Summary
On September 27, 2007, Fifth Third Bancorp (FITB) filed a Form 8-K to report an amendment to a Stockholders Agreement related to its Series B Preferred Stock. This amendment paves the way for Fifth Third Mortgage Company, a subsidiary, to purchase all outstanding shares of the Series B Preferred Stock from current holders, DB Holdings (New York), Inc. and Deutsche Bank Securities Inc. This transaction, scheduled for December 27, 2007, is subject to regulatory approvals. The primary financial impact of this transaction for Fifth Third Bancorp and Fifth Third Bank will be a reduction in Tier 1 capital by approximately $690 million in the fourth quarter of 2007. However, the company notes that this impact on regulatory capital ratios will be mitigated by a recent issuance of $575 million in trust preferred securities in August 2007. Despite this capital reduction, Fifth Third Bancorp anticipates remaining "well-capitalized" according to Federal Reserve Board guidelines.
Key Highlights
- 1Fifth Third Bancorp's subsidiary, Fifth Third Mortgage Company, will purchase Series B Preferred Stock from DB Holdings and Deutsche Bank Securities Inc.
- 2The transaction involves the acquisition of $425 million (original issuance) of Series B Preferred Stock, with a carrying value of approximately $690 million at the time of completion.
- 3The purchase is scheduled for December 27, 2007, and is contingent upon receiving necessary regulatory approvals.
- 4This transaction will reduce Fifth Third Bank's and Fifth Third Bancorp's Tier 1 capital by approximately $690 million in Q4 2007.
- 5The negative impact on regulatory capital ratios is expected to be mitigated by a prior issuance of $575 million in trust preferred securities.
- 6Fifth Third Bancorp expects to remain 'well-capitalized' after the transaction.
- 7An alternative plan is in place where Fifth Third would issue Floating Rate Capital Securities if regulatory approval is not obtained.