Fifth Third Bank 2001 Annual Report Download - page 27

Notes to Consolidated Financial Statements
FIFTH THIRD BANCORP AND SUBSIDIARIES
25
8. Long-Term Borrowings
A summary of long-term borrowings at December 31:
($ in millions) 2001 2000
Bancorp:
Capital Securities, 8.136%, due 2027 . . . . $ 214.9 200.0
Subsidiaries:
Capital Securities, three month LIBOR
plus .80%, due 2027. . . . . . . . . . . . . . . 100.0 100.0
Subordinated notes,
6.625%, due 2005 . . . . . . . . . . . . . . . . 100.0 100.0
Subordinated notes, 6.75%, due 2005 . . . 248.7 248.5
Subordinated notes, three month LIBOR
plus .75%, due 2005. . . . . . . . . . . . . . . 100.0 100.0
Subordinated notes, years 1-5: 7.75%;
Years 6-10: one month LIBOR plus
1.16%, due 2010 . . . . . . . . . . . . . . . . . 150.0 149.8
Federal Home Loan Bank advances. . . . . . 5,779.9 4,847.9
Securities sold under agreements
to repurchase . . . . . . . . . . . . . . . . . . . . 325.0 304.9
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 14.5
Total long-term borrowings . . . . . . . . . . . $7,029.9 6,065.6
In March 1997, Fifth Third Capital Trust 1 (FTCT1), a
wholly-owned finance subsidiary of the Bancorp, issued 8.136%
Capital Securities due in 2027. The Bancorp has fully and
unconditionally guaranteed all of FTCT1’s obligations under the
Capital Securities. The Capital Securities qualify as Tier 1 capital
for regulatory capital purposes.
In connection with the merger of Old Kent, the Bancorp assumed
three-month LIBOR plus .80% Capital Securities due in 2027
through Old Kent Capital Trust 1 (OKCT1), an indirect wholly
owned finance subsidiary of the Bancorp. The Bancorp has fully and
unconditionally guaranteed all of OKCT1’s obligations under the
Capital Securities. The Capital Securities qualify as Tier 1 capital for
regulatory capital purposes.
The 6.625% Subordinated Notes due in 2005 are unsecured
obligations of a subsidiary bank. Interest is payable semi-annually and
the notes qualify as total capital for regulatory capital purposes.
The 6.75% Subordinated Notes due in 2005 are unsecured
obligations of a subsidiary bank. Interest is payable semi-annually and
the notes qualify as total capital for regulatory capital purposes.
The LIBOR + .75% Subordinated Notes due in 2005 are
unsecured obligations of a subsidiary bank. Interest is payable
quarterly and the notes may also be redeemed on the quarterly
interest payment date. The notes qualify as total capital for
regulatory capital purposes.
The 7.75% (years 1-5); 1 month LIBOR + 1.16% (years 6-10)
Subordinated Notes due 2010 are unsecured obligations of a
subsidiary bank. Interest is payable semi-annually and the notes may
also be redeemed on the semi-annual interest payment date. The
notes qualify as total capital for regulatory capital purposes.
At December 31, 2001, Federal Home Loan Bank advances have
rates ranging from 2.00% to 8.34%, with interest payable monthly.
The advances were secured by certain mortgage loans and securities
totaling $9.7 billion. The advances mature as follows: $422 million in
2002, $372 million in 2003, $247 million in 2004, $1,407 million in
2005, $302 million in 2006 and $3,030 million in 2007 and thereafter.
At December 31, 2001, securities sold under agreements to
repurchase have rates ranging from 5.08% to 5.36%, with interest
payable monthly. The repurchase agreements mature as follows:
$300 million in 2002 and $25 million in 2004.
9. Guaranteed Preferred Beneficial Interests in
Convertible Subordinated Debentures
In connection with the merger of CNB Bancshares, Inc. (CNB), the
Bancorp assumed $172.5 million of trust preferred securities
through CNB Capital Trust I, a Delaware statutory business trust.
Effective December 31, 2001, the Bancorp announced that it would
redeem all of the outstanding 6.0% convertible subordinated
debentures due 2028, thereby causing a redemption of all of the
issued and outstanding 6.0% trust preferred securities. The trust
preferred securities were redeemable at a price of $25 per share plus
accumulated, accrued and unpaid distributions through the
redemption date. Prior to the redemption date the holders of the
trust preferred securities had the option to convert each trust
preferred security for .6401 shares of common stock of the Bancorp
(equivalent to a conversion price of $39.056). The holders elected to
convert all but 2,800 shares of the trust preferred securities into
Bancorp common stock.
10. Minority Interest
During 2001, a subsidiary of the Bancorp issued $425 million of
preferred stock through a private placement. The preferred stock
qualifies as Tier 1 capital for regulatory capital purposes. The
preferred stock will be exchanged for trust preferred securities in
2031 and, in certain circumstances, the preferred stock can be
exchanged for trust preferred securities or cash prior to the
automatic exchange in 2031. Annual dividend returns to the
preferred stock holder are reflected as minority interest expense in
the Consolidated Statements of Income.
11. Income Taxes
The Bancorp and its subsidiaries file a consolidated Federal income
tax return. A summary of applicable income taxes included in the
Consolidated Statements of Income at December 31:
($ in millions) 2001 2000 1999
Current U.S. income taxes . . . . . $264.8 214.3 213.3
State and local income taxes . . . . 31.5 16.5 25.3
Total . . . . . . . . . . . . . . . . . . . . . 296.3 230.8 238.6
Deferred U.S. income taxes
resulting from temporary
differences. . . . . . . . . . . . . . . . 253.7 308.3 268.8
Applicable income taxes . . . . . . . $550.0 539.1 507.4
Deferred income taxes are included in the caption Accrued
Taxes, Interest and Expenses in the Consolidated Balance Sheets
and are comprised of the following temporary differences at
December 31:
($ in millions) 2001 2000
Lease financing . . . . . . . . . . . . . . . . . . . . . . $1,290.4 1,028.1
Reserve for credit losses . . . . . . . . . . . . . . . . ( 247.2) ( 213.4)
Bank premises and equipment . . . . . . . . . . . 25.1 21.4
Net unrealized gains on securities
available-for-sale and hedging instruments . 3.9 14.4
Mortgage servicing and other . . . . . . . . . . . . 122.5 101.0
Total net deferred tax liability. . . . . . . . . . . . $1,194.7 951.5