8-KOther Events

FIFTH THIRD BANCORP 8-K Report, Corporate Update (May 18, 2011)

Filed May 18, 2011For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed an 8-K on May 18, 2011, to announce the redemption of several trust preferred securities. This action is significant as these securities will no longer qualify as Tier 1 capital for the company upon the notice of redemption, as per bank regulatory guidelines. The company previously announced this potential capital action in March 2011 as part of its capital plan submitted under the Federal Reserve's Comprehensive Capital Analysis and Review, which did not receive an objection from the Federal Reserve Board. The redemptions are set to occur on specific dates in June 2011 and will be funded by the company's existing excess cash. This move reflects a strategic adjustment in its capital structure, aligning with regulatory expectations and potentially enhancing its capital ratios. Investors should note the specific redemption dates and amounts for each series of trust preferred securities.

Key Highlights

  • 1Fifth Third Bancorp is redeeming trust preferred securities totaling $450 million across three trusts.
  • 2The redemption of these securities will result in them no longer qualifying as Tier 1 capital for regulatory purposes.
  • 3The Federal Reserve Board did not object to these redemptions as part of the company's capital plan submitted under the Comprehensive Capital Analysis and Review.
  • 4The redemptions will be funded using the company's available excess cash.
  • 5Specific redemption dates are June 15, 2011 (for $400 million), June 26, 2011 (for $10 million), and June 30, 2011 (for $40 million).
  • 6The redemption price for Fifth Third Capital Trust VII's 8.875% Trust Preferred Securities is $25 per security plus accrued distributions of $0.1848958.
  • 7The filing indicates a proactive approach by the company to manage its capital structure in response to regulatory guidance.

Frequently Asked Questions

Fifth Third Bancorp is redeeming these securities as a strategic capital management action. Upon notice of redemption, these securities will no longer qualify as Tier 1 capital for regulatory purposes. This action was part of a capital plan submitted to the Federal Reserve, which did not receive an objection.

The redemptions will be funded using Fifth Third Bancorp's existing excess cash, indicating the company has sufficient liquidity to cover these obligations without needing external financing.

The total amount being redeemed is $450 million. The specific redemption dates are June 15, 2011 ($400 million from Fifth Third Capital Trust VII), June 26, 2011 ($10 million from R&G Capital Trust II, LLT), and June 30, 2011 ($40 million from First National Bankshares Statutory Trust I).

Tier 1 capital is a core measure of a bank's financial strength. By redeeming these securities, Fifth Third Bancorp is adjusting its capital structure. This change is permissible and was reviewed by the Federal Reserve as part of their capital planning process, suggesting it aligns with regulatory expectations for capital adequacy.