Fifth Third Bank 2003 Annual Report Download - page 4

Dear Shareholders and Friends,
It gives me great pleasure to report to you that 2003
was another good year for Fifth Third. Earnings per
diluted share were $3.03, an increase of 10 percent
over last year’s $2.76. Return on average assets was
2.01 percent and return on average equity was 20.4
percent on a strong capital base, continuing our long
history of high returns and once again ranking among
the best in the industry. Our four lines of business –
Retail and Commercial Banking, Investment Advisors
and Electronic Payment Processing – continued to
provide strong results in 2003 with total revenues up
10 percent for the full year. The 2003 dividend of $1.13
per share was a 15 percent increase over last year and
a 36 percent increase over the 2001 annual dividend.
Other highlights include:
•Retail Banking continued expansion plans with the
opening of 58 new banking centers since December
2002 and delivered 12 percent growth in average
consumer checking accounts and record levels of
productivity on a per banking center basis.
• Our Investment Advisors group posted strong
investment performance, added significantly to its
customer base and finished the year on a high note
as revenue accelerated in the fourth quarter to a 14
percent year over year growth rate.
• Our Electronic Payment Processing team
contributed 12 percent revenue growth in 2003
despite a tough environment in terms of year over
year comparisons for retailers.
• Commercial Banking welcomed a record number of
new middle market relationships during the year,
driving 37 percent growth in commercial demand
deposits and 13 percent growth in commercial
banking revenues.
• Our consumer lending and residential mortgage
group had a record year in 2003 with very strong
loan and revenue growth.
While 2003 was certainly not an easy year, I believe
we accomplished a great deal. We were faced with
the lowest level of interest rates in over 40 years,
earning asset yields and margins declining to levels not
seen since the 1970’s and business and economic
stress in some segments of the economy that resulted in
credit losses well in excess of our historical averages.
Despite these factors, we were able to produce solid
earnings growth driven by a focused loan and deposit
sales effort and continued growth from our service
businesses. We also invested significantly in
strengthening your investment in Fifth Third for the
years to come by adding new banking center locations
in vibrant growth markets, increasing automation of
processes, building a comprehensive risk management
infrastructure and welcoming numerous talented and
experienced bankers to the Fifth Third team.
Over the years, we have delivered value to our
shareholders by staying committed to and focused on
the things we do best. Banking is first and foremost a
relationship business where the strength of the
competition and challenges for growth can vary in
every market and indeed on every street corner. I’ve
always believed that the bank with the best people will
eventually gain leading market share over time. In
realization of these facts, we strive to operate the
company through many small units and give individual
managers, from the banking center to the executive
level, the opportunity to drive results. All of our lines
of business report to local presidents in each of our
markets and all of our managers are evaluated based
on financial performance. We continue to strive to
make all of our employees business owners that share
in the success of the businesses they are building, and I
am consistently amazed at the ideas that talented and
passionate people come up with when they are given
the incentives and opportunity to succeed. More so
than at any time in our history, this promise of being
recognized and rewarded for individual contributions
at Fifth Third is attracting experienced, passionate and
energetic bankers to work for us. These people bring
with them new and better ideas that are implemented
across the company to the benefit of each and every
one of us as owners. In all, we are reaching sales and
George A. Schaefer, Jr.
President & CEO
Fifth Third Bancorp
PRESIDENT’S LETTER
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