8-KOther Events

FIFTH THIRD BANCORP 8-K Report, Corporate Update (Nov 28, 2008)

Filed November 28, 2008For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) has filed an 8-K report detailing its progress and necessary actions for participation in the U.S. Department of the Treasury's Capital Purchase Program (CPP). The bank applied for $3.46 billion in preferred stock investment. A key development is the need to obtain shareholder approval to amend its Articles of Incorporation and Code of Regulations to grant limited voting rights to preferred stockholders, a requirement of the Treasury's standard terms that conflicts with Fifth Third's current charter. This amendment is crucial for issuing the preferred stock to the Treasury and is subject to a shareholder vote tentatively scheduled for December 29, 2008. Furthermore, Fifth Third has resolved a conflict regarding the seniority of its preferred stock. To align with the Treasury's requirement that its investment rank senior to or pari passu with other preferred stock, the company repurchased its Series D and Series E preferred stock for $27.75 million on November 26, 2008. This action ensures the Series G preferred stock, now the senior-most, will be effectively pari passu with the anticipated Treasury investment, clearing a significant hurdle for the CPP participation.

Key Highlights

  • 1Fifth Third Bancorp (FITB) is seeking a $3.46 billion investment from the Treasury's Capital Purchase Program (CPP).
  • 2Shareholder approval is required to amend the company's Articles of Incorporation and Code of Regulations to grant limited voting rights to preferred stock, a condition of the CPP.
  • 3A special meeting of shareholders is tentatively scheduled for December 29, 2008, to vote on this amendment.
  • 4The company repurchased its Series D and Series E preferred stock for $27.75 million on November 26, 2008.
  • 5This repurchase was necessary to meet Treasury's requirement that its investment rank senior to or pari passu with other preferred stock.
  • 6Following the repurchase, Series G preferred stock is now the senior-most preferred stock, and the Treasury investment is expected to rank pari passu with it.

Frequently Asked Questions

The Capital Purchase Program (CPP) was a U.S. Treasury initiative aimed at stabilizing the financial system during the 2008 financial crisis by injecting capital into banks. Fifth Third Bancorp is participating to strengthen its capital base and comply with the program's requirements, which involve receiving a preferred stock investment from the Treasury.

Fifth Third Bancorp requires shareholder approval to amend its Articles of Incorporation and Code of Regulations. This amendment is necessary to grant limited voting rights to preferred stockholders, a standard term mandated by the Treasury for its investment in the CPP. Current company bylaws do not permit these specific voting rights for preferred stock.

The repurchase of Series D and Series E preferred stock for $27.75 million was essential to comply with the Treasury's requirement that any investment in Fifth Third rank senior to or pari passu (on an equal footing) with other preferred stock. The original terms of the Series D and E stock made them senior to all other preferred stock, creating a conflict that needed resolution before the Treasury investment could proceed.

By obtaining shareholder approval for amended voting rights and repurchasing the senior preferred stock, Fifth Third Bancorp is clearing the path to receive the Treasury's $3.46 billion investment. This will bolster the company's capital, likely improving its financial stability. The Series G preferred stock will become the senior-most, and the Treasury's investment is expected to rank equally with it.