Fifth Third Bank 2002 Annual Report Download - page 4

2FIFTH THIRD BANCORP AND SUBSIDIARIES
REPORT TO SHAREHOLDERS
Dear Shareholders and Friends,
2002 was another good year for
Fifth Third. Financial results
were driven by outstanding cus-
tomer and deposit growth in all of our
markets, solid revenue growth, and
consistently strong credit quality. Net
income increased by 17 percent on a
comparable basis over 2001 and totaled
$1.63 billion for the full year. I would
like to thank all of our employees for
their hard work, both in maintaining
our high standard of customer service
and in managing the challenges that
come with growth. Some of the
highlights:
●Total revenue increased by 15 per-
cent on double-digit growth in
nearly all of our affiliate markets
despite the challenges of a difficult
year in financial services.
●Our capital ratio improved six percent
to 10.93 percent, representing an
additional $836 million in shareholder
equity and one of the best capitalized
balance sheets in the industry.
Fifth Third Bancorp President and CEO George A. Schaefer, Jr.
●Return on average assets was 2.18
percent and return on average
equity was 19.9 percent on an
expanded capital base, continuing
our long history of high returns and
once again ranking among the best
in the industry.
●Our efficiency ratio improved to
44.9 percent in 2002 from 46.6
percent on a comparable basis in
2001.
●The 2002 dividend of $.98 per
share was an 18 percent increase
over last year’s dividend and an
increase of 40 percent over the 2000
annual dividend.
●In 2002, five affiliates contributed
earnings in excess of $100 million,
with an additional six affiliates
earning more than $50 million for
the full year.
The year was highlighted by deposit
and customer growth stronger than at
any other time in our history and an
across-the-board return to traditional
Fifth Third performance metrics less
than a year after the largest acquisition
Fifth Third has ever undertaken. Our
four primary businesses – Retail and
Commercial Banking, Investment
Advisors and Electronic Payment
Processing – continued to provide
strong results in 2002 with non-
interest income up 18 percent for the
full year. Electronic Payment Proc-
essing once again led the growth with
an annual increase in revenues of 47
percent over last year, or 27 percent
excluding the incremental revenue
addition from the 2001 purchase
acquisition of Universal Companies
(USB), on the addition of several
significant new merchant and
electronic funds transfer (EFT)
customer relationships. Successful sales
of Retail and Commercial deposit
accounts fueled an annual increase in
deposit service revenues of 17 percent
over last year and provided an
important base for the sale of
additional products and services within
these business lines. Investment
Advisors revenues increased 10 percent
on the year despite a difficult equity
market on the strength of double-digit
growth in private banking and retail
brokerage. The credit quality of our
loan portfolio remained stable at levels
among the best in the industry, an area
where some competitors experienced a
great deal of difficulty this year. We
continue to maintain our commitment
to a strong, flexible balance sheet as
evidenced by the full year 2002 capital
ratio of 10.93 percent compared to
10.28 percent in 2001. Overall, we were
extremely pleased with the quality
growth and performance in each of our
markets in 2002.
Over the years, as we have grown from
our base here in Cincinnati by
expanding into adjacent markets, we