CINCINNATI, Oct. 28 /PRNewswire-FirstCall/ -- Fifth Third Bancorp (Nasdaq:
FITB) today announced its participation in the U.S. Department of the
Treasury's voluntary Capital Purchase Program ("CPP" or "Program").
We were notified on October 28, 2008, that the Treasury intends to invest
approximately $3.45 billion in senior preferred stock and related warrants of
Fifth Third Bancorp under the terms of the program. The anticipated sale of
the preferred stock and warrants is subject to standard closing conditions and
execution of definitive agreements, which have not yet been published.
The Treasury has announced plans to purchase up to $250 billion of senior
preferred shares on a voluntary basis in healthy U.S. financial institutions,
as part of its efforts to provide a firmer capital foundation for financial
firms and to increase credit availability to consumers and businesses. Nine
institutions participated initially in this plan and a number of others have
subsequently announced their participation. We expect many additional
institutions to also avail themselves of this program.
"This investment significantly enhances Fifth Third's already strong
capital position," said Kevin T. Kabat, chairman, president and chief
executive officer of Fifth Third Bancorp. "The additional capital increases
our capacity to provide additional credit to businesses and consumers in our
markets and to further assist struggling borrowers. It also adds to our
flexibility in considering strategic opportunities that become available as
the industry undergoes change. Finally, in accordance with our capital plan,
it generates additional capital above our capital targets to provide for
potential negative effects of a challenging and uncertain economic outlook."
In June, Fifth Third announced a capital plan that included, among other
elements, raising its capital ratios targets - including a targeted Tier 1
ratio of 8 to 9 percent. As of September 30, 2008, our capital ratios were
within target ranges and significantly above "well-capitalized" regulatory
levels. The current investment, on a pro forma basis, would have increased our
Tier 1 capital ratio on that date to approximately 11.5 percent from 8.5
percent; our Total capital ratio to 15.3 percent from 12.3 percent; and our
ratio of tangible equity and tangible assets to 9.3 percent from 6.2 percent.
Included within tangible equity is $1.1 billion of preferred stock issued in
June that is convertible into common equity.
As part of our capital plan, we anticipated the sale of non-core assets
that would generate an additional $1 billion or more in capital to provide for
the possibility of a difficult 2009. Upon the Treasury's announcement of the
CPP, we indicated that as we evaluated participation in the CPP, we would
reevaluate our plans and activities with respect to pursuing a current sale of
non-core assets as part of our capital plan. The CPP investment provides
capital in excess of our previous planned levels, on terms we believe are
favorable to our investors. As a result, while we will continue to evaluate
our businesses from a strategic planning perspective, the sale of non-core
assets is no longer a part of our near-term capital planning.
"We continue to own outstanding businesses that have significant value, a
large portion of which is not reflected in our reported common equity and
capital ratios," said Kabat. "This is a source of significant flexibility as
we evaluate future opportunities for value creation that may present
themselves in a changing financial services landscape. We'll continue to make
our strategic decisions in the context of what's best for our shareholders and
other investors and our customers."
The Treasury's investment consists of senior preferred stock with a five
percent dividend for each of the first five years of the investment, and nine
percent thereafter, unless the shares are redeemed. The shares are callable at
par after three years and may be repurchased at any time under certain
conditions. The Treasury will also receive 10-year warrants for common stock
in the amount of 15 percent of the preferred stock investment. A summary of
the CPP can be found on the Treasury's web site at
www.ustreas.gov/initiatives/eesa.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of September 30, 2008, the Company has
$116 billion in assets, operates 18 affiliates with 1,298 full-service Banking
Centers, including 93 Bank Mart(R) locations open seven days a week inside
select grocery stores and 2,329 ATMs in Ohio, Kentucky, Indiana, Michigan,
Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia
and North Carolina. Fifth Third operates five main businesses: Commercial
Banking, Branch Banking, Consumer Lending, Investment Advisors and Fifth Third
Processing Solutions. Fifth Third is among the largest money managers in the
Midwest and, as of September 30, 2008, has $196 billion in assets under care,
of which it managed $30 billion for individuals, corporations and
not-for-profit organizations. Investor information and press releases can be
viewed at www.53.com. Fifth Third's common stock is traded on the NASDAQ(R)
National Global Select Market under the symbol "FITB."
FORWARD-LOOKING STATEMENTS
This report may contain forward-looking statements about Fifth Third
Bancorp within the meaning of Sections 27A of the Securities Act of 1933, as
amended, and Rule 175 promulgated thereunder, and 21E of the Securities
Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that
involve inherent risks and uncertainties. This report may contain certain
forward-looking statements with respect to the financial condition, results of
operations, plans, objectives, future performance and business of Fifth Third
Bancorp including statements preceded by, followed by or that include the
words or phrases such as "believes," "expects," "anticipates," "plans,"
"trend," "objective," "continue," "remain" or similar expressions or future or
conditional verbs such as "will," "would," "should," "could," "might," "can,"
"may" or similar expressions. 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) general economic conditions
and weakening in the economy, specifically the real estate market, either
national or in the states in which Fifth Third, does business, are less
favorable than expected; (2) deteriorating credit quality; (3) political
developments, wars or other hostilities may disrupt or increase volatility in
securities markets or other economic conditions; (4) changes in the interest
rate environment reduce interest margins; (5) prepayment speeds, loan
origination and sale volumes, charge-offs and loan loss provisions; (6) Fifth
Third's ability to maintain required capital levels and adequate sources of
funding and liquidity; (7) changes and trends in capital markets; (8)
competitive pressures among depository institutions increase significantly;
(9) effects of critical accounting policies and judgments; (10) changes in
accounting policies or procedures as may be required by the Financial
Accounting Standards Board or other regulatory agencies; (11) legislative or
regulatory changes or actions, or significant litigation, adversely affect
Fifth Third, or the businesses in which Fifth Third, one is engaged; (12)
ability to maintain favorable ratings from rating agencies; (13) fluctuation
of Fifth Third's stock price; (14) ability to attract and retain key
personnel; (15) ability to receive dividends from its subsidiaries; (16)
potentially dilutive effect of future acquisitions on current shareholders'
ownership of Fifth Third; (17) effects of accounting or financial results of
one or more acquired entities; (18) difficulties in combining the operations
of acquired entities; (19) inability to generate the gains on sale and related
increase in shareholders' equity that it anticipates from the sale of certain
non-core businesses, (20) loss of income from the sale of certain non-core
businesses could have an adverse effect on Fifth Third's earnings and future
growth (21) ability to secure confidential information through the use of
computer systems and telecommunications networks; (22) the impact of
reputational risk created by these developments on such matters as business
generation and retention, funding and liquidity; and (23) the Treasury
providing satisfactory definitive documentation for its purchase of senior
preferred shares and agreement on final terms and conditions. Additional
information concerning factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements
is available in the Bancorp's Annual Report on Form 10-K for the year ended
December 31, 2007, filed with the United States Securities and Exchange
Commission (SEC). Copies of this filing are available at no cost on the SEC's
Web site at www.sec.gov or on the Fifth Third's Web site at www.53.com. Fifth
Third undertakes no obligation to release revisions to these forward-looking
statements or reflect events or circumstances after the date of this report.
