8-KOther Events

FIFTH THIRD BANCORP 8-K Report, Corporate Update (Nov 9, 2007)

Filed November 9, 2007For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

This Form 8-K filing by Fifth Third Bancorp (FITB) on November 9, 2007, primarily addresses the financial impact of a settlement between Visa Inc. and American Express (AmEx) on the bank. As a member of Visa USA, Fifth Third Bancorp has recorded a liability of $78 million as of September 30, 2007, related to its potential share of losses from this settlement. This liability led to a reduction in Fifth Third Bancorp's reported net income for the third quarter of 2007, decreasing it by $51 million to $325 million, or $0.61 per diluted share. The filing also notes that Fifth Third Bancorp received approximately 17.5 million Class USA shares of Visa Inc. common stock as part of Visa's restructuring in preparation for its IPO. While the settlement amount is currently reflected as a liability, Fifth Third Bancorp anticipates that Visa will use a portion of its IPO proceeds to fund an escrow account for litigation settlements. Consequently, Fifth Third Bancorp expects that this current liability would be resolved and that its proceeds from the anticipated Visa share redemption would more than offset this amount, mitigating the ultimate financial impact.

Key Highlights

  • 1Fifth Third Bancorp recorded a $78 million liability as of September 30, 2007, related to the Visa Inc. and American Express (AmEx) settlement.
  • 2The AmEx-Visa settlement is expected to impact Fifth Third Bancorp due to its membership in Visa USA, although it was not a direct defendant in the lawsuit.
  • 3Fifth Third Bancorp's reported net income for the third quarter of 2007 was reduced by $51 million to $325 million ($0.61 per diluted share) as a result of this liability.
  • 4The bank received approximately 17.5 million Class USA shares of Visa Inc. common stock as part of Visa's restructuring for its upcoming IPO.
  • 5Fifth Third Bancorp anticipates that Visa will use IPO proceeds to fund an escrow account to cover litigation, potentially eliminating the need for the current liability.
  • 6The bank expects proceeds from the redemption of its Visa shares to more than offset the recorded liability.
  • 7The information regarding the settlement and its impact is detailed in Fifth Third Bancorp's Third Quarter Report on Form 10-Q filed on November 9, 2007.

Frequently Asked Questions

This filing is primarily to report on the financial impact of a settlement reached between Visa Inc. and American Express (AmEx), which could affect Fifth Third Bancorp as a member of Visa USA. It also details the receipt of Visa shares in anticipation of Visa's IPO.

Fifth Third Bancorp recorded a $78 million liability as of September 30, 2007, representing its potential share of losses from the settlement. This reduced its third-quarter net income by $51 million.

Fifth Third Bancorp anticipates that Visa will use proceeds from its upcoming Initial Public Offering (IPO) to fund an escrow account for litigation settlements. If this occurs, Fifth Third Bancorp expects this current liability to be resolved and that proceeds from its Visa share redemption will more than offset this amount, meaning it likely will not bear the full financial burden.

Fifth Third Bancorp received approximately 17.5 million Class USA shares of Visa Inc. common stock. These shares are expected to be redeemed as part of Visa's IPO, with remaining shares eventually converting to Class A shares.