2003 Committee Charter : FITB

As Approved by the Board of Directors
of Fifth Third Bancorp on June 17, 2003
and of Fifth Third Bank on June 17, 2003
CHARTER
OF THE
RISK AND COMPLIANCE JOINT COMMITTEE
OF THE
BOARDS OF DIRECTORS OF
FIFTH THIRD BANCORP
AND
FIFTH THIRD BANK
I. AUTHORITY AND MEMBERSHIP
The Committee shall be a joint committee of the Boards of Directors of Fifth
Third Bancorp (the "Corporation") and of Fifth Third Bank, an Ohio corporation (the
"Bank"). The Committee initially, and at all times thereafter, will be comp rised of at
least three members, at least one of whom must be a director of the Bank. The
Committee may increase the number of Members from time to time thereafter. In
connection with each such increase, the Committee shall determine whether the
additional member(s) shall be from the Board of Directors of the Corporation or from the
Board of Directors of the Bank. Regardless of the number of members that the
Committee may have, at all times the Committee shall be comprised solely of members
who meet all of the following eligibility criteria:
The member must satisfy the independence requirements applicable to
Nasdaq National Market issuers or such other exchange or system upon
which the Corporation's securities are listed, quoted and/ or traded
("Nasdaq") and any standards of independence as may be prescribed for
purposes of any federal securities, tax, banking or other laws relating to
the Committee's duties and responsibilities.
The member must not be an executive officer as defined in Regulation O
of the Board of Governors of the Federal Reserve (12 C.F.R. Section
215.2(e)(1)) of the Corporation, the Bank or any other direct or indirect
subsidiary of the Corporation (collectively, "Fifth Third").
The member must not be an employee, officer, a former officer or an
"affiliated person" of Fifth Third.
The member must not directly or indirectly own more than ten percent
(10%) of the outstanding shares of the Corporation's common stock or
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any other class of the Corporation's capital stock as may be outstanding
from time to time.
The member must not serve as an executive officer or policy making
officer of any entity that owns own more than ten percent (10%) of the
outstanding shares of the Corporation's common stock or any other class
of the Corporation's capital stock as may be outstanding from time to
time.
Director's fees are the only compensation that a Committee member may receive
directly or indirectly from or on behalf of Fifth Third.
The members of the Committee representing the Corporation shall be
recommended by the Corporation's Nominating and Corporate Governance Committee
and approved by the entire Board. The members of the Committee representing the Bank
shall be recommended and approved by the Bank's entire Board. The members of the
Committee shall serve until their successors are duly elected and qualified by the
respective Board that appointed such member.
The Committee will elect one of its members to serve as Committee Chair. The
Committee may also appoint a Secretary, who need not be a Director. The Secretary
shall keep detailed minutes of each Committee meeting.
The Committee has the authority, to the extent it deems necessary or appropriate,
to retain independent legal, accounting or other advisors. The Committee shall also have
the authority, to the extent it deems necessary or appropriate, to ask the Corporation
and/or the Bank to provide the Committee with the support of one or more Fifth Third
employees to assist it in carrying out its duties. The Corporation shall provide for
appropriate funding, as determined solely by the Committee, for payment of
compensation to any advisors employed by the Committee. The Committee may request
any officer or employee of Fifth Third or the Corporation's outside counsel or other
advisors to attend a meeting of the Committee or to meet with any members of, or
consultant to, the Committee.
II. PURPOSE OF THE COMMITTEE
The Committee's primary purpose is to:
Oversee management's compliance with all of Fifth Third's regulatory
obligations arising under applicable federal and state banking laws, rules
and regulations, including any terms and conditions required from time to
time by any action, formal or informal, of the Board of Governors of the
Federal Reserve, the Federal Reserve Bank of Cleveland, the Office of
the Comptroller of the Currency, or any other federal or state banking
regulatory agency or authority (each a "Banking Regulator"), and any
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responses of management to any inquiries from any applicable Banking
Regulator; and
Oversee management's implementation and enforcement of Fifth Third's
risk management policies and procedures.
III. RESPONSIBILITIES OF THE COMMITTEE
A. Charter Review
The Committee shall:
Review and reassess the adequacy of this charter annually and
recommend to the Board any proposed changes to this charter; and
Publicly disclose the charter and any such amendments at the times
and in the manner required by the SEC and/or any other regulatory
body or stock exchange having authority over the Corporation, and in
all events post such charter and amendments to the Corporation's
website.
B. Compliance Oversight
The Committee shall:
Ensure that the Corporation is taking appropriate measures to address
all existing regulatory requirements, and new requirements that may be
enacted hereafter, including those under the Bank Holding Company
Act, the Patriot Act, the Bank Secrecy Act and similar laws, rules and
regulations;
Become familiar with the terms and conditions of any and all orders,
Memoranda of Understanding, Written Agreements, other agreements,
supervisory letters or similar actions of any Banking Regulator
("Orders") and Fifth Third's responsibility to comply with such
Orders;
Review management progress in taking the appropriate steps within
acceptable timeframes, to comply with the requirements of the terms
of any Order;
Review and ensure proper and timely management response to all
issues identified in all audits (whether internal or external) of Fifth
Third's regulatory functions as may be undertaken from time to time
as directed by the Committee;
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Work with the Audit Committee of the Corporation's Board of
Directors to ensure that any and all audit related deficiencies identified
in any audit or Order are properly addressed and that the Audit
Committee is informed of management's progress in responding to
any audit or Order;
Review management reporting to all Banking Regulators and to serve
as a contact point for any applicable Banking Regulator with respect to
all matters relating to any Order; and
Review and approve the broad policies submitted by management that
are designed to comply with the terms of any Order and applicable
laws, rules and regulations.
C. Risk Management
1. General
The Committee shall:
Ensure that the Corporation is taking appropriate measures to identify,
assess, monitor, control and mitigate Fifth Third's risks in the areas of
asset and liability management, credit, market, operations (including
new products), technology and acquisition integration;
Periodically review and approve the Corporation's risk management
framework, including the development of effective policies, processes
and procedures; and
Review information relating to compliance with both external
regulations and internal policies regarding asset and liability
management, market risk, credit risk, operational risk, new products,
technology, and integration of acquired entities.
2. Asset and Liability Management.
Management shall develop and maintain an asset and liability
management policy (the "A&L Policy"), which policy shall be
discussed by the Committee with management. Following such
discussion, and after taking into consideration any matters as the
Committee may deem advisable and appropriate, including
management's recommendation, the Committee shall annually
recommend the A&L Policy to the Boards of Directors of the
Corporation and the Bank for approval. In addition, the Committee
may authorize management to develop and implement any additional
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detailed polices and procedures relating to asset and liability
management as may be consistent with the A&L Policy.
The Committee shall review the Corporation's capital position;
liquidity position; the sensitivity of the Corporation's earnings under
varying interest rate scenarios; the status of the securities portfolio and
end-user derivatives portfolio; and trends in the economy in general
and interest rates in particular with a view toward their impact on the
Corporation.
3. Market Risk.
Management shall develop and maintain a market risk policy (the "MR
Policy"), which policy shall be discussed by the Committee with
management. Following such discussion and after taking into
consideration any matters as the Committee may deem advisable and
appropriate, including management's recommendation, the Committee
shall annually recommend the MR Policy to the Boards of Directors of
the Corporation and the Bank for approval. In addition, the
Committee may authorize management to develop and implement any
additional detailed policies and procedures relating to market risk as
may be consistent with the MR Policy.
The Committee shall review the Corporation's market risk resulting
from the Corporation's trading activity; market risk limits for each risk
type, and information on value at risk models; and trends affecting the
various markets and products to which the Corporation has exposure.
4. Credit Risk.
Management shall develop and maintain a lending and investing
policy (the "L&I Policy"), which policy shall be discussed by the
Committee with management. Following such discussion, and after
taking into consideration any matters as the Committee may deem
advisable and appropriate, including management's recommendation,
the Committee shall annually recommend the L&I Policy to the
Boards of Directors of the Corporation and the Bank for approval. In
addition, the Committee may authorize management to develop and
implement any additional detailed policies and procedures relating to
credit risk as may be consistent with the L&I Policy.
The Committee shall review matters relating to specific portfolios
and/or specific industries; non-performing assets and owned real estate
of the Corporation, charge-offs and the level and adequacy of the
allowance for loan and lease losses; corporate limits on lending, such
as house limits, industry concentration limits, country exposure limits
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and investing limits; and trends in the economy in general and in the
lending industry in particular relating to credit risk.
The Committee shall, from time to time, receive reports and
information from the Corporation's credit risk review department,
including an annual examination/review schedule prepared by credit
risk review, as well as information regarding the independence of
credit risk review. The head of the credit risk review department shall
report to both the Committee and to the Corporation's risk
management division. The Committee shall also be entitled to request
such other reports and information, including relevant forecast
information, as it may deem desirable and appropriate from external or
internal sources, including from other committees of the Boards of
Directors, and shall similarly provide access to its reports and
information.
5. Operational Risk.
Management shall develop and maintain an operational risk policy (the
"Operational Risk Policy"), which policy shall be discussed by the
Committee with management. Following such discussion, and after
taking into consideration any matters as the Committee may deem
advisable and appropriate, including management's recommendation,
the Committee shall annually recommend the Operational Risk Policy
to the Boards of Directors of the Corporation and the Bank for
approval. In addition, the Committee may authorize management to
develop and implement any additional detailed policies and procedures
(including but not limited to technology policies and acquisition
integration policies) relating to operational risk as may be consistent
with the Operational Risk Policy.
The Committee shall review management reports relating to
operational risk issues in areas including but not limited to: internal
and external fraud; development of material products and services;
execution, delivery and process management; acquisition integration
issues; technology risks and technology strategies; business disruption
and system failures; and business practices generally.
D. General
The Committee shall:
Act completely independent of management and shall have the power
and authority to contract with third parties for advice or to accomplish
the terms or purpose of any Order; meet as a Committee with or
without the presence of any member of senior management as
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determined to be necessary by the Committee; and meet with any third
party, including any Banking Regulator or other regulatory agencies,
without the presence of senior management as desired by the
Committee;
Form and delegate authority to subcommittees when appropriate;
Retain and terminate any risk management or other consultant to be
used to assist in the evaluation of Fifth Third's risk management and
compliance activities by the Committee; have sole authority to
approve such consultant's fees and other retention terms; and have
authority to obtain advice and assistance from internal or external
legal, accounting or other advisors;
Meet monthly, provide a monthly written report to the full Boards of
Directors of both the Corporation and the Bank and orally report to the
respective Board on the Committee's activities at each Board meeting;
and
Annually review the performance of the Committee.
In performing their responsibilities, Committee members are entitled to rely in
good faith on information, opinions, reports or statements prepared or presented by:
One or more officers or employees of Fifth Third whom the
Committee member reasonably believes to be reliable and competent
in the matters presented;
Counsel, independent auditors, or other persons as to matters which
the Committee member reasonably believes to be within the
professional or expert competence of such person; or
Another committee of the Board of either the Corporation or the Bank
as to matters within its designated authority which committee the
Committee member reasonably believes to merit confidence.