Edgar Filing: FIFTH THIRD BANCORP

Current Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): April 23, 2008

FIFTH THIRD BANCORP

(Exact Name of Registrant as Specified in Its Charter)

OHIO

(State or Other Jurisdiction of Incorporation)


0-8076		31-0854434
(Commission File Number)		(IRS Employer Identification No.)

Fifth Third Center 38 Fountain Square Plaza, Cincinnati, Ohio		45263
(Address of Principal Executive Offices)		(Zip Code)

(513) 534-5300

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01

Other Events

Fifth Third Bancorp is filing this Current Report on Form 8-K to incorporate into its securities filings: (a) certain financial information from its April 22, 2008 earnings release for the quarter ended March 31, 2008 and (b) certain information regarding litigation.


(a)		2008 First Quarter Financial Information

Earnings Highlights


	For the Three Months Ended															% Change
	March 2008			December 2007			September 2007			June 2007			March 2007			Seq		Yr/Yr
Net income (in millions)	$	292		$	16		$	325		$	376		$	359		NM		(19	%)
Common Share Data
Earnings per share, basic		0.55			0.03			0.61			0.69			0.65		NM		(15	%)
Earnings per share, diluted		0.55			0.03			0.61			0.69			0.65		NM		(15	%)
Cash dividends per common share		0.44			0.44			0.42			0.42			0.42		—		5	%
Financial Ratios
Return on average assets		1.06	%		0.06	%		1.26	%		1.49	%		1.47	%	NM		(28	%)
Return on average equity		12.5			0.7			13.8			15.7			14.6		NM		(14	%)
Tangible equity		6.22			6.05			6.83			6.92			7.65		3	%	(19	%)
Net interest margin (a)		3.41			3.29			3.34			3.37			3.44		4	%	(1	%)
Efficiency (a)		42.1			72.6			59.2			54.1			55.8		(42	%)	(25	%)
Common shares outstanding (in thousands)		532,106			532,672			532,627			535,697			550,077		—		(3	%)
Average common shares outstanding (in thousands):
Basic		528,498			529,120			530,123			540,264			551,501		—		(4	%)
Diluted		530,372			530,939			532,471			543,228			554,175		—		(4	%)

(a)	Presented on a fully taxable equivalent basis

NM:	not meaningful

On April 22, 2008, Fifth Third Bancorp (Nasdaq: FITB) reported first quarter 2008 earnings of $292 million, or $0.55 per diluted share, compared with $16 million, or $0.03 per diluted share in the fourth quarter of 2007 and $359 million, or $0.65 per diluted share, for the same period in 2007.

Reported results include a gain of $273 million pre-tax, or $0.33 per share after-tax, related to the redemption of a portion of our ownership interests in Visa, Inc., as well as the reversal of $152 million pre-tax in expenses, or $0.19 per share after-tax, representing a portion of the previously recorded litigation reserves, both related to Visa’s initial public offering. Reported results also include a non-cash estimated charge of $144 million pre-tax, or $0.21 per share after-tax, to further reduce the current cash surrender value of one of our Bank-Owned Life Insurance (“BOLI”) policies, and expenses related to acquisitions and severance expenses totaling $16 million pre-tax, or $0.02 per share after-tax.

As noted above, the BOLI charge is based on quarter-end estimated values and is subject to change. Our financial results, which we expect to file on Form 10-Q in early May, will be based on the most current March 31, 2008 performance information we have received concerning the performance of the underlying investments. Performance information received after the date of this release could result in changes that would affect the reported earnings, earnings per share, and other financial measures reported in the release.

Income Statement Highlights


	For the Three Months Ended															% Change
	March 2008			December 2007			September 2007			June 2007			March 2007			Seq		Yr/Yr
Condensed Statements of Income ($ in millions)
Net interest income (taxable equivalent)	$	826		$	785		$	760		$	745		$	742		5	%	11	%
Provision for loan and lease losses		544			284			139			121			84		91	%	550	%
Total noninterest income		872			509			681			669			608		71	%	43	%
Total noninterest expense		715			940			853			765			753		(24	%)	(5	%)

Income before income taxes (taxable equivalent)		439			70			449			528			513		527	%	(15	%)

Taxable equivalent adjustment		6			6			6			6			6		—		—
Applicable income taxes		141			48			118			146			148		194	%	(5	%)

Net income available to common shareholders (a)		292			16			325			375			359		NM		(19	%)

Earnings per share, diluted	$	0.55		$	0.03		$	0.61		$	0.69		$	0.65		NM		(15	%)

(a) Dividends on preferred stock are $.185 million for all quarters presented NM: not meaningful Net Interest Income
	For the Three Months Ended															% Change
	March 2008			December 2007			September 2007			June 2007			March 2007			Seq		Yr/Yr
Interest Income ($ in millions)
Total interest income (taxable equivalent)	$	1,453		$	1,556		$	1,535		$	1,495		$	1,466		(7	%)	(1	%)
Total interest expense		627			771			775			750			724		(19	%)	(13	%)

Net interest income (taxable equivalent)	$	826		$	785		$	760		$	745		$	742		5	%	11	%

Average Yield
Yield on interest-earning assets		5.99	%		6.52	%		6.73	%		6.75	%		6.79	%	(8	%)	(12	%)
Yield on interest-bearing liabilities		2.99	%		3.78	%		4.04	%		4.08	%		4.07	%	(21	%)	(27	%)

Net interest rate spread (taxable equivalent)		3.00	%		2.74	%		2.69	%		2.67	%		2.72	%	9	%	10	%

Net interest margin (taxable equivalent)		3.41	%		3.29	%		3.34	%		3.37	%		3.44	%	4	%	(1	%)
Average Balances ( $ in millions)
Loans and leases, including held for sale	$	84,912		$	82,172		$	78,243		$	77,048		$	75,860		3	%	12	%
Total securities and other short-term investments		12,597			12,506			12,169			11,741			11,710		1	%	8	%
Total interest-bearing liabilities		84,353			80,977			76,070			73,735			72,148		4	%	17	%
Shareholders’ equity		9,379			9,446			9,324			9,599			9,970		(1	%)	(6	%)

Net interest income of $826 million on a taxable equivalent basis grew $41 million, or 5 percent, from the fourth quarter of 2007. Net interest income benefited from lower funding costs on core deposits and wholesale borrowings as well as strong growth in earning assets, which more than offset the effect of lower asset yields, the effect of loan securitizations, tightening spreads between LIBOR and Fed Funds rates and growth in non-earning assets. The net interest margin was 3.41 percent, up 12 bps from the fourth quarter of 2007, primarily driven by 26 bps widening of the net interest rate spread resulting from effective rate management as market rates have declined.

Compared with the first quarter of 2007, net interest income increased $84 million, or 11 percent, and net interest margin compressed 3 bps from 3.44 percent. The increase in net interest income reflected earning assets growth and 28 bps widening in the net interest rate spread. The growth in assets and lower free funding offset the benefits of wider spreads in the net interest margin.

Average Loans


	For the Three Months Ended										% Change
	March 2008		December 2007		September 2007		June 2007		March 2007		Seq		Yr/Yr
Average Portfolio Loans and Leases ($ in millions)
Commercial:
Commercial loans	$	25,367	$	23,650	$	22,183	$	21,584	$	20,908	7	%	21	%
Commercial mortgage		12,016		11,497		11,041		11,008		10,566	5	%	14	%
Commercial construction		5,577		5,544		5,499		5,595		6,014	1	%	(7	%)
Commercial leases		3,723		3,692		3,698		3,673		3,658	1	%	2	%

Subtotal - commercial loans and leases		46,683		44,383		42,421		41,860		41,146	5	%	13	%

Consumer:
Residential mortgage loans		10,395		9,943		8,765		8,490		8,830	5	%	18	%
Home equity		11,846		11,843		11,752		11,881		12,062	—		(2	%)
Automobile loans		9,278		9,445		10,853		10,552		10,230	(2	%)	(9	%)
Credit card		1,660		1,461		1,366		1,248		1,021	14	%	63	%
Other consumer loans and leases		1,083		1,099		1,138		1,174		1,127	(1	%)	(4	%)

Subtotal - consumer loans and leases		34,262		33,791		33,874		33,345		33,270	1	%	3	%

Total average loans and leases (excluding held for sale)	$	80,945	$	78,174	$	76,295	$	75,205	$	74,416	4	%	9	%
Average loans held for sale		3,967		3,998		1,950		1,843		1,445	(1	%)	175	%

Average loan and lease balances grew 4 percent sequentially and 9 percent from the first quarter of last year. Average commercial loans and leases grew 5 percent sequentially and 13 percent compared with the first quarter of 2007. Growth was primarily driven by commercial and industrial (C&I) lending, up 7 percent sequentially and 21 percent versus a year ago, reflecting solid production across most of our footprint. Compared with last quarter, commercial mortgage balances increased $519 million. Consumer loans and leases were up 1 percent sequentially and increased 3 percent compared with the first quarter of 2007. Comparisons with both periods reflect growth in residential mortgages and credit card loans, offset by lower home equity originations and securitization activity.

First quarter loan sales and securitizations totaled approximately $3.3 billion, including $2.7 billion of auto loans and $615 million in residential mortgage-related loans.

Average Deposits


	For the Three Months Ended										% Change
	March 2008		December 2007		September 2007		June 2007		March 2007		Seq		Yr/Yr
Average Deposits ($ in millions)
Demand deposits	$	13,208	$	13,345	$	13,143	$	13,370	$	13,185	(1	%)	—
Interest checking		14,836		14,394		14,334		15,061		15,509	3	%	(4	%)
Savings		16,075		15,616		15,390		14,620		13,689	3	%	17	%
Money market		6,896		6,363		6,247		6,244		6,377	8	%	8	%
Foreign office (a)		2,443		2,249		1,808		1,637		1,343	9	%	82	%

Subtotal - Transaction deposits		53,458		51,967		50,922		50,932		50,103	3	%	7	%

Other time		10,884		11,011		10,290		10,780		11,037	(1	%)	(1	%)

Subtotal - Core deposits		64,342		62,978		61,212		61,712		61,140	2	%	5	%

Certificates - $100,000 and over		5,835		6,613		6,062		6,511		6,682	(12	%)	(13	%)
Other foreign office		3,861		2,464		1,981		732		364	57	%	960	%

Total deposits	$	74,038	$	72,055	$	69,255	$	68,955	$	68,186	3	%	9	%

(a)	Includes commercial customer Eurodollar sweep balances for which the Bancorp pays rates comparable to other commercial deposit accounts.

Average core deposits were up 2 percent sequentially and 5 percent year-over-year, with transaction deposits (excluding consumer time deposits) growing 3 percent sequentially and 7 percent from a year ago. Core

deposit growth versus the fourth quarter of 2007 was driven primarily by growth in interest checking, savings and money market balances which offset a seasonal decline in demand deposit account (DDA) and consumer certificate of deposits (CD) balances. On a year-over-year basis, strong growth in savings, foreign office deposits and money market balances more than offset lower interest checking balances.

Retail core deposits increased 2 percent sequentially and 4 percent year-over-year. Growth in savings, money market balances, and demand deposit accounts more than offset a sequential decline in CD balances and a year-over-year decline in interest checking and CDs. Commercial core deposits increased 2 percent sequentially and 7 percent year-over-year. Strong sequential growth in money market accounts, interest checking, and foreign office deposits more than offset declines in seasonally lower DDA and savings balances. On a year-over-year basis, strong growth in foreign office deposits, interest checking, money market accounts, and CDs more than offset lower DDA and savings balances.

Noninterest Income


	For the Three Months Ended											% Change
	March 2008		December 2007			September 2007		June 2007		March 2007		Seq		Yr/Yr
Noninterest Income ($ in millions)
Electronic payment processing revenue	$	213	$	223		$	212	$	205	$	185	(5	%)	15	%
Service charges on deposits		147		160			151		142		126	(8	%)	17	%
Investment advisory revenue		93		94			95		97		96	(1	%)	(3	%)
Corporate banking revenue		107		106			91		88		83	1	%	30	%
Mortgage banking net revenue		97		26			26		41		40	272	%	144	%
Other noninterest income		185		(113	)		93		96		78	NM		136	%
Securities gains (losses), net		27		7			13		—		—	286	%	NM
Securities gains, net - non-qualifying hedges on mortgage servicing rights		3		6			—		—		—	(56	%)	NM

Total noninterest income	$	872	$	509		$	681	$	669	$	608	71	%	43	%

Noninterest income of $872 million grew $363 million sequentially and $264 million from a year ago. Growth was driven by the $273 million gain resulting from the Visa IPO, partially offset by an estimated $144 million pre-tax charge to further reduce the cash surrender value of one of our BOLI policies. This charge was due to further deterioration in the values of the underlying investments of the policy, reflecting widening credit and municipal spreads during the quarter. First quarter results also included net securities gains of $30 million. Fourth quarter 2007 noninterest income included a $177 million charge related to the same BOLI policy, a $22 million loss due to the termination of cash flow hedges, and $13 million in net securities gains. Sequential growth was otherwise driven by strong mortgage banking revenue that more than offset seasonally lower payments processing and deposit service charge revenue. Year-over-year comparisons reflected strong growth in mortgage banking, payments processing, deposit service charges and corporate banking revenue.

Electronic payment processing (EPP) revenue of $213 million decreased 5 percent sequentially from seasonally strong fourth quarter levels. EPP revenue increased 15 percent from a year ago driven by continued strong merchant processing results, up 23 percent, as well as 17 percent growth in card issuer interchange primarily due to higher debit card usage. Higher debit and credit card usage volumes drove solid financial institutions revenue growth of 6 percent versus the first quarter of 2007.

Service charges on deposits of $147 million declined 8 percent sequentially and increased 17 percent compared with the same quarter last year. Retail service charges declined 16 percent from the fourth quarter, reflecting lower levels of customer activity compared with seasonally strong fourth quarter levels. Retail service charges grew 17 percent compared with the first quarter a year ago on higher customer activity and growth in the number of accounts. Commercial service charges increased 3 percent sequentially and 17 percent compared with last year. This growth primarily reflects the effect of lower market interest rates, as reduced earnings credit rates paid to customers have resulted in higher use of services fees to pay for treasury management services.

Corporate banking revenue of $107 million increased $1 million sequentially and $24 million or 30 percent year-over-year. Included in revenue for the quarter were $8 million in losses related to $102 million of commercial mortgages that were moved from the held-for-sale portfolio to the held-for-investment portfolio during the quarter. Revenue growth for both periods was driven by broad-based strength, with particularly strong growth in foreign exchange and customer interest rate derivative sales resulting from more volatile markets and increased penetration of our middle-market customer base.

Investment advisory revenue of $93 million was down 1 percent sequentially and 3 percent from the first quarter of 2007. Institutional trust revenue decreased 4 percent sequentially and 1 percent year-over-year largely due to market value declines. Brokerage fee revenue was up 3 percent sequentially and down 4 percent from the first quarter of 2007, reflecting a shift in assets from stock and bond funds to money market funds.

Mortgage banking net revenue totaled $97 million in the first quarter of 2008, a $71 million increase from the previous quarter and a $57 million increase from the first quarter of 2007. First quarter originations of $4 billion increased 49 percent sequentially and 41 percent from the prior year, driven by customer activity related to lower interest rates during the quarter. Strong originations resulted in gains on the sale of mortgages of $93 million, compared with $18 million in the fourth quarter of 2007 and $26 million in the first quarter of 2007. Effective January 1, 2008, the Bancorp adopted FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”) for valuation and treatment of origination costs related to mortgages originated for sale. The revenue impact of this adoption in the first quarter of 2008 was an increase of approximately $25 million. Upon adoption of FAS 159, origination costs of approximately $20 million this quarter are now being recognized immediately in expense that previous to this adoption were deferred and offset against flow revenue. Additionally, we recognized gains of approximately $5 million in the first quarter related to embedded gains which previous to this adoption would not have been realized until sale. Revenue for the first quarter included $11 million related to gains on the sale of portfolio loans compared with $1 million and $5 million in the fourth and first quarters of 2007. Net servicing revenue, before mortgage servicing rights (MSR) valuation adjustments, totaled $8 million in the first quarter, compared with $14 million last quarter and $13 million a year ago. MSR valuation adjustments, including mark-to-market related

adjustments on free-standing derivatives, netted to a $3 million loss in the first quarter of 2008, compared with a $6 million loss last quarter. The mortgage servicing asset, net of valuation reserve, was $592 million at quarter end on a servicing portfolio of $36.5 billion.

Net securities gains of $3 million offsetting MSR valuation adjustments were recorded in the first quarter on non-qualifying hedges on mortgage servicing rights compared with $6 million last quarter.

Net gains on investment securities were $27 million in the first quarter of 2008 compared with net gains of $7 million last quarter.

Other noninterest income totaled $185 million in the first quarter compared with a loss of $113 million last quarter and income of $78 million in the same quarter last year. Results in the first quarter of 2008 included a $273 million gain resulting from the Visa IPO and an estimated charge of $144 million related to the decrease in the cash surrender value of one of our BOLI policies. Results also included $26 million in losses associated with the sale of auto loans during the quarter and $15 million in gains on sale from auto securitization transactions. Last quarter’s results included the decrease in value of the BOLI policy of $177 million as well as a $22 million loss on the termination of hedges associated with auto loans held for sale during the fourth quarter of 2007. Also included the fourth quarter of 2007 results was a $7 million gain on the sale of $53 million of certain non-strategic credit card accounts.

Noninterest Expense


	For the Three Months Ended										% Change
	March 2008		December 2007		September 2007		June 2007		March 2007		Seq		Yr/Yr
Noninterest Expense ($ in millions)
Salaries, wages and incentives	$	347	$	328	$	310	$	309	$	292	6	%	19	%
Employee benefits		85		56		67		68		87	51	%	(3	%)
Payment processing expense		66		68		65		59		52	(3	%)	27	%
Net occupancy expense		72		70		66		68		65	3	%	10	%
Technology and communications		47		47		41		41		40	—		19	%
Equipment expense		31		32		30		31		29	(6	%)	5	%
Other noninterest expense		67		339		274		189		188	(80	%)	(64	%)

Total noninterest expense	$	715	$	940	$	853	$	765	$	753	(24	%)	(5	%)

Noninterest expense of $715 million decreased by $225 million from the fourth quarter of 2007 and $38 million from a year ago. First quarter results included the reversal of $152 million in Visa litigation reserves, $9 million in severance-related costs and $7 million in acquisition-related expenses. Fourth quarter results included $94 million in litigation expenses related to the Visa/American Express settlement and $8 million in acquisition-related expenses. Employee compensation expenses increased sequentially by $48 million. This increase was the result of seasonally higher FICA and unemployment expenses, up $18 million; $9 million in severance expense; and approximately $20 million in mortgage origination costs related to the adoption of FAS 159. Payment processing expense declined 3 percent sequentially from seasonally strong fourth quarter levels. Expense growth from a year ago was primarily related to the FAS 159 mortgage origination costs,

volume-related processing expense, incentive compensation, branch expansion related expenses including RG Crown, and technology investments.


	For the Three Months Ended
	March 2008		December 2007		September 2007		June 2007		March 2007
Total net losses charged off ($ in millions)
Commercial loans	($36	)	($48	)	($23	)	($24	)	($15	)
Commercial mortgage loans	(33	)	(15	)	(8	)	(16	)	(7	)
Commercial construction loans	(72	)	(12	)	(5	)	(7	)	(6	)
Commercial leases	—		—		—		—		(1	)
Residential mortgage loans	(34	)	(18	)	(9	)	(9	)	(7	)
Home equity	(41	)	(32	)	(27	)	(20	)	(17	)
Automobile loans	(35	)	(30	)	(25	)	(15	)	(16	)
Credit card	(20	)	(15	)	(13	)	(10	)	(8	)
Other consumer loans and leases	(5	)	(4	)	(5	)	(1	)	6

Total net losses charged off	(276	)	(174	)	(115	)	(102	)	(71	)
Total losses	(293	)	(193	)	(127	)	(124	)	(99	)
Total recoveries	17		19		12		22		28

Total net losses charged off	($276	)	($174	)	($115	)	($102	)	($71	)
Ratios
Net losses charged off as a percent of average loans and leases (excluding held for sale)	1.37	%	0.89	%	0.60	%	0.55	%	0.39	%
Commercial	1.21	%	0.66	%	0.33	%	0.44	%	0.27	%
Consumer	1.58	%	1.18	%	0.93	%	0.68	%	0.53	%

Credit Quality

Net charge-offs as a percentage of average loans and leases were 137 bps in the first quarter, compared with 89 bps in the fourth quarter of 2007 and 39 bps in the first quarter of 2007. Loss experience continues to be concentrated in Michigan and Florida and primarily related to consumer residential real estate loans as well as loans to residential real estate builders and developers. Michigan and Florida represented approximately 57 percent of total first quarter net charge-offs. Residential real estate losses were 27 percent of total net charge-offs, and losses on loans to residential real estate builders and developers were 15 percent of total net charge-offs.

Consumer net charge-offs of $135 million, or 158 bps, grew $36 million from the fourth quarter of 2007, driven primarily by losses in the residential real estate portfolio. Net charge-offs in Michigan and Florida represented 38 percent of consumer losses in the first quarter, up from 34 percent in the fourth quarter of 2007. Home equity net charge-offs of $41 million increased $9 million compared with last quarter, primarily due to increased losses on brokered home equity loans reflecting borrower stress and lower home price valuations. Originations of these loans has been discontinued. Net losses on brokered home equity loans were $23 million, or 55 percent, of first quarter home equity losses. Brokered home equity loans represented $2.6 billion, or 22 percent, of total home equity portfolio of $11.8 billion. Michigan and Florida represented 40 percent of first quarter home equity losses, up from 37 percent in the fourth quarter of 2007. Net charge-offs within the residential mortgage portfolio were $34 million, an increase of $16 million, primarily as a result of declining property values on loans at foreclosure, with losses in Michigan and Florida representing 64 percent of losses in the first quarter, up from 58 percent in the previous quarter. Net charge-offs in the auto portfolio

increased $5 million from the fourth quarter to $35 million. The auto loan charge-off ratio increased due primarily to the movement during the last several quarters of more recent vintage auto loans from the portfolio to held for sale, which has resulted in a portfolio consisting of more mature loans nearer to their peak loss cycle. Prior quarter auto loan net charge offs also include a $1 million recovery due to a sale of charged off loans.

Commercial net charge-offs of $141 million, or 121 bps, increased $66 million compared with the fourth quarter of 2007. Losses related to residential real estate builders and developers represented $42 million, or 30 percent, of commercial charge-offs. Commercial construction net charge-offs increased to $72 million from $12 million the previous quarter, driven by homebuilder and residential development losses. Michigan and Florida accounted for 89 percent of these losses. Commercial mortgage net charge-offs increased to $33 million, up $18 million from the fourth quarter of 2007. Michigan and Florida accounted for 82 percent of these losses. Net charge-offs in the C&I portfolio were $36 million, down $12 million from the fourth quarter of 2007.


	For the Three Months Ended
	March 2008			December 2007			September 2007			June 2007			March 2007
Allowance for Credit Losses ($ in millions)
Allowance for loan and lease losses, beginning	$	937		$	827		$	803		$	784		$	771
Total net losses charged off		(276	)		(174	)		(115	)		(102	)		(71	)
Provision for loan and lease losses		544			284			139			121			84

Allowance for loan and lease losses, ending		1,205			937			827			803			784
Reserve for unfunded commitments, beginning		95			79			77			79			76
Provision for unfunded commitments		8			13			2			(2	)		3
Acquisitions		—			3			—			—			—

Reserve for unfunded commitments, ending		103			95			79			77			79
Components of allowance for credit losses:
Allowance for loan and lease losses		1,205			937			827			803			784
Reserve for unfunded commitments		103			95			79			77			79

Total allowance for credit losses	$	1,308		$	1,032		$	906		$	880		$	863
Ratio
Allowance for loan and lease losses as a percent of loans and leases		1.49	%		1.17	%		1.08	%		1.06	%		1.05	%

Provision for loan and lease losses totaled $544 million in the first quarter of 2008, exceeding net charge-offs by $268 million. The increase in the provision for loan and lease losses and allowance for loan and lease losses was driven by higher probable losses resulting from deterioration in residential real estate collateral values and negative trends in nonperforming and other criticized assets.

The allowance for loan and lease losses represented 1.49 percent of total loans and leases outstanding as of quarter end, compared with 1.17 percent last quarter and 1.05 percent in the same quarter last year.


	As of
	March 2008			December 2007			September 2007			June 2007			March 2007
Nonperforming Assets and Delinquency ($ in millions)
Commercial loans	$	300		$	175		$	175		$	136		$	138
Commercial mortgage		312			243			146			113			107
Commercial construction		408			249			105			65			57
Commercial leases		11			5			5			4			5
Residential mortgage (a)		211			121			74			40			38
Home equity (b)		128			91			61			45			41
Automobile		5			3			3			3			4
Credit card (c)		13			5			—			—			—
Other consumer loans and leases		—			1			—			—			—

Total nonaccrual loans and leases	$	1,388			893			569			406			390
Repossessed personal property		22			21			19			17			9
Other real estate owned (d)		182			150			118			105			95

Total nonperforming assets	$	1,592		$	1,064		$	706		$	528		$	494

Total loans and leases 90 days past due	$	539		$	491		$	360		$	302		$	243
Nonperforming assets as a percent of total loans, leases and other assets, including other real estate owned		1.96	%		1.32	%		0.92	%		0.70	%		0.66	%

a)	Nonaccrual loans include debt restructuring balances of $73 million as of 03/31/08, $29 million as of 12/31/07, $6 million as of September 30, 2007 and $2 million as of June 30, 2007.

b)	Nonaccrual loans include debt restructuring balances of $86 million as of 03/31/08, $46 million as of 12/31/07, and $16 million as of 09/30/07

c)	All nonaccrual credit card balances are the result of debt restructurings.

d)	Excludes government insured advances.

Nonperforming assets (NPAs) at quarter end were $1.6 billion, or 1.96 percent of total loans and leases and other real estate owned (“OREO”), up from 1.32 percent last quarter and 0.66 percent in the first quarter a year ago. Sequential growth in NPAs was $528 million, or 50 percent, driven by increases related to residential real estate builders and developers as well as residential real estate OREO.

Commercial NPAs of $1.1 billion, or 2.20 percent, grew $363 million or 52 percent in the first quarter of 2008. Commercial NPA growth was primarily driven by continued deterioration in the commercial construction and commercial mortgage portfolios, particularly in Michigan and Florida. NPAs in the C&I portfolio of $305 million increased $126 million from the previous quarter. Commercial construction NPAs were $418 million, an increase of $162 million from the fourth quarter of 2007. Commercial mortgage NPAs were $325 million, a sequential increase of $70 million. Commercial real estate loans in Michigan and Florida represented 46 percent of our total commercial real estate portfolio. Increases in NPAs in these states represented 69 percent of commercial real estate NPA growth and these regions accounted for 66 percent of total commercial real estate NPAs. Residential real estate builders and developers represented approximately $309 million in commercial NPAs, an increase of $133 million from the fourth quarter of 2007.

Consumer NPAs of $534 million, or 1.62 percent, rose $165 million, or 45 percent in the first quarter of 2008. Of the growth, $156 million was experienced in residential real estate portfolios. Residential mortgage NPAs increased $117 million to $333 million, of which $122 million was in OREO. Of residential mortgage NPAs, $12 million were in residential construction loans (of which $5 million was OREO). Home equity NPAs increased $38 million to $162 million, of which $34 million was OREO. Residential real estate loans in Michigan and Florida represented 71 percent of the growth in residential real estate NPAs, 58 percent of total residential real estate NPAs, and 26 percent of total residential real estate loans. Included within consumer NPAs, primarily in residential real estate loans, were $172 million in troubled debt restructurings, including

$92 million restructured in the first quarter of 2008. These debt restructurings assist qualifying borrowers in creating workable payment plans to enable them to remain in their homes.

Loans still accruing over 90 days past due were $539 million, up $48 million from the fourth quarter of 2007. Consumer 90 days past due balances increased 5 percent from the previous quarter and commercial 90 days past due balances increased 18 percent. Growth in commercial and consumer 90 days past dues was generally concentrated in commercial real estate and residential mortgages in the regions noted earlier.

Capital Position/Other


	For the Three Months Ended
	March 2008 (a)		December 2007		September 2007		June 2007		March 2007
Capital Position
Average shareholders’ equity to average assets	8.43	%	8.77	%	9.13	%	9.53	%	10.05	%
Tangible equity	6.22	%	6.05	%	6.83	%	6.92	%	7.65	%
Regulatory capital ratios:
Tier I capital	7.71	%	7.72	%	8.46	%	8.13	%	8.71	%
Total risk-based capital	11.32	%	10.16	%	10.87	%	10.54	%	11.19	%
Tier I leverage	8.29	%	8.50	%	9.23	%	8.76	%	9.36	%

(a)	Current period regulatory capital data and ratios are estimated

The tangible common equity ratio increased 17 bps to 6.22 percent due to higher retained earnings and the effect of loan securitizations. The Tier 1 capital ratio decreased 1 bps to 7.71 percent. The total capital ratio increased 116 bps due to the aforementioned factors and the issuance of $1.0 billion on Tier 2 qualifying subordinated debt during the first quarter.

There were no open market share repurchases during the quarter and, as of March 31, 2008, there were 19.2 million shares remaining under our current share repurchase authorization.

On August 16, 2007, Fifth Third Bancorp and First Charter Corporation signed a definitive agreement for Fifth Third to acquire First Charter, which operates 57 branches in North Carolina and two in Atlanta. Fifth Third has received all regulatory approvals and currently expects to close this transaction in the latter part of the second quarter of 2008 after completion of the election process. This transaction, when consummated, is expected to reduce capital ratios by approximately 35 bps. On March 26, 2008, Fifth Third and First Horizon Corporation announced an agreement was reached on terms for the completion of Fifth Third’s acquisition of nine branches and their deposits in the Atlanta metro area from First Horizon, originally announced September 25, 2007. Fifth Third has received all necessary regulatory approvals and the transaction is expected to close in the second quarter of 2008.

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of March 31, 2008, the Company has $111 billion in assets, operates 18 affiliates with 1,232 full-service Banking Centers, including 107 Bank Mart^® locations open seven days a week inside select grocery stores and 2,221 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri and Georgia. Fifth Third operates five main businesses: Commercial Banking, Branch Banking, Consumer Lending, Investment Advisors and Fifth Third Processing Solutions. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2008, has $212 billion in assets under care, of which it managed $31 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ^® National Global Select Market under the symbol “FITB.”

FORWARD-LOOKING STATEMENTS

This report may contain forward-looking statements about Fifth Third Bancorp and/or the company as combined acquired entities within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent risks and uncertainties. This report may contain certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Fifth Third Bancorp and/or the combined company including statements preceded by, followed by or that include the words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) general economic conditions and weakening in the economy, specifically the real estate market, either national or in the states in which Fifth Third, one or more acquired entities and/or the combined company do business, are less favorable than expected; (2) deteriorating credit quality; (3) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (4) changes in the interest rate environment reduce interest margins; (5) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (6) Fifth Third’s ability to maintain required capital levels and adequate sources of funding and liquidity; (7) changes and trends in capital markets; (8) competitive pressures among depository institutions increase significantly; (9) effects of critical accounting policies and judgments; (10) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; (11) legislative or regulatory changes or actions, or significant litigation, adversely affect Fifth Third, one or more acquired entities and/or the combined company or the businesses in which Fifth Third, one or more acquired entities and/or the combined company are engaged; (12) ability to maintain favorable ratings from rating agencies; (13) fluctuation of Fifth Third’s stock price; (14) ability to attract and retain key personnel; (15) ability to receive dividends from its subsidiaries; (16) potentially dilutive effect of future acquisitions on current shareholders' ownership of Fifth Third; (17) effects of accounting or financial results of one or more acquired entities; (18) difficulties in combining the operations of acquired entities; (19) ability to secure confidential information through the use of computer systems and telecommunications networks; and (20) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. Additional information concerning factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements is available in the Bancorp's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the United States Securities and Exchange Commission (SEC). Copies of this filing are available at no cost on the SEC's Web site at www.sec.gov or on the Fifth Third’s Web site at www.53.com. Fifth Third undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this report.

# # #

Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Income

$ in millions

(unaudited)


	For the Three Months Ended							% Change
	March 2008		December 2007			March 2007		Seq		Yr/Yr
Interest Income
Interest and fees on loans and leases	$	1,290	$	1,386		$	1,314	(7	%)	(2	%)
Interest on securities		152		157			143	(3	%)	7	%
Interest on other short-term investments		5		7			3	(34	%)	54	%

Total interest income		1,447		1,550			1,460	(7	%)	(1	%)
Interest Expense
Interest on deposits		399		493			498	(19	%)	(20	%)
Interest on short-term borrowings		80		100			59	(20	%)	36	%
Interest on long-term debt		148		178			167	(17	%)	(12	%)

Total interest expense		627		771			724	(19	%)	(13	%)

Net Interest Income		820		779			736	5	%	11	%
Provision for loan and lease losses		544		284			84	91	%	550	%

Net interest income after provision for loan and lease losses		276		495			652	(44	%)	(58	%)
Noninterest Income
Electronic payment processing revenue		213		223			185	(5	%)	15	%
Service charges on deposits		147		160			126	(8	%)	17	%
Investment advisory revenue		93		94			96	(1	%)	(3	%)
Corporate banking revenue		107		106			83	1	%	30	%
Mortgage banking net revenue		97		26			40	272	%	144	%
Other noninterest income		185		(113	)		78	NM		136	%
Securities gains (losses), net		27		7			—	286	%	NM
Securities gains, net - non-qualifying hedges on mortgage servicing rights		3		6			—	(56	%)	NM

Total noninterest income		872		509			608	71	%	43	%
Noninterest Expense
Salaries, wages and incentives		347		328			292	6	%	19	%
Employee benefits		85		56			87	51	%	(3	%)
Payment processing expense		66		68			52	(3	%)	27	%
Net occupancy expense		72		70			65	3	%	10	%
Technology and communications		47		47			40	—		19	%
Equipment expense		31		32			29	(6	%)	5	%
Other noninterest expense		67		339			188	(80	%)	(64	%)

Total noninterest expense		715		940			753	(24	%)	(5	%)
Income before income taxes		433		64			507	576	%	(15	%)
Applicable income taxes		141		48			148	194	%	(5	%)

Net income	$	292	$	16		$	359	1,690	%	(19	%)

Net income available to common shareholders (a)	$	292	$	16		$	359	1,710	%	(19	%)

(a)	Dividends on preferred stock are $.185 million for all quarters presented

Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)


	As of									% Change
	March 2008			December 2007			March 2007			Seq		Yr/Yr
Assets
Cash and due from banks	$	3,092		$	2,660		$	2,211		16	%	40	%
Available-for-sale and other securities (a)		12,421			10,677			10,592		16	%	17	%
Held-to-maturity securities (b)		353			355			347		(1	%)	2	%
Trading securities		184			171			160		8	%	15	%
Other short-term investments		517			620			256		(17	%)	102	%
Loans held for sale		2,573			4,329			1,382		(41	%)	86	%
Portfolio loans and leases:
Commercial loans		26,590			24,813			21,479		7	%	24	%
Commercial mortgage loans		12,155			11,862			10,906		2	%	11	%
Commercial construction loans		5,592			5,561			5,688		1	%	(2	%)
Commercial leases		3,727			3,737			3,687		—		1	%
Residential mortgage loans		9,873			10,540			8,484		(6	%)	16	%
Home equity		11,803			11,874			11,926		(1	%)	(1	%)
Automobile loans		8,394			9,201			10,400		(9	%)	(19	%)
Credit card		1,686			1,591			1,111		6	%	52	%
Other consumer loans and leases		1,066			1,074			1,140		(1	%)	(6	%)

Portfolio loans and leases		80,886			80,253			74,821		1	%	8	%
Allowance for loan and lease losses		(1,205	)		(937	)		(784	)	29	%	54	%

Portfolio loans and leases, net		79,681			79,316			74,037		—		8	%
Bank premises and equipment		2,265			2,223			2,001		2	%	13	%
Operating lease equipment		317			353			212		(10	%)	50	%
Goodwill		2,460			2,470			2,192		—		12	%
Intangible assets		143			147			158		(3	%)	(9	%)
Servicing rights		596			618			572		(4	%)	4	%
Other assets		6,802			7,023			5,704		(3	%)	19	%

Total assets	$	111,404		$	110,962		$	99,824		—		12	%

Liabilities
Deposits:
Demand	$	14,949		$	14,404		$	13,510		4	%	11	%
Interest checking		14,842			15,254			15,755		(3	%)	(6	%)
Savings		16,572			15,635			14,256		6	%	16	%
Money market		7,077			6,521			6,336		9	%	12	%
Foreign office		2,354			2,572			1,495		(8	%)	57	%
Other time		9,883			11,440			10,869		(14	%)	(9	%)
Certificates - $100,000 and over		4,993			6,738			6,776		(26	%)	(26	%)
Other foreign office		731			2,881			191		(75	%)	282	%

Total deposits		71,401			75,445			69,188		(5	%)	3	%
Federal funds purchased		5,612			4,427			1,622		27	%	246	%
Other short-term borrowings		6,387			4,747			2,383		35	%	168	%
Accrued taxes, interest and expenses		2,379			2,427			2,324		(2	%)	2	%
Other liabilities		2,226			1,898			1,883		17	%	18	%
Long-term debt		14,041			12,857			12,620		9	%	11	%

Total liabilities		102,046			101,801			90,020		—		13	%
Total shareholders’ equity (c)		9,358			9,161			9,804		2	%	(5	%)

Total liabilities and shareholders’ equity	$	111,404		$	110,962		$	99,824		—		12	%

(a) Amortized cost	$	12,417		$	10,821		$	10,754		15	%	15	%
(b) Market values		353			355			347		(1	%)	2	%
(c) Common shares, stated value $2.22 per share (in thousands):
Authorized		1,300,000			1,300,000			1,300,000		—		—
Outstanding, excluding treasury		532,106			532,672			550,077		—		(3	%)
Treasury		51,321			51,516			33,350		—		54	%

Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

$ in millions

(unaudited)


	For the Three Months Ended
	March 2008			March 2007
Total shareholders’ equity, beginning	$	9,161		$	10,022
Net income		292			359
Other comprehensive income, net of tax:
Change in unrealized gains and (losses):
Available-for-sale securities		96			14
Qualifying cash flow hedges		39			1
Change in accumulated other comprehensive income related to employee benefit plans		2			1

Comprehensive income		429			375
Cash dividends declared:
Common stock		(234	)		(231	)
Preferred stock (a)		—			—
Stock-based awards exercised, including treasury shares issued		2			18
Stock-based compensation expense		12			17
Loans repaid (issued) related to exercise of stock-based awards, net		(2	)		2
Change in corporate tax benefit related to stock-based compensation		(10	)		(5	)
Shares acquired for treasury		—			(280	)
Impact of cumulative effect of change in accounting principle (b)		—			(98	)
Other		—			(16	)

Total shareholders’ equity, ending	$	9,358		$	9,804

(a)	Dividends on preferred stock are $.185 million for all quarters presented

(b)

2007 includes $96 million impact due to the adoption of FSP FAS 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leverage Lease Transaction” on January 1, 2007 and $2 million impact due to the adoption of FIN No. 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109” on January 1, 2007.

Fifth Third Bancorp and Subsidiaries

Regulatory Capital (a)

$ in millions

(unaudited)


	As of
	March 2008			December 2007			September 2007			June 2007			March 2007
Tier I capital:
Shareholders’ equity	$	9,358		$	9,161		$	9,293		$	9,191		$	9,804
Goodwill and certain other intangibles		(2,632	)		(2,590	)		(2,299	)		(2,318	)		(2,328	)
Unrealized (gains) losses		(23	)		118			196			294			162
Qualifying trust preferred securities		2,302			2,303			1,390			815			815
Other		(6	)		(68	)		621			634			600

Total tier I capital	$	8,999		$	8,924		$	9,201		$	8,616		$	9,053

Total risk-based capital:
Tier I capital	$	8,999		$	8,924		$	9,201		$	8,616		$	9,053
Qualifying allowance for credit losses		1,327			1,051			926			901			885
Qualifying subordinated notes		2,884			1,758			1,697			1,646			1,696

Total risk-based capital	$	13,210		$	11,733		$	11,824		$	11,163		$	11,634

Risk-weighted assets	$	116,737		$	115,529		$	108,754		$	105,950		$	103,937
Ratios:
Average shareholders’ equity to average assets		8.43	%		8.77	%		9.13	%		9.53	%		10.05	%
Regulatory capital:
Tier I capital		7.71	%		7.72	%		8.46	%		8.13	%		8.71	%
Total risk-based capital		11.32	%		10.16	%		10.87	%		10.54	%		11.19	%
Tier I leverage		8.29	%		8.50	%		9.23	%		8.76	%		9.36	%

(a)	Current period regulatory capital data and ratios are estimated

(b) Litigation Update

During May 2005, the Bancorp filed suit in the United States District Court for the Southern District of Ohio related to a dispute with the Internal Revenue Service concerning the timing of deductions associated with certain leveraged lease transactions in its 1997 tax return. The Internal Revenue Service has also proposed adjustments to the tax effects of certain leveraged lease transactions in subsequent tax return years. The proposed adjustments, including penalties, relate to the Bancorp’s portfolio of lease-in lease-out transactions, service contract leases and qualified technology equipment leases with both domestic and foreign municipalities. The Bancorp is challenging the Internal Revenue Service’s proposed treatment of all of these leasing transactions. The Bancorp’s original net investment in these leases totaled approximately $900 million. Management continues to believe that its treatment of these leveraged leases was appropriate and in compliance with applicable tax law and regulations. While management cannot predict with certainty the result of the suit, given the tax treatment of these transactions has been challenged by the Internal Revenue Service, management believes a resolution may involve a projected change in the timing of the leveraged lease cash flows. Under FSP FAS No. 13-2, which was effective as of January 1, 2007, a change or projected change in the timing of lessor cash flows related to income taxes generated by leveraged lease transactions, excluding interest and penalty assessments, requires a lessor to recalculate the rate of return and allocation of income to positive investment years from inception of the lease. Upon adoption of FSP FAS No. 13-2 on January 1, 2007, the Bancorp recorded a $96 million after-tax charge to retained earnings related to its portfolio of leveraged leases. The amount of this reduction will be recognized as income over the remaining term of the affected leases. The Bancorp has made deposits of $407 million with the IRS to mitigate the risk associated with tax years currently under audit. These deposits enable the Bancorp to stop the accrual of interest on any tax deficiency, to the extent of the deposit, if the Bancorp is not ultimately successful. Trial for the three 1997 lease-leaseback transactions concluded on April 17, 2008 and the jury rendered a verdict in the form of a series of answers to special interrogatories. Some of the jury’s answers to the interrogatories favored Fifth Third and some favored the IRS. Because the court has not yet entered a judgment in this case, the Bancorp is not able to assess what effects the jury’s answers may have. If the case is ultimately determined unfavorably to the Bancorp, the Bancorp will explore what rights of appeal it may have or what options for relief it may seek.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


				FIFTH THIRD BANCORP
				(Registrant)

April 23, 2008				/s/ Christopher G. Marshall
				Christopher G. Marshall
				Executive Vice President and Chief Financial Officer