Fifth Third Bank 2006 Annual Report Download - page 90

ANNUAL REPORT ON FORM 10-K
Fifth Third Bancorp
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industry may be significantly affected by new laws and
regulations.
The GLBA amended the federal securities laws to
eliminate the blanket exceptions that banks traditionally have
had from the definition of “broker” and “dealer.” The GLBA
also required that there be certain transactional activities that
would not be “brokerage” activities, which banks could effect
without having to register as a broker. In a series of orders, the
SEC delayed the effective date of the repeal of the “broker”
exemption for banks until, most recently, July 2, 2007. On
December 13, 2006, the FRB and SEC jointly proposed new
Regulation R, that will govern bank securities broker activities.
As currently proposed, we will have until January 1, 2009 to
comply by either registering as a broker-dealer or “pushing out”
brokerage activities to affiliated broker-dealers. The
transactional exemptions will permit, without broker-dealer
registration, banks to enter into a de minimis number of riskless
principal transactions, certain asset-backed transactions and
certain securities lending transactions. The Bancorp is currently
evaluating alternatives to ensure that its subsidiary banks will
not be required to register as a broker upon the effective date.
The Sarbanes-Oxley Act of 2002, (“Sarbanes-Oxley”)
implements a broad range of corporate governance and
accounting measures for public companies (including publicly-
held bank holding companies such as the Bancorp) designed to
promote honesty and transparency in corporate America.
Sarbanes-Oxley’s principal provisions, many of which have
been interpreted through regulations, provide for and include,
among other things: (i) the creation of an independent
accounting oversight board; (ii) auditor independence
provisions that restrict non-audit services that accountants may
provide to their audit clients; (iii) additional corporate
governance and responsibility measures, including the
requirement that the chief executive officer and chief financial
officer of a public company certify financial statements; (iv) the
forfeiture of bonuses or other incentive-based compensation and
profits from the sale of an issuer’s securities by directors and
senior officers in the twelve month period following initial
publication of any financial statements that later require
restatement; (v) an increase in the oversight of, and
enhancement of certain requirements relating to, audit
committees of public companies and how they interact with the
Bancorp’s independent auditors; (vi) requirements that audit
committee members must be independent and are barred from
accepting consulting, advisory or other compensatory fees from
the issuer; (vii) requirements that companies disclose whether at
least one member of the audit committee is a ‘financial expert’
(as such term is defined by the SEC) and if not discussed, why
the audit committee does not have a financial expert; (viii)
expanded disclosure requirements for corporate insiders,
including accelerated reporting of stock transactions by insiders
and a prohibition on insider trading during pension blackout
periods; (ix) a prohibition on personal loans to directors and
officers, except certain loans made by insured financial
institutions on nonpreferential terms and in compliance with
other bank regulatory requirements; (x) disclosure of a code of
ethics and filing a Form 8-K for a change or waiver of such
code; (xi) requirements that management assess the
effectiveness of internal control over financial reporting and the
Bancorp’s Independent Registered Public Accounting Firm
attest to the assessment; and (xii) a range of enhanced penalties
for fraud and other violations.
Additional information regarding regulatory matters is
included in Note 26 of the Notes to Consolidated Financial
Statements.
ITEM 2. PROPERTIES
The Bancorp’s executive offices and the main office of Fifth
Third Bank are located on Fountain Square Plaza in downtown
Cincinnati, Ohio in a 32-story office tower, a five-story office
building with an attached parking garage and a separate ten-
story office building known as the Fifth Third Center, the
William S. Rowe Building and the 530 Building, respectively.
The Bancorp’s main operations center is located in Cincinnati,
Ohio, in a three-story building with an attached parking garage
known as the Madisonville Operations Center. A subsidiary of
the Bancorp owns 100 percent of these buildings.
At December 31, 2006, the Bancorp, through its banking
and non-banking subsidiaries, operated 1,150 banking centers,
of which 781 were owned, 280 were leased and 89 for which
the buildings are owned but the land is leased. The banking
centers are located in the states of Ohio, Kentucky, Indiana,
Michigan, Illinois, Florida, Tennessee, West Virginia,
Pennsylvania and Missouri. The Bancorp’s significant owned
properties are owned free from mortgages and major
encumbrances.
EXECUTIVE OFFICERS OF THE BANCORP
Officers are appointed annually by the Board of Directors at the
meeting of Directors immediately following the Annual
Meeting of Shareholders. The names, ages and positions of the
Executive Officers of the Bancorp as of February 20, 2007 are
listed below along with their business experience during the
past 5 years:
George A. Schaefer, Jr., 61. Chairman of the Bancorp since
June 2006 and Chief Executive Officer of the Bancorp and Fifth
Third Bank since 1990.
Kevin T. Kabat, 50. President of the Bancorp since June 2006.
Previously, Mr. Kabat was Executive Vice President of the
Bancorp since December 2003. Prior to that he was President
and CEO of Fifth Third Bank (Michigan) since April 2001 as
well as Vice Chairman of Old Kent Financial Corporation and
President and CEO of Old Kent Bank prior to its acquisition by
Fifth Third Bancorp in 2001.
Greg D. Carmichael, 45. Executive Vice President and Chief
Operating Officer of the Bancorp since June 2006. Prior to that
he was the Executive Vice President and Chief Information
Officer of the Bancorp since June 2003. Previously, Mr.
Carmichael was the Chief Information Officer of Emerson
Electric Company.
David J. DeBrunner, 40. Senior Vice President and Controller
of the Bancorp since September 2004 and January 2002,
respectively. Previously, Mr. DeBrunner was Vice President of
the Bancorp and Fifth Third Bank since January 2002 and 1997,
respectively.
Charles D. Drucker, 43. Executive Vice President of the
Bancorp since June 2005 and President of Fifth Third
Processing Solutions since July 2004. Previously, Mr. Drucker
was Executive Vice President and Chief Operating Officer of
STAR ® Debit Services, a division of First Data Corporation.
Malcolm D. Griggs, 46. Executive Vice President and Chief
Risk Officer of the Bancorp since June 2003. Previously, Mr.
Griggs was the Director of Risk Policy for Wachovia
Corporation.
Bruce K. Lee, 46. Executive Vice President of the Bancorp
since June 2005. Previously, Mr. Lee was President and CEO
of Fifth Third Bank (Northwestern Ohio) since July 2002 and
Executive Vice President, Commercial Banking Division, Fifth
Third Bank (Northwestern Ohio) since March 2001 as well as