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Fifth Third Bancorp

annual report 2005

focused.

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Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $105.2 billion in assets and operates 19 affiliates with 1,119 full-service banking centers, including 119 BankMart® locations open seven days a week inside select grocery stores, and 2,024 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania and Missouri. The financial Rapids strength of Fifth Third’s Ohio and Michigan banks continues to be recognized by rating agencies with Detroit Cleveland deposit ratings of AA- and Aa1 from Standard & Poor’s and Moody’s, respectively. Additionally, Fifth Third Bancorp continues to maintain among the highest short-term ratings available at A-1+ and Prime-1 and is recognized by Moody’s with a senior debt rating of Aa2. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors and Fifth Third Processing Solutions. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2005, has $196 billion in assets under care – of which it manages $33 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 through the NASDAQ® National Market Systemunder the Orlando symbol “FITB.”

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financial highlights

For the years ended December 31 2005 2004 Percent Change

$ in millions, except per share data

Earnings and Dividends

Net Income $1,549 $1,525 2

Common Dividends Declared 810 735 10

Per Share Earnings $2.79 $2.72 3

Diluted Earnings 2.77 2.68 3

Cash Dividends 1.46 1.31 11

Book Value 17.00 16.00 6

At Year-End

Assets $105,225 $94,456 11

Total Loans and Leases 71,229 60,367 18

Deposits 67,434 58,226 16

Shareholders’ Equity 9,446 8,924 6

Year-End Market Price 37.72 47.30 (20)

Market Capitalization 20,958 26,377 (21)

Key Ratios (percent)

Return on Average Assets (ROA) 1.50 1.61 (7)

Return on Average Equity (ROE) 16.6 17.2 (3)

Net Interest Margin 3.23 3.48 (7)

Efficiency Ratio 53.2 53.9 (1)

Average Shareholders’ Equity to Average Assets 9.06 9.34 (3)

Actuals

Common Shares Outstanding (in thousands) 555,623 557,649 —  

Banking Centers 1,119 1,011 11

Full-Time Equivalent Employees 21,681 19,659 10

Deposit and Debt Ratings Moody’s Standard & Poor’s Fitch

Fifth Third Bancorp

Commercial Paper Prime -1 A-1 F1+

Senior Debt Aa2 A+ AA-

Fifth Third Bank and Fifth Third Bank (Michigan)

Short-Term Deposit Prime -1 A-1+ F1+

Long-Term Deposit Aa1 AA- AA

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letter from the President & Chief Executive Officer

focused on

value creation.

Dear Shareholders and Friends,

2005 proved to be a challenging year for Fifth Third, with both revenue and net income significantly below our initial expectations. Earnings per diluted share for the full-year were $2.77, an increase of three percent over last year’s earnings of $2.68. Total revenues were flat compared to the prior year and totaled $5.5 billion.

Return on average assets for the full-year 2005 was 1.50 percent and return on average equity was 16.6 percent, compared to 1.61 percent and 17.2 percent, respectively, in 2004. Despite these relatively modest results, your company still earned more than $1.5 billion in net income and added significantly to our customer base.

Throughout its history, the story of Fifth Third has been one of growth and value creation that was perhaps

unrivaled in the banking industry. In fact, Fifth Third is more than five times larger than it was when I sat down

to compose this letter just 10 years ago. During that time, deposits, loans, assets and, most importantly, net income have all increased more than five-fold. Unfortunately, we have learned that challenges can also increase with size and even the most highly regarded

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“We have learned that challenges can also increase with size and even the most highly regarded of companies and strongest of cultures are not immune to difficulties.”

companies and strongest cultures are not immune to difficulties. Our performance over the last two years has not matched our historical success. And while disappointing and below our potential, I believe these results are best understood within the context of the many things we accomplished this year to improve our competitive position and drive revenue and earnings growth in the years to come – progress that will ultimately be reflected in our performance. After reviewing both our business performance and key priorities as detailed in this letter and the pages that follow, I hope you will agree that Fifth Third is making significant progress and taking the right steps to regain

traction and enhance shareholder value over the long run.

2005 Business Performance

Loan growth remained strong in 2005, with period end total loans and leases increasing by $10.9 billion, or 18 percent, over 2004. Commercial customer additions and steadily improving loan demand throughout the year resulted in a 22 percent increase in commercial loan outstandings. Similar success was achieved through the hard work of our retail employees, with consumer loans increasing by 13 percent over the prior year.

Retail transaction account growth and commercial customer additions resulted in good deposit growth trends in 2005, despite a sluggish start to the year. On a full-year average basis, total transaction deposits increased by $4.8 billion, or 11 percent, and total core deposits increased by $7.0 billion, or 14 percent, over 2004.

Noninterest revenues experienced mixed results in 2005, with strong performance from Fifth Third Processing Solutions and our commercial line of

business mitigated by more modest results in other areas. In total, noninterest revenues increased by a healthy 10 percent over the prior year, excluding operating lease revenue, gains and losses on the sales of securities and a gain realized on the sales of certain third-party sourced merchant processing contracts in 2004.

Despite good loan and deposit trends, spread-based revenues proved to be our greatest challenge in 2005 and remained essentially unchanged from prior year levels. Increased funding costs resulting from the convergence of short- and long-term interest rates and sharp declines in returns realized from our securities portfolio resulted in 25 basis points of contraction in our net interest margin. This compression offset growth generated from core banking activities and resulted in flat overall revenue performance for the year.

Operating expenses decreased by two percent compared to 2004 but increased by 11 percent when debt termination charges in the prior year are excluded. This increase was largely due to sales force and banking center additions and investments in information technology. While the investments associated with this increase in spending resulted in negative operating leverage in 2005, we believe that these improvements in

distribution and infrastructure are essential to the future success of Fifth Third.

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Our Priorities

Investing For Growth

With the profit margins available in our business,

success has always been a function of the ability to

generate revenue growth. However, the temptation to

curtail investments and slash costs is extremely high

during difficult times. The benefits of these strategies

are generally short term in nature and the impact can

extend well into the future. Success in any business is

defined as consistently delivering above average returns

that compound over time. History has shown that a

company cannot shrink its way to meeting that standard.

During 2005, Fifth Third:

• Invested in distribution. We added 63 de-novo

     banking centers and relocated other existing

     facilities across the footprint to drive deposit and

     loan growth in the years to come. These additions

     complement the 76 new banking centers added in

     2004 and together will be an integral growth driver

     as we continue to attract customers and increase

     productivity. We acquired and integrated First

     National Bankshares of Florida, creating three

     affiliates in some of the fastest growing deposit

     markets in the country. Continuing de-novo

     investments will result in powerful distribution

     networks in the Orlando, Tampa and Southwest

     Florida metropolitan markets.

• Invested in people. We increased our sales force by

     nearly 1,400 positions in 2005. We still have work

     to do in reaching productivity goals for many of

     these additions, but I remain confident that a

     strong culture of sales measurement, accountability

     and performance-based rewards will drive future

     revenue growth.

• Invested in customer service. The manner and

     efficiency in which we support and interact with

     our customers is critical to Fifth Third’s success.

     In order to improve our service, we began

     extensive customer polling efforts to identify

     successes as well as opportunities for

     improvement. Based on feedback from our

     customers, we realigned employee incentives,

     adjusted fee policies and expanded our product

     set. More opportunities exist to enhance customer

     service levels and improve retention, and

     we are committed to delivering best-in-class

     customer service.

• Invested in technology. With the expertise that

     comes from the successful handling of more than

     16.4 billion electronic transactions in 2005,

     we are dedicated to providing a proven sales

     culture with the absolute best tools available to

     serve and grow our customer base. Initiatives

     included new relationship management systems,

     fully automated and integrated teller platforms,

     new call center management systems and

     improved processing capabilities with enhanced

     capacity, reliability and scale.

“Success in any business is defined as consistently delivering above average returns that compound over time. History has shown that a company cannot shrink its way to meeting that standard.”

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“Our primary responsibility

is to invest shareholders’ capital

in a manner that enhances value while ensuring

that our businesses are being properly

compensated for the level of risk being assumed.”

Maintaining Financial Discipline

Financial discipline is the foundation of great companies, and great companies consistently deliver superior risk-adjusted returns relative to the competition. Fifth Third is determined to once again be one of those companies. Our primary responsibility is to invest shareholders’ capital in a manner that enhances value while ensuring that our businesses are being properly compensated for the level of risk being assumed. We will continue to improve our ability to measure and manage risk in all its various forms – credit, interest rate, operational liquidity and general business – in order to reduce volatility and react more quickly to changing business and economic climates.

In business, just as in personal finance, investment climates are not all created equal. Fifth Third will take a long-term view and will forego short-term profits if they are accompanied by the potential for excess risk and volatility. During 2005, Fifth Third:

• Responded to relatively low long-term interest rates and a poor climate for acquisitions by returning excess capital to shareholders. We increased the dividend by 11 percent to $1.46 per common share and repurchased 38 million shares, six percent of total outstanding, for $1.6 billion.

• Responded to the relatively inferior return inherent in continuing to invest in bond securities by foregoing current period earnings through a $5.6 billion, or 18 percent, reduction in average securities held on the balance sheet.

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Fostering a Team-Driven Culture

I have always believed, regardless of starting position, the bank with the best people will gain leading market share over time. Everything we do at Fifth Third is focused on identifying and rewarding top performers with the opportunity to drive results through our unique affiliate operating model. In recent years, as we have many times in the past, we experienced some change at both the affiliate and senior management levels. We thank these leaders for their efforts and honor their contributions by recommitting to the challenge of revenue growth and matching the work ethic for which this company has

long been known. In each of our affiliates, we have experienced leaders working as a team to serve all of the customers in their market. Whether, like me, these leaders have been with Fifth Third for a very long time or have brought to our company many years of banking experience gained elsewhere, we all share a team orientation, a sales focus and a desire to serve our customers and shareholders. We remain committed to the challenge of driving revenue growth and capitalizing on the opportunities that lie ahead.

Supporting Our Communities

Fifth Third has always operated under the premise that helping to build stronger communities will result in a

stronger and more dynamic bank. Lending to build and revitalize neighborhoods, philanthropic giving and active community involvement are long-standing traditions at Fifth Third. I invite you to read about our most recent

efforts on page 20 of this report.

“We remain committed to the challenge of driving revenue growth and capitalizing on the opportunities that lie ahead.”

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“We have asked a great deal of our employees in 2005, and they have delivered. However, many challenges remain, and we still have a lot of work remaining to complete our shared vision of what Fifth Third can become.”

In Closing

Fifth Third has truly been transformed in the last couple of years, but perhaps not in the manner you would expect. The growth trajectories of the key drivers in our business – deposits, fees and loans – remain intact, with annualized growth rates consistent with Fifth Third’s standards and historical performance. Change can be seen, however, in improvements in our commitment to customer service, use of technology, corporate governance and capital and risk management. Perhaps more so than at any time in our history, Fifth Third today has the infrastructure necessary to aggressively

compete in a consolidating financial services landscape while maintaining the local market differentiation provided by our affiliate bank model. In the years to come, you can expect to see Fifth Third continuing to increase our presence in high opportunity markets while remaining mindful of opportunities to establish affiliates in new metropolitan markets.

I would like to thank our customers, employees, board members and the communities in our 19 affiliates for their contributions and continued support. We have asked a great deal of our employees in 2005, and they have delivered. However, many challenges remain, and we still have a lot of work remaining to complete our shared vision of what Fifth Third can become. The focus for 2006 will be on continuing to generate quality deposit and loan growth, enhancing all of our businesses and gaining market share by meeting more of the financial services needs of our customers. Our

existing competitive and financial strengths, combined with superior talent and an enhanced infrastructure and focus, make me extremely optimistic about the years to come.

Sincerely,

George A. Schaefer, Jr.

President & Chief Executive Officer

January 2006

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sticking to a successful business model

focused on commitment.

Our affiliate operating structure differentiates us from the competition and ensures that our customers receive individualized service and comprehensive financial solutions. All aspects of customer relationships are managed locally by affiliate presidents responsible for each affiliate’s

operation and community development. Competitive pressures are different in every market, so we rely on experienced local officers empowered

with the authority and infrastructure to employ the best practices of our company to deliver a personalized level of service to our customers.

FITB Affiliate State Deposits (billions) Percent of FITB Assets (billions) Banking Centers Affiliate President Years in Banking Cincinnati OH $12.3 18% $17.4 106 R. Sullivan

30 Chicago IL 8.9 13 10.1 140 T. Zink 17 Western Michigan MI 7.3 11 9.6 135 M. Van Dyke 20 Detroit MI 4.4 7 7.1 83 G. Kosch 22 Columbus OH 3.7 5 5.1 65 R. Eversole 21 Cleveland OH 3.7 5 5.7 86 T. Clossin 22 South Florida FL 3.6 5 6.8 45 T. Quinn 13 Dayton OH 3.3 5 3.8 62 R. Webb 19 Indianapolis IN 3.3 5 5.4 81 M. Spagnoletti 31 Toledo OH 3.2 5 4.6 50 R. LaClair 23 Southern Indiana IN 2.4 4 3.4 52 J. Daniel 36 Louisville KY 1.8 3 2.2 46 P. McHugh 19 Northern Michigan MI 1.4 2 2.1 25 J. Pelizzari 27 Northern Kentucky KY 1.3 2 1.7 34 T. Rawe 31 Nashville TN 1.1 2 2.1 20 D. Hogan 21 Lexington KY 1.1 2 1.8 21 S. Barnes 34 Ohio Valley WV 0.9 1 1.6 27 D. Call 18 Tampa Bay FL 0.9 1 1.4 26 B. Keenan 19 Orlando FL 0.7 1 1.3 15 G. Howlett 30

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Fifth Third believes in the affiliate model. In a

relationship business, this model keeps motivated

decision makers close to the customer. It creates

the ability to respond with market-specific strategies and

flexible pricing to go after entrenched large

market share competitors and the less efficient smaller

institutions. It is based on the individual talent and

entrepreneurship of our employees. It inspires new

ideas from the bottom up because all of our affiliates,

business lines and banking centers are managed to

detailed financial statements. It fosters a culture of

business ownership. It rewards talented individuals for

making the right decisions for customers, communities

and shareholders. It encourages our employees to

work together across business lines to develop

complete financial solutions for our customers.

Our affiliate model is characterized by a local presence

with market knowledge, management accountability

and a team approach. We believe it is the key to our

past and future success, and we are committed to it.

Establishing a presence in new metropolitan markets is an important part of our continuing growth. In 2005, new affiliates were established in Tampa and Orlando, and our presence was greatly enhanced in

Fifth Third operates 19 affiliates with 1,119 banking centers and 2,024 Jeanie® ATMs in 10 states and now has three affiliates with $5.2 billion in deposits and $9.5 billion in assets in the state of Florida.

our existing South Florida affiliate with the January acquisition of First National Bankshares of Florida. Fifth Third now has three affiliates, $5.2 billion in deposits and $9.5 billion in assets in the state of Florida. Efforts are underway to continue to expand our presence in these markets with the planned addition of 22 new banking centers in 2006. In addition, the seeds for two new affiliates were planted in 2005, with the opening of two banking centers in St. Louis and three banking centers in Pittsburgh.

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long-term vision of people and technology

focused on expertise.

Fifth Third has been highly successful over the

years in gaining new customers. High-performing

employees, a performance-based sales culture,
a strong balance sheet and nimble operating model

have afforded Fifth Third numerous advantages

in a highly competitive industry. Beginning in

2004 and continuing in earnest through 2005,

Fifth Third endeavored to add another advantage

over peers – a superior “Service First” mentality

enabled by increasingly streamlined processes

and technological innovation.

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Improving the way we support and grow our customer

base is critical to continuing Fifth Third’s growth.

In order to succeed, we must improve information

flow to create a better understanding of our customers,

the products they have, the products they should have

and the opportunities to serve them better. In 2005,

we made an investment in an improved customer

relationship management solution that creates a single

customer view across our key operating platforms.

This solution crosses business lines and affiliates with

a seamless integration of a common set of sales and

management information. The simplified and faster

information flow will increase reaction time for sales

opportunities and allow for management decisions that

consider all aspects of a customer relationship.

We are committed to improving the experience our

customers have when they enter a banking center.

Recent improvements in the automation and

standardization of account opening procedures,

with predetermined touch and follow-up points, will

greatly reduce new account attrition. Our new

teller automation platform is a significant step toward

improving customer service and supplying employees

with the tools they need to deliver a great customer

experience. By eliminating the manual processes and

paper forms that create inefficiency, we are reducing

the workload to execute a single transaction and

allowing our front line employees to focus more time

where it belongs – with the customer.

Our operations group is taking major steps to ensure a

“Service First” mentality within our central call center.

Customer service personnel currently handle

approximately 50 million calls annually. Fifth Third

strives to show our customers that we value every

single one of those experiences. Strategic changes are

being implemented in how we manage, recognize and

reward representatives, with emphasis migrating from

volume to resolution. We also are in the midst of

We are committed to improving the experience our customers have when they enter a banking center.

implementing a new system to track the effective

resolution of customer service issues, allowing for

faster identification and improvement of processes.

Fifth Third is implementing an improved customer

service model through a long-term investment in

technology and efficiency that will provide a

competitive advantage for years to come. These

efforts represent a tremendous challenge, but one

in which Fifth Third has laser-like focus. Recent

increases in equipment and depreciation expenses

illustrate these investments are not without cost.

However, Fifth Third expects information technology

expenses to begin to show trend improvement in 2006,

and benefits will be realized through improvement in

customer service and ongoing growth in both our

customer base and in products delivered.

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retail banking

focused on service.

Fifth Third’s 1,119 banking centers, including

119 Bank Mart® locations open seven days a

week inside select grocery stores, and 2,024

Jeanie® ATM’s serve as the primary point of

contact for our six million customers. Fifth

Third’s internet banking and bill payment

system provides an additional point of access

for customers to manage their money quickly

and conveniently – 24 hours a day, seven days

a week. Through these channels, Fifth Third

strives to provide industry leading products,

convenience and customer service to the

individual and small business customers within

our geographic footprint.

Bancorp Average Transaction Deposits

$ billions

2000 2001 2002 2003 2004 2005

$22.5 $26.4 $35.8 $40.4 $43.2 $47.9

10 15 20 25 30 35 40

Average Consumer Loans & Leases

$ billions

2000 2001 2002 2003 2004 2005

$21.4 $22.1 $22.4 $26.3 $27.6 $31.6

10 15 20 25 30 35 40 45

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With increased database marketing and new deposit and cash management products, small business deposits increased by 19 percent in 2005.

Fifth Third is focused on continuing to drive core

deposit growth within the retail franchise, with the

goal of core funding total earning asset growth. To

accomplish this goal, we introduced an “everyday great

rate” approach on transaction accounts and time

deposits, improved customer and account

segmentation and put new tools in the hands of our

retail sales force. Our banking center employees

responded in 2005. Average transaction account

balances increased by 11 percent in 2005, highlighted

by 33 percent growth in average savings and money

market balances and eight percent growth in average

consumer demand deposits. Average core deposits

overall increased by 14 percent over the prior year.

Consumer loan generation also remained strong in

2005 with period end balances increasing by

$3.8 billion, or 13 percent, over 2004.

In 2005, our long-standing dedication to sales

performance and tracking individual results was

complemented by increased emphasis on customer

service and retention. Today, we interview customers

about their experiences in our banking centers so we

can evaluate the service we deliver in every affiliate,

region and banking center. For the first time, incentive

compensation programs across the Bancorp

incorporate customer satisfaction results to ensure that

we are providing best-in-class customer service. Our

initial efforts are meeting with success, with total retail

account openings increasing by 13 percent and

attrition rates improving by 20 percent on a full-year

basis in 2005. Despite this success, we are continuing

to develop a number of additional initiatives to

improve the overall customer experience.

Small business banking received special focus in 2005.

Fifth Third believes that competition in the small

business segment is primarily service related.

We deploy individual relationship managers to work

with small business customers and learn about their

businesses. That knowledge allows us to deliver

customized solutions through integrated web-based

platforms that offer big company functionality at

small business prices. With increased database

marketing and new bundled deposit and cash

management products, small business deposits

increased by 19 percent in 2005 and now total

$5.1 billion. Investments in streamlined underwriting

capabilities drove similar performance in small

business lending with 19 percent growth over the

prior year.

We will continue recent de-novo banking center

expansion activities with the planned addition of

approximately 50 net new offices in 2006.

Investments in this area continue to be primarily

concentrated in the Chicago, Florida, Detroit and

Nashville markets, but expansion efforts also will

continue in Pittsburgh and St. Louis.

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commercial banking

focused

on relationships.

Fifth Third’s commercial relationship officers are respected for their commitment to understanding the challenges and opportunities facing each of our commercial customers. Our relationship officers provide creative and insightful perspectives that come from our almost 150 years of commercial banking experience. Decisions are made locally by people familiar with our business partners and the communities in which they operate. Fifth Third’s commercial team has the experience to advise our customers, the financial resources to support their growth and the willingness, infrastructure and ability to provide customized financial solutions.

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Fifth Third’s team of commercial bankers is committed to a single goal – building solid relationships with our business partners by quickly and efficiently matching products and services to their needs. Fifth Third offers a comprehensive product set from traditional commercial and industrial lending, to real estate and leasing, to corporate and international finance, trade facilitation and payment solutions. Our extensive cash management expertise spans across industries and international borders. Fifth Third offers dedicated teams and strategic partnerships ready to assist companies in improving cash flow and growing their business.

Sales force additions and increasing productivity drove significant market share gains across our footprint in 2005. The resulting customer growth and sales of corporate treasury management products resulted in 14 percent growth in average commercial demand deposits and 23 percent average commercial loan and lease growth. Related deposit service revenues were essentially unchanged from 2004 levels, fully overcoming the negative impact on deposit revenues from increasing earnings credit rates on compensating balances.

The depth and breadth of Fifth Third’s commercial relationships can be seen in commercial noninterest income performance in 2005. Commercial banking revenue increased 22 percent over 2004 with widespread strength across numerous subcategories. Foreign exchange revenues increased by 16 percent, and international letter of credit revenues increased by 15 percent, driving 15 percent growth in international related revenues overall. New customer additions and increasing loan demand throughout the year contributed to 49 percent growth in commercial loan- and lease-related fees. Separately, corporate finance also delivered very strong growth with a 142 percent increase in customer interest rate derivative sales revenue.

Fifth Third has always recognized the importance of maintaining conservative underwriting and a strong credit culture. Profitable growth is achieved by attracting new customers, not simply by increasing exposure to existing customers. The result is a diverse and granular commercial loan portfolio with industry concentrations and exposure limits closely monitored. At year end 2005, over 89 percent of commercial loan and lease obligations were less than $5 million and 88 percent of exposures were originated in footprint.

As we begin a new year, we see tremendous potential for further growth in a number of our markets. In 2005, Fifth Third opened its first commercial banking office in Toronto, Canada, which offers seamless, cross-border banking to Canadian- and U.S.-based companies. With a proven strategy, a dedication to forging strong local partnerships, an expanded sales force and conservative credit culture, Fifth Third will continue to provide our customers with solutions that create lasting business relationships.

New customer additions and increasing loan demand throughout the year contributed to 49 percent growth in commercial loan- and lease related fees.

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processing solutions

focused
on growth.

Fifth Third Processing Solutions (FTPS), our electronic payment processing division, initiates, captures, authorizes and settles electronic payment transactions as part of integrated cash management solutions for financial institutions, merchants and consumers all over the world. As a leading electronic payment processor, we help our customers eliminate paper and reduce cycle time and expense while providing instant online access to information through a platform integrated with traditional banking services. With robust systems architecture, including three world-class data centers, we provide a highly reliable processing environment for even the most demanding processing applications.

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FTPS had another outstanding year and delivered an 18 percent increase in annual revenues. Exclusive of the impact of the 2004 sales of certain third-party sourced merchant processing contracts, electronic payment processing revenue increased 23 percent. In 2005, FTPS processed more than 16.4 billion electronic transactions, an increase of 33 percent over 2004 and double the number processed just three years ago. FTPS operates three primary businesses – Merchant Services, Financial Institution and Card Services.

Our Merchant Services group provides over 127,000 merchant locations with debit, credit and stored-value payment processing. For more than three decades, Fifth Third has been trusted by the nation’s top retailers and businesses to provide superior card acceptance solutions. At Fifth Third, we understand that all merchants are not the same. We have developed flexible system architecture with a wealth of technology options and processing features capable of meeting the individual requirements of any business. Among the largest bankcard acquirers in the nation, FTPS currently processes annual credit and debit card volume of nearly $200 billion. In 2005, merchant revenues increased by 15 percent, or 27 percent on a core basis.

Our Financial Institution and Card Services groups together provide a complete global payments solution delivered with a consultative approach from one of the nation’s leading financial institutions. We act as a business advisor to our clients, forging strategic partnerships and creating solutions that enable revenue enhancements while simultaneously reducing costs. Customers are provided with a full array of capabilities including correspondent banking services, Check 21 processing and support, automated teller machine processing, credit and debit card management, network gateway access, fraud monitoring services and international banking.

FTPS currently drives approximately 12,500 automated teller machines and supports more than 33 million debit cards for approximately 1,500 financial institutions around the world. In 2005, financial institution and card revenues increased by 21 percent over the prior year.

As one of the few processors that can offer customers a complete array of financial services solutions, the outlook for FTPS remains as bright as ever. In Merchant Services, FTPS is building upon its core competencies in large merchant processing and increasing profit margins by continuing recent momentum in the penetration of the middle market channel. The Financial Institutions group continues to see significant growth potential through the expansion of relationships with existing customers and by increasing the card issuer base through upstream participation of large financial institutions. FTPS is also experiencing significant success in partnering with retail teammates in the expansion of Fifth Third’s credit card portfolio through increased focus and enhanced point-of-sale approval strategies.

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investment advisors

focused on wealth creation.

Fifth Third Investment Advisors is a full-service money management business with $33 billion in assets under management and $196 billion in assets under care. Fifth Third takes a careful, disciplined approach to investing client assets and delivers a full spectrum of investment strategies of varying scope and complexity for both long- and short-term investment horizons. Our broad array of equity and fixed income products are offered through separately managed portfolios, daily-valued collective funds, lifestyle funds and our nationally recognized mutual funds*.

*For important disclosures, see the bottom of page 31.

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Fifth Third’s institutional investment professionals help commercial clients manage their assets more efficiently and profitably, provide retirement planning for their employees and achieve their financial goals through a range of innovative services.

Fifth Third Asset Management (FTAM) professionals are committed to helping clients successfully manage investment funds by taking the time to learn their needs and carefully creating individualized plans tailored to their risk, reward and liquidity objectives. FTAM provides advisory services for a long list of institutional clients including states and municipalities, Taft-Hartley plans, pension and profit sharing plans and foundations and endowments.

Fifth Third’s retail brokerage business encompasses over 2,400 full-time licensed securities representatives deployed throughout the affiliate network. Our brokerage sales force is focused on working closely with banking center personnel to deepen customer relationships and meet all of the financial services needs of our retail customers. Fifth Third’s experienced team of financial advisors offers customers sound advice to achieve well-diversified portfolios that remain aligned with long-term financial goals.

Fifth Third’s private client group creates individualized, comprehensive solutions to assist our customers in achieving financial success including:

Expert advice concerning life event planning, cash flow and tax efficiency analysis, benefit and stock option optimization, wealth transfer, business succession and tax and estate planning strategies.

Investment strategies constructed around specific objectives offering choices between managed portfolios and self-directed brokerage services available through Fifth Third Securities.

Dedicated to servicing wealth across generations with trust strategies that help preserve wealth and provide for efficient transfer to heirs or charitable institutions.

traditional and specialized banking needs, including personal checking and cash management, mortgage loans, lines of credit and other customized solutions.

Specialized tools and techniques to safeguard wealth, including customized hedging and diversification strategies, as well as tailored insurance strategies for wealth creation, preservation and business planning.

Investment advisory revenues were essentially unchanged in 2005, but ended the year on a positive note with fourth quarter revenues increasing five percent over the prior year. Modest revenue performance in 2005 resulted primarily from declines in brokerage-related revenues.

Fifth Third continues to focus its efforts on improving execution in retail brokerage and growing the institutional money management business by improving penetration and cross-sell of money management products and 401(k) plans into out large middle market commercial customer base. Success in these efforts will help drive growth and diversification of revenues in 2006.

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committed to our neighbors & community

focused on community.

The Foundation Office administers grants on behalf of the Fifth Third Foundation and the eight charitable trusts for which the bank serves as trustee. \The primary areas of giving for the Fifth Third Foundation are arts & culture, community development, education and health & human services.

In 2005, the Fifth Third Foundation announced a matching gift of $500,000 to the American Veterans Disabled for Life Memorial, which is to be built near the National Mall in Washington, D.C. in 2010. The gift was the first corporate foundation gift for the Memorial, which will be the first to honor all of America’s disabled veterans.

Fifth Third Community Development Corporation invests in low-income housing, historic tax credit and economic development projects to support community revitalization in neighborhoods throughout the Fifth Third footprint.

Our Community Affairs department identifies lending and real estate opportunities in traditionally underserved markets, such as ethnically diverse, urban and low- to moderate-income census tracts. This group also champions financial literacy by providing homebuyer training, credit counseling and college savings match programs.

United Way Giving

Over the past five years, Fifth Third’s corporate and employee contributions to the United Way have reached $44.2 million. 2005 was a year marked by natural disasters – hurricanes Katrina and Rita changed the landscape of our country and caused an outpouring of generosity from individuals from all walks of life. Fifth Third employees were no different. Many volunteered at disaster collection stations, some held fundraisers, while still others made contributions to organizations such as the United Way and the American Red Cross. In honor of its nearly 22,000 employees, Fifth Third donated $500,000 to the 2005 disaster relief effort.

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Fifth Third Bancorp

2005 Annual Report

Financial Contents

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) competitive pressures among depository institutions increase significantly; (2) changes in the interest rate environment reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (4) general economic conditions, 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; (5) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (6) changes and trends in the securities markets; (7) 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; (8) difficulties in combining the operations of acquired entities and (9) the impact of reputational risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity. Fifth Third undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this report.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of certain significant factors that have affected Fifth Third Bancorp’s (the “Bancorp” or “Fifth Third”) financial condition and results of operations during the periods included in the Consolidated Financial Statements, which are a part of this report. Reference to the Bancorp incorporates the parent holding company and all consolidated subsidiaries.

TABLE 1: SELECTED FINANCIAL DATA

TABLE 2: QUARTERLY INFORMATION (unaudited)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RECENT ACCOUNTING STANDARDS

CRITICAL ACCOUNTING POLICIES

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RISK FACTORS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

STATEMENTS OF INCOME ANALYSIS

TABLE 3: CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE 4: CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME (FTE)