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Fifth Third Announces 2013 CCAR Capital Plan

Fifth Third Bancorp (NASDAQ: FITB) announced today that the Board of Governors of the Federal Reserve System (“the Federal Reserve”) did not object to the proposed potential capital actions from April 1, 2013 through March 31, 2014 (the “CCAR period”) included in Fifth Third’s capital plan submitted in January under the Comprehensive Capital Analysis and Review (“CCAR”) process. Fifth Third also announced that its company-run internal stress test results under the Dodd-Frank Act stress testing rules are being disclosed on a Form 8-K published contemporaneously with this release.

In comments related to Fifth Third’s announcement regarding its 2013 capital plan under CCAR, Kevin Kabat, CEO of Fifth Third Bancorp, said, “Our capital plan reflects our strong capital base, profitability and earnings generation, which enable us to return excess capital generation to shareholders while retaining more than sufficient capital to support ongoing business opportunities and balance sheet growth. The plan included a number of potential actions which were designed and intended to maintain a strong capital position, while moving our capital structure further toward new Basel III standards and reducing our overall cost of capital and common shares outstanding. We believe our plan for capital management and retention is balanced and prudent given our expectations, our capital position under current and proposed regulatory capital rules, and the current economic outlook.”

2013 CCAR Capital Plan

Fifth Third included in its capital plan the following potential capital actions for the period beginning April 1, 2013 and ending March 31, 2014, subject to Board approval and other factors including regulatory developments and market conditions.
  • The potential increase in the quarterly common stock dividend, which will be considered by the Board at its scheduled quarterly meeting in June
  • The potential repurchase of up to $750 million in trust preferred securities (TruPS), subject to the determination of a regulatory capital event, and replacement with the issuance of a similar amount of Tier 2-qualifying subordinated debt
  • The potential conversion of the $398 million in outstanding Series G 8.5 percent convertible preferred stock into approximately 35.5 million common shares issued to the holders. 1 (Note that these securities are currently accounted for under the “if-converted” method for inclusion in common shares for earnings per share reporting purposes.)
    • If this conversion were to occur, we would intend to repurchase the common shares issued in the conversion up to $550 million in market value 2, and issue $550 million in preferred stock.
    • The net effect of the potential Series G transactions described above is to produce a Tier 1 capital neutral outcome (Tier 1 common equity would be modestly reduced by $152 million). It would be approximately neutral to common shares outstanding, but would reduce diluted common shares for earnings per share reporting purposes by approximately 33.6 million shares. 3
  • The potential repurchase of common shares in an amount up to $984 million, including any shares issued in a Series G preferred stock conversion (up to $550 million in value). 4
    • In addition, we would currently intend to make incremental repurchases of common shares in the amount of any after-tax gains from the sale of Vantiv, Inc. (“Vantiv”) stock.
    • These common share repurchase plans were intended to limit the further accumulation of excess common equity capital during the CCAR period.
  • The potential issuance of an additional $500 million in preferred stock to increase the non-common portion of Tier 1 capital as defined under Basel III proposed rules

The Federal Reserve’s non-objection applies only to those actions proposed in Fifth Third’s CCAR submission to be taken from April 1, 2013 through March 31, 2014. Any actions that Fifth Third assumed as part of this CCAR submission that it may potentially take subsequent to March 31, 2014 would be subject to a subsequent CCAR plan submission and non-objection for that subsequent period. Any capital distributions, including those contemplated in the above announced actions, are subject to evaluation and approval by the Board of Directors at any given time, Fifth Third’s performance, the state of the economic environment, market conditions, regulatory factors, and other risks and uncertainties. Fifth Third has no current information and makes no representations as to whether, when or in what amounts there may be a) future gains from the sale of Vantiv stock; b) the potential for a mandatory conversion of Series G shares and issuance of replacement preferred stock; c) a regulatory capital event with respect to TruPS securities and issuance of replacement subordinated debt; d) other capital actions or distributions requiring future Board approval, future regulatory developments, or future requisite market conditions.

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