------------
1. National City $4,549 114 9.4%
2. US Bancorp 4,036 134 8.4
3. Bank One 3,995 68 8.3
4. PNC Bank 3,322 56 6.9
------------------------------------------------------------
5. Fifth Third 2,589 97 5.4
------------------------------------------------------------
MICHIGAN
Population 9.8 million
National Rank 8th
DEPOSITS BRANCHES MARKET SHARE
-----------------------------------
1. Bank One Corp $18,008 259 15.9%
2. Comerica Inc. 16,053 251 14.2
------------------------------------------------------------
3. FITB / OK 10,604 269 9.4
------------------------------------------------------------
4. National City Corp. 10,040 275 8.9
5. ABN AMRO 9,268 151 8.2
Source: SNL Branch Migration Database as of June 30, 1999.
NB -combined FITB / OK data pre-divestiture (if required).
11
<PAGE>
Similar Market Territory
--------------------------------------------------------------------------------
TOP 10 STATES FOR BUSINESS EXPANSION IN 1999:
NEW / EXPANDED FACILITIES
+ 1. MICHIGAN....................2,174
2. CALIFORNIA..................2,137
+ 3. OHIO........................1,141
4. TEXAS.........................939
5. NEW YORK......................934
+ 6. ILLINOIS......................872
7. NORTH CAROLINA................793
8. MINNESOTA.....................435
9. PENNSYLVANIA..................386
10. VIRGINIA......................357
NEW MANUFACTURING PLANTS
1. CALIFORNIA....................432
+ 2. MICHIGAN......................296
+ 3. OHIO..........................200
+ 4. ILLINOIS......................168
5. TEXAS.........................137
6. NEW YORK .....................117
7. NORTH CAROLINA................110
8. VIRGINIA.......................87
9. PENNSYLVANIA...................76
10. MINNESOTA......................72
TOP 3 METROPOLITAN AREAS FOR TOTAL FACILITIES
+ 1. DETROIT
+ 2. CHICAGO
3. ORANGE COUNTY
Source: Site Selection Magazine's "Top 10" States.
12
<PAGE>
Transaction Rationale
--------------------------------------------------------------------------------
+ COMPLETELY CONSISTENT WITH STATED FIFTH THIRD STRATEGY
- Consistent Markets and Demographics
- Consistent Credit and Operating Philosophy
- Consistent Business Lines
- Builds on Fifth Third's Decentralized Affiliate Bank Structure
- Compatible Risk Philosophy
13
<PAGE>
Expands Revenue Potential
--------------------------------------------------------------------------------
+ CORE BUSINESSES COMPLIMENTED BY OTHER BUSINESS EXPERTISE
FIFTH THIRD OLD KENT
MID-SIZED BUSINESS BANKING SMALL & MIDDLE-MARKET
RETAIL BANKING BUSINESS BANKING
WEALTH MANAGEMENT <--- RETAIL BANKING
- TRUST AUM $22.2B ---> WEALTH MANAGEMENT
- MUTUAL FUNDS $5.3B - TRUST AUM $11.9B
- MUTUAL FUNDS $6.5B
DEPOSIT GENERATION ---> LOCAL MANAGEMENT TALENT
ROBUST FEE INCOME GROWTH HIGH CUSTOMER AFFINITY
MERCHANT PROCESSING <---
EFT PROCESSING
14
<PAGE>
Uninterrupted Growth Story
--------------------------------------------------------------------------------
+ FIFTH THIRD AND OLD KENT COMBINED WILL CONTINUE TO GENERATE HIGH REVENUE
GROWTH RATES
+ SOURCES OF REVENUE GROWTH:
ATTRACTIVE NEW MARKETS FOR FIFTH THIRD PRODUCTS:
- Duplicate FITB's deposit campaign successes in new markets
- Sell MPS' e-commerce solutions in new markets
- Enrich Commercial and Investment Advisory revenue mix
ACHIEVING FITB RESULTS ON OK'S DEPOSIT BASE IS A $48 MILLION PER YEAR
REVENUE OPPORTUNITY:
- Improve Old Kent's fee income to net revenue ratio*:
FITB = 38%; OK = 26%
- Ratio of deposit fee revenue to core deposits:
FITB = 1.54%; OK = 0.97%
* Ratios calculated exclusing mortgage banking fees
15
<PAGE>
--------------------------------------------------------------------------------
FINANCIALLY ATTRACTIVE
--------------------------------------------------------------------------------
16
<PAGE>
Consistent Shareholder M&A Focus
--------------------------------------------------------------------------------
+ IMMEDIATELY ACCRETIVE TO EPS, BEFORE COST SAVINGS:
Estimated
EPS Accretion
-------------
2001 No Synergies 9.4%
2001 with Phased-in Synergies (a) 11.3
2002 with Phased-in Synergies (a) 12.5
+ CONSERVATIVE, IDENTIFIABLE AND READILY ACHIEVABLE COST SAVINGS
Only 20% of Old Kent overhead
Realistic Savings Timetable: 25% in `01 75% in `02 and 100% in `03
Goal: - Protect and grow revenues
- Positioned to roll-out typical Fifth Third enhancement programs
+ IRR WELL ABOVE COST OF CAPITAL WITH CONSERVATIVE ASSUMPTIONS
(a) Assumes cost savings equal to 20% of Old Kent's controllable non-interest
expenses phased-in at 25% in 2001 and 75% in 2002.
17
<PAGE>
Consistent Shareholder M&A Focus
--------------------------------------------------------------------------------
+ NO REVENUE ENHANCEMENTS ASSUMED, BUT LONG STANDING TRACK RECORD OF IMPROVING
PERFORMANCE AND REVENUE
+ SIGNIFICANT POTENTIAL FOR REVENUE AND PRODUCTIVITY IMPROVEMENTS
Fifth Third Old Kent
----------- --------
- Net income per FTE $76.4k $35.6k
- Net revenue per FTE $226k $141k
- Earning assets per FTE $3.7m $2.2m
- Efficiency ratio 41.3% 56.6%
+ DEMONSTRATED PERFORMANCE WITH CNB ACQUISITION
- Net income per FTE at announcement (6/99) $35.0k
- Consol. Indiana NI per FTE - Q3 2000 $77.8k
18
<PAGE>
Disciplined Pricing
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FITB/OK Selected (3)
Fifth Third Transaction Multiples Transaction Multiples Peer
Multiples Absolute Relative (2) Absolute Relative (2) Market (4)
<S> <C> <C> <C> <C> <C> <C>
PRICE AS A MULTIPLE OF:
LTM EPS 26.9x 15.7x 58.5% 14.8x 91.3% 16.0x
2001E EPS 22.0 14.2 64.5 13.2 100.5 13.3
2001E EPS
Adj. for Synergies (1) 22.0 11.2 51.0 11.8 77.3 --
Book Value 4.43 2.88 65.0 2.34 70.6 2.46
Tangible Book Value 4.93 3.12 63.3 2.69 69.0 2.83
Pro Forma Target Ownership 18% 16%
(1) Assumes synergies are fully phased-in in 2001.
(2) Represents transaction multiple as a percentage of Fifth Third multiple.
(3) Median of the following transactions: CMA/IMP, FSR/USB, FBF/SUB, MTB/KSTN,
WFC/FSCO, NCBC/CCB, BBT/OV, FITB/BNK, FSR/MTL, FBF/BKB.
(4) High Performing Bank Peer Group median include: MI, MRBK, MTB, NCBC, TCB,
ZION.
</TABLE>
19
<PAGE>
Ongoing Superior Performance Measures
--------------------------------------------------------------------------------
PRO FORMA
LTM - 9/00 FIFTH THIRD OLD KENT COMBINED (1)
---------------------------------------------------------------
ROACE 20.0 % 20.7 % 21.8 %
ROAA 1.94 1.47 1.93
Efficiency Ratio (2) 41.3 56.6 42.9
Tangible Common Ratio 8.91 % 6.50 % 8.09 %
Leverage Ratio 9.99 7.24 9.04
(1) LTM 9/30 pro forma combined for ROACE, ROAA and Efficiency Ratio assuming
full 20% of Old Kent controllable non-interest expenses, and excludes
non-recurring items.
(2) LTM 9/30 excludes amortization of intangibles.
20
<PAGE>
FITB Continues to Deliver Industry-Leading Returns
--------------------------------------------------------------------------------
ROE (1)
-------------------------------------------
1 Bank Of New York 26.6%
2 Mellon Financial 25.2
-------------------------------------------
| 3 FITB / OK * 21.8 |
-------------------------------------------
4 Northern Trust Corp. 21.8
5 Comerica 21.4
3 US Bancorp (pro forma) * 21.1
7 PNC Financial Serv. 20.8
8 Synovus Financial 20.0
9 FleetBoston Financial 17.8
10 Bank of America 17.1
ROA
-------------------------------------------
1 Mellon Financial 2.11%
2 Synovus Financial 1.94
-------------------------------------------
| 3 FITB / OK * 1.93 |
-------------------------------------------
4 US Bancorp (pro forma) * 1.89
5 Wells Fargo & Co. 1.86
6 Comerica 1.85
7 Bank Of New York 1.83
8 PNC Financial Serv. 1.78
9 National City Corp. 1.56
10 SunTrust Banks, Inc. 1.44
EFFICIENCY
-------------------------------------------
1 US Bancorp (pro forma) * 42.7%
-------------------------------------------
| 2 FITB / OK * 42.9 |
-------------------------------------------
3 Comerica 46.6
4 Bank Of New York 49.5
5 Bank of America 51.4
6 Southtrust Corp. 51.4
7 BB&T Corp. 52.2
8 Wachovia Corp. 54.1
9 FleetBoston Financial 55.5
10 National City Corp. 56.9
LT GROWTH
-------------------------------------------
-------------------------------------------
| 1 FITB / OK 16.0%
-------------------------------------------
2 State Street Corp. 15.0
3 Synovus Financial 15.0
4 US Bancorp 14.0
5 Wells Fargo & Co. 13.0
6 Bank Of New York 13.0
7 Mellon Financial 13.0
8 Northern Trust Corp. 13.0
9 FleetBoston Financial 12.0
10 BB&T Corp. 12.0
Data excludes Citigroup and companies that have announced control sales
(1) For U.S. banking institutions with leverage ratio > 6.75%
LT EPS Growth Rate Source: IBES
* 9/30 LTM combined financial data adjusted to reflect 100% of announced cost
savings
21
<PAGE>
Accelerating EPS Growth Accelerating EPS Growth
--------------------------------------------------------------------------------
[BAR GRAPH DEPICTING
FIFTH THIRD STAND ALONE IBES EPS FOR THE FOLLOWING YEARS:
YEAR EPS
----------------
1995 $ 0.88 |
1996 $ 1.03 |
1997 $ 1.17 |--> 16% CAGR
1998 $ 1.40 |
1999 $ 1.61 |
PRO FORMA
YEAR EPS EPS
-----------------------------
2000E $ 1.88 | Post-Transaction: 18+%
2001E $ 2.18 $ 2.43 |--->
2002E $ 2.50 $ 2.81 | Wall Street Estimates: 15% ]
N.B. Fifth Third historical EPS restated for 3:2 stock split.
22
<PAGE>
Midwestern Powerhouse with Superior Performance
--------------------------------------------------------------------------------
Traditional Banking
-------------------
MKT PRICE/ LTM IBES L-T
RANK INSTITUTION CAP 2001E ROE GR. RATE
-------------------------------------------------------------------
1 FIFTH THIRD / OLD KENT $27.9 22.0x 21.9% 16.0%
1 FIFTH THIRD 23.0 22.0 20.0 15.0
2 State Street 21.4 30.4 24.9 15.0
3 Synovus 6.5 20.4 19.9 15.0
4 U.S. Bancorp 31.4 10.2 19.9 14.0
5 Wells Fargo 79.7 15.4 17.7 13.0
6 Bank of New York 41.4 24.8 24.6 13.0
7 Mellon Financial 22.8 19.8 24.9 13.0
8 Northern Trust 19.4 34.8 21.8 13.0
9 Bank of America 72.0 7.0 18.3 12.0
10 J.P. Morgan Chase 77.4 9.5 18.1 12.0
11 FleetBoston 37.1 9.2 19.6 12.0
12 BB&T 13.0 12.6 15.5 12.0
13 SunTrust 14.5 9.8 18.8 11.5
14 OLD KENT 3.5 10.0 20.7 11.0
15 Comerica 9.2 9.7 20.4 10.5
MEDIAN $22.9 14.0x 20.0% 13.0%
Growth Financial Services
-------------------------
MKT PRICE/ IBES L-T
RANK INSTITUTION CAP 2001E GR. RATE
-----------------------------------------------------------
1 Capital One $10.3 18.1x 25.0%
1 Charles Schwab 40.8 38.3 20.0
2 MBNA 31.0 19.7 20.0
3 FIFTH THIRD / OLD KENT 27.9 22.0 16.0
4 State Street 21.4 30.4 15.0
5 Synovus 6.5 20.4 15.0
6 AXA 23.9 19.8 15.0
7 Citigroup 229.5 16.6 15.0
8 Morgan Stanley 78.3 12.4 14.5
9 AIG 225.2 34.8 14.0
10 American Express 74.6 23.9 13.8
11 Northern Trust 19.4 34.8 13.0
12 Bank of New York 41.4 24.8 13.0
13 Mellon 22.8 19.8 13.0
14 Merrill Lynch 51.7 15.8 13.0
15 Goldman Sachs 42.3 13.4 13.0
MEDIAN $35.9 20.1x 14.8%
N.B. Implied pro forma market capitalization does not include sYnergies and
based on announced transaction value.
23
<PAGE>
Selected Growth Companies
--------------------------------------------------------------------------------
[LINE GRAPH DEPICTING THE FOLLOWING DATA:
COMPANY PRICE/ PRICE/2001E TO
2001E 5-YEAR IBES LONG-TERM GROWTH RATE
----------------------------------------------------------------------
Yahoo Inc. 88.4 1.84x
Cisco Sys Inc 52.8 1.62x
Coca Cola Co 35.5 2.54x
GE 35.3 2.36x
Northern Trust 34.8 2.68x
AIG 34.8 2.48x
Pfizer Inc. 33.3 1.59x
Colgate Palmolive 31.1 2.40x
Merck 27.8 2.32x
Pepsico Inc. 27.0 2.07x
Bank of New York 24.8 1.91x
FIFTH THIRD 22.0 1.47x
IBM 20.3 1.57x ]
N.B. Numbers inside bars represent P/2001E to 5-year IBES long-term growth rate.
Numbers above bars represent price to 2001 earnings
24
<PAGE>
--------------------------------------------------------------------------------
CONSISTENTLY EXECUTING CONSISTENTLY EXECUTING
LOW RISK TRANSACTIONS LOW RISK TRANSACTIONS
--------------------------------------------------------------------------------
25
<PAGE>
Low Execution Risk
--------------------------------------------------------------------------------
+ Proven acquisition track record augmented by: Proven acquisition track
record augmented by:
Combination of 2 superior performing banks
Contiguous and similar Midwest markets
Local management teams & traditional affiliate structure
Both institutions on single operating platform
Fifth Third experienced with integrating Old Kent's systems
+ Thoughtful & deliberate approach to merger integration
Conservative assumptions
Realistic timetable (25% in `01....75% in `02....and 100% in `03)
Careful attention to preservation of revenues and growth rates
<TABLE>
<CAPTION>
Previous FITB Transactions
--------------------------
At Announcement Realized
-------------------- -----------------
Old Kent Market Market
Transaction In-Market Extension In-Market Extension
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost Savings as % of 20% 30% 20% >35% >25%
Target Overhead
</TABLE>
26
<PAGE>
Consistency of Culture
--------------------------------------------------------------------------------
+ Both committed to superior financial performance
Fifth Third & Old Kent each have over 25 consecutive years of increased
earnings
+ Commitment to sales culture
+ Top-tier capital ratios and ratings
Tangible Common Ratio -- to remain at 9.00*
Leverage Ratio -- to remain at 10.00*
Ratings -- maintain AA/Aa ratings
+ Both Fifth Third and Old Kent maintain pristine asset quality profiles
* Target ratio at closing
27
<PAGE>
Good Balance: Corporate, Retail & Fee Income Good Balance: Corporate, Retail &
Fee Income
--------------------------------------------------------------------------------
+ Continuity of business mix
+ Diversified sources
+ Core components:
- Corporate Banking
- Retail Banking
- Fee Generating Businesses
[PIE CHART ENTITLED "NET INCOME OLD KENT" DEPICTING THE FOLLOWING DATA
CORPORATE BANKING 23%
RETAIL BANKING 44%
TREASURY/OTHER 17%
MORTGAGE BANKING 6%
INVESTMENT/ INSURANCE 10% ]
[PIE CHART ENTITLED "NET INCOME FIFTH THIRD" DEPICTING THE FOLLOWING DATA
COMMERCIAL BANKING 30%
RETAIL BANKING 49%
DATA PROCESSING 9%
ADVISORY SERVICES 9%
OTHER 3% ]
[PIE CHART ENTITLED "PRO FORMA NET INCOME" DEPICTING THE FOLLOWING DATA
COMMERCIAL BANKING 29%
RETAIL BANKING 44%
DATA PROCESSING 7%
MORTGAGE BANKING 5%
ADVISORY SERVICES 9% ]
N.B. Segment date shown for the nine months ended September 30, 2000
28
<PAGE>
Consistency of High Credit Quality Culture
--------------------------------------------------------------------------------
No borrower or sector concentration issues
Average commercial loan balance = $2.8 m
History of high reserve coverage & low charge-offs
[BAR GRAPH ENTITLED "NPAS/LOANS + LEASES + OREO"
DEPICTING OK AND FITB VALUES AS COMPARED TO THE
LARGE CAP BANK INDEX BETWEEN THE YEARS 1994 AND 2000]
[BAR GRAPH ENTITLED "LOAN LOSS RESERVE/NPAS"
DEPICTING OK AND FITB VALUES AS COMPARED TO THE
LARGE CAP BANK INDEX BETWEEN THE YEARS 1994 AND 2000]
[BAR GRAPH ENTITLED "NET CHARGE-OFFS/AVG LOANS"
DEPICTING OK AND FITB VALUES AS COMPARED TO THE
LARGE CAP BANK INDEX BETWEEN THE YEARS 1994 AND 2000]
29
<PAGE>
Management Management
--------------------------------------------------------------------------------
+ Adds experienced local management to expand Fifth Third's affiliate bank
network
+ Additional product line depth in Investment Advisory, Commercial and
Residential Mortgage
+ Old Kent Management has same shareholder focus
Name Age New Position
---- --- ------------
David J. Wagner 46 Chairman & CEO - Michigan Bank
Robert H. Warrington 53 President - Mortgage Banking Business
Kevin T. Kabat 43 President - Grand Rapids Affiliate
30
<PAGE>
Maintain Decentralized Structure
--------------------------------------------------------------------------------
Fifth Third affiliate bank structure designed to:
Enhance growth
Clear and local sales accountability and communication
All product-lines report to local affiliate CEO
Significant "at-risk" salesperson compensation structure
Local management and boards to best serve customers
Transaction creates 3 new Fifth Third affiliates:
Grand Rapids
Chicago (combined with existing Northern Indiana Fifth Third affiliate)
Detroit
Northern Michigan
31
<PAGE>
FITB Affiliate Banks
--------------------------------------------------------------------------------
+ Old Kent affiliates will represent a significant portion of the combined
franchise
<TABLE>
<CAPTION>
FITB Affiliates Assets Deposits Branches President Years @ 5/3
<S> <C> <C> <C> <C> <C>
Cincinnati $11.7 $8.0 100 G. Schaefer, Jr. 28
Grand Rapids 12.1 7.9 173 K. Kabat -- OK Affiliate (c)
Chicago 8.0 6.7 100 B. Stamper (a) 14 OK Affiliate
Southern Indiana 5.1 2.4 58 J. Daniel (b) 1
Dayton 4.9 2.8 65 D. Sadlier 9
Detroit 3.7 3.0 74 TBD -- OK Affiliate
Columbus 4.1 2.5 59 P. Fehring 20
Toledo 4.1 2.6 44 B. Sullivan (b) 1
Central Indiana 3.9 2.6 82 M. Alley 14
Cleveland 3.7 2.4 75 R. King 24
Northern Michigan 1.5 1.1 21 TBD -- OK Affiliate
Louisville 2.0 1.0 40 J. Gaunt 31
Northern Kentucky 1.3 0.9 28 T. Rawe 24
Arizona 1.0 0.4 11 B. Robert (b) 2
Lexington 1.0 0.4 17 S. Barnes 6
Ohio Valley 1.0 0.6 23 S. Greenlee 10
Florida 0.5 0.3 10 C. Kvetko 12
----------------------------------------------------------------------------------------------
(a) Current Fifth Third executive.
(b) Indicates executives who have joined FITB from acquired institutions.
(c) Includes pending acquisitions.
</TABLE>
32
<PAGE>
Record of Successful Acquisition Integration
--------------------------------------------------------------------------------
+ Proven ability to improve target profitability
+ Fifth Third has always delivered on acquisition promises
--------------------------------------------------------------------------------
| Affiliate Year ROA at 2000 % of
Acquired Purchase ROA Market Cap
--------------------------------------------------------------------------------
Central Indiana (CNB Bancshares) 1999 1.38% 1.75% )
Southern Indiana ( " " ) 1999 1.42 1.50 |> 9.9%
Northern Indiana ( " " ) 1999 1.00 1.33 )
Western Ohio (CitFed*) 1998 0.87 1.64 4.7
Columbus, Ohio (State SB*) 1998 1.26 2.08 5.4
Louisville, Kentucky (Cumberland*) 1994 0.85 1.62 4.1
Northwestern Ohio 1989 0.97 2.18 20.1
* Thrift Institution
33
<PAGE>
Perspective on Deal Size
--------------------------------------------------------------------------------
+ No dimunition of FITB culture, OK easily assimilated
+ Fifth Third's most recent acquisition (CNB) is fully integrated and
performing at FITB performance levels
+ As compared to many recent bank M&A transactions:
Low deal value as % of market capitalization
Lower year 1 phased-in cost savings assumptions
Strong financial position affords Fifth Third the opportunity to
preserve revenues and growth rates
+ IRR estimate exceeds previous Fifth Third transaction IRRs
34
<PAGE>
Linking Share Ownership to Behavior
--------------------------------------------------------------------------------
Implementation of Fifth Third's incentive programs
Key components
- Performance based incentive compensation
- Variable bonus level tied to high performance targets
- All front-line managers have and will continue to participate in Fifth
Third option grant program
- Significant personal investment by Fifth Third team in FITB stock
- Old Kent executives will have significant ownership as well
Share Ownership mindset:
FITB OK
---- --
- % of Employees Owning Shares 77% 33%
- # of Officers Receiving Options 2,250 1,750
- % ownership by Employees & Directors 9.7% 6.5%
35
<PAGE>
--------------------------------------------------------------------------------
PRO FORMA FINANCIAL IMPACT
--------------------------------------------------------------------------------
36
<PAGE>
Immediately Accretive to EPS
--------------------------------------------------------------------------------
Dollars in millions, except per share amounts.
PROJECTED NET INCOME 2001 2002
----------------------------- -------- --------
Fifth Third $1,038 $1,190
Old Kent 346 373
-------- --------
Pro Forma Combined $1,384 $1,563
After Tax Cost Savings 23 69
-------- --------
Pro Forma Earnings $1,407 $1,632
Average diluted shares O/S (millions) 580 580
Pro Forma EPS $2.43 $2.81
Fifth Third Stand-Alone EPS 2.18 2.50
----------------------------------------------------------------------
EPS ACCRETION EPS ACCRETION 11.3% 12.5%
----------------------------------------------------------------------
N.B. Earnings based on mean IBES estimates as of November 16, 2000 and
9/30/00 average FD shares outstanding.
(1) Assumes synergies are 25% realized in 2001, and 75% in 2002,
and 100% thereafter.
(2) Pro forma.
37
<PAGE>
Conservative Cost Savings
--------------------------------------------------------------------------------
Dollars in millions.
OLD KENT COST % OF
LTM TAKEOUT OLD KENT
---------------------------------------------------------------------------
Salaries & Benefits $377 $95 25%
Occupancy & Equipment 110 16 14
Other 224 31 14
------ ------ ------
TOTAL $711 $142 20%
Taxes (50)
------
Cost Takeouts (After-Tax) $92
------
------
N.B. Synergies are expected to be realized 25% in 2001, 75% in 2002,
and 100% thereafter.
(1) Excludes amortization of intagibles and non-recurring expenses.
38
<PAGE>
Merger Related Charges
--------------------------------------------------------------------------------
Dollars in millions.
Employee-related Costs $77
Conversion Costs 50
Duplicate Facilities / Equipment 39
Conforming Policies / Balance Sheet 80
Other 58
----------
TOTAL (PRE-TAX) $304
----------
----------
TOTAL (AFTER-TAX) $235
----------
----------
(1) Approximately equally divided between conforming credit adjustments
and balance sheet items.
(2) Effective tax rate reflects impact of nondeductible items.
39
<PAGE>
Transaction Summary Transaction Summary
--------------------------------------------------------------------------------
- GOOD FIT WITH FIFTH THIRD EXISTING BUSINESS
- ENHANCES REVENUE GROWTH POTENTIAL
- FINANCIALLY COMPELLING - OVERALL AND ON A PER SHARE BASIS
- LOW EXECUTION RISK
- EXAMPLE OF FIFTH THIRD FINANCIAL STRENGTH AND VALUATION PROVIDING
FLEXIBILITY TO ACQUIRE ATTRACTIVE BUSINESSES
40
<PAGE>
--------------------------------------------------------------------------------
APPENDIX
--------------------------------------------------------------------------------
41
<PAGE>
Combined Balance Sheet
--------------------------------------------------------------------------------
Dollars in millions.
FIFTH THIRD OLD KENT PRO FORMA
----------------------------------------------------------------------------
Cash & Securities $15,872 $4,660 $20,532
Gross Loans 26,299 15,617 41,916
Allowance for Loan Losses (384) (224) (608)
Other Assets 2,609 2,466 5,075
----------- ----------- -----------
Total Assets $44,396 $22,519 $66,915
----------- ----------- -----------
----------- ----------- -----------
Deposits $25,474 $16,758 $42,232
Other Liabilities 14,313 4,059 18,372
Capital Securities 173 100 273
Total Equity 4,436 1,602 6,038
----------- ----------- -----------
Total Liabilities & Equity $44,396 $22,519 $66,915
----------- ----------- -----------
----------- ----------- -----------
N.B. Financial data as of September 30, 2000
42
<PAGE>
Loan Comparison
--------------------------------------------------------------------------------
Dollars in millions.
FIFTH THIRD OLD KENT PRO FORMA
LOANS % LOANS % LOANS %
----------------------------------------------------------------------------
Commercial & Industrial $8,665 33% $4,277 27% $12,942 31%
Commercial Real Estate 2,878 11 3,190 20 6,068 14
Construction 1,220 4 1,644 11 2,864 7
Residential Real Estate 5,238 20 1,328 9 6,566 16
Consumer 8,298 32 5,178 33 13,476 32
----- ----- ----- ----- ----- -----
TOTAL $26,299 100% $15,617 100% $41,916 100%
Yield 8.47% 9.03% 8.67%
N.B. Financial data as of September 30, 2000.
43
<PAGE>
Deposit Comparison
--------------------------------------------------------------------------------
Dollars in millions.
FIFTH THIRD OLD KENT PRO FORMA
DEPOSITS % DEPOSITS % DEPOSITS %
----------------------------------------------------------------------------
Demand Deposits $4,041 16% $2,239 13% $6,280 15%
Int.-bearing Transaction 9,863 39 6,145 37 16,008 38
Time & Foreign 11,570 45 8,374 50 19,944 47
------ ------ ------ ------ ------ ------
TOTAL $25,474 100.0% $16,758 100% $42,232 100.0%
Rate 4.03% 4.28% 4.12%
N.B. Financial data as of September 30, 2000.
44
<PAGE>
Noninterest Income Comparison
--------------------------------------------------------------------------------
Dollars in millions.
FIFTH THIRD OLD KENT PRO FORMA
AMOUNT % AMOUNT % AMOUNT %
----------------------------------------------------------------------------
Investment Advisory $195 20% $85 19% $280 20%
Insurance --- --- 24 5 24 2
Data Processing 224 23 --- --- 224 16
Service Charges on Deposits 207 21 81 18 288 20
Mortgage Banking 82 8 183 40 265 18
Other 260 28 82 18 342 24
Securities Gains 2 --- --- --- 2 ---
----- ----- ----- ----- ----- -----
TOTAL $970 100% $455 100% $1,425 100%
N.B. Financial data is for the twelve months ended September 20, 2000.
45
<PAGE>
Credit Quality
--------------------------------------------------------------------------------
FIFTH THIRD OLD KENT PRO FORMA
----------------------------------------------------------------------------
Allowance/Loans + Leases 1.48% 1.43% 1.47%
Net Charge-offs/
Average Loans + Leases 0.28 0.25 0.27
NPA's/Loans + Leases + OREO 0.65 0.75 0.69
Allowance/Non-performing Assets 228 190 213
N.B. Non-performing assets include loans + leases 90 or more days past due
still accruing.
Financial data as of September 30, 2000.
46
