Fifth Third Bank 2010 Annual Report Download - page 113

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 111
24. COMMON, PREFERRED AND TREASURY STOCK
The following is a summary of the share activity within common, preferred and treasury stock for the years ended December 31:
Common Stock Preferred Stock Treasury Stock
($ in millions, except share data) Value Shares Value Shares Value Shares
Shares at December 31, 2007 $1,295 583,427,104 $9 9,250 $2,209 51,482,500
Issuance of preferred shares, Series G - - 1,072 44,300 - -
Issuance of preferred shares, Series F - - 3,169 136,320 - -
Redemption of preferred shares, Series D, E - - (9) (9,250) - -
Stock-based awards exercised, including treasury shares issued - - - - (2) -
Restricted stock grants - - - - (136) (2,551,432)
Shares issued in business combinations - - - - (1,841) (42,890,576)
Employee stock ownership through benefit plans - - - - (1) -
Shares at December 31, 2008 $1,295 583,427,104 $4,241 180,620 $229 6,040,492
Issuance of common shares 351 157,955,960 - - - -
Exchange of preferred shares, Series G 133 60,121,124 (674) (27,849) - -
A
ccretion from dividends on preferred shares, Series F - - 41 - - -
Restricted stock forfeitures - - - - 5 819,796
Restricted stock grants - - - - (32) (751,464)
Other - - 1 - (1) 327,200
Shares at December 31, 2009 $1,779 801,504,188 $3,609 152,771 $201 6,436,024
A
ccretion from dividends on preferred shares, Series F --45- - -
Stock-based awards exercised, including treasury shares issued - - - - (8) 16,391
Restricted stock grants and forfeitures, net - - - - (62) (1,334,967)
Employee stock ownership through benefit plans - - - - (1) 114,218
Shares at December 31, 2010 $1,779 801,504,188 $3,654 152,771 $130 5,231,666
In 2008, 8.5% non-cumulative Series G convertible preferred
stock was issued in the second quarter. The depository shares
represented shares of its convertible preferred stock and had a
liquidation preference of $25,000 per share. The preferred stock is
convertible at any time, at the option of the shareholder, into
2,159.8272 shares of common stock, representing a conversion
price of approximately $11.575 per share of common stock. As of
December 31, 2010, Series G preferred stock had 16,451 shares
outstanding and 1,700 shares reserved for issuance.
On December 31, 2008, the U.S. Treasury purchased $3.4
billion, or 136,320 shares, of the Bancorp’s Fixed Rate Cumulative
Perpetual Preferred Stock, Series F, with a liquidation preference
of $25,000 per share and related 10-year warrants in the amount
of 15% of the preferred stock investment. The warrants allow the
U.S. Treasury to purchase up to 43,617,747 shares of the
Bancorp’s common stock with an exercise price of $11.72. The
Series F senior preferred stock was issued complying with the
terms established by the CPP. Per the program terms, the U.S.
Treasury’s investment consists of senior preferred stock with a
five percent dividend for each of the first five years of investment
and nine percent thereafter, unless the shares are redeemed. The
shares are callable by the Bancorp at par after three years and may
be repurchased at any time under certain circumstances. The
terms also include restrictions on the repurchase of common
stock and an increase in common stock dividends, which require
the U.S. Treasury’s consent, for a period of three years from the
date of investment unless the preferred shares are redeemed in
whole or the U.S. Treasury has transferred all of the preferred
shares to a third party.
The proceeds from issuance of the Series F preferred stock
were allocated to the preferred stock and to the warrants based on
their relative fair values, which resulted in an initial book value of
$3.2 billion for the preferred stock and $239 million for the
warrants. The resulting discount to the preferred stock is being
accreted over five years through retained earnings as a preferred
stock dividend, resulting in an effective yield of 6.7% for the
Series F preferred stock for the first five years. The warrants will
remain in capital surplus at their initial book value until they are
exercised or expire.
The CPP terms also required that preferred stock issued to
U.S. Treasury rank senior to, or pari passu with, other preferred
stock. In order to meet the U.S. Treasury’s standard terms, in the
fourth quarter of 2008, the Bancorp repurchased its Series D and
Series E preferred stock. The preferred stock was repurchased for
aggregate consideration in cash of $28 million, in which $9 million
par value was accounted for as retirement of the Series D and
Series E preferred stock and the remaining $19 million was
recognized as dividends paid to the holders of the preferred stock.
On May 7, 2009, the Bancorp announced the SCAP results.
While not required to raise additional overall capital, the Bancorp
was required to augment its existing capital base to maintain a
capital buffer above the newly required four percent threshold of
the Tier I common equity ratio. As a result, the Bancorp initiated
a number of capital actions including the offer to exchange Series
G preferred shares and a common stock offering.
On June 4, 2009, the Bancorp announced the successful
completion of a $1 billion at-the-market offering of its common
shares. Through this offering, the Bancorp issued approximately
158 million shares at an average price of $6.33.
On June 17, 2009, the Bancorp completed its offer to
exchange 2,158.8272 shares of its common stock, no par value,
and $8,250 in cash, for each set of 250 validly tendered and
accepted depositary shares. The Bancorp issued approximately 60
million shares of common stock and paid $230 million in cash in
exchange for 7 million depositary shares. Overall, $696 million in
liquidation amount of the Bancorp’s depositary shares were validly
tendered, not withdrawn and exchanged, which represented 63%
of the aggregate liquidation amount of its depositary shares. An
aggregate of 7 million depositary shares representing 27,849 shares
of Series G preferred stock were retired upon receipt. At the time
of exchange, the Bancorp recognized an increase to retained
earnings and net income available to common shareholders of $35
million, calculated as the difference between the carrying amount
of the Series G preferred stock exchanged and the sum of the fair
value of the common stock plus cash delivered. After settlement
of the exchange offer and as of December 31, 2010, 4,112,750
depositary shares representing 16,451 shares of Series G preferred
stock remained outstanding. As a result of this exchange, the
Bancorp increased its common equity by $441 million.
During 2010, 2009 and 2008, the Bancorp repurchased an
immaterial amount of common stock.
On January 20, 2011, the Bancorp announced it had priced a
public offering of 121,428,572 shares of its common stock at a
price of $14.00 per share, or $1.7 billion in aggregate gross