Fifth Third Bank 2002 Annual Report Download - page 40

Notes to Consolidated Financial Statements
FIFTH THIRD BANCORP AND SUBSIDIARIES
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6.0% trust preferred securities. The holders elected to convert all but
2,800 shares of the trust preferred securities into Bancorp common
stock in December, 2001.
The diluted per share impact of the change in accounting
principle in 2001 related to the adoption of SFAS No. 133 was
$.01. Options to purchase 6.2 million and .6 million shares
outstanding at December 31, 2002 and 2001, respectively, were
not included in the computation of net income per diluted share
because the exercise price of these options was greater than the
average market price of the common shares, and therefore, the effect
would be antidilutive.
24. Fair Value of Financial Instruments
Carrying amounts and estimated fair values for financial instruments
at December 31:
2002
Carrying Fair
($ in millions) Amount Value
Financial Assets —
Cash and due from banks . . . . . . . . . . $ 1,890.8 $ 1,890.8
Securities available-for-sale . . . . . . . . . 25,464.1 25,464.1
Securities held-to-maturity . . . . . . . . . 51.8 51.8
Other short-term investments . . . . . . . 311.9 311.9
Loans held for sale . . . . . . . . . . . . . . . 3,357.5 3,395.2
Loans and leases. . . . . . . . . . . . . . . . . 45,928.1 46,593.7
Accrued income receivable . . . . . . . . . 569.4 569.4
Financial Liabilities —
Deposits . . . . . . . . . . . . . . . . . . . . . . 52,208.4 52,432.9
Federal funds borrowed . . . . . . . . . . . 4,748.5 4,748.5
Other short-term borrowings . . . . . . . 4,074.6 4,063.3
Accrued interest payable . . . . . . . . . . . 127.0 127.0
Long-term debt . . . . . . . . . . . . . . . . . 8,178.7 9,115.0
Financial Instruments —
Commitments to extend credit . . . . . . — 25.1
Letters of credit . . . . . . . . . . . . . . . . . — 35.2
Interest rate swap agreements . . . . . . . 120.2 120.2
Principal only swaps. . . . . . . . . . . . . . 9.6 9.6
Purchased options . . . . . . . . . . . . . . . 37.0 37.0
Forward contracts:
Commitments to sell loans . . . . . . . ( 35.1) ( 35.1)
Foreign exchange contracts:
Commitments to purchase . . . . . . 46.8 46.8
Commitments to sell . . . . . . . . . . ( 37.2) ( 37.2)
2001
Carrying Fair
($ in millions) Amount Value
Financial Assets —
Cash and due from banks . . . . . . . . . . $ 2,031.0 $ 2,031.0
Securities available-for-sale . . . . . . . . . 20,506.6 20,506.6
Securities held-to-maturity . . . . . . . . . 16.4 16.4
Other short-term investments . . . . . . . 224.7 224.7
Loans held for sale . . . . . . . . . . . . . . . 2,180.1 2,184.0
Loans and leases. . . . . . . . . . . . . . . . . 41,547.9 42,812.1
Accrued income receivable . . . . . . . . . 617.9 617.9
Financial Liabilities —
Deposits . . . . . . . . . . . . . . . . . . . . . . 45,854.1 45,905.6
Federal funds borrowed . . . . . . . . . . . 2,543.8 2,543.8
Short-term bank notes . . . . . . . . . . . . 33.9 33.9
Other short-term borrowings . . . . . . . 4,875.0 4,959.6
Accrued interest payable . . . . . . . . . . . 194.6 194.6
Long-term debt . . . . . . . . . . . . . . . . . 7,029.9 7,444.8
Financial Instruments —
Commitments to extend credit . . . . . . — 20.4
Letters of credit . . . . . . . . . . . . . . . . . — 31.0
Interest rate swap agreements . . . . . . . ( 15.1) ( 15.1)
Interest rate floors . . . . . . . . . . . . . . . — ( .9)
Interest rate caps . . . . . . . . . . . . . . . . — .2
Purchased options . . . . . . . . . . . . . . . 31.4 31.4
Interest rate lock commitments. . . . . . 3.9 3.9
Forward contracts:
Commitments to sell loans . . . . . . . 13.6 13.6
Foreign exchange contracts:
Commitments to purchase . . . . . . ( 1.4) ( 1.4)
Commitments to sell . . . . . . . . . . 5.1 5.1
Fair values for financial instruments, which were based on various
assumptions and estimates as of a specific point in time, represent
liquidation values and may vary significantly from amounts that will
be realized in actual transactions. In addition, certain non-financial
instruments were excluded from the fair value disclosure
requirements. Therefore, the fair values presented in the table above
should not be construed as the underlying value of the Bancorp.
The following methods and assumptions were used in
determining the fair value of selected financial instruments:
Short-term financial assets and liabilities–for financial
instruments with a short or no stated maturity, prevailing market
rates and limited credit risk, carrying amounts approximate fair
value. Those financial instruments include cash and due from
banks, other short-term investments, accrued income receivable,
certain deposits (demand, interest checking, savings and money
market), Federal funds borrowed, short-term bank notes, other
short-term borrowings and accrued interest payable.
Securities, available-for-sale and held-to-maturity–fair values
were based on prices obtained from an independent nationally
recognized pricing service.
Loans–fair values were estimated by discounting the future cash
flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturities.
Loans held for sale–the fair value of loans held for sale was
estimated based on outstanding commitments from investors or
current investor yield requirements.
Deposits–fair values for other time, certificates of deposit–
$100,000 and over and foreign office were estimated using a
discounted cash flow calculation that applies interest rates currently
being offered for deposits of similar remaining maturities.