Fifth Third Bank 2004 Annual Report Download - page 53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 51
11. LONG-TERM DEBT
A summary of long-term debt at December 31:
($ in millions) Maturity Interest Rate 2004 2003
Parent Company
Senior:
Extendable notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 – 2009 2.375% $ 1,749 —
Subordinated:
Fixed-rate notes (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 4.5% 469 458
Junior subordinated:
Fixed-rate debentures (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2027 8.136% 229 233
Subsidiaries
Senior:
Fixed-rate bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 – 2019 1.05% – 5.20% 2,565 497
Floating-rate bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 2.21% – 2.37% 1,100 —
Extendable bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 – 2014 2.11% – 2.43% 1,199 —
Subordinated:
Fixed-rate notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 6.625% – 6.75% 354 365
FixFloat notes (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 7.75% 151 159
Junior subordinated:
Floating-rate debentures (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2027 2.96% 103 103
Floating-rate debentures (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2030 5.57% 17 —
Mandatorily redeemable securities (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2031 Varies 548 505
Federal Home Loan Bank advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 – 2034 1.09% – 8.34% 3,888 5,094
Securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . 2007 – 2008 2.00% – 2.15% 1,300 825
Commercial paper-backed obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 – 2007 2.34% – 2.41% 286 792
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 – 2032 Varies 25 32
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,983 9,063
(a) Qualify as total capital for regulatory capital purposes.
The 8.136% junior subordinated debentures due in 2027 were
issued by the Bancorp to Fifth Third Capital Trust I (“FTCT1”). The
Bancorp has fully and unconditionally guaranteed all of FTCT1’s
obligations under trust preferred securities issued by FTCT1. The
trust preferred securities are redeemable beginning in 2007.
The three-month LIBOR plus 80 bp junior subordinated
debentures due in 2027 were issued to Old Kent Capital Trust 1
(“OKCT1”). The Bancorp has fully and unconditionally guaran-
teed all of OKCT1’s obligations under trust preferred securities
issued by OKCT1. The trust preferred securities are redeemable
beginning in 2007.
Upon the early adoption of FIN 46 effective July 1, 2003, the
Bancorp deconsolidated both FTCT1 and OKCT1 resulting in a
recharacterization of the underlying consolidated debt obligations
from the previous trust preferred securities obligations to junior
subordinated debenture obligations.
The junior subordinated debentures due in 2030 were assumed
by a subsidiary of the Bancorp in connection with the acquisition of
Franklin Financial. The obligations were issued to Franklin Capi-
tal Trust 1 (“FCT1”). The Bancorp has fully and unconditionally
guaranteed all of FCT1’s obligations under trust preferred securities
issued by FCT1.
The interest rate on the unsecured subordinated fi xfl oat notes
due in 2010 is 7.75% and will convert to a fl oating rate during
2005. The notes may be redeemed on a semi-annual basis.
The mandatorily redeemable securities due 2031 relate to
a preferred stock obligation of a subsidiary of the Bancorp. The
preferred stock will be automatically exchanged for trust preferred
securities in 2031. Beginning fi ve years from the date of issuance,
the Bancorp’s subsidiary has the option, subject to regulatory
approval, to exchange the preferred stock for trust preferred securi-
ties or cash upon a change in the Bancorp’s senior debt rating to or
below BBB, a change in the investor’s tax elections or a change in
applicable tax law. Upon the adoption of SFAS No. 150 on July 1,
2003, the Bancorp reclassifi ed its previous minority interest obli-
gation to long-term debt and its corresponding minority interest
expense to interest expense due to the existence of the mandatory
redemption feature.
At December 31, 2004, Federal Home Loan Bank advances
have rates ranging from 1.09% to 8.34%, with interest payable
monthly. The advances are secured by certain residential mortgage
loans and securities totaling $8.4 billion. The advances mature
as follows: $400 million in 2005, $105 million in 2006, $1,827
million in 2007, $3 million in 2008 and $1,553 million thereafter.
At December 31, 2004, securities sold under agreements to
repurchase have variable rates ranging from 2.00% to 2.15% with
interest payable monthly. The repurchase agreements mature as
follows: $1,000 million in 2007 and $300 million in 2008.
The fl oating-rate, commercial paper-backed obligations are
rolling in nature, mature through 2007 and were recognized as a
result of the early adoption of FIN 46 and related consolidation
of an unrelated SPE involved in the sale and subsequent leaseback
of certain automobile operating lease assets with the Bancorp. See
Note 1 for further discussion of adoption of FIN 46.
Medium-term senior notes and subordinated bank notes with
maturities ranging from one year to 30 years can be issued by two
subsidiary banks, of which $4.9 billion was outstanding at Decem-
ber 31, 2004 with $14.3 billion available for future issuance. There
were no other medium-term senior notes outstanding on either
of the two subsidiary banks as of December 31, 2004. In January
2005, a subsidiary of the Bancorp issued $500 million of subordi-
nated bank notes with a rate of 4.75% due in 2015.