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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2004

Commission File Number 0-8076

FIFTH THIRD BANCORP

(Exact name of Registrant as specified in its charter)

Fifth Third Center

Cincinnati, Ohio 45263

(Address of principal executive offices)

Registrant’s telephone number, including area code:  (513) 534-5300

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X      No        

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  X      No        

There were 560,690,190 shares of the Registrant’s Common Stock, without par value, outstanding as of July 31, 2004.

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FIFTH THIRD BANCORP

INDEX

This report includes forward-looking statements 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 contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Registrant including statements preceded by, followed by or that include the words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” 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 the Registrant does 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 the Registrant or the businesses in which the Registrant is engaged; and (8) the impact of reputational risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity. The Registrant 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 (Item 2)

  TABLE 1: Selected Financial Data

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following is management’s discussion and analysis of certain significant factors that have affected Fifth Third Bancorp’s (the Registrant or Fifth Third) financial condition and results of operations during the periods included in the Condensed Consolidated Financial Statements, which are a part of this filing.

Overview

This overview of management’s discussion and analysis highlights selected information in the financial results of the Registrant and may not contain all of the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources and critical accounting estimates, you should carefully read this entire document. Each of these items could have an impact on the Registrant’s financial condition and results of operations.

The Registrant is a diversified financial services company headquartered in Cincinnati, Ohio. The Registrant has $96 billion in assets, operates 17 affiliates with 992 full-service Banking Centers including 130 Bank Mart^® locations open seven days a week inside select grocery stores and 1,844 Jeanie^® ATMs in Ohio, Indiana, Kentucky, Michigan, Illinois, Florida, West Virginia, and Tennessee. The financial strength of two of the Registrant’s affiliate banks, Fifth Third Bank and Fifth Third Bank (Michigan), continues to be recognized by rating agencies with deposit ratings of AA- and Aa1 from Standard & Poor’s and Moody’s, respectively. Additionally, the Registrant is recognized by Moody’s with one of the highest senior debt ratings for any U.S. bank holding company of Aa2. The Registrant operates four main businesses: Commercial Banking, Retail Banking, Investment Advisors and Fifth Third Processing Solutions.

The Registrant’s revenues are equally dependent on net interest income and noninterest income. For the six months ended June 30, 2004, net interest income, on a taxable equivalent basis, and noninterest income provided 53% and 47% of total revenue, respectively. Changes in interest rates, credit quality and the capital markets are therefore primary factors that drive the performance of the Registrant. As described on pages 62-64 of the Registrant’s 2003 Annual Report, risk identification, measurement, monitoring, control and reporting are important to the management of risk and to the continuation of the strong financial performance and capital strength of the Registrant.

Net interest income is derived from the interest collected from borrowers and on interest-earning investments less interest paid to depositors and on other interest-bearing liabilities. Generally, the rates of interest the Registrant earns on its assets and owes on its liabilities are established for a period of time. The change in market interest rates over time exposes the Registrant to interest-rate risk and potential adverse changes in net interest income. The Registrant manages this risk by continually analyzing and adjusting the composition of its assets and liabilities based on their payment streams and interest rates, the timing of their maturities and their sensitivity to changes in market interest rates.

The Registrant is also exposed to the risk of losses on its loan and lease portfolio as a result of changing expected cash flows caused by loan defaults, inadequate collateral or changes in prepayment rates, among other factors.

Noninterest income is derived primarily from electronic funds transfer (“EFT”) and merchant transaction processing fees, fiduciary and investment management fees, banking fees and service charges, mortgage banking revenue and operating lease revenue. The Registrant manages market risk and credit risk by monitoring and reacting to changes that may impact revenue.

Net interest income, net interest margin, net interest rate spread and the efficiency ratio are presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations on a fully taxable equivalent (“FTE”) basis as the interest on certain loans and securities held by the Registrant is not taxable for federal income tax purposes. The FTE basis adjusts for the tax-favored status of income from certain loans and

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

securities. The Registrant believes this measure to be the preferred industry measurement of net interest income as it provides a relevant comparison between taxable and non-taxable amounts.

The Registrant’s net income available to common shareholders was $448 million for the second quarter of 2004, up eight percent compared to $415 million for the same period last year. Earnings per diluted share were $.79 for the second quarter, up 11 percent from $.71 for the same period last year. The Registrant increased its quarterly dividend to $.32 per common share from $.29, an increase of 10% on a year-over-year basis. The financial results reflect growth experienced across nearly all of the lines of business, including solid growth in both commercial and consumer loans. The Registrant also benefited from improvements in commercial credit quality and continued expense control. Noninterest income increased as the Registrant continues to benefit from its strong emphasis on cross-selling services to its customers.

The Registrant continues to invest in the geographic areas within its footprint that offer the best growth prospects. The Registrant opened 42 new banking centers during the first half of 2004 and plans for a similar number in the second half of 2004 in high population, low market share areas. The Registrant also completed its acquisition of Franklin Financial Corporation (‘Franklin”) during the second quarter of 2004, which expanded the Registrant’s presence in the Nashville market to 11 full-service banking centers with plans to open an additional six by mid-2005.

The Registrant’s capital ratios exceed the “well-capitalized” guidelines as defined by the Board of Governors of the Federal Reserve System (“FRB”). As of June 30, 2004, the Tier 1 capital ratio was 10.52 percent and the Total Risk Based capital ratio was 12.75 percent. The Registrant’s capital strength and financial stability have enabled the Registrant to maintain credit ratings that are equaled or surpassed by only three other U.S. bank holding companies.

Statements of Income Analysis

Net Interest Income

Net interest income (FTE basis) for the second quarter of 2004 was $771 million, a three percent increase over $749 million for the same period last year. The increase in net interest income was due to the $6.2 billion or eight percent increase in average interest-earning assets, mitigated by the 15 basis point (bp) decrease in net interest margin. Tables 2 and 3 provide the relative impact of the growth in the balance sheet and changes in interest rates on net interest income. The net interest margin has contracted compared to the same period in 2003 due to the absolute level of interest rates and the impact of new origination volumes at lower market rates of interest. The implementation of Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (‘SFAS”) No. 150 during the third quarter of 2003, and the resulting reclassification of $11 million of minority interest expense into interest expense caused the net interest margin to contract by 5 bp year over year. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further discussion of the adoption of SFAS No. 150. The contribution of noninterest-bearing funding to the net interest margin declined from 36 bp in the second quarter of 2003 to 26 bp in the second quarter of 2004 due to both the lower level of interest rates and the Registrant’s share repurchase activity. The Registrant has repurchased 19.2 million shares of its common stock for approximately $1.1 billion since the beginning of the third quarter in 2003, including 8.5 million shares repurchased in the second quarter 2004. The Registrant views share repurchases as an effective means of delivering value to shareholders in a low interest rate environment.

Average loans and leases grew by $4.5 billion or nine percent for the second quarter of 2004 over the comparable period in 2003. The increase in average loans and leases in the second quarter of 2004 included growth in commercial loans and leases of $1.4 billion, growth in commercial construction and mortgage loans of $1.8 billion and growth in the total consumer loan and lease category of $1.3 billion, as compared to the second quarter of 2003. The Registrant benefited from increasing credit line usage in its existing commercial customer base as well as continued success in gaining new customers within its footprint.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Average investment securities and other short-term investments for the second quarter of 2004 grew $1.6 billion or six percent from the second quarter of 2003. Over the past several months, the Registrant has taken action to migrate the investment portfolio to be more heavily weighted towards adjustable-rate and shorter-term securities in connection with the asset/liability management activities.

Average demand deposits for the second quarter of 2004 increased $2.2 billion or 22 percent over the second quarter of 2003 reflecting the Registrant’s success in generating new account growth in its commercial line of business. Average interest-bearing deposits were lower by $1.5 billion or three percent in the second quarter of 2004 from the comparable period in 2003. The decline is largely attributable to certificates of deposits greater than $100,000, which declined $2.0 billion or 48 percent in the second quarter of 2004. The movement in this deposit type is a function of overall balance sheet funding requirements. A key focus of the Registrant for the remainder of the year is growing its interest-bearing products such as checking, savings and money market accounts in order to reduce its reliance on other sources to fund the expected growth in the balance sheet.

Average long-term debt increased $4.2 billion or 52 percent in the second quarter of 2004 over the comparable period in 2003. The Registrant has increased long-term debt to fund the growth in the balance sheet and to reduce its short-term wholesale funding position.

The Registrant expects that net interest margin and net interest income trends in coming periods will benefit from the steepness in the short end of the yield curve and moderation in the level of prepayment activity. The Registrant expects mid-single digit growth in net interest income in the third quarter on an annualized sequential basis over the second quarter, with results dependent on the magnitude of deposit growth in relation to balance sheet growth and the speed of interest rate changes in an improving economy.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

TABLE 2: Consolidated Average Balance Sheets and Analysis of Net Interest Income (FTE Basis)