8-KFinancial Events

FIFTH THIRD BANCORP 8-K Report, Financial Restatement (May 10, 2007)

Filed May 10, 2007For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed a Form 8-K on May 10, 2007, to announce that its management has recommended the restatement of its Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005, and 2004. This restatement means that previously issued financial statements for these periods should no longer be relied upon regarding the cash flow statements. The primary reason for the restatement is the misclassification of cash flows related to mortgage and commercial loans. Specifically, cash flows from the sale of residential mortgage loans originally held for investment were incorrectly classified as operating activities, and cash flows from commercial loans originated to be sold were incorrectly classified as investing activities. The company is correcting these classifications to align with accounting standards.

Key Highlights

  • 1Fifth Third Bancorp is restating its Consolidated Statements of Cash Flows for 2004, 2005, and 2006.
  • 2Previously issued financial statements for the affected periods can no longer be relied upon due to this restatement.
  • 3The restatement is due to the misclassification of cash flows from loan sales and origination activities.
  • 4Cash flows from sales of residential mortgage loans held for investment were misclassified as operating.
  • 5Cash flows from commercial loans originated for sale were misclassified as investing.
  • 6The restatement impacts the classification and subtotals of operating and investing cash flows but does not affect net income, revenues, EPS, assets, or capital.
  • 7The company expects to file an amended 2006 Form 10-K with the corrected information.

Frequently Asked Questions

The main issue is that Fifth Third Bancorp's management has recommended restating its Consolidated Statements of Cash Flows for the years 2004, 2005, and 2006, meaning previous statements for these periods are no longer considered reliable.

The restatement is necessary because of errors in classifying cash flows. Specifically, cash generated from selling residential mortgage loans that were initially held for investment was wrongly reported as an operating activity, and cash from originating commercial loans for sale was wrongly reported as an investing activity.

No, the company explicitly states that this restatement only affects the classification of cash flows within the Statement of Cash Flows. It does not change the historical revenues, net income, earnings per share, total assets, or regulatory capital for the affected periods.

Fifth Third Bancorp is filing a Form 10-Q for the first quarter of 2007 which includes the restated cash flow information. The company also plans to file an amended 2006 Form 10-K as soon as practicable to reflect the corrections.