Fifth Third Bank 2004 Annual Report Download - page 63

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 61
Options to purchase 16.2 million, 7.0 million and 6.2 million
shares outstanding at December 31, 2004, 2003 and 2002, respec-
tively, were not included in the computation of net income per
diluted share because the effect would be antidilutive.
25. FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts and estimated fair values for fi nancial instruments as of December 31:
2004 2003
($ in millions)
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial assets:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,561 2,561 2,359 2,359
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,687 24,687 28,999 28,999
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 255 135 135
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 77 55 55
Other short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 532 268 268
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 562 1,881 1,897
Total loans and leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,095 59,708 51,611 52,331
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 271 302 302
Bank owned life insurance assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,573 1,573 1,016 1,016
Financial liabilities:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,226 58,221 57,095 56,990
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,714 4,714 6,928 6,928
Short-term bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775 775 500 500
Other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,537 4,537 5,742 5,742
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,983 14,232 9,063 9,724
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 232 208 208
Short positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 15 22
Other fi nancial instruments:
Commitments to extend credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 53 55 55
Letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 19 18 18
Fair values for fi nancial instruments, which were based on
various assumptions and estimates as of a specifi c point in time,
represent liquidation values and may vary signifi cantly from
amounts that will be realized in actual transactions. In addition,
certain non-fi nancial 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 deter-
mining the fair value of selected fi nancial instruments:
Short-term fi nancial assets and liabilities—for fi nancial instru-
ments with a short-term or no stated maturity, prevailing market
rates and limited credit risk, carrying amounts approximate fair
value. Those fi nancial instruments include cash and due from banks,
other short-term investments, certain deposits (demand, interest
checking, savings and money market), federal funds purchased,
short-term bank notes and other short-term borrowings.
24. EARNINGS PER SHARE
Reconciliation of earnings per share to diluted earnings per share for the years ended December 31:
2004 2003 2002
($ in millions, except per share data) Income
Average
Shares
Per Share
Amount Income
Average
Shares
Per Share
Amount Income
Average
Shares
Per Share
Amount
EPS
Income from continuing operations before
cumulative effect . . . . . . . . . . . . . . . . . . . . . $1,525 $1,632 $1,527
Net income from continuing operations available
to commons shareholders (a) . . . . . . . . . . . . 1,524 561 $2.72 1,631 572 $2.85 1,526 580 $2.63
Income from discontinued operations,
net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . ——44 .08 4 .01
Cumulative effect of change in accounting
principle, net of tax . . . . . . . . . . . . . . . . . . . ——(11) (.02) — —
Net income available to common shareholders . $1,524 561 $2.72 $1,664 572 $2.91 $1,530 580 $2.64
Diluted EPS
Net income from continuing operations available
to common shareholders . . . . . . . . . . . . . . . $1,524 561 $1,631 572 $1,526 580
Effect of dilutive securities . . . . . . . . . . . . . . . . 7812
Income from continuing operations plus assumed
conversions (b) . . . . . . . . . . . . . . . . . . . . . . . 1,525 568 $2.68 1,632 580 $2.81 1,527 592 $2.58
Income from discontinued operations,
net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . ——44 .08 4 .01
Cumulative effect of change in accounting
principle, net of tax . . . . . . . . . . . . . . . . . . . ——(11) (.02) — —
Net income available to common shareholders
plus assumed conversions . . . . . . . . . . . . . . . $1,525 568 $2.68 $1,665 580 $2.87 $1,531 592 $2.59
(a) Dividends on preferred stock are $.740 million for the years ended December 31, 2004, 2003 and 2002.
(b) The effect of dividends on convertible preferred stock is $.580 million for the years ended December 31, 2004, 2003 and 2002.