ITEM 1. BUSINESS
ORGANIZATION
Registrant was organized in 1974 under the laws of the State of Ohio. It began operations in 1975 upon reorganization of its principal subsidiary, The Fifth Third Bank. The executive offices of the Registrant are located in Cincinnati, Ohio. The Registrant is a multi-bank holding company as defined in the Bank Holding Company Act of 1956, as amended, and is registered as such with the Board of Governors of the Federal Reserve System. The Registrant is also a multi-savings-and-loan holding company and is registered with the Office of Thrift Supervision. Registrant has sixteen wholly-owned subsidiaries: Fifth Third Kentucky Bank Holding Company; The Fifth Third Bank; The Fifth Third Bank of Columbus Ohio; 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 Savings Bank of Northern Ohio, FSB; Fifth Third Bank of Florida; Fifth Third Bank of Northern Kentucky, Inc.; Fifth Third Bank of Kentucky, Inc.; The Fifth Third Savings Bank of Western Kentucky, FSB; Fifth Third Community Development Company; Fifth Third Investment Company; and Fountain Square Insurance Company. Unless the context otherwise indicates the term "Company" as used herein means the Registrant and the term "Bank" means its wholly-owned subsidiary, The Fifth Third Bank.
As of December 31, 1995, the Company's consolidated total assets were $17,052,883,000 and stockholders' equity totalled $1,724,575,000.
The Bank has four wholly-owned subsidiaries: Midwest Payment Systems, Inc.; Fifth Third Securities, Inc.; The Fifth Third Company; and The Fifth Third Leasing Company.
ACQUISITIONS
The Company is the result of mergers and acquisitions over the years involving financial institutions throughout Ohio, Indiana, Kentucky, and Florida. The Company made the following acquisitions during 1995:
On January 20, 1995, the Company acquired Mutual Federal Savings Bank of Miamisburg (Ohio), A Federal Savings Bank, with total assets of approximately $78 million, in a transaction accounted for as a pooling of interests.
On June 23, 1995, the Company purchased approximately $16 million in deposits and the fixed assets of the Lebanon, Ohio branch of Bank One.
On July 21, 1995, the Company acquired Falls Financial, Inc., with consolidated assets of approximately $573 million, and its wholly-owned subsidiary, Falls Savings Bank, FSB ("Falls FSB") in a transaction accounted for as a pooling of interests.
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On September 8, 1995, the Company acquired Bank of Naples (Florida), with total assets of approximately $49 million, in a transaction accounted for as a pooling of interests. Concurrent with this transaction, Fifth Third Trust Co. & Savings Bank, FSB retained the bank charter of Bank of Naples and was renamed Fifth Third Bank of Florida.
On September 22, 1995, the Company purchased the Dayton Division of PNC Bank (Ohio). The offices, with approximately $256 million in deposits and $215 million in assets, were merged into the Bank's branch network.
On November 17, 1995, the Company purchased approximately $118 million in deposits and the fixed assets of several offices of Bank One, Cincinnati.
In August of 1995, the Company entered into a merger agreement with Kentucky Enterprise Bancorp, Inc., with $280 million in assets. In October of 1995 the Company entered into an agreement with NBD Bank (Ohio), a subsidiary of NBD Bancorp, Inc. to acquire 25 offices with deposits of $542 million in Columbus and Dayton. These transactions are expected to be completed in the first quarter of 1996.
On January 19, 1996, the Company purchased approximately $1.4 billion in deposits and the fixed assets of 28 Cleveland-area offices from 1st Nationwide Bank. The acquisition price of the deposits, offices and other fixed assets was approximately $136 million.
COMPETITION
There are hundreds of commercial banks, savings and loans and other financial services providers in Ohio, Kentucky, Indiana, Florida and nationally, which provide strong competition to the Company's banking subsidiaries. As providers of a full range of financial services, these subsidiaries compete with national and state banks, savings and loan associations, securities dealers, brokers, mortgage bankers, finance and insurance companies, and other financial service companies. With respect to data processing services, the Bank's data processing subsidiary, Midwest Payment Systems, Inc., competes with other electronic fund transfer (EFT) service providers such as Deluxe Data Services, EDS and Electronic Payment Systems and other merchant processing providers such as FDR, NPC and FIRST USA.
The earnings of the Company are affected by general economic conditions as well as by the monetary policies of the Federal Reserve Board. Such policies, which include regulating the national supply of bank reserves and bank credit, can have a major effect upon the source and cost of funds and the rates of return earned on loans and investments. The Federal Reserve influences the size and distribution of bank reserves through its open market operations and changes in cash reserve requirements against member bank deposits.
REGULATION AND SUPERVISION
The Company, as a bank holding company, is subject to the restrictions of the Bank Holding Company act of 1956, as amended. This Act provides that the acquisition of control of a bank is subject to the prior approval of the Board of Governors of the Federal Reserve System. The Company is required to obtain the prior approval of the Federal Reserve Board before it can acquire control of more than 5% of the voting shares of another bank. The Act does not permit the Federal Reserve Board to approve an acquisition by the Company, or any of its subsidiaries, of any bank located in a state other than Ohio, unless the acquisition is specifically authorized by the law of the state in which such bank is located. Page 4
On September 29, 1994, the Act was amended by The Interstate Banking and Branch Efficiency Act of 1994 which authorizes interstate bank acquisitions anywhere in the country effective one year after the date of enactment, and interstate branching by acquisition and consolidation effective June 1, 1997, in those states that have not opted out by that date. The impact of this amendment on the Company cannot be measured at this time.
The Company's subsidiary state banks are primarily subject to the laws of the state in which each is located, the Board of Governors of the Federal Reserve System and/or the Federal Deposit Insurance Corporation. The subsidiary bank which is organized under the laws of the United States is primarily subject to regulation by the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The Company, as a savings and loan holding company, and its savings and loan subsidiaries are subject to regulation by the Office of Thrift Supervision.
The Company and its subsidiaries are subject to certain restrictions on intercompany loans and investments. The Company and its subsidiaries are also subject to certain restrictions with respect to engaging in the underwriting and public sale and distribution of securities. In addition, the Company and its subsidiaries are subject to examination at the discretion of supervisory authorities.
The Bank Holding Company Act limits the activities which may be engaged in by the Company and its subsidiaries to ownership of banks and those activities which the Federal Reserve Board has deemed or may in the future find to be so closely related to banking as to be a proper incident thereto.
The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA) provides that a holding company's controlled insured depository institutions are liable for any loss incurred by the Federal Deposit Insurance Corporation in connection with the default of, or any FDIC-assisted transaction involving, an affiliated insured bank or savings association.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the "FDIC Improvement Act") covers a wide expanse of banking regulatory issues. The FDIC Improvement Act deals with the recapitalization of the Bank Insurance Fund, with deposit insurance reform, including requiring the FDIC to establish a risk-based premium assessment system, and with a number of other regulatory and supervisory matters.
EMPLOYEES
As of December 31, 1995, there were no employees of the Company. Subsidiaries of the Company employed 6,432 employees--1,042 were officers and 1,270 were part-time employees.
STATISTICAL INFORMATION
Pages 6 to 12 contain statistical information on the Company and its subsidiaries.
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SECURITIES PORTFOLIO
The securities portfolio as of December 31 for each of the last five years, and the maturity distribution and weighted average yield of securities as of December 31, 1995, are incorporated herein by reference to the securities tables on page 32 of the Company's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
The weighted average yields for the securities portfolio are yields to maturity weighted by the par values of the securities. The weighted average yields on securities exempt from income taxes are computed on a taxable equivalent basis. The taxable equivalent yields are net after-tax yields to maturity divided by the complement of the full corporate tax rate (35%). In order to express yields on a taxable equivalent basis, yields on obligations of states and political subdivisions (municipal securities) have been increased as follows:
Under 1 year 2.48% 1 - 5 years 2.56% 6 - 10 years 2.63% Over 10 years 2.95% Total municipal securities 2.56%
AVERAGE BALANCE SHEETS
The average balance sheets are incorporated herein by reference to Table 1 on pages 28 and 29 of the Company's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
ANALYSIS OF NET INTEREST INCOME AND NET INTEREST INCOME CHANGES
The analysis of net interest income and the analysis of net interest income changes are incorporated herein by reference to Table 1 and Table 2 and the related discussion on pages 28 through 30 of the Company's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
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Reserve for Credit Losses - -------------------------
The reserve for credit losses is established through charges to operations by a provision for credit losses. Loans and leases which are determined to be uncollectible are charged against the reserve and any subsequent recoveries are credited to the reserve. The amount charged to operations is based on several factors. These include the following:
1. Analytical reviews of the credit loss experience in relationship to outstanding loans and leases to determine an adequate reserve for credit losses required for loans and leases at risk. 2. A continuing review of problem or at risk loans and leases and the overall portfolio quality. 3. Regular examinations and appraisals of the loan and lease portfolio conducted by the Bank's examination staff and the banking supervisory authorities. 4. Management's judgement with respect to the current and expected economic conditions and their impact on the existing loan and lease portfolio.
The amount provided for credit losses exceeded actual net charge-offs by $13,101,000 in 1995, $18,306,000 in 1994 and $20,963,000 in 1993.
Management reviews the reserve on a quarterly basis to determine whether additional provisions should be made after considering the factors noted above. Based on these procedures, management is of the opinion that the reserve at December 31, 1995 of $177,388,000 is adequate.
Maturity Distribution of Domestic Certificates of Deposit of $100,000 - --------------------------------------------------------------------- and Over at December 31, 1995 ($000's) --------------------------------------
Three months or less $456,803 Over three months through six months 149,296 Over six months through twelve months 69,059 Over twelve months 29,810 -------- Total certificates - $100,000 and over $704,968 ========
Note: Foreign office deposits are denominated in amounts greater then $100,000.
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Return on Equity and Assets - ---------------------------
The following table presents certain operating ratios:
1995 1994 1993 ------ ------ ------ Return on assets (A) 1.78% 1.77 1.71
Return on equity (B) 18.1% 18.6 17.8
Dividend payout ratio (C) 33.9% 32.3 31.7
Equity to assets ratio (D) 9.82% 9.50 9.61 - ------------------------------------ (A) net income divided by average assets (B) net income divided by average equity (C) dividends declared per share divided by fully diluted net income per share (D) average equity divided by average assets
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ITEM 2.
ITEM 2. PROPERTIES
The Company's executive offices and the main office of the Bank are located on Fountain Square Plaza in downtown Cincinnati, Ohio, located in a 32-story office tower and a 5-story office building and parking garage known as the Fifth Third Center and the William S. Rowe Building, respectively. One of the Bank's subsidiaries owns 100% of these buildings.
The Company, through its subsidiary banks and savings banks, seven located in Ohio, three in Kentucky, one in Indiana and one in Florida, operate 384 banking centers, of which 191 are owned and 193 are leased. The properties owned are free from mortgages and encumbrances.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are not parties to any material legal proceedings other than routine litigation incidental to its business.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to Page 1 of Registrant's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference to page 37 of Registrant's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference to pages 28 through 36 of Registrant's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to pages 15 through 27 and page 37 of Registrant's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item concerning Directors is incorporated herein by reference under the caption "ELECTION OF DIRECTORS" of the Registrant's 1996 Proxy Statement. The names, ages and positions of the Executive Officers of the Company as of January 31, 1996 are listed below along with their business experience during the past 5 years. Officers are appointed annually by the Board of Directors at the meeting of Directors immediately following the Annual Meeting of Stockholders.
CURRENT POSITION and Name and Age Business Experience During Past 5 Years
George A. Schaefer, Jr., 50 PRESIDENT AND CEO. President and Chief Executive Officer of the Company and the Bank since January, 1991. Previously, Mr. Schaefer was President and COO of the Company and the Bank.
George W. Landry, 55 EXECUTIVE VICE PRESIDENT. Executive Vice President of the Company and the Bank.
Stephen J. Schrantz, 47 EXECUTIVE VICE PRESIDENT. Executive Vice President of the Company and the Bank.
Michael D. Baker, 45 EXECUTIVE VICE PRESIDENT. Executive Vice President of the Company and the Bank since August, 1995. Previously, Mr. Baker was Senior Vice President of the Company since March, 1993, and of the Bank.
P. Michael Brumm, 48 EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER. Executive Vice President of the Company and the Bank since August, 1995. Previously, Mr. Brumm was CFO of the Company and the Bank and Senior Vice President of the Bank.
Robert P. Niehaus, 49 EXECUTIVE VICE PRESIDENT. Executive Vice President of the Company and the Bank since August, 1995. Previously, Mr. Niehaus was Senior Vice President of the Company since March, 1993, and Senior Vice President of the Bank.
Michael K. Keating, 40 EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY. Executive Vice President of the Company and the Bank 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 the Bank. Mr. Keating is a son of Mr. William J. Keating, Director.
CURRENT POSITION and Name and Age Business Experience During Past 5 Years
Robert J. King, Jr., 40 SENIOR VICE PRESIDENT. Senior Vice President of the Company since March, 1995, and President and CEO of Fifth Third Bank of Northwestern Ohio, N.A.
James R. Gaunt, 50 SENIOR VICE PRESIDENT. Senior Vice President of the Company since March, 1994, and President and CEO of Fifth Third Bank of Kentucky, Inc. since August, 1994. Previously, Mr. Gaunt was Senior Vice President of the Bank.
Neal E. Arnold, 35 TREASURER. Treasurer of the Company and the Bank, and Senior Vice President of the Bank since April, 1993. Previously, Mr. Arnold was Vice President of the Bank.
Gerald L. Wissel, 39 AUDITOR. Auditor of the Company and the Bank, and Senior Vice President of the Bank since November 1991. Previously, Mr. Wissel was Vice President of the Bank.
Roger W. Dean, 33 CONTROLLER. Controller of the Company and Vice President of the Bank since June, 1993. Previously, Mr. Dean was with Deloitte & Touche LLP, independent public accountants.
Paul L. Reynolds, 34 ASSISTANT SECRETARY. Assistant Secretary of the Company since March, 1995, and Vice President, General Counsel and Assistant Secretary of the Bank since January, 1995. Previously, Mr. Reynolds was Vice President, Counsel and Assistant Secretary of the Bank.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference under the caption "EXECUTIVE COMPENSATION" of the Registrant's 1996 Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference under the captions "CERTAIN BENEFICIAL OWNERS, ELECTION OF DIRECTORS, AND EXECUTIVE COMPENSATION" of the Registrant's 1996 Proxy Statement.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference under the caption "CERTAIN TRANSACTIONS" of the Registrant's 1996 Proxy Statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) Documents Filed as Part of the Report PAGE
1. Index to Financial Statements
Consolidated Statements of Income for the Years Ended December 31, 1995, 1994 and 1993 *
Consolidated Balance Sheets, December 31, 1995 and 1994 *
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1995, 1994 and 1993 *
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 *
Notes to Consolidated Financial Statements *
* Incorporated by reference to pages 15 through 27 of Registrant's 1995 Annual Report to Stockholders attached to this filing as Exhibit 13.
2. Financial Statement Schedules
The schedules for Registrant and its subsidiaries are omitted because of the absence of conditions under which they are required, or because the information is set forth in the consolidated financial statements or the notes thereto.
3. Exhibits
EXHIBIT NO.
3- Amended Articles of Incorporation and Code of Regulations (a)
10(a)- Fifth Third Bancorp Unfunded Deferred Compensation Plan for Non-Employee Directors (b)
10(b)- Fifth Third Bancorp 1990 Stock Option Plan (c)
10(c)- Fifth Third Bancorp 1987 Stock Option Plan (d)
10(d)- Fifth Third Bancorp 1982 Stock Option Plan (e)
10(e)- Fifth Third Bancorp Stock Option Plan for Employees of The Fifth Third Bank of Miami Valley, National Association (f)
10(f)- Fifth Third Bancorp Stock Option Plan for Employees of The Fifth Third Bank of Eastern Indiana (g)
10(g)- Indenture effective November 19, 1992 between Fifth Third Bancorp, Issuer and NBD Bank, N.A., Trustee (h)
10(h)- Fifth Third Bancorp Amended and Restated Stock Option Plan for Employees and Directors of The TriState Bancorp (i)
10(i)- Fifth Third Bancorp 1993 Discount Stock Purchase Plan (j)
10(j)- Fifth Third Bancorp Amended and Restated Stock Incentive Plan for selected Executive Officers, Employees and Directors of The Cumberland Federal Bancorporation, Inc. (k)
10(k)- Fifth Third Bancorp Master Profit Sharing Plan (l)
10(l)- Fifth Third Bancorp Amended and Restated Stock Option and Incentive Plan for Selected Executive Officers, Employees and Directors of Falls Financial, Inc. (m)
11- Computation of Consolidated Net Income Per Share for the Years Ended December 31, 1995, 1994, 1993, 1992 and 1991
13- Fifth Third Bancorp 1995 Annual Report to Stockholders
21- Fifth Third Bancorp Subsidiaries
23- Independent Auditors' Consent
b) Reports on Form 8-K
NONE. ____________________ (a) Incorporated by reference to Registrant's Registration Statement, Exhibits 3.1 and 3.2, on Form S-4, Registration No. 33-19965 which is effective.
(b) Incorporated in this Form 10-K Annual Report by reference to Form 10-K filed for fiscal year ended December 31, 1985.
(c) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 34075, which is effective.
(d) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 13252, which is effective.
(e) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 2-98550, which is effective.
(f) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 20888, which is effective.
(g) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission on November 18, 1992 a Form 8-K Current Report as an exhibit to a Registration Statement on Form S-8, Registration No. 33-30690, which is effective.
(h) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission on November 18, 1992 a Form 8-K Current Report dated November 16, 1992 and as Exhibit 4.1 to a Registration Statement on Form S-3, Registration No. 33-54134, which is effective.
(i) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 51679, which is effective.
(j) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 60474, which is effective.
(k) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 55223, which is effective.
(l) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 55553, which is effective.
(m) Incorporated by reference to Registrant's filing with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form S-8, Registration No. 33- 61149, which is effective.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FIFTH THIRD BANCORP (Registrant)
/s/George A. Schaefer, Jr. February 20, 1996 George A. Schaefer, Jr. President and CEO (Principal Executive Officer)
Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed on February 20, 1996 by the following persons on behalf of the Registrant and in the capacities indicated.
/s/P. Michael Brumm /s/Roger W. Dean P. Michael Brumm Roger W. Dean Executive Vice President and CFO Controller (Chief Financial Officer) (Principal Accounting Officer)
/s/John F. Barrett /s/Michael H. Norris John F. Barrett Ivan W. Gorr Michael H. Norris Director Director Director
/s/Joseph H. Head, Jr. /s/James E. Rogers Milton C. Boesel, Jr.Joseph H. Head, Jr. James E. Rogers Director Director Director
/s/Clement L. Buenger/s/Joan R. Herschede /s/Brian H. Rowe Clement L. Buenger Joan R. Herschede Brian H. Rowe Director Director Director
/s/Gerald V. Dirvin /s/George A. Schaefer, Jr. Gerald V. Dirvin William G. Kagler George A. Schaefer, Jr. Director Director Director
/s/William J. Keating /s/John J. Schiff, Jr. Thomas B. Donnell William J. Keating John J. Schiff, Jr. Director Director Director
/s/James D. Kiggen /s/Dennis J. Sullivan, Jr. Richard T. Farmer James D. Kiggen Dennis J. Sullivan, Jr. Director Director Director
/s/John D. Geary /s/Robert B. Morgan /s/Dudley S. Taft John D. Geary Robert B. Morgan Dudley S. Taft Director Director Director