Fifth Third Bank 2007 Annual Report Download - page 5
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Please find page 5 of the 2007 Fifth Third Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.top10.Whilethepaceofforeclosureshasincreasedin
recentmonthsinFlorida,thegrowthrateofforeclosuresina
numberofourgeographiesseemstobeslowing.Therefore,
thereisreasontohopethatatsomepointduring2008we
maybegintoseestabilizationinkeycredittrends.When
thatoccurs,wewouldexpectourbottomlinetobeginto
benetfromthenumerousstepswe’vetakentoincrease
theCompany’sunderlyingearningsbase.
Our2007resultsreectedtheweakoperatingenvironment
outlinedabove.Reportedearningsperdilutedsharewere
$1.99,lowerthanthe$2.13pershareindilutedearnings
reportedin2006.Resultsduringtherstthreequartersof
2007weresolid,reectingboththebenetsofthebalance
sheetactionswetookinthefourthquarteroflastyearas
wellasincreasesinrevenue,whichweremorethanoffsetby
theeffectofrisingprovisionexpensestocoverincreases
inloanlosses.
Duringthefourthquarterof2007,however,theCompany
recordedseveralchargesthatreectedthedeteriorating
creditenvironmentexperiencedthroughoutthenancial
sector.First,asaresultofhigherexpectedlosses,we
recordedanincrementalprovisionforloanandleaselosses
overnetcharge-offsof$110million.Thisrepresented$0.13
inearningspershare.Second,wetookachargeof
$177million,or$0.33pershareonanafter-taxbasis,
againstoneofourBank-OwnedLifeInsurance(BOLI)
policies,toreectlossesexperiencedontheunderlying
investmentsduetosignicantdisruptionsinthenancial
markets.Additionally,FifthThirdandanumberofother
bankswererequiredtoaccrueexpensesrelatedtocurrent
andfuturelegalsettlementsasamember-bankowner
ofVisa,Inc.Theseexpenseswere$78millioninthethird
quarterand$94millioninthefourthquarter,totaling
$0.21persharefortheyear.Wefullyexpecttoreverse
theselegalaccrualswhenVisacompletesitsinitialpublic
offering,currentlyanticipatedinthersthalfof2008.
Finally,werecorded$8million,or$0.01pershare,inmerger-
relatedcostsinthefourthquarter,primarilyrelatedtoour
acquisitionofR-GCrownBankinFloridainNovember2007.
Asareminder,inthefourthquarterof2006,werecorded
pretaxchargesrelatedtobalancesheetactionstotaling
$454million,or$0.52pershare.
Settingasidetheitemsoutlinedabove,2007resultswere
inlinewith2006,withsignicantimprovementsinour
underlyingbusinesslargelyoffsetbyhigherloanlosses
during2007.Weareworkinghardtohavethemany
improvementsmadetotheCompany’soperationsresult
inabetterbottomline.
Whileourcredittrendswerelargelyinlinewiththerest
oftheindustry,theyalsoweredisappointing.Higherloss
expectationsdroveprovisionexpenseto$628million
comparedto$343millionin2006.Netloanlosseswere
$462millionin2007versus$316millionin2006.Asa
percentageofloansandleases,netlossesroseto0.61
percentforthefullyearof2007comparedwith0.44
percentin2006.Thedeteriorationoccurredmostlyinour
consumerportfolio,whichsawitsloanlossratioincrease
from0.55percentin2006to0.84percentin2007,largely
reectinghigherresidentialrealestatelosses,particularlyin
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