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Filed by Fifth Third Bancorp pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule14a-12 under the Securities Exchange Act of 1934 Subject Company: MB Financial, Inc. SEC File No.:001-36599 Filer’s SEC File No.:001-33653 Date: July 19, 2018 |
CONTACTS: | Sameer Gokhale (Investors) | News Release | ||
(513) 534-2219 | ||||
Larry Magnesen (Media) (513) 534-8055 | FOR IMMEDIATE RELEASE July 19, 2018 |
FIFTH THIRD ANNOUNCES SECOND QUARTER 2018 NET INCOME TO COMMON SHAREHOLDERS OF
$563 MILLION, OR $0.80 PER DILUTED SHARE
• | 2Q18 net income available to common shareholders of $563 million, or $0.80 per diluted common share |
• | Results included a net positive $0.17 impact on reported 2Q18 EPS: |
• | $205 millionpre-tax (~$162 millionafter-tax)(a) gain related to the sale of Worldpay, Inc. (“Worldpay”) shares |
• | $30 millionpre-tax (~$24 millionafter-tax)(a) charge to other noninterest income related to our branch optimization efforts, including the decision to close 29 branches and sell 21 parcels of land |
• | $19 millionpre-tax (~$15 millionafter-tax)(a) in compensation expense primarily related to the previously announced staffing review |
• | $11 millionpre-tax (~$9 millionafter-tax)(a) gain related to our ownership stake in GreenSky (including a $16 millionpre-tax gain from the IPO recorded in other noninterest income, partially offset by a negative $5 millionpre-tax securities mark) |
• | $10 millionpre-tax (~$8 millionafter-tax)(a) charge to other noninterest income related to the valuation of the Visa total return swap |
• | $10 millionpre-tax (~$8 millionafter-tax)(a) contribution to the Fifth Third Foundation |
• | Reported net interest income (NII) of $1.020 billion; taxable equivalent NII of $1.024 billion(b), up 3% from 1Q18 and up 8% from 2Q17 |
• | Taxable equivalent net interest margin (NIM) of 3.21%(b), up 3 bps from 1Q18 and up 20 bps from 2Q17 |
• | Average portfolio loans and leases of $92.6 billion, flat from 1Q18 and up 1% from 2Q17 |
• | Noninterest income of $743 million, compared with $909 million in 1Q18 and $564 million in 2Q17; 2Q18 performance includes the aforementioned gain from the sale of Worldpay shares; 1Q18 results included a $414 millionpre-tax Worldpaystep-up gain |
• | Noninterest expense of $1.037 billion, down 1% from 1Q18 and up 8% from 2Q17; excluding the 2Q18 expenses noted above and an $8 millionpre-tax litigation charge in 1Q18, noninterest expense was down 3% from 1Q18 |
• | Net charge-offs (NCOs) of $94 million, up $13 million from 1Q18 and up $30 million from 2Q17; NCO ratio of 0.41% compared to 0.36% in 1Q18 and 0.28% in 2Q17; criticized assets as a percentage of commercial loans of 3.87% compared to 4.83% in 1Q18 and 5.50% in 2Q17 |
• | Portfolio nonperforming asset (NPA) ratio of 0.52%, down 3 bps from 1Q18 and down 20 bps from 2Q17 |
• | 2Q18 provision expense of $33 million compared to $23 million in 1Q18 and $52 million in 2Q17 |
• | Common equity Tier 1 (CET1) ratio of 10.91%(c); tangible common equity ratio of 8.98%(b), or 9.33% excluding unrealized gains/losses(b) |
• | Book value per share of $21.97, up 1% from 1Q18 and up 8% from 2Q17; tangible book value per share(b) of $18.30 up 1% from 1Q18 and up 7% from 2Q17 |
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Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2018 net income of $586 million versus net income of $704 million in the first quarter of 2018 and $367 million in the second quarter of 2017. After preferred dividends, net income available to common shareholders was $563 million, or $0.80 per diluted share, in the second quarter of 2018, compared with $689 million, or $0.97 per diluted share, in the first quarter of 2018, and $344 million, or $0.45 per diluted share, in the second quarter of 2017.
Earnings Highlights
For the Three Months Ended | % Change | |||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Income Statement Data ($ in millions) |
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Net income attributable to Bancorp | $ | 586 | $ | 704 | $ | 509 | $ | 1,014 | $ | 367 | (17 | %) | 60 | % | ||||||||||||||
Net income available to common shareholders | $ | 563 | $ | 689 | $ | 486 | $ | 999 | $ | 344 | (18 | %) | 64 | % | ||||||||||||||
Earnings Per Share Data | ||||||||||||||||||||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||||||||||
Basic | 683,345 | 689,820 | 703,372 | 721,280 | 741,401 | (1 | %) | (8 | %) | |||||||||||||||||||
Diluted | 696,210 | 704,101 | 716,908 | 733,285 | 752,328 | (1 | %) | (7 | %) | |||||||||||||||||||
Earnings per share, basic | $ | 0.81 | $ | 0.99 | $ | 0.68 | $ | 1.37 | $ | 0.46 | (18 | %) | 76 | % | ||||||||||||||
Earnings per share, diluted | 0.80 | 0.97 | 0.67 | 1.35 | 0.45 | (18 | %) | 78 | % | |||||||||||||||||||
Common Share Data |
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Cash dividends per common share | $ | 0.18 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.14 | 13 | % | 29 | % | ||||||||||||||
Book value per share | 21.97 | 21.68 | 21.67 | 21.30 | 20.42 | 1 | % | 8 | % | |||||||||||||||||||
Tangible book value per share(b) | 18.30 | 18.05 | 18.10 | 17.86 | 17.11 | 1 | % | 7 | % | |||||||||||||||||||
Common shares outstanding (in thousands) | 678,162 | 684,942 | 693,805 | 705,474 | 738,873 | (1 | %) | (8 | %) | |||||||||||||||||||
Financial Ratios | bps Change | |||||||||||||||||||||||||||
Return on average assets | 1.66 | % | 2.02 | % | 1.43 | % | 2.85 | % | 1.05 | % | (36 | ) | 61 | |||||||||||||||
Return on average common equity | 15.3 | 18.6 | 12.7 | 25.6 | 9.0 | (330 | ) | 630 | ||||||||||||||||||||
Return on average tangible common equity(b) | 18.4 | 22.4 | 15.2 | 30.4 | 10.7 | (400 | ) | 770 | ||||||||||||||||||||
CET1 capital(c) | 10.91 | 10.82 | 10.61 | 10.59 | 10.63 | 9 | 28 | |||||||||||||||||||||
Tier I risk-based capital(c) | 12.02 | 11.95 | 11.74 | 11.72 | 11.76 | 7 | 26 | |||||||||||||||||||||
Taxable equivalent net interest margin(b) | 3.21 | 3.18 | 3.02 | 3.07 | 3.01 | 3 | 20 | |||||||||||||||||||||
Taxable equivalent efficiency(b) | 58.7 | 54.8 | 69.7 | 38.4 | 63.4 | 390 | (470 | ) |
“We had a very productive second quarter and remained focused on achieving our long-term objectives. Our quarterly results were very strong, as evidenced by the continued expansion in our net interest margin, lower operating expenses, record capital markets revenue and another very significant decline in the level of criticized assets. Our commercial middle market loan originations were also very strong and we expect this trend to continue over the remainder of the year,” said Greg D. Carmichael, Chairman, President and CEO of Fifth Third Bancorp.
“During the quarter, we continued to execute on expense initiatives and also took further actions to optimize our branch network. We are very excited about reallocating our resources to grow branches in high-growth markets which should significantly boost household growth. I am confident that these decisions are in the best long-term interests of our shareholders. We remain focused on achieving our enhanced profitability targets.”
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“Also during the second quarter we announced the acquisition of MB Financial, which will create a leading retail and commercial franchise in the attractive Chicago market. We are purchasing a well-respected and successful bank, and combining forces will allow us to build scale in the strategically important Chicago market. Since the announcement in May, we have made significant progress in finalizing the composition of the management team in Chicago. We are very confident that the talent we have in place will help us achieve the financial outcomes that we discussed during the announcement. We are looking forward to completing the merger as soon as possible so that we can begin realizing the substantial cost and revenue synergies we have identified.”
“Lastly, the recently announced CCAR results provide further proof of our commitment to our shareholders. Over the next four quarters, we expect to return a significant amount of capital through a 33% increase in our quarterly common dividend and a 42% increase in share repurchases compared to last year’s capital plan. We are also pleased that a resubmission of our capital plan, given the pending acquisition of MB Financial, will not delay our capital distribution plans.”
Income Statement Highlights
($ in millions, exceptper-share data) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Condensed Statements of Income | ||||||||||||||||||||||||||||
Taxable equivalent net interest income(b) | $ | 1,024 | $ | 999 | $ | 963 | $ | 977 | $ | 945 | 3 | % | 8 | % | ||||||||||||||
Provision for loan and lease losses | 33 | 23 | 67 | 67 | 52 | 43 | % | (37 | %) | |||||||||||||||||||
Total noninterest income | 743 | 909 | 577 | 1,561 | 564 | (18 | %) | 32 | % | |||||||||||||||||||
Total noninterest expense | 1,037 | 1,046 | 1,073 | 975 | 957 | (1 | %) | 8 | % | |||||||||||||||||||
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Taxable equivalent income before income taxes(b) | $ | 697 | $ | 839 | $ | 400 | $ | 1,496 | $ | 500 | (17 | %) | 39 | % | ||||||||||||||
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Taxable equivalent adjustment | 4 | 3 | 7 | 7 | 6 | 33 | % | (33 | %) | |||||||||||||||||||
Applicable income tax expense (benefit) | 107 | 132 | (116 | ) | 475 | 127 | (19 | %) | (16 | %) | ||||||||||||||||||
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Net income | $ | 586 | $ | 704 | $ | 509 | $ | 1,014 | $ | 367 | (17 | %) | 60 | % | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | — | NM | NM | |||||||||||||||||||||
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Net income attributable to Bancorp | $ | 586 | $ | 704 | $ | 509 | $ | 1,014 | $ | 367 | (17 | %) | 60 | % | ||||||||||||||
Dividends on preferred stock | 23 | 15 | 23 | 15 | 23 | 53 | % | — | ||||||||||||||||||||
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Net income available to common shareholders | $ | 563 | $ | 689 | $ | 486 | $ | 999 | $ | 344 | (18 | %) | 64 | % | ||||||||||||||
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Earnings per share, diluted | $ | 0.80 | $ | 0.97 | $ | 0.67 | $ | 1.35 | $ | 0.45 | (18 | %) | 78 | % | ||||||||||||||
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Net Interest Income
(Taxable equivalent basis; $ in millions)(b) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Interest Income | ||||||||||||||||||||||||||||
Total interest income | $ | 1,273 | $ | 1,209 | $ | 1,151 | $ | 1,159 | $ | 1,112 | 5 | % | 14 | % | ||||||||||||||
Total interest expense | 249 | 210 | 188 | 182 | 167 | 19 | % | 49 | % | |||||||||||||||||||
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Taxable equivalent net interest income (NII) | $ | 1,024 | $ | 999 | $ | 963 | $ | 977 | $ | 945 | 3 | % | 8 | % | ||||||||||||||
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Average Yield | bps Change | |||||||||||||||||||||||||||
Yield on interest-earning assets | 3.98 | % | 3.85 | % | 3.61 | % | 3.64 | % | 3.54 | % | 13 | 44 | ||||||||||||||||
Adjusted yield on interest-earning assets | 3.98 | % | 3.85 | % | 3.69 | % | 3.64 | % | 3.54 | % | 13 | 44 | ||||||||||||||||
Rate paid on interest-bearing liabilities | 1.12 | % | 0.97 | % | 0.88 | % | 0.85 | % | 0.79 | % | 15 | 33 | ||||||||||||||||
Ratios | ||||||||||||||||||||||||||||
Taxable equivalent net interest rate spread | 2.86 | % | 2.88 | % | 2.73 | % | 2.79 | % | 2.75 | % | (2 | ) | 11 | |||||||||||||||
Taxable equivalent net interest margin (NIM) | 3.21 | % | 3.18 | % | 3.02 | % | 3.07 | % | 3.01 | % | 3 | 20 | ||||||||||||||||
Adjusted taxable equivalent NIM | 3.21 | % | 3.18 | % | 3.10 | % | 3.07 | % | 3.01 | % | 3 | 20 | ||||||||||||||||
Average Balances | % Change | |||||||||||||||||||||||||||
Loans and leases, including held for sale | $ | 93,232 | $ | 92,869 | $ | 92,865 | $ | 92,617 | $ | 92,653 | — | 1 | % | |||||||||||||||
Total securities and other short-term investments | 34,935 | 34,677 | 33,756 | 33,826 | 33,481 | 1 | % | 4 | % | |||||||||||||||||||
Total interest-earning assets | 128,167 | 127,546 | 126,621 | 126,443 | 126,134 | — | 2 | % | ||||||||||||||||||||
Total interest-bearing liabilities | 89,222 | 87,607 | 84,820 | 85,328 | 85,320 | 2 | % | 5 | % | |||||||||||||||||||
Bancorp shareholders’ equity | 16,108 | 16,313 | 16,493 | 16,820 | 16,615 | (1 | %) | (3 | %) |
Taxable equivalent NII of $1.024 billion in the second quarter of 2018 increased $25 million, or 3 percent, from the prior quarter. Performance reflected higher short-term market rates, a higher day count and growth in middle market commercial and industrial (C&I) loans. Taxable equivalent NIM of 3.21 percent in the second quarter of 2018 increased 3 bps from the prior quarter, primarily driven by higher short-term market rates, partially offset by a higher day count.
Compared to the second quarter of 2017, taxable equivalent NII increased $79 million, or 8 percent. Performance reflected higher short-term rates and an increase in investment portfolio balances. Taxable equivalent NIM increased 20 bps from the second quarter of 2017, primarily driven by higher short-term market rates.
Securities
Average securities and other short-term investments were $34.9 billion in the second quarter of 2018 compared to $34.7 billion in the previous quarter and $33.5 billion in the second quarter of 2017. Averageavailable-for-sale debt and other securities of $32.6 billion in the second quarter of 2018 were up $395 million, or 1 percent, sequentially and up $1.3 billion, or 4 percent, from the second quarter of 2017.
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Loans
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Average Portfolio Loans and Leases | ||||||||||||||||||||||||||||
Commercial loans and leases: | ||||||||||||||||||||||||||||
Commercial and industrial loans | $ | 42,292 | $ | 41,782 | $ | 41,438 | $ | 41,302 | $ | 41,601 | 1 | % | 2 | % | ||||||||||||||
Commercial mortgage loans | 6,514 | 6,582 | 6,751 | 6,807 | 6,845 | (1 | %) | (5 | %) | |||||||||||||||||||
Commercial construction loans | 4,743 | 4,671 | 4,660 | 4,533 | 4,306 | 2 | % | 10 | % | |||||||||||||||||||
Commercial leases | 3,847 | 3,960 | 4,016 | 4,072 | 4,036 | (3 | %) | (5 | %) | |||||||||||||||||||
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Total commercial loans and leases | $ | 57,396 | $ | 56,995 | $ | 56,865 | $ | 56,714 | $ | 56,788 | 1 | % | 1 | % | ||||||||||||||
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Consumer loans: |
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Residential mortgage loans | $ | 15,581 | $ | 15,575 | $ | 15,590 | $ | 15,523 | $ | 15,417 | — | 1 | % | |||||||||||||||
Home equity | 6,672 | 6,889 | 7,066 | 7,207 | 7,385 | (3 | %) | (10 | %) | |||||||||||||||||||
Automobile loans | 8,968 | 9,064 | 9,175 | 9,267 | 9,410 | (1 | %) | (5 | %) | |||||||||||||||||||
Credit card | 2,221 | 2,224 | 2,202 | 2,140 | 2,080 | — | 7 | % | ||||||||||||||||||||
Other consumer loans | 1,719 | 1,587 | 1,352 | 1,055 | 892 | 8 | % | 93 | % | |||||||||||||||||||
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Total consumer loans | $ | 35,161 | $ | 35,339 | $ | 35,385 | $ | 35,192 | $ | 35,184 | (1 | %) | — | |||||||||||||||
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Total average portfolio loans and leases | $ | 92,557 | $ | 92,334 | $ | 92,250 | $ | 91,906 | $ | 91,972 | — | 1 | % | |||||||||||||||
Average loans held for sale | $ | 675 | $ | 535 | $ | 615 | $ | 711 | $ | 681 | 26 | % | (1 | %) |
Average portfolio loan and lease balances were flat sequentially and up 1 percent year-over-year. Sequential performance was primarily driven by increases in C&I and other consumer loans, offset by decreases in home equity loans and commercial leases. Year-over-year performance was primarily driven by increases in other consumer and C&I loans, partially offset by decreases in home equity and automobile loans. Period end portfolio loans and leases of $92.0 billion were flat sequentially and up 1 percent year-over-year.
Average commercial portfolio loan and lease balances were up 1 percent both sequentially and from the second quarter of 2017. Sequential performance was primarily driven by an increase in C&I loans reflecting solid growth in middle market lending, partially offset by a decrease in commercial leases consistent with the planned reduction in indirect non-relationship based lease originations. Within commercial real estate, commercial mortgage balances decreased 1 percent and commercial construction balances were up 2 percent sequentially. Year-over-year overall commercial performance was primarily driven by an increase in C&I and commercial construction loans, partially offset by a decrease in commercial mortgage. Period end commercial line utilization was 35 percent in both the first and second quarter of 2018, compared to 34 percent in the second quarter of 2017.
Average consumer portfolio loan and lease balances were down 1 percent sequentially and were flat year-over-year. Sequential performance was primarily driven by a decline in home equity and automobile loan balances, partially offset by an increase in other consumer loans. Year-over-year performance was primarily driven by an increase in other consumer and residential mortgage loans, offset by lower home equity and automobile loan balances.
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Deposits
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Average Deposits | ||||||||||||||||||||||||||||
Demand | $ | 32,834 | $ | 33,825 | $ | 35,519 | $ | 34,850 | $ | 34,915 | (3 | %) | (6 | %) | ||||||||||||||
Interest checking | 28,715 | 28,403 | 26,992 | 25,765 | 26,014 | 1 | % | 10 | % | |||||||||||||||||||
Savings | 13,618 | 13,546 | 13,593 | 13,889 | 14,238 | 1 | % | (4 | %) | |||||||||||||||||||
Money market | 22,036 | 20,750 | 20,023 | 20,028 | 20,278 | 6 | % | 9 | % | |||||||||||||||||||
Foreign office(d) | 371 | 494 | 323 | 395 | 380 | (25 | %) | (2 | %) | |||||||||||||||||||
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Total transaction deposits | $ | 97,574 | $ | 97,018 | $ | 96,450 | $ | 94,927 | $ | 95,825 | 1 | % | 2 | % | ||||||||||||||
Other time | 4,018 | 3,856 | 3,792 | 3,722 | 3,745 | 4 | % | 7 | % | |||||||||||||||||||
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Total core deposits | $ | 101,592 | $ | 100,874 | $ | 100,242 | $ | 98,649 | $ | 99,570 | 1 | % | 2 | % | ||||||||||||||
Certificates - $100,000 and over | 2,155 | 2,284 | 2,429 | 2,625 | 2,623 | (6 | %) | (18 | %) | |||||||||||||||||||
Other | 198 | 379 | 119 | 560 | 264 | (48 | %) | (25 | %) | |||||||||||||||||||
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Total average deposits | $ | 103,945 | $ | 103,537 | $ | 102,790 | $ | 101,834 | $ | 102,457 | — | 1 | % | |||||||||||||||
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Average core deposits increased 1 percent sequentially and were up 2 percent year-over-year. Average transaction deposits increased 1 percent sequentially and were up 2 percent compared with the second quarter of 2017. The sequential performance continued to reflect deposit migration from demand deposits to interest-bearing accounts. Sequential and year-over-year growth was primarily driven by increases in consumer money market account balances and commercial interest checking deposits, partially offset by lower commercial demand deposit account balances. Other time deposits increased by 4 percent sequentially and 7 percent year-over-year.
Average total commercial transaction deposits of $42 billion decreased 1 percent sequentially and were flat from the second quarter of 2017. Average total consumer transaction deposits of $55 billion increased 2 percent sequentially and increased 3 percent from the second quarter of 2017.
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Wholesale Funding
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Average Wholesale Funding | ||||||||||||||||||||||||||||
Certificates - $100,000 and over | $ | 2,155 | $ | 2,284 | $ | 2,429 | $ | 2,625 | $ | 2,623 | (6 | %) | (18 | %) | ||||||||||||||
Other deposits | 198 | 379 | 119 | 560 | 264 | (48 | %) | (25 | %) | |||||||||||||||||||
Federal funds purchased | 1,080 | 692 | 602 | 675 | 311 | 56 | % | 247 | % | |||||||||||||||||||
Other short-term borrowings | 2,452 | 2,423 | 2,316 | 4,212 | 4,194 | 1 | % | (42 | %) | |||||||||||||||||||
Long-term debt | 14,579 | 14,780 | 14,631 | 13,457 | 13,273 | (1 | %) | 10 | % | |||||||||||||||||||
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Total average wholesale funding | $ | 20,464 | $ | 20,558 | $ | 20,097 | $ | 21,529 | $ | 20,665 | — | (1 | %) | |||||||||||||||
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Average wholesale funding of $20.5 billion decreased $94 million sequentially and decreased $201 million, or 1 percent, from the second quarter of 2017. The sequential decrease in average wholesale funding reflected lower long-term debt balances resulting from maturities in the first and second quarter of 2018 exceeding a debt issuance in the second quarter of 2018 as well as lower other deposits and jumbo CD balances, partially offset by an increase in Federal funds borrowings. The year-over-year decrease primarily resulted from the ability to fund interest-earning asset growth with core deposits.
Noninterest Income
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Noninterest Income | ||||||||||||||||||||||||||||
Service charges on deposits | $ | 137 | $ | 137 | $ | 138 | $ | 138 | $ | 139 | — | (1 | %) | |||||||||||||||
Corporate banking revenue | 120 | 88 | 77 | 101 | 101 | 36 | % | 19 | % | |||||||||||||||||||
Mortgage banking net revenue | 53 | 56 | 54 | 63 | 55 | (5 | %) | (4 | %) | |||||||||||||||||||
Wealth and asset management revenue | 108 | 113 | 106 | 102 | 103 | (4 | %) | 5 | % | |||||||||||||||||||
Card and processing revenue | 84 | 79 | 80 | 79 | 79 | 6 | % | 6 | % | |||||||||||||||||||
Other noninterest income | 250 | 460 | 123 | 1,076 | 85 | (46 | %) | 194 | % | |||||||||||||||||||
Securities gains (losses), net | (5 | ) | (11 | ) | 1 | — | — | 55 | % | NM | ||||||||||||||||||
Securities gains (losses), net -non-qualifying hedges on mortgage servicing rights | (4 | ) | (13 | ) | (2 | ) | 2 | 2 | 69 | % | NM | |||||||||||||||||
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Total noninterest income | $ | 743 | $ | 909 | $ | 577 | $ | 1,561 | $ | 564 | (18 | %) | 32 | % | ||||||||||||||
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Noninterest income of $743 million decreased $166 million sequentially and increased $179 million year-over-year. The sequential and year-over-year comparisons reflect the impact of the following items:
Noninterest Income excluding certain items
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June 2018 | March 2018 | June 2017 | Seq | Yr/Yr | ||||||||||||||||
Noninterest Income excluding certain items | ||||||||||||||||||||
Noninterest income (U.S. GAAP) | $ | 743 | $ | 909 | $ | 564 | ||||||||||||||
Worldpaystep-up gain | — | (414 | ) | — | ||||||||||||||||
Gain on sale of Worldpay shares | (205 | ) | — | — | ||||||||||||||||
Gain from GreenSky IPO | (16 | ) | — | — | ||||||||||||||||
Branch and land network impairment charge | 30 | 8 | — | |||||||||||||||||
Valuation of Visa total return swap | 10 | 39 | 9 | |||||||||||||||||
Securities losses / (gains), net | 5 | 11 | — | |||||||||||||||||
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Noninterest income excluding certain items(b) | $ | 567 | $ | 553 | $ | 573 | 3 | % | (1 | %) | ||||||||||
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Excluding the items in the table above, noninterest income of $567 million increased $14 million, or 3 percent, from the previous quarter and decreased 1 percent from the second quarter of 2017. The sequential performance was primarily driven by increases in corporate banking revenue and card and processing revenue, partially offset by a decrease in wealth and asset management revenue compared to the seasonally strong performance in the first quarter of 2018.
Corporate banking revenue of $120 million was up 36 percent sequentially and up 19 percent year-over-year. The sequential and year-over-year increase was primarily driven by strong, broad-based capital markets revenue growth, led by corporate bond fees and loan syndication revenue.
Mortgage Banking Net Revenue
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Mortgage Banking Net Revenue | ||||||||||||||||||||||||||||
Origination fees and gains on loan sales | $ | 28 | $ | 24 | $ | 32 | $ | 40 | $ | 37 | 17 | % | (24 | %) | ||||||||||||||
Net mortgage servicing revenue: | ||||||||||||||||||||||||||||
Gross mortgage servicing fees | 54 | 53 | 54 | 56 | 49 | 2 | % | 10 | % | |||||||||||||||||||
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs | (29 | ) | (21 | ) | (32 | ) | (33 | ) | (31 | ) | 38 | % | (6 | %) | ||||||||||||||
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Net mortgage servicing revenue | 25 | 32 | 22 | 23 | 18 | (22 | %) | 39 | % | |||||||||||||||||||
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Total mortgage banking net revenue | $ | 53 | $ | 56 | $ | 54 | $ | 63 | $ | 55 | (5 | %) | (4 | %) | ||||||||||||||
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Mortgage banking net revenue was $53 million in the second quarter of 2018, down 5 percent from the first quarter of 2018 and down 4 percent from the second quarter of 2017. The sequential decrease was driven by elevated negative net valuation adjustments, partially offset by higher origination fees and gains on loan sales. The year-over-year decrease was driven by lower origination fees and gains on loan sales, partially offset by higher gross mortgage servicing fees. Originations of $2.1 billion in the current quarter increased 35 percent sequentially and decreased 7 percent from the second quarter of 2017.
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Wealth and asset management revenue of $108 million decreased 4 percent from the first quarter of 2018 and increased 5 percent from the second quarter of 2017. The sequential decrease was primarily driven by seasonally strongtax-related private client service revenue in the first quarter of 2018 and a decrease in personal asset management revenue. The year-over-year increase was primarily driven by higher personal asset management revenue.
Card and processing revenue of $84 million in the second quarter of 2018 increased 6 percent both sequentially and year-over-year. The sequential increase reflected seasonally higher credit card spend volume and higher debit transaction volume. The year-over-year increase in card and processing revenue was due to higher credit card spend volume and higher debit transaction volume.
Other noninterest income totaled $250 million in the second quarter of 2018, compared with $460 million in the previous quarter, and $85 million in the second quarter of 2017. As disclosed in the table on page 8, the reported results included the impact of Worldpay gains, a gain from the GreenSky IPO, valuation adjustments from the Visa total return swap, and branch impairment charges. For the second quarter of 2018, excluding these items, other noninterest income of $69 million decreased $24 million, or 26 percent, from the first quarter of 2018 and decreased $25 million, or 27 percent, from the second quarter of 2017. The sequential decrease was primarily due to lower private equity investment income. The year-over-year results also reflected a decline in equity method earnings from the ownership interest in Worldpay.
Net losses on investment securities were $5 million in the second quarter of 2018 (primarily due to the ownership stake in GreenSky), compared with net losses of $11 million in the first quarter of 2018 and no net gains/losses in the second quarter of 2017. Net losses on securities held asnon-qualifying hedges for the MSR portfolio were $4 million in the second quarter of 2018 and $13 million in the first quarter of 2018.
Noninterest Expense
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||
Salaries, wages and incentives | $ | 471 | $ | 447 | $ | 418 | $ | 407 | $ | 397 | 5 | % | 19 | % | ||||||||||||||
Employee benefits | 78 | 110 | 82 | 77 | 86 | (29 | %) | (9 | %) | |||||||||||||||||||
Net occupancy expense | 74 | 75 | 74 | 74 | 70 | (1 | %) | 6 | % | |||||||||||||||||||
Technology and communications | 67 | 68 | 68 | 62 | 57 | (1 | %) | 18 | % | |||||||||||||||||||
Equipment expense | 30 | 31 | 29 | 30 | 29 | (3 | %) | 3 | % | |||||||||||||||||||
Card and processing expense | 30 | 29 | 34 | 32 | 33 | 3 | % | (9 | %) | |||||||||||||||||||
Other noninterest expense | 287 | 286 | 368 | 293 | 285 | — | 1 | % | ||||||||||||||||||||
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Total noninterest expense | $ | 1,037 | $ | 1,046 | $ | 1,073 | $ | 975 | $ | 957 | (1 | %) | 8 | % | ||||||||||||||
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Noninterest expense of $1.037 billion decreased $9 million, or 1 percent, compared with the first quarter of 2018, and increased $80 million, or 8 percent, compared with the second quarter of 2017. Excluding the $19 million compensation expense primarily related to the previously announced staffing review and the $10 million contribution to the Fifth Third Foundation in the second quarter of 2018, as well as an $8 million litigation reserve charge in the first quarter of 2018, noninterest expense of $1.008 billion decreased $30 million, or 3 percent. The sequential decrease primarily reflected seasonally lower compensation-related expenses and ongoing discipline in managing expenses throughout the company. The year-over-year increase was primarily driven by higher base compensation and technology and communications expense.
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Summary of Credit Loss Experience
($ in millions) | For the Three Months Ended | |||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Net lossescharged-off | ||||||||||||||||||||
Commercial and industrial loans | ($ | 47 | ) | ($ | 28 | ) | ($ | 32 | ) | ($ | 27 | ) | ($ | 18 | ) | |||||
Commercial mortgage loans | (2 | ) | (1 | ) | 1 | (3 | ) | (5 | ) | |||||||||||
Commercial leases | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Residential mortgage loans | (2 | ) | (3 | ) | (1 | ) | 1 | (2 | ) | |||||||||||
Home equity | (2 | ) | (5 | ) | (4 | ) | (3 | ) | (5 | ) | ||||||||||
Automobile loans | (8 | ) | (11 | ) | (10 | ) | (8 | ) | (6 | ) | ||||||||||
Credit card | (26 | ) | (25 | ) | (20 | ) | (20 | ) | (22 | ) | ||||||||||
Other consumer loans | (7 | ) | (8 | ) | (9 | ) | (8 | ) | (5 | ) | ||||||||||
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Total net lossescharged-off | ($ | 94 | ) | ($ | 81 | ) | ($ | 76 | ) | ($ | 68 | ) | ($ | 64 | ) | |||||
Total lossescharged-off | ($ | 118 | ) | ($ | 103 | ) | ($ | 94 | ) | ($ | 85 | ) | ($ | 95 | ) | |||||
Total recoveries of losses previouslycharged-off | 24 | 22 | 18 | 17 | 31 | |||||||||||||||
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Total net lossescharged-off | ($ | 94 | ) | ($ | 81 | ) | ($ | 76 | ) | ($ | 68 | ) | ($ | 64 | ) | |||||
Ratios (annualized) | ||||||||||||||||||||
Net lossescharged-off as a percent of average portfolio loans and leases | 0.41 | % | 0.36 | % | 0.33 | % | 0.29 | % | 0.28 | % | ||||||||||
Commercial | 0.34 | % | 0.21 | % | 0.22 | % | 0.21 | % | 0.17 | % | ||||||||||
Consumer | 0.52 | % | 0.60 | % | 0.51 | % | 0.43 | % | 0.46 | % |
Net charge-offs were $94 million, or 41 bps of average portfolio loans and leases on an annualized basis, in the second quarter of 2018 compared with net charge-offs of $81 million, or 36 bps, in the first quarter of 2018 and $64 million, or 28 bps, in the second quarter of 2017.
Commercial net charge-offs of $49 million, or 34 bps, increased $20 million sequentially. This primarily reflected a $19 million increase in net charge-offs of C&I loans.
Consumer net charge-offs of $45 million, or 52 bps, decreased $7 million sequentially. This primarily reflected a $3 million decrease in net charge-offs on both home equity and automobile loans.
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($ in millions) | For the Three Months Ended | |||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Allowance for Credit Losses |
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Allowance for loan and lease losses, beginning | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | $ | 1,238 | ||||||||||
Total net lossescharged-off | (94 | ) | (81 | ) | (76 | ) | (68 | ) | (64 | ) | ||||||||||
Provision for loan and lease losses | 33 | 23 | 67 | 67 | 52 | |||||||||||||||
Deconsolidation of a variable interest entity (VIE) | — | — | — | (20 | ) | — | ||||||||||||||
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Allowance for loan and lease losses, ending | $ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
Reserve for unfunded commitments, beginning | $ | 151 | $ | 161 | $ | 157 | $ | 162 | $ | 159 | ||||||||||
(Benefit from) provision for unfunded commitments | (20 | ) | (10 | ) | 4 | (5 | ) | 3 | ||||||||||||
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Reserve for unfunded commitments, ending | $ | 131 | $ | 151 | $ | 161 | $ | 157 | $ | 162 | ||||||||||
Components of allowance for credit losses: |
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Allowance for loan and lease losses | $ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
Reserve for unfunded commitments | 131 | 151 | 161 | 157 | 162 | |||||||||||||||
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Total allowance for credit losses | $ | 1,208 | $ | 1,289 | $ | 1,357 | $ | 1,362 | $ | 1,388 | ||||||||||
Allowance for loan and lease losses ratio |
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As a percent of portfolio loans and leases | 1.17 | % | 1.24 | % | 1.30 | % | 1.31 | % | 1.34 | % | ||||||||||
As a percent of nonperforming portfolio loans and leases(e) | 247 | % | 252 | % | 274 | % | 238 | % | 200 | % | ||||||||||
As a percent of nonperforming portfolio assets(e) | 224 | % | 226 | % | 245 | % | 217 | % | 185 | % |
The provision for loan and lease losses totaled $33 million in the second quarter of 2018, compared to $23 million in the first quarter of 2018 and $52 million in the second quarter of 2017.
As of quarter end, the allowance for loan and lease loss ratio represented 1.17 percent of total portfolio loans and leases outstanding, compared with 1.24 percent last quarter, and represented 247 percent of nonperforming loans and leases, and 224 percent of nonperforming assets. Performance reflected a significant improvement in criticized assets and nonperforming loans.
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($ in millions) | As of | |||||||||||||||||||
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2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
Nonperforming Assets and Delinquent Loans | ||||||||||||||||||||
Nonaccrual portfolio loans and leases: |
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Commercial and industrial loans | $ | 99 | $ | 155 | $ | 144 | $ | 144 | $ | 225 | ||||||||||
Commercial mortgage loans | 8 | 9 | 12 | 14 | 15 | |||||||||||||||
Commercial leases | 25 | 4 | — | 1 | 1 | |||||||||||||||
Residential mortgage loans | 13 | 16 | 17 | 19 | 19 | |||||||||||||||
Home equity | 54 | 55 | 56 | 56 | 52 | |||||||||||||||
Automobile loans | 3 | — | — | — | — | |||||||||||||||
Other consumer loans | 1 | 1 | — | — | — | |||||||||||||||
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Total nonaccrual portfolio loans and leases (excludes restructured loans) | $ | 203 | $ | 240 | $ | 229 | $ | 234 | $ | 312 | ||||||||||
Nonaccrual restructured portfolio commercial loans and leases(f) | 173 | 154 | 150 | 214 | 244 | |||||||||||||||
Nonaccrual restructured portfolio consumer loans and leases | 61 | 58 | 58 | 58 | 58 | |||||||||||||||
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Total nonaccrual portfolio loans and leases | $ | 437 | $ | 452 | $ | 437 | $ | 506 | $ | 614 | ||||||||||
Repossessed property | 7 | 9 | 9 | 10 | 11 | |||||||||||||||
OREO | 36 | 43 | 43 | 39 | 37 | |||||||||||||||
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Total nonperforming portfolio assets(e) | $ | 480 | $ | 504 | $ | 489 | $ | 555 | $ | 662 | ||||||||||
Nonaccrual loans held for sale | 5 | 5 | 5 | 18 | 7 | |||||||||||||||
Nonaccrual restructured loans held for sale | 18 | 19 | 1 | 2 | 1 | |||||||||||||||
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Total nonperforming assets | $ | 503 | $ | 528 | $ | 495 | $ | 575 | $ | 670 | ||||||||||
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Restructured portfolio consumer loans and leases (accrual) | $ | 1,029 | $ | 916 | $ | 927 | $ | 929 | $ | 933 | ||||||||||
Restructured portfolio commercial loans and leases (accrual)(f) | $ | 111 | $ | 249 | $ | 249 | $ | 232 | $ | 224 | ||||||||||
Total loans and leases30-89 days past due (accrual) | $ | 217 | $ | 299 | $ | 280 | $ | 252 | $ | 190 | ||||||||||
Total loans and leases 90 days past due (accrual) | $ | 89 | $ | 107 | $ | 97 | $ | 77 | $ | 75 | ||||||||||
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(e) | 0.47 | % | 0.49 | % | 0.48 | % | 0.55 | % | 0.67 | % | ||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(e) | 0.52 | % | 0.55 | % | 0.53 | % | 0.60 | % | 0.72 | % |
Total nonperforming portfolio assets decreased $24 million, or 5 percent, from the previous quarter to $480 million. Portfolio nonperforming loans and leases (NPLs) at quarter end decreased $15 million from the previous quarter to $437 million. NPLs as a percent of total loans, leases and OREO at quarter end decreased 2 bps from the previous quarter to 0.47 percent.
Commercial portfolio NPLs decreased $17 million from last quarter to $305 million, or 0.54 percent of commercial portfolio loans, leases and OREO. Consumer portfolio NPLs increased $2 million from last quarter to $132 million, or 0.37 percent of consumer portfolio loans, leases and OREO.
OREO balances decreased $7 million from the prior quarter to $36 million, and included $14 million in commercial OREO and $22 million in consumer OREO. Repossessed personal property decreased $2 million from the prior quarter to $7 million.
Loans over 90 days past due and still accruing decreased $18 million from the first quarter of 2018 to $89 million. Loans30-89 days past due of $217 million decreased $82 million from the previous quarter.
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Capital and Liquidity Position
For the Three Months Ended | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Capital Position | ||||||||||||||||||||
Average total Bancorp shareholders’ equity as a percent of average assets | 11.38 | % | 11.52 | % | 11.69 | % | 11.93 | % | 11.84 | % | ||||||||||
Tangible equity(b) | 10.29 | % | 10.09 | % | 9.90 | % | 9.84 | % | 9.98 | % | ||||||||||
Tangible common equity (excluding unrealized gains/losses)(b) | 9.33 | % | 9.14 | % | 8.94 | % | 8.89 | % | 9.02 | % | ||||||||||
Tangible common equity (including unrealized gains/losses)(b) | 8.98 | % | 8.89 | % | 8.99 | % | 9.00 | % | 9.12 | % | ||||||||||
Regulatory Capital and Liquidity Ratios | ||||||||||||||||||||
CET1 capital(c) | 10.91 | % | 10.82 | % | 10.61 | % | 10.59 | % | 10.63 | % | ||||||||||
Tier I risk-based capital(c) | 12.02 | % | 11.95 | % | 11.74 | % | 11.72 | % | 11.76 | % | ||||||||||
Total risk-based capital(c) | 15.21 | % | 15.25 | % | 15.16 | % | 15.16 | % | 15.22 | % | ||||||||||
Tier I leverage | 10.24 | % | 10.11 | % | 10.01 | % | 9.97 | % | 10.07 | % | ||||||||||
Modified liquidity coverage ratio (LCR) | 116 | % | 113 | % | 129 | % | 124 | % | 115 | % |
Capital ratios remained strong and increased during the quarter. The CET1 ratio was 10.91 percent, the tangible common equity to tangible assets ratio(b) was 9.33 percent (excluding unrealized gains/losses), and 8.98 percent (including unrealized gains/losses). The Tier I risk-based capital ratio was 12.02 percent, the Total risk-based capital ratio was 15.21 percent, and the Tier I leverage ratio was 10.24 percent.
On May 25, 2018, Fifth Third initially settled a share repurchase agreement whereby Fifth Third would purchase $235 million of its outstanding stock. The initial settlement reduced second quarter common shares outstanding by 6.4 million shares. On June 15, 2018, Fifth Third settled the forward contract. An additional 1.2 million shares were repurchased in connection with the completion of this agreement.
On June 27, 2018, Fifth Third completed the sale of 5 million shares of Class A common stock of Worldpay, Inc. Fifth Third had previously received these Class A shares in exchange for Class B Units of Vantiv Holding, LLC. Fifth Third recognized apre-tax gain of approximately $205 million (~ $162 million after tax)(a) related to the sale. The sale added approximately 16 basis points to Fifth Third’s CET1 ratio. As a result of the sale, Fifth Third beneficially owns approximately 3.3% of Worldpay’s equity through its ownership of approximately 10.3 million Class B Units.
On June 28, 2018, Fifth Third announced that the Board of Governors of the Federal Reserve System did not object to Fifth Third’s 2018 CCAR capital plan for the period beginning July 1, 2018 and ending June 30, 2019. Fifth Third’s capital plan included the following capital actions related to common dividends and share repurchases:
• | The increase in the quarterly common stock dividend to $0.22 from $0.18 beginning 4Q 2018 and to $0.24 beginning 2Q 2019, a 33 percent increase over the current dividend rate |
• | The repurchase of common shares in an amount up to $1.651 billion, or a 42 percent increase over the 2017 capital plan. Included in these repurchases are: |
• | $81 million in repurchases related to share issuances under employee benefit plans |
• | $53 million in repurchases related to previously-recognized Worldpay tax receivable agreement (“TRA”) transactionafter-tax gains |
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• | The additional ability to repurchase common shares in the amount of anyafter-tax capital generated from the sale of Worldpay common stock (including expected share repurchases associated with the recent sale of 5 million shares of Worldpay which generated approximately $162 million inafter-tax capital)(a) |
• | The additional ability to repurchase common shares in the amount of anyafter-tax cash income generated from the termination and settlement of gross cash flows from existing TRAs with Worldpay or potential future TRAs that may be generated from additional sales of Worldpay |
Fifth Third intends to execute open market share repurchases associated with up to $500 million of its 2018 CCAR repurchase plan before the beginning of the proxy solicitation in connection with the MB Financial, Inc. shareholder vote on its merger with Fifth Third, and may repurchase additional shares after the vote. The timing and amount of this repurchase activity is subject to market conditions and applicable securities laws.
Tax Rate
The effective tax rate was 15.5 percent in the second quarter of 2018 compared with 15.8 percent in the previous quarter and 25.9 percent in the second quarter of 2017. The tax rate in the second quarter of 2018 was impacted by a $12 million tax benefit primarily associated with the exercise and vesting of employee equity awards.
Other
On May 20, 2018, Fifth Third Bancorp and MB Financial, Inc. signed a definitive agreement under which MB Financial will merge with Fifth Third in a transaction valued at approximately $4.7 billion as of May 18, 2018. The transaction is expected to reduce Fifth Third’s regulatory common CET1 ratio by approximately 45 basis points. The pro forma tangible common equity to tangible assets (TCE) ratio of the combined entity is projected to be 8.2 percent at closing. The transaction is subject to the satisfaction of all customary closing conditions, including regulatory approvals as well as the approval of MB Financial shareholders.
As of June 30, 2018, Fifth Third Bank owned approximately 10.3 million units representing a 3.3 percent interest in Vantiv Holding, LLC, convertible into shares of Worldpay, Inc., a publicly traded firm. Based upon Worldpay’s closing price of $81.78 on June 30, 2018, our interest in Worldpay was valued at approximately $840 million. The difference between the market value and the book value of Fifth Third’s interest in Worldpay’s shares is not recognized in Fifth Third’s equity or capital.
Conference Call
Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website atwww.53.com (click on “About Us” then “Investor Relations”).
Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available after the conference call until approximately August 2, 2018 by dialing800-585-8367 for domestic access or404-537-3406 for international access (passcode 3569128#).
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Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of June 30, 2018, the Company had $141 billion in assets and operates 1,158 full-service Banking Centers, and 2,458 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 54,000fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of June 30, 2018, Fifth Third also had a 3.3% interest in Vantiv Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2018, had $368 billion in assets under care, of which it managed $37 billion for individuals, corporations andnot-for-profit organizations through its Trust and Registered Investment Advisory businesses.Investor information andpress releases can be viewed atwww.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
Earnings Release End Notes
(a) | Assumes a 21% tax rate. |
(b) | Non-GAAP measure; see discussion ofnon-GAAP and Reg. G reconciliation beginning on page 31. |
(c) | Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts ofoff-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting weighted values are added together resulting in the total risk-weighted assets. Current period regulatory capital ratios are estimated. |
(d) | Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts. |
(e) | Excludes nonaccrual loans held for sale. |
(f) | As of June 30, 2017 excludes $7 million of restructured accruing loans and $19 million of restructured nonaccrual loans associated with a consolidated VIE in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party. |
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IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Fifth Third Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes the Proxy Statement of MB Financial, Inc. and a Prospectus of Fifth Third Bancorp, as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Fifth Third Bancorp and MB Financial, Inc., may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Fifth Third Bancorp at ir.53.com or from MB Financial, Inc. by accessing MB Financial, Inc.’s website at investor.mbfinancial.com.
Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Fifth Third Investor Relations at Fifth Third Investor Relations, MD 1090QC, 38 Fountain Square Plaza, Cincinnati, OH 45263, by calling (866)670-0468, or by sending ane-mail toir@53.com or to MB Financial, Attention: Corporate Secretary, at 6111 North River Road, Rosemont, Illinois 60018, by calling (847)653-1992 or by sending ane-mail todkoros@mbfinancial. com.
Fifth Third Bancorp and MB financial, Inc. and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of MB Financial, Inc. in respect of the transaction described in the Proxy Statement/Prospectus. Information regarding Fifth Third Bancorp’s directors and executive officers is contained in Fifth Third Bancorp’s Annual Report on Form10-K for the year ended December 31, 2017 and its Proxy Statement on Schedule 14A, dated March 6, 2018, which are filed with the SEC. Information regarding MB Financial, Inc.’s directors and executive officers is contained in its Proxy Statement on Schedule 14A filed with the SEC on April 3, 2018. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger. Free copies of this document may be obtained as described in the preceding paragraph.
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third Bancorp’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections.
In addition to factors previously disclosed in Fifth Third Bancorp’s and MB Financial, Inc.’s reports filed with or furnished to the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval of the merger by MB Financial, Inc.’s stockholders on the expected terms and schedule, including the risk that regulatory approvals required for the merger are not obtained or are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating the businesses of MB Financial, Inc. or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of Fifth Third Bancorp’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
# # #
16
Table of Contents
Quarterly Financial Review for June 30, 2018
Table of Contents
18-19 | ||||
20 | ||||
21-22 | ||||
23 | ||||
24-26 | ||||
27 | ||||
28 | ||||
29 | ||||
30 | ||||
32 | ||||
33 |
17
Table of Contents
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
For the Three Months Ended | % / bps Change | Year to Date | % / bps Change | |||||||||||||||||||||||||||||
June 2018 | March 2018 | June 2017 | Seq | Yr/Yr | June 2018 | June 2017 | Yr/Yr | |||||||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||||||||||||||
Taxable equivalent net interest income(c) | $ | 1,024 | $ | 999 | $ | 945 | 3 | % | 8 | % | $ | 2,023 | $ | 1,884 | 7 | % | ||||||||||||||||
Noninterest income | 743 | 909 | 564 | (18 | %) | 32 | % | 1,652 | 1,087 | 52 | % | |||||||||||||||||||||
Taxable equivalent total revenue | 1,767 | 1,908 | 1,509 | (7 | %) | 17 | % | 3,675 | 2,971 | 24 | % | |||||||||||||||||||||
Provision for loan and lease losses | 33 | 23 | 52 | 43 | % | (37 | %) | 56 | 126 | (56 | %) | |||||||||||||||||||||
Noninterest expense | 1,037 | 1,046 | 957 | (1 | %) | 8 | % | 2,083 | 1,943 | 7 | % | |||||||||||||||||||||
Net income attributable to Bancorp | 586 | 704 | 367 | (17 | %) | 60 | % | 1,290 | 672 | 92 | % | |||||||||||||||||||||
Net income available to common shareholders | 563 | 689 | 344 | (18 | %) | 64 | % | 1,252 | 634 | 97 | % | |||||||||||||||||||||
Earnings Per Share Data | ||||||||||||||||||||||||||||||||
Net income allocated to common shareholders | $ | 557 | $ | 681 | $ | 340 | (18 | %) | 64 | % | $ | 1,238 | $ | 627 | 97 | % | ||||||||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||
Basic | 683,345 | 689,820 | 741,401 | (1 | %) | (8 | %) | 686,565 | 744,517 | (8 | %) | |||||||||||||||||||||
Diluted | 696,210 | 704,101 | 752,328 | (1 | %) | (7 | %) | 700,134 | 756,545 | (7 | %) | |||||||||||||||||||||
Earnings per share, basic | $ | 0.81 | $ | 0.99 | $ | 0.46 | (18 | %) | 76 | % | $ | 1.80 | $ | 0.84 | 114 | % | ||||||||||||||||
Earnings per share, diluted | 0.80 | 0.97 | 0.45 | (18 | %) | 78 | % | 1.77 | 0.83 | 113 | % | |||||||||||||||||||||
Common Share Data | ||||||||||||||||||||||||||||||||
Cash dividends per common share | $ | 0.18 | $ | 0.16 | $ | 0.14 | 13 | % | 29 | % | $ | 0.34 | $ | 0.28 | 21 | % | ||||||||||||||||
Book value per share | 21.97 | 21.68 | 20.42 | 1 | % | 8 | % | 21.97 | 20.42 | 8 | % | |||||||||||||||||||||
Market price per share | 28.70 | 31.75 | 25.96 | (10 | %) | 11 | % | 28.70 | 25.96 | 11 | % | |||||||||||||||||||||
Common shares outstanding (in thousands) | 678,162 | 684,942 | 738,873 | (1 | %) | (8 | %) | 678,162 | 738,873 | (8 | %) | |||||||||||||||||||||
Market capitalization | $ | 19,463 | $ | 21,747 | $ | 19,181 | (11 | %) | 1 | % | $ | 19,463 | $ | 19,181 | 1 | % | ||||||||||||||||
Financial Ratios | ||||||||||||||||||||||||||||||||
Return on average assets | 1.66 | % | 2.02 | % | 1.05 | % | (36 | ) | 61 | 1.84 | % | 0.97 | % | 87 | ||||||||||||||||||
Return on average common equity | 15.3 | % | 18.6 | % | 9.0 | % | (330 | ) | 630 | 17.0 | % | 8.4 | % | 860 | ||||||||||||||||||
Return on average tangible common equity(a)(c) | 18.4 | % | 22.4 | % | 10.7 | % | (400 | ) | 770 | 20.4 | % | 10.0 | % | 1,040 | ||||||||||||||||||
Noninterest income as a percent of total revenue | 42 | % | 48 | % | 37 | % | (600 | ) | 500 | 45 | % | 37 | % | 800 | ||||||||||||||||||
Dividend payout ratio | 22.2 | % | 16.2 | % | 30.4 | % | 600 | (820 | ) | 18.9 | % | 33.3 | % | (1,440 | ) | |||||||||||||||||
Average total Bancorp shareholders’ equity as a percent of average assets | 11.38 | % | 11.52 | % | 11.84 | % | (14 | ) | (46 | ) | 11.45 | % | 11.78 | % | (33 | ) | ||||||||||||||||
Tangible common equity(b)(c) | 9.33 | % | 9.14 | % | 9.02 | % | 19 | 31 | 9.33 | % | 9.02 | % | 31 | |||||||||||||||||||
Taxable equivalent net interest margin(c) | 3.21 | % | 3.18 | % | 3.01 | % | 3 | 20 | 3.19 | % | 3.01 | % | 18 | |||||||||||||||||||
Taxable equivalent efficiency(c) | 58.7 | % | 54.8 | % | 63.4 | % | 390 | (470 | ) | 56.7 | % | 65.4 | % | (870 | ) | |||||||||||||||||
Effective tax rate | 15.5 | % | 15.8 | % | 25.9 | % | (30 | ) | (1,040 | ) | 15.7 | % | 24.5 | % | (880 | ) | ||||||||||||||||
Credit Quality | ||||||||||||||||||||||||||||||||
Net lossescharged-off | $ | 94 | $ | 81 | $ | 64 | 16 | % | 47 | % | $ | 175 | $ | 153 | 14 | % | ||||||||||||||||
Net lossescharged-off as a percent of average portfolio loans and leases | 0.41 | % | 0.36 | % | 0.28 | % | 5 | 13 | 0.38 | % | 0.34 | % | 4 | |||||||||||||||||||
ALLL as a percent of portfolio loans and leases | 1.17 | % | 1.24 | % | 1.34 | % | (7 | ) | (17 | ) | 1.17 | % | 1.34 | % | (17 | ) | ||||||||||||||||
Allowance for credit losses as a percent of portfolio loans and leases(j) | 1.31 | % | 1.40 | % | 1.52 | % | (9 | ) | (21 | ) | 1.31 | % | 1.52 | % | (21 | ) | ||||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(d) | 0.52 | % | 0.55 | % | 0.72 | % | (3 | ) | (20 | ) | 0.52 | % | 0.72 | % | (20 | ) | ||||||||||||||||
Average Balances | ||||||||||||||||||||||||||||||||
Loans and leases, including held for sale | $ | 93,232 | $ | 92,869 | $ | 92,653 | — | 1 | % | $ | 93,051 | $ | 92,721 | — | ||||||||||||||||||
Total securities and other short-term investments | 34,935 | 34,677 | 33,481 | 1 | % | 4 | % | 34,806 | 33,329 | 4 | % | |||||||||||||||||||||
Total assets | 141,529 | 141,565 | 140,344 | — | 1 | % | 141,547 | 140,243 | 1 | % | ||||||||||||||||||||||
Transaction deposits(e) | 97,574 | 97,018 | 95,825 | 1 | % | 2 | % | 97,298 | 96,419 | 1 | % | |||||||||||||||||||||
Core deposits(f) | 101,592 | 100,874 | 99,570 | 1 | % | 2 | % | 101,235 | 100,205 | 1 | % | |||||||||||||||||||||
Wholesale funding(g) | 20,464 | 20,558 | 20,665 | — | (1 | %) | 20,511 | 19,900 | 3 | % | ||||||||||||||||||||||
Bancorp shareholders’ equity | 16,108 | 16,313 | 16,615 | (1 | %) | (3 | %) | 16,209 | 16,522 | (2 | %) | |||||||||||||||||||||
Regulatory Capital and Liquidity Ratios(h) | ||||||||||||||||||||||||||||||||
CET1 capital(i) | 10.91 | % | 10.82 | % | 10.63 | % | 9 | 28 | 10.91 | % | 10.63 | % | 28 | |||||||||||||||||||
Tier I risk-based capital(i) | 12.02 | % | 11.95 | % | 11.76 | % | 7 | 26 | 12.02 | % | 11.76 | % | 26 | |||||||||||||||||||
Total risk-based capital(i) | 15.21 | % | 15.25 | % | 15.22 | % | (4 | ) | (1 | ) | 15.21 | % | 15.22 | % | (1 | ) | ||||||||||||||||
Tier I leverage | 10.24 | % | 10.11 | % | 10.07 | % | 13 | 17 | 10.24 | % | 10.07 | % | 17 | |||||||||||||||||||
Modified liquidity coverage ratio (LCR) | 116 | % | 113 | % | 115 | % | 3 | % | 1 | % | 116 | % | 115 | % | 1 | % | ||||||||||||||||
Operations | ||||||||||||||||||||||||||||||||
Banking centers | 1,158 | 1,153 | 1,157 | — | — | 1,158 | 1,157 | — | ||||||||||||||||||||||||
ATMs | 2,458 | 2,459 | 2,461 | — | — | 2,458 | 2,461 | — | ||||||||||||||||||||||||
Full-time equivalent employees | 18,163 | 18,344 | 17,744 | (1 | %) | 2 | % | 18,163 | 17,744 | 2 | % |
(a) | The return on average tangible common equity is calculated as tangible net income available to common shareholders (excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets). |
(b) | The tangible common equity ratio is calculated as tangible common equity [shareholders’ equity less preferred stock, goodwill, intangible assets and accumulated other comprehensive income divided by tangible assets (total assets less goodwill, intangible assets and AOCI)]. |
(c) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31. |
(d) | Excludes nonaccrual loans held for sale. |
(e) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers. |
(f) | Includes transaction deposits plus other time deposits. |
(g) | Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
(h) | Current period regulatory capital and liquidity ratios are estimates. |
(i) | Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
(j) | The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
18
Table of Contents
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Taxable equivalent net interest income(c) | $ | 1,024 | $ | 999 | $ | 963 | $ | 977 | $ | 945 | ||||||||||
Noninterest income | 743 | 909 | 577 | 1,561 | 564 | |||||||||||||||
Taxable equivalent total revenue | 1,767 | 1,908 | 1,540 | 2,538 | 1,509 | |||||||||||||||
Provision for loan and lease losses | 33 | 23 | 67 | 67 | 52 | |||||||||||||||
Noninterest expense | 1,037 | 1,046 | 1,073 | 975 | 957 | |||||||||||||||
Net income attributable to Bancorp | 586 | 704 | 509 | 1,014 | 367 | |||||||||||||||
Net income available to common shareholders | 563 | 689 | 486 | 999 | 344 | |||||||||||||||
Earnings Per Share Data | ||||||||||||||||||||
Net income allocated to common shareholders | $ | 557 | $ | 681 | $ | 482 | $ | 989 | $ | 340 | ||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||
Basic | 683,345 | 689,820 | 703,372 | 721,280 | 741,401 | |||||||||||||||
Diluted | 696,210 | 704,101 | 716,908 | 733,285 | 752,328 | |||||||||||||||
Earnings per share, basic | $ | 0.81 | $ | 0.99 | $ | 0.68 | $ | 1.37 | 0.46 | |||||||||||
Earnings per share, diluted | 0.80 | 0.97 | 0.67 | 1.35 | 0.45 | |||||||||||||||
Common Share Data | ||||||||||||||||||||
Cash dividends per common share | $ | 0.18 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.14 | ||||||||||
Book value per share | 21.97 | 21.68 | 21.67 | 21.30 | 20.42 | |||||||||||||||
Market value per share | 28.70 | 31.75 | 30.34 | 27.98 | 25.96 | |||||||||||||||
Common shares outstanding (in thousands) | 678,162 | 684,942 | 693,805 | 705,474 | 738,873 | |||||||||||||||
Market capitalization | $ | 19,463 | $ | 21,747 | $ | 21,050 | $ | 19,739 | $ | 19,181 | ||||||||||
Financial Ratios | ||||||||||||||||||||
Return on average assets | 1.66 | % | 2.02 | % | 1.43 | % | 2.85 | % | 1.05 | % | ||||||||||
Return on average common equity | 15.3 | % | 18.6 | % | 12.7 | % | 25.6 | % | 9.0 | % | ||||||||||
Return on average tangible common equity(a)(c) | 18.4 | % | 22.4 | % | 15.2 | % | 30.4 | % | 10.7 | % | ||||||||||
Noninterest income as a percent of total revenue | 42 | % | 48 | % | 37 | % | 62 | % | 37 | % | ||||||||||
Dividend payout ratio | 22.2 | % | 16.2 | % | 23.5 | % | 11.7 | % | 30.4 | % | ||||||||||
Average total Bancorp shareholders’ equity as a percent of average assets | 11.38 | % | 11.52 | % | 11.69 | % | 11.93 | % | 11.84 | % | ||||||||||
Tangible common equity(b)(c) | 9.33 | % | 9.14 | % | 8.94 | % | 8.89 | % | 9.02 | % | ||||||||||
Taxable equivalent net interest margin(c) | 3.21 | % | 3.18 | % | 3.02 | % | 3.07 | % | 3.01 | % | ||||||||||
Taxable equivalent efficiency ratio(c) | 58.7 | % | 54.8 | % | 69.7 | % | 38.4 | % | 63.4 | % | ||||||||||
Effective tax rate | 15.5 | % | 15.8 | % | (29.8 | %) | 31.9 | % | 25.9 | % | ||||||||||
Credit Quality | ||||||||||||||||||||
Net lossescharged-off | $ | 94 | $ | 81 | $ | 76 | $ | 68 | $ | 64 | ||||||||||
Net lossescharged-off as a percent of average portfolio loans and leases | 0.41 | % | 0.36 | % | 0.33 | % | 0.29 | % | 0.28 | % | ||||||||||
ALLL as a percent of portfolio loans and leases | 1.17 | % | 1.24 | % | 1.30 | % | 1.31 | % | 1.34 | % | ||||||||||
Allowance for credit losses as a percent of portfolio loans and leases(j) | 1.31 | % | 1.40 | % | 1.48 | % | 1.48 | % | 1.52 | % | ||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(d) | 0.52 | % | 0.55 | % | 0.53 | % | 0.60 | % | 0.72 | % | ||||||||||
Average Balances | ||||||||||||||||||||
Loans and leases, including held for sale | $ | 93,232 | $ | 92,869 | $ | 92,865 | $ | 92,617 | $ | 92,653 | ||||||||||
Total securities and other short-term investments | 34,935 | 34,677 | 33,756 | 33,826 | 33,481 | |||||||||||||||
Total assets | 141,529 | 141,565 | 141,055 | 140,992 | 140,344 | |||||||||||||||
Transaction deposits(e) | 97,574 | 97,018 | 96,450 | 94,927 | 95,825 | |||||||||||||||
Core deposits(f) | 101,592 | 100,874 | 100,242 | 98,649 | 99,570 | |||||||||||||||
Wholesale funding(g) | 20,464 | 20,558 | 20,097 | 21,529 | 20,665 | |||||||||||||||
Bancorp shareholders’ equity | 16,108 | 16,313 | 16,493 | 16,820 | 16,615 | |||||||||||||||
Regulatory Capital and Liquidity Ratios(h) | ||||||||||||||||||||
CET1 capital(i) | 10.91 | % | 10.82 | % | 10.61 | % | 10.59 | % | 10.63 | % | ||||||||||
Tier I risk-based capital(i) | 12.02 | % | 11.95 | % | 11.74 | % | 11.72 | % | 11.76 | % | ||||||||||
Total risk-based capital(i) | 15.21 | % | 15.25 | % | 15.16 | % | 15.16 | % | 15.22 | % | ||||||||||
Tier I leverage | 10.24 | % | 10.11 | % | 10.01 | % | 9.97 | % | 10.07 | % | ||||||||||
Modified liquidity coverage ratio (LCR) | 116 | % | 113 | % | 129 | % | 124 | % | 115 | % | ||||||||||
Operations | ||||||||||||||||||||
Banking centers | 1,158 | 1,153 | 1,154 | 1,155 | 1,157 | |||||||||||||||
ATMs | 2,458 | 2,459 | 2,469 | 2,465 | 2,461 | |||||||||||||||
Full-time equivalent employees | 18,163 | 18,344 | 18,125 | 17,797 | 17,744 |
(a) | The return on average tangible common equity is calculated as tangible net income available to common shareholders (excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets). |
(b) | The tangible common equity ratio is calculated as tangible common equity [shareholders’ equity less preferred stock, goodwill, intangible assets and accumulated other comprehensive income divided by tangible assets (total assets less goodwill, intangible assets and AOCI)]. |
(c) | Non-GAAP measure; see discussion ofnon-GAAP and Reg. G reconciliation beginning on page 31. |
(d) | Excludes nonaccrual loans held for sale. |
(e) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers. |
(f) | Includes transaction deposits plus other time deposits. |
(g) | Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
(h) | Current period regulatory capital and liquidity ratios are estimates. |
(i) | Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts ofoff-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
(j) | The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
19
Table of Contents
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
For the Three Months Ended | % Change | Year to Date | % Change | |||||||||||||||||||||||||||||
June | March | June | June | June | ||||||||||||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | 2018 | 2017 | Yr/Yr | |||||||||||||||||||||||||
Interest Income | ||||||||||||||||||||||||||||||||
Interest and fees on loans and leases | $ | 996 | $ | 938 | $ | 858 | 6 | % | 16 | % | $ | 1,933 | $ | 1,696 | 14 | % | ||||||||||||||||
Interest on securities | 267 | 263 | 245 | 2 | % | 9 | % | 530 | 490 | 8 | % | |||||||||||||||||||||
Interest on other short-term investments | 6 | 5 | 3 | 20 | % | 100 | % | 11 | 6 | 83 | % | |||||||||||||||||||||
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Total interest income | 1,269 | 1,206 | 1,106 | 5 | % | 15 | % | 2,474 | 2,192 | 13 | % | |||||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||||||||||
Interest on deposits | 119 | 95 | 65 | 25 | % | 83 | % | 215 | 124 | 73 | % | |||||||||||||||||||||
Interest on federal funds purchased | 5 | 2 | 1 | 150 | % | 400 | % | 7 | 2 | 250 | % | |||||||||||||||||||||
Interest on other short-term borrowings | 11 | 8 | 10 | 38 | % | 10 | % | 19 | 12 | 58 | % | |||||||||||||||||||||
Interest on long-term debt | 114 | 105 | 91 | 9 | % | 25 | % | 217 | 182 | 19 | % | |||||||||||||||||||||
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Total interest expense | 249 | 210 | 167 | 19 | % | 49 | % | 458 | 320 | 43 | % | |||||||||||||||||||||
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Net Interest Income | 1,020 | 996 | 939 | 2 | % | 9 | % | 2,016 | 1,872 | 8 | % | |||||||||||||||||||||
Provision for loan and lease losses | 33 | 23 | 52 | 43 | % | (37 | %) | 56 | 126 | (56 | %) | |||||||||||||||||||||
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Net Interest Income After Provision for Loan and Lease Losses | 987 | 973 | 887 | 1 | % | 11 | % | 1,960 | 1,746 | 12 | % | |||||||||||||||||||||
Noninterest Income | ||||||||||||||||||||||||||||||||
Service charges on deposits | 137 | 137 | 139 | — | (1 | %) | 275 | 277 | (1 | %) | ||||||||||||||||||||||
Corporate banking revenue | 120 | 88 | 101 | 36 | % | 19 | % | 208 | 175 | 19 | % | |||||||||||||||||||||
Mortgage banking net revenue | 53 | 56 | 55 | (5 | %) | (4 | %) | 109 | 108 | 1 | % | |||||||||||||||||||||
Wealth and asset management revenue | 108 | 113 | 103 | (4 | %) | 5 | % | 221 | 211 | 5 | % | |||||||||||||||||||||
Card and processing revenue | 84 | 79 | 79 | 6 | % | 6 | % | 163 | 153 | 7 | % | |||||||||||||||||||||
Other noninterest income | 250 | 460 | 85 | (46 | %) | 194 | % | 708 | 160 | 343 | % | |||||||||||||||||||||
Securities (losses) gains, net | (5 | ) | (11 | ) | — | 55 | % | NM | (15 | ) | 1 | NM | ||||||||||||||||||||
Securities (losses) gains, net -non-qualifying hedges on mortgage servicing rights | (4 | ) | (13 | ) | 2 | 69 | % | NM | (17 | ) | 2 | NM | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total noninterest income | 743 | 909 | 564 | (18 | %) | 32 | % | 1,652 | 1,087 | 52 | % | |||||||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||||||
Salaries, wages and incentives | 471 | 447 | 397 | 5 | % | 19 | % | 918 | 808 | 14 | % | |||||||||||||||||||||
Employee benefits | 78 | 110 | 86 | (29 | %) | (9 | %) | 188 | 196 | (4 | %) | |||||||||||||||||||||
Net occupancy expense | 74 | 75 | 70 | (1 | %) | 6 | % | 149 | 148 | 1 | % | |||||||||||||||||||||
Technology and communications | 67 | 68 | 57 | (1 | %) | 18 | % | 135 | 116 | 16 | % | |||||||||||||||||||||
Equipment expense | 30 | 31 | 29 | (3 | %) | 3 | % | 61 | 57 | 7 | % | |||||||||||||||||||||
Card and processing expense | 30 | 29 | 33 | 3 | % | (9 | %) | 60 | 63 | (5 | %) | |||||||||||||||||||||
Other noninterest expense | 287 | 286 | 285 | — | 1 | % | 572 | 555 | 3 | % | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total noninterest expense | 1,037 | 1,046 | 957 | (1 | %) | 8 | % | 2,083 | 1,943 | 7 | % | |||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income Before Income Taxes | 693 | 836 | 494 | (17 | %) | 40 | % | 1,529 | 890 | 72 | % | |||||||||||||||||||||
Applicable income tax expense | 107 | 132 | 127 | (19 | %) | (16 | %) | 239 | 218 | 10 | % | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 586 | 704 | 367 | (17 | %) | 60 | % | 1,290 | 672 | 92 | % | |||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | NM | NM | — | — | — | ||||||||||||||||||||||||
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|
|
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|
|
|
|
| |||||||||||||||||
Net Income Attributable to Bancorp | 586 | 704 | 367 | (17 | %) | 60 | % | 1,290 | 672 | 92 | % | |||||||||||||||||||||
Dividends on preferred stock | 23 | 15 | 23 | 53 | % | — | 38 | 38 | — | |||||||||||||||||||||||
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|
|
|
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| |||||||||||||||||
Net Income Available to Common Shareholders | $ | 563 | $ | 689 | $ | 344 | (18 | %) | 64 | % | $ | 1,252 | $ | 634 | 97 | % | ||||||||||||||||
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20
Table of Contents
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | % Change | |||||||||||||||||||
June 2018 | March 2018 | June 2017 | Seq | Yr/Yr | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 2,052 | $ | 2,038 | $ | 2,203 | 1 | % | (7 | %) | ||||||||||
Other short-term investments | 1,636 | 1,747 | 2,163 | (6 | %) | (24 | %) | |||||||||||||
Available-for-sale debt and other securities(a) | 31,961 | 31,819 | 31,733 | — | 1 | % | ||||||||||||||
Held-to-maturity securities(b) | 19 | 23 | 26 | (17 | %) | (27 | %) | |||||||||||||
Trading debt securities | 280 | 571 | 490 | (51 | %) | (43 | %) | |||||||||||||
Equity securities | 475 | 418 | 442 | 14 | % | 7 | % | |||||||||||||
Loans and leases held for sale | 783 | 717 | 766 | 9 | % | 2 | % | |||||||||||||
Portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | 41,403 | 41,635 | 40,914 | (1 | %) | 1 | % | |||||||||||||
Commercial mortgage loans | 6,625 | 6,509 | 6,868 | 2 | % | (4 | %) | |||||||||||||
Commercial construction loans | 4,687 | 4,766 | 4,366 | (2 | %) | 7 | % | |||||||||||||
Commercial leases | 3,788 | 3,919 | 4,157 | (3 | %) | (9 | %) | |||||||||||||
Residential mortgage loans | 15,640 | 15,563 | 15,460 | — | 1 | % | ||||||||||||||
Home equity | 6,599 | 6,757 | 7,301 | (2 | %) | (10 | %) | |||||||||||||
Automobile loans | 8,938 | 9,018 | 9,318 | (1 | %) | (4 | %) | |||||||||||||
Credit card | 2,270 | 2,188 | 2,117 | 4 | % | 7 | % | |||||||||||||
Other consumer loans | 1,982 | 1,615 | 945 | 23 | % | 110 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases | 91,932 | 91,970 | 91,446 | — | 1 | % | ||||||||||||||
Allowance for loan and lease losses | (1,077 | ) | (1,138 | ) | (1,226 | ) | (5 | %) | (12 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases, net | 90,855 | 90,832 | 90,220 | — | 1 | % | ||||||||||||||
Bank premises and equipment | 1,915 | 1,966 | 2,041 | (3 | %) | (6 | %) | |||||||||||||
Operating lease equipment | 606 | 625 | 719 | (3 | %) | (16 | %) | |||||||||||||
Goodwill | 2,462 | 2,462 | 2,423 | — | 2 | % | ||||||||||||||
Intangible assets | 30 | 30 | 18 | — | 67 | % | ||||||||||||||
Servicing rights | 959 | 926 | 849 | 4 | % | 13 | % | |||||||||||||
Other assets | 6,662 | 7,326 | 6,974 | (9 | %) | (4 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $ | 140,695 | $ | 141,500 | $ | 141,067 | (1 | %) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand | $ | 32,680 | $ | 34,066 | $ | 34,965 | (4 | %) | (7 | %) | ||||||||||
Interest checking | 29,452 | 29,627 | 25,436 | (1 | %) | 16 | % | |||||||||||||
Savings | 13,455 | 13,751 | 14,068 | (2 | %) | (4 | %) | |||||||||||||
Money market | 21,593 | 21,540 | 20,191 | — | 7 | % | ||||||||||||||
Foreign office | 336 | 374 | 395 | (10 | %) | (15 | %) | |||||||||||||
Other time | 4,058 | 3,945 | 3,692 | 3 | % | 10 | % | |||||||||||||
Certificates $100,000 and over | 2,557 | 2,042 | 2,633 | 25 | % | (3 | %) | |||||||||||||
Other | — | 116 | 500 | NM | NM | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total deposits | 104,131 | 105,461 | 101,880 | (1 | %) | 2 | % | |||||||||||||
Federal funds purchased | 597 | 178 | 117 | 235 | % | 410 | % | |||||||||||||
Other short-term borrowings | 1,763 | 1,335 | 5,389 | 32 | % | (67 | %) | |||||||||||||
Accrued taxes, interest and expenses | 1,206 | 1,104 | 1,617 | 9 | % | (25 | %) | |||||||||||||
Other liabilities | 2,425 | 2,418 | 2,162 | — | 12 | % | ||||||||||||||
Long-term debt | 14,321 | 14,800 | 13,456 | (3 | %) | 6 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | 124,443 | 125,296 | 124,621 | (1 | %) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity | ||||||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | — | — | |||||||||||||||
Preferred stock | 1,331 | 1,331 | 1,331 | — | — | |||||||||||||||
Capital surplus | 2,833 | 2,828 | 2,751 | — | 3 | % | ||||||||||||||
Retained earnings | 16,143 | 15,707 | 13,862 | 3 | % | 16 | % | |||||||||||||
Accumulated other comprehensive (loss) income | (552 | ) | (389 | ) | 163 | (42 | %) | NM | ||||||||||||
Treasury stock | (5,574 | ) | (5,344 | ) | (3,739 | ) | 4 | % | 49 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Bancorp shareholders’ equity | 16,232 | 16,184 | 16,419 | — | (1 | %) | ||||||||||||||
Noncontrolling interests | 20 | 20 | 27 | — | (26 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Equity | 16,252 | 16,204 | 16,446 | — | (1 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities and Equity | $ | 140,695 | $ | 141,500 | $ | 141,067 | (1 | %) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Amortized cost | $ | 32,589 | $ | 32,230 | $ | 31,402 | 1 | % | 4 | % | ||||||||||
(b) Market values | 19 | 23 | 26 | (17 | %) | (27 | %) | |||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | ||||||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | — | — | |||||||||||||||
Outstanding, excluding treasury | 678,162 | 684,942 | 738,873 | (1 | %) | (8 | %) | |||||||||||||
Treasury | 245,731 | 238,951 | 185,020 | 3 | % | 33 | % |
21
Table of Contents
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 2,052 | $ | 2,038 | $ | 2,514 | $ | 2,205 | $ | 2,203 | ||||||||||
Other short-term investments | 1,636 | 1,747 | 2,753 | 3,298 | 2,163 | |||||||||||||||
Available-for-sale debt and other securities(a) | 31,961 | 31,819 | 31,751 | 31,391 | 31,733 | |||||||||||||||
Held-to-maturity securities(b) | 19 | 23 | 24 | 25 | 26 | |||||||||||||||
Trading debt securities | 280 | 571 | 492 | 511 | 490 | |||||||||||||||
Equity securities | 475 | 418 | 439 | 428 | 442 | |||||||||||||||
Loans and leases held for sale | 783 | 717 | 492 | 711 | 766 | |||||||||||||||
Portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | 41,403 | 41,635 | 41,170 | 41,011 | 40,914 | |||||||||||||||
Commercial mortgage loans | 6,625 | 6,509 | 6,604 | 6,863 | 6,868 | |||||||||||||||
Commercial construction loans | 4,687 | 4,766 | 4,553 | 4,652 | 4,366 | |||||||||||||||
Commercial leases | 3,788 | 3,919 | 4,068 | 4,043 | 4,157 | |||||||||||||||
Residential mortgage loans | 15,640 | 15,563 | 15,591 | 15,588 | 15,460 | |||||||||||||||
Home equity | 6,599 | 6,757 | 7,014 | 7,143 | 7,301 | |||||||||||||||
Automobile loans | 8,938 | 9,018 | 9,112 | 9,236 | 9,318 | |||||||||||||||
Credit card | 2,270 | 2,188 | 2,299 | 2,168 | 2,117 | |||||||||||||||
Other consumer loans | 1,982 | 1,615 | 1,559 | 1,179 | 945 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases | 91,932 | 91,970 | 91,970 | 91,883 | 91,446 | |||||||||||||||
Allowance for loan and lease losses | (1,077 | ) | (1,138 | ) | (1,196 | ) | (1,205 | ) | (1,226 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases, net | 90,855 | 90,832 | 90,774 | 90,678 | 90,220 | |||||||||||||||
Bank premises and equipment | 1,915 | 1,966 | 2,003 | 2,018 | 2,041 | |||||||||||||||
Operating lease equipment | 606 | 625 | 646 | 663 | 719 | |||||||||||||||
Goodwill | 2,462 | 2,462 | 2,445 | 2,423 | 2,423 | |||||||||||||||
Intangible assets | 30 | 30 | 27 | 18 | 18 | |||||||||||||||
Servicing rights | 959 | 926 | 858 | 848 | 849 | |||||||||||||||
Other assets | 6,662 | 7,326 | 6,975 | 7,047 | 6,974 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $ | 140,695 | $ | 141,500 | $ | 142,193 | $ | 142,264 | $ | 141,067 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand | $ | 32,680 | $ | 34,066 | $ | 35,276 | $ | 35,246 | $ | 34,965 | ||||||||||
Interest checking | 29,452 | 29,627 | 27,703 | 26,091 | 25,436 | |||||||||||||||
Savings | 13,455 | 13,751 | 13,425 | 13,693 | 14,068 | |||||||||||||||
Money market | 21,593 | 21,540 | 20,097 | 19,646 | 20,191 | |||||||||||||||
Foreign office | 336 | 374 | 484 | 609 | 395 | |||||||||||||||
Other time | 4,058 | 3,945 | 3,775 | 3,756 | 3,692 | |||||||||||||||
Certificates $100,000 and over | 2,557 | 2,042 | 2,402 | 2,411 | 2,633 | |||||||||||||||
Other | — | 116 | — | — | 500 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total deposits | 104,131 | 105,461 | 103,162 | 101,452 | 101,880 | |||||||||||||||
Federal funds purchased | 597 | 178 | 174 | 118 | 117 | |||||||||||||||
Other short-term borrowings | 1,763 | 1,335 | 4,012 | 5,688 | 5,389 | |||||||||||||||
Accrued taxes, interest and expenses | 1,206 | 1,104 | 1,412 | 2,071 | 1,617 | |||||||||||||||
Other liabilities | 2,425 | 2,418 | 2,144 | 2,516 | 2,162 | |||||||||||||||
Long-term debt | 14,321 | 14,800 | 14,904 | 14,039 | 13,456 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | 124,443 | 125,296 | 125,808 | 125,884 | 124,621 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity | ||||||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | 2,051 | 2,051 | |||||||||||||||
Preferred stock | 1,331 | 1,331 | 1,331 | 1,331 | 1,331 | |||||||||||||||
Capital surplus | 2,833 | 2,828 | 2,790 | 2,682 | 2,751 | |||||||||||||||
Retained earnings | 16,143 | 15,707 | 15,122 | 14,748 | 13,862 | |||||||||||||||
Accumulated other comprehensive (loss) income | (552 | ) | (389 | ) | 73 | 185 | 163 | |||||||||||||
Treasury stock | (5,574 | ) | (5,344 | ) | (5,002 | ) | (4,637 | ) | (3,739 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Bancorp shareholders’ equity | 16,232 | 16,184 | 16,365 | 16,360 | 16,419 | |||||||||||||||
Noncontrolling interests | 20 | 20 | 20 | 20 | 27 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Equity | 16,252 | 16,204 | 16,385 | 16,380 | 16,446 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities and Equity | $ | 140,695 | $ | 141,500 | $ | 142,193 | $ | 142,264 | $ | 141,067 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Amortized cost | $ | 32,589 | $ | 32,230 | $ | 31,577 | $ | 31,026 | $ | 31,402 | ||||||||||
(b) Market values | 19 | 23 | 24 | 25 | 26 | |||||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | ||||||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||||
Outstanding, excluding treasury | 678,162 | 684,942 | 693,805 | 705,474 | 738,873 | |||||||||||||||
Treasury | 245,731 | 238,951 | 230,088 | 218,419 | 185,020 |
22
Table of Contents
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Equity
$ in millions
(unaudited)
For the Three Months Ended | Year to Date | |||||||||||||||
June | June | June | June | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Total Equity, Beginning | $ | 16,204 | $ | 16,457 | $ | 16,385 | $ | 16,232 | ||||||||
Net income attributable to Bancorp | 586 | 367 | 1,290 | 672 | ||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Change in unrealized (losses) gains: | ||||||||||||||||
Available-for-sale securities | (167 | ) | 93 | (620 | ) | 109 | ||||||||||
Qualifying cash flow hedges | 3 | 1 | (5 | ) | (7 | ) | ||||||||||
Change in accumulated other comprehensive income related to employee benefit plans | 1 | 1 | 2 | 2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income | 423 | 462 | 667 | 776 | ||||||||||||
Cash dividends declared: | ||||||||||||||||
Common stock | (124 | ) | (104 | ) | (235 | ) | (210 | ) | ||||||||
Preferred stock | (23 | ) | (23 | ) | (38 | ) | (38 | ) | ||||||||
Impact of stock transactions under stock compensation plans, net | 7 | (3 | ) | 22 | 29 | |||||||||||
Shares acquired for treasury | (235 | ) | (342 | ) | (553 | ) | (342 | ) | ||||||||
Other | — | (1 | ) | — | (1 | ) | ||||||||||
Impact of cumulative effect of change in account principles | — | — | 4 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Equity, Ending | $ | 16,252 | $ | 16,446 | $ | 16,252 | $ | 16,446 | ||||||||
|
|
|
|
|
|
|
|
23
Table of Contents
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
For the Three Months Ended | % Change | |||||||||||||||||||
June | March | June | ||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | ||||||||||||||||
Assets | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Commercial and industrial loans | $ | 42,327 | $ | 41,799 | $ | 41,656 | 1 | % | 2 | % | ||||||||||
Commercial mortgage loans | 6,521 | 6,588 | 6,861 | (1 | %) | (5 | %) | |||||||||||||
Commercial construction loans | 4,743 | 4,671 | 4,306 | 2 | % | 10 | % | |||||||||||||
Commercial leases | 3,847 | 3,960 | 4,039 | (3 | %) | (5 | %) | |||||||||||||
Residential mortgage loans | 16,213 | 16,086 | 16,024 | 1 | % | 1 | % | |||||||||||||
Home equity | 6,672 | 6,889 | 7,385 | (3 | %) | (10 | %) | |||||||||||||
Automobile loans | 8,968 | 9,064 | 9,410 | (1 | %) | (5 | %) | |||||||||||||
Credit card | 2,221 | 2,224 | 2,080 | — | 7 | % | ||||||||||||||
Other consumer loans | 1,720 | 1,588 | 892 | 8 | % | 93 | % | |||||||||||||
Taxable securities | 33,380 | 33,133 | 32,092 | 1 | % | 4 | % | |||||||||||||
Tax exempt securities | 81 | 73 | 68 | 11 | % | 19 | % | |||||||||||||
Other short-term investments | 1,474 | 1,471 | 1,321 | — | 12 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-earning assets | 128,167 | 127,546 | 126,134 | — | 2 | % | ||||||||||||||
Cash and due from banks | 2,179 | 2,175 | 2,175 | — | — | |||||||||||||||
Other assets | 12,320 | 13,039 | 13,272 | (6 | %) | (7 | %) | |||||||||||||
Allowance for loan and lease losses | (1,137 | ) | (1,195 | ) | (1,237 | ) | (5 | %) | (8 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $ | 141,529 | $ | 141,565 | $ | 140,344 | — | 1 | % | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest checking deposits | $ | 28,715 | $ | 28,403 | $ | 26,014 | 1 | % | 10 | % | ||||||||||
Savings deposits | 13,618 | 13,546 | 14,238 | 1 | % | (4 | %) | |||||||||||||
Money market deposits | 22,036 | 20,750 | 20,278 | 6 | % | 9 | % | |||||||||||||
Foreign office deposits | 371 | 494 | 380 | (25 | %) | (2 | %) | |||||||||||||
Other time deposits | 4,018 | 3,856 | 3,745 | 4 | % | 7 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing core deposits | 68,758 | 67,049 | 64,655 | 3 | % | 6 | % | |||||||||||||
Certificates $100,000 and over | 2,155 | 2,284 | 2,623 | (6 | %) | (18 | %) | |||||||||||||
Other deposits | 198 | 379 | 264 | (48 | %) | (25 | %) | |||||||||||||
Federal funds purchased | 1,080 | 692 | 311 | 56 | % | 247 | % | |||||||||||||
Other short-term borrowings | 2,452 | 2,423 | 4,194 | 1 | % | (42 | %) | |||||||||||||
Long-term debt | 14,579 | 14,780 | 13,273 | (1 | %) | 10 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing liabilities | 89,222 | 87,607 | 85,320 | 2 | % | 5 | % | |||||||||||||
Demand deposits | 32,834 | 33,825 | 34,915 | (3 | %) | (6 | %) | |||||||||||||
Other liabilities | 3,345 | 3,800 | 3,467 | (12 | %) | (4 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | 125,401 | 125,232 | 123,702 | — | 1 | % | ||||||||||||||
Total Equity | 16,128 | 16,333 | 16,642 | (1 | %) | (3 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities and Equity | $ | 141,529 | $ | 141,565 | $ | 140,344 | — | 1 | % | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
For the Three Months Ended | bps Change | |||||||||||||||||||
June | March | June | ||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | ||||||||||||||||
Yield Analysis | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Commercial and industrial loans(a) | 4.26 | % | 3.96 | % | 3.60 | % | 30 | 66 | ||||||||||||
Commercial mortgage loans(a) | 4.43 | % | 4.20 | % | 3.65 | % | 23 | 78 | ||||||||||||
Commercial construction loans(a) | 4.94 | % | 4.59 | % | 4.01 | % | 35 | 93 | ||||||||||||
Commercial leases(a) | 2.82 | % | 2.78 | % | 2.73 | % | 4 | 9 | ||||||||||||
Residential mortgage loans | 3.56 | % | 3.60 | % | 3.54 | % | (4 | ) | 2 | |||||||||||
Home equity | 4.85 | % | 4.62 | % | 4.20 | % | 23 | 65 | ||||||||||||
Automobile loans | 3.26 | % | 3.12 | % | 2.87 | % | 14 | 39 | ||||||||||||
Credit card | 11.96 | % | 12.36 | % | 10.95 | % | (40 | ) | 101 | |||||||||||
Other consumer loans | 6.75 | % | 6.58 | % | 6.63 | % | 17 | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans and leases | 4.30 | % | 4.11 | % | 3.74 | % | 19 | 56 | ||||||||||||
Taxable securities | 3.20 | % | 3.21 | % | 3.05 | % | (1 | ) | 15 | |||||||||||
Tax exempt securities(a) | 4.03 | % | 1.40 | % | 5.10 | % | 263 | (107 | ) | |||||||||||
Other short-term investments | 1.62 | % | 1.37 | % | 0.99 | % | 25 | 63 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-earning assets | 3.98 | % | 3.85 | % | 3.54 | % | 13 | 44 | ||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest checking deposits | 0.76 | % | 0.63 | % | 0.38 | % | 13 | 38 | ||||||||||||
Savings deposits | 0.10 | % | 0.07 | % | 0.06 | % | 3 | 4 | ||||||||||||
Money market deposits | 0.71 | % | 0.53 | % | 0.34 | % | 18 | 37 | ||||||||||||
Foreign office deposits | 0.45 | % | 0.13 | % | 0.18 | % | 32 | 27 | ||||||||||||
Other time deposits | 1.34 | % | 1.25 | % | 1.23 | % | 9 | 11 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing core deposits | 0.65 | % | 0.52 | % | 0.34 | % | 13 | 31 | ||||||||||||
Certificates $100,000 and over | 1.35 | % | 1.49 | % | 1.36 | % | (14 | ) | (1 | ) | ||||||||||
Other deposits | 1.80 | % | 1.44 | % | 0.98 | % | 36 | 82 | ||||||||||||
Federal funds purchased | 1.76 | % | 1.43 | % | 0.94 | % | 33 | 82 | ||||||||||||
Other short-term borrowings | 1.84 | % | 1.34 | % | 0.93 | % | 50 | 91 | ||||||||||||
Long-term debt | 3.11 | % | 2.86 | % | 2.76 | % | 25 | 35 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing liabilities | 1.12 | % | 0.97 | % | 0.79 | % | 15 | 33 | ||||||||||||
Ratios: | ||||||||||||||||||||
Taxable equivalent net interest margin(b) | 3.21 | % | 3.18 | % | 3.01 | % | 3 | 20 | ||||||||||||
Taxable equivalent net interest rate spread(b) | 2.86 | % | 2.88 | % | 2.75 | % | (2 | ) | 11 | |||||||||||
Interest-bearing liabilities to interest-earning assets | 69.61 | % | 68.69 | % | 67.64 | % | 92 | 197 |
(a) | Presented on a fully taxable equivalent basis. |
(b) | Non-GAAP measure; see discussion ofnon-GAAP and Reg. G reconciliation beginning on page 31. |
24
Table of Contents
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
Assets | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Commercial and industrial loans | $ | 42,327 | $ | 41,799 | $ | 41,455 | $ | 41,314 | $ | 41,656 | ||||||||||
Commercial mortgage loans | 6,521 | 6,588 | 6,757 | 6,814 | 6,861 | |||||||||||||||
Commercial construction loans | 4,743 | 4,671 | 4,660 | 4,533 | 4,306 | |||||||||||||||
Commercial leases | 3,847 | 3,960 | 4,018 | 4,079 | 4,039 | |||||||||||||||
Residential mortgage loans | 16,213 | 16,086 | 16,178 | 16,206 | 16,024 | |||||||||||||||
Home equity | 6,672 | 6,889 | 7,066 | 7,207 | 7,385 | |||||||||||||||
Automobile loans | 8,968 | 9,064 | 9,175 | 9,267 | 9,410 | |||||||||||||||
Credit card | 2,221 | 2,224 | 2,202 | 2,140 | 2,080 | |||||||||||||||
Other consumer loans | 1,720 | 1,588 | 1,354 | 1,057 | 892 | |||||||||||||||
Taxable securities | 33,380 | 33,133 | 32,222 | 32,289 | 32,092 | |||||||||||||||
Tax exempt securities | 81 | 73 | 75 | 65 | 68 | |||||||||||||||
Other short-term investments | 1,474 | 1,471 | 1,459 | 1,472 | 1,321 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-earning assets | 128,167 | 127,546 | 126,621 | 126,443 | 126,134 | |||||||||||||||
Cash and due from banks | 2,179 | 2,175 | 2,288 | 2,227 | 2,175 | |||||||||||||||
Other assets | 12,320 | 13,039 | 13,351 | 13,532 | 13,272 | |||||||||||||||
Allowance for loan and lease losses | (1,137 | ) | (1,195 | ) | (1,205 | ) | (1,210 | ) | (1,237 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $ | 141,529 | $ | 141,565 | $ | 141,055 | $ | 140,992 | $ | 140,344 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest checking deposits | $ | 28,715 | $ | 28,403 | $ | 26,992 | $ | 25,765 | $ | 26,014 | ||||||||||
Savings deposits | 13,618 | 13,546 | 13,593 | 13,889 | 14,238 | |||||||||||||||
Money market deposits | 22,036 | 20,750 | 20,023 | 20,028 | 20,278 | |||||||||||||||
Foreign office deposits | 371 | 494 | 323 | 395 | 380 | |||||||||||||||
Other time deposits | 4,018 | 3,856 | 3,792 | 3,722 | 3,745 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing core deposits | 68,758 | 67,049 | 64,723 | 63,799 | 64,655 | |||||||||||||||
Certificates $100,000 and over | 2,155 | 2,284 | 2,429 | 2,625 | 2,623 | |||||||||||||||
Other deposits | 198 | 379 | 119 | 560 | 264 | |||||||||||||||
Federal funds purchased | 1,080 | 692 | 602 | 675 | 311 | |||||||||||||||
Other short-term borrowings | 2,452 | 2,423 | 2,316 | 4,212 | 4,194 | |||||||||||||||
Long-term debt | 14,579 | 14,780 | 14,631 | 13,457 | 13,273 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing liabilities | 89,222 | 87,607 | 84,820 | 85,328 | 85,320 | |||||||||||||||
Demand deposits | 32,834 | 33,825 | 35,519 | 34,850 | 34,915 | |||||||||||||||
Other liabilities | 3,345 | 3,800 | 4,203 | 3,973 | 3,467 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | 125,401 | 125,232 | 124,542 | 124,151 | 123,702 | |||||||||||||||
Total Equity | 16,128 | 16,333 | 16,513 | 16,841 | 16,642 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities and Equity | $ | 141,529 | $ | 141,565 | $ | 141,055 | $ | 140,992 | $ | 140,344 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Yield Analysis | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Commercial and industrial loans(a) | 4.26 | % | 3.96 | % | 3.75 | % | 3.75 | % | 3.60 | % | ||||||||||
Commercial mortgage loans(a) | 4.43 | % | 4.20 | % | 3.92 | % | 3.85 | % | 3.65 | % | ||||||||||
Commercial construction loans(a) | 4.94 | % | 4.59 | % | 4.28 | % | 4.23 | % | 4.01 | % | ||||||||||
Commercial leases(a) | 2.82 | % | 2.78 | % | 0.06 | % | 2.70 | % | 2.73 | % | ||||||||||
Residential mortgage loans | 3.56 | % | 3.60 | % | 3.52 | % | 3.48 | % | 3.54 | % | ||||||||||
Home equity | 4.85 | % | 4.62 | % | 4.38 | % | 4.39 | % | 4.20 | % | ||||||||||
Automobile loans | 3.26 | % | 3.12 | % | 3.06 | % | 2.96 | % | 2.87 | % | ||||||||||
Credit card | 11.96 | % | 12.36 | % | 11.83 | % | 11.63 | % | 10.95 | % | ||||||||||
Other consumer loans | 6.75 | % | 6.58 | % | 6.64 | % | 6.89 | % | 6.63 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans and leases | 4.30 | % | 4.11 | % | 3.80 | % | 3.88 | % | 3.74 | % | ||||||||||
Taxable securities | 3.20 | % | 3.21 | % | 3.15 | % | 3.06 | % | 3.05 | % | ||||||||||
Tax exempt securities(a) | 4.03 | % | 1.40 | % | 5.62 | % | 5.33 | % | 5.10 | % | ||||||||||
Other short-term investments | 1.62 | % | 1.37 | % | 1.24 | % | 1.16 | % | 0.99 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-earning assets | 3.98 | % | 3.85 | % | 3.61 | % | 3.64 | % | 3.54 | % | ||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest checking deposits | 0.76 | % | 0.63 | % | 0.51 | % | 0.44 | % | 0.38 | % | ||||||||||
Savings deposits | 0.10 | % | 0.07 | % | 0.06 | % | 0.06 | % | 0.06 | % | ||||||||||
Money market deposits | 0.71 | % | 0.53 | % | 0.42 | % | 0.39 | % | 0.34 | % | ||||||||||
Foreign office deposits | 0.45 | % | 0.13 | % | 0.30 | % | 0.21 | % | 0.18 | % | ||||||||||
Other time deposits | 1.34 | % | 1.25 | % | 1.23 | % | 1.23 | % | 1.23 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing core deposits | 0.65 | % | 0.52 | % | 0.43 | % | 0.39 | % | 0.34 | % | ||||||||||
Certificates $100,000 and over | 1.35 | % | 1.49 | % | 1.45 | % | 1.38 | % | 1.36 | % | ||||||||||
Other deposits | 1.80 | % | 1.44 | % | 1.17 | % | 1.16 | % | 0.98 | % | ||||||||||
Federal funds purchased | 1.76 | % | 1.43 | % | 1.21 | % | 1.16 | % | 0.94 | % | ||||||||||
Other short-term borrowings | 1.84 | % | 1.34 | % | 1.10 | % | 1.09 | % | 0.93 | % | ||||||||||
Long-term debt | 3.11 | % | 2.86 | % | 2.72 | % | 2.82 | % | 2.76 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total interest-bearing liabilities | 1.12 | % | 0.97 | % | 0.88 | % | 0.85 | % | 0.79 | % | ||||||||||
Ratios: | ||||||||||||||||||||
Taxable equivalent net interest margin(b) | 3.21 | % | 3.18 | % | 3.02 | % | 3.07 | % | 3.01 | % | ||||||||||
Taxable equivalent net interest rate spread(b) | 2.86 | % | 2.88 | % | 2.73 | % | 2.79 | % | 2.75 | % | ||||||||||
Interest-bearing liabilities to interest-earning assets | 69.61 | % | 68.69 | % | 66.99 | % | 67.48 | % | 67.64 | % |
(a) | Presented on a fully taxable equivalent basis. |
(b) | Non-GAAP measure; see discussion ofnon-GAAP and Reg. G reconciliation beginning on page 31. |
25
Table of Contents
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
Year to Date | % Change | |||||||||||
June 2018 | June 2017 | Yr/Yr | ||||||||||
Assets | ||||||||||||
Interest-earning assets: | ||||||||||||
Commercial and industrial loans | $ | 42,064 | $ | 41,773 | 1 | % | ||||||
Commercial mortgage loans | 6,555 | 6,903 | (5 | %) | ||||||||
Commercial construction loans | 4,707 | 4,147 | 14 | % | ||||||||
Commercial leases | 3,903 | 3,972 | (2 | %) | ||||||||
Residential mortgage loans | 16,150 | 15,912 | 1 | % | ||||||||
Home equity | 6,780 | 7,482 | (9 | %) | ||||||||
Automobile loans | 9,016 | 9,597 | (6 | %) | ||||||||
Credit card | 2,223 | 2,111 | 5 | % | ||||||||
Other consumer loans | 1,653 | 824 | 101 | % | ||||||||
Taxable securities | 33,257 | 31,954 | 4 | % | ||||||||
Tax exempt securities | 77 | 61 | 26 | % | ||||||||
Other short-term investments | 1,472 | 1,314 | 12 | % | ||||||||
|
|
|
|
|
| |||||||
Total interest-earning assets | 127,857 | 126,050 | 1 | % | ||||||||
Cash and due from banks | 2,177 | 2,190 | (1 | %) | ||||||||
Other assets | 12,679 | 13,248 | (4 | %) | ||||||||
Allowance for loan and lease losses | (1,166 | ) | (1,245 | ) | (6 | %) | ||||||
|
|
|
|
|
| |||||||
Total Assets | $ | 141,547 | $ | 140,243 | 1 | % | ||||||
|
|
|
|
|
| |||||||
Liabilities | ||||||||||||
Interest-bearing liabilities: | ||||||||||||
Interest checking deposits | $ | 28,560 | $ | 26,385 | 8 | % | ||||||
Savings deposits | 13,582 | 14,178 | (4 | %) | ||||||||
Money market deposits | 21,397 | 20,440 | 5 | % | ||||||||
Foreign office deposits | 432 | 417 | 4 | % | ||||||||
Other time deposits | 3,937 | 3,786 | 4 | % | ||||||||
|
|
|
|
|
| |||||||
Total interest-bearing core deposits | 67,908 | 65,206 | 4 | % | ||||||||
Certificates $100,000 and over | 2,220 | 2,601 | (15 | %) | ||||||||
Other deposits | 288 | 213 | 35 | % | ||||||||
Federal funds purchased | 887 | 474 | 87 | % | ||||||||
Other short-term borrowings | 2,438 | 3,050 | (20 | %) | ||||||||
Long-term debt | 14,678 | 13,562 | 8 | % | ||||||||
|
|
|
|
|
| |||||||
Total interest-bearing liabilities | 88,419 | 85,106 | 4 | % | ||||||||
Demand deposits | 33,327 | 34,999 | (5 | %) | ||||||||
Other liabilities | 3,571 | 3,589 | (1 | %) | ||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 125,317 | 123,694 | 1 | % | ||||||||
Total Equity | 16,230 | 16,549 | (2 | %) | ||||||||
|
|
|
|
|
| |||||||
Total Liabilities and Equity | $ | 141,547 | $ | 140,243 | 1 | % | ||||||
|
|
|
|
|
| |||||||
Year to Date | bps Change | |||||||||||
Yield Analysis | June 2018 | June 2017 | Yr/Yr | |||||||||
Interest-earning assets: |
| |||||||||||
Commercial and industrial loans(a) | 4.11 | % | 3.53 | % | 58 | |||||||
Commercial mortgage loans(a) | 4.32 | % | 3.60 | % | 72 | |||||||
Commercial construction loans(a) | 4.77 | % | 3.89 | % | 88 | |||||||
Commercial leases(a) | 2.80 | % | 2.71 | % | 9 | |||||||
Residential mortgage loans | 3.58 | % | 3.55 | % | 3 | |||||||
Home equity | 4.74 | % | 4.09 | % | 65 | |||||||
Automobile loans | 3.19 | % | 2.84 | % | 35 | |||||||
Credit card | 12.16 | % | 11.95 | % | 21 | |||||||
Other consumer loans | 6.67 | % | 6.57 | % | 10 | |||||||
|
|
|
|
|
| |||||||
Total loans and leases | 4.21 | % | 3.72 | % | 49 | |||||||
Taxable securities | 3.21 | % | 3.08 | % | 13 | |||||||
Tax exempt securities(a) | 2.79 | % | 5.41 | % | (262 | ) | ||||||
Other short-term investments | 1.50 | % | 0.86 | % | 64 | |||||||
|
|
|
|
|
| |||||||
Total interest-earning assets | 3.91 | % | 3.53 | % | 38 | |||||||
Interest-bearing liabilities: |
| |||||||||||
Interest checking deposits | 0.70 | % | 0.34 | % | 36 | |||||||
Savings deposits | 0.08 | % | 0.05 | % | 3 | |||||||
Money market deposits | 0.62 | % | 0.33 | % | 29 | |||||||
Foreign office deposits | 0.27 | % | 0.15 | % | 12 | |||||||
Other time deposits | 1.30 | % | 1.23 | % | 7 | |||||||
|
|
|
|
|
| |||||||
Total interest-bearing core deposits | 0.58 | % | 0.33 | % | 25 | |||||||
Certificates $100,000 and over | 1.42 | % | 1.36 | % | 6 | |||||||
Other deposits | 1.57 | % | 0.85 | % | 72 | |||||||
Federal funds purchased | 1.63 | % | 0.78 | % | 85 | |||||||
Other short-term borrowings | 1.60 | % | 0.81 | % | 79 | |||||||
Long-term debt | 2.98 | % | 2.71 | % | 27 | |||||||
|
|
|
|
|
| |||||||
Total interest-bearing liabilities | 1.05 | % | 0.76 | % | 29 |
(a) | Presented on a fully taxable equivalent basis. |
26
Table of Contents
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Average Portfolio Loans and Leases | ||||||||||||||||||||
Commercial loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | $ | 42,292 | $ | 41,782 | $ | 41,438 | $ | 41,302 | $ | 41,601 | ||||||||||
Commercial mortgage loans | 6,514 | 6,582 | 6,751 | 6,807 | 6,845 | |||||||||||||||
Commercial construction loans | 4,743 | 4,671 | 4,660 | 4,533 | 4,306 | |||||||||||||||
Commercial leases | 3,847 | 3,960 | 4,016 | 4,072 | 4,036 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial loans and leases | 57,396 | 56,995 | 56,865 | 56,714 | 56,788 | |||||||||||||||
Consumer loans: | ||||||||||||||||||||
Residential mortgage loans | 15,581 | 15,575 | 15,590 | 15,523 | 15,417 | |||||||||||||||
Home equity | 6,672 | 6,889 | 7,066 | 7,207 | 7,385 | |||||||||||||||
Automobile loans | 8,968 | 9,064 | 9,175 | 9,267 | 9,410 | |||||||||||||||
Credit card | 2,221 | 2,224 | 2,202 | 2,140 | 2,080 | |||||||||||||||
Other consumer loans | 1,719 | 1,587 | 1,352 | 1,055 | 892 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total consumer loans | 35,161 | 35,339 | 35,385 | 35,192 | 35,184 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total average portfolio loans and leases | $ | 92,557 | $ | 92,334 | $ | 92,250 | $ | 91,906 | $ | 91,972 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Average loans held for sale | $ | 675 | $ | 535 | $ | 615 | $ | 711 | $ | 681 | ||||||||||
End of Period Portfolio Loans and Leases | ||||||||||||||||||||
Commercial loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | $ | 41,403 | $ | 41,635 | $ | 41,170 | $ | 41,011 | $ | 40,914 | ||||||||||
Commercial mortgage loans | 6,625 | 6,509 | 6,604 | 6,863 | 6,868 | |||||||||||||||
Commercial construction loans | 4,687 | 4,766 | 4,553 | 4,652 | 4,366 | |||||||||||||||
Commercial leases | 3,788 | 3,919 | 4,068 | 4,043 | 4,157 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial loans and leases | 56,503 | 56,829 | 56,395 | 56,569 | 56,305 | |||||||||||||||
Consumer loans: | ||||||||||||||||||||
Residential mortgage loans | 15,640 | 15,563 | 15,591 | 15,588 | 15,460 | |||||||||||||||
Home equity | 6,599 | 6,757 | 7,014 | 7,143 | 7,301 | |||||||||||||||
Automobile loans | 8,938 | 9,018 | 9,112 | 9,236 | 9,318 | |||||||||||||||
Credit card | 2,270 | 2,188 | 2,299 | 2,168 | 2,117 | |||||||||||||||
Other consumer loans | 1,982 | 1,615 | 1,559 | 1,179 | 945 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total consumer loans | 35,429 | 35,141 | 35,575 | 35,314 | 35,141 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total portfolio loans and leases | $ | 91,932 | $ | 91,970 | $ | 91,970 | $ | 91,883 | $ | 91,446 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans and leases held for sale | $ | 783 | $ | 717 | $ | 492 | $ | 711 | $ | 766 | ||||||||||
Operating lease equipment | $ | 606 | $ | 625 | $ | 646 | $ | 663 | $ | 719 | ||||||||||
Loans and leases serviced for others:(a) | ||||||||||||||||||||
Commercial and industrial loans | $ | 421 | $ | 401 | $ | 415 | $ | 449 | $ | 495 | ||||||||||
Commercial mortgage loans | 263 | 238 | 240 | 228 | 242 | |||||||||||||||
Commercial construction loans | 82 | 87 | 76 | 72 | 62 | |||||||||||||||
Commercial leases | 222 | 243 | 254 | 257 | 261 | |||||||||||||||
Residential mortgage loans | 62,247 | 60,973 | 60,021 | 60,783 | 61,803 | |||||||||||||||
Other consumer loans | 50 | 50 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans and leases serviced for others | 63,285 | 61,992 | 61,006 | 61,789 | 62,863 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans and leases serviced | $ | 156,606 | $ | 155,304 | $ | 154,114 | $ | 155,046 | $ | 155,794 |
(a) | Fifth Third sells certain loans and leases and obtains servicing responsibilities. |
27
Table of Contents
Fifth Third Bancorp and Subsidiaries
Regulatory Capital
$ in millions
(unaudited)
As of | ||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||
2018(a) | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
Regulatory capital: | ||||||||||||||||||||
Common stock and related surplus (net of treasury stock) | ($ | 690 | ) | ($ | 465 | ) | ($ | 160 | ) | $ | 96 | $ | 1,063 | |||||||
Retained earnings | 16,143 | 15,707 | 15,122 | 14,748 | 13,862 | |||||||||||||||
Common equity tier I capital adjustments and deductions | (2,467 | ) | (2,470 | ) | (2,445 | ) | (2,401 | ) | (2,403 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
CET1 capital | 12,986 | 12,772 | 12,517 | 12,443 | 12,522 | |||||||||||||||
Additional tier I capital | 1,331 | 1,331 | 1,331 | 1,330 | 1,331 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tier I capital | 14,317 | 14,103 | 13,848 | 13,773 | 13,853 | |||||||||||||||
Tier II capital | 3,799 | 3,896 | 4,039 | 4,043 | 4,074 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total regulatory capital | $ | 18,116 | $ | 17,999 | $ | 17,887 | $ | 17,816 | $ | 17,927 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Risk-weighted assets(b) | $ | 119,073 | $ | 118,001 | $ | 117,997 | $ | 117,527 | $ | 117,761 | ||||||||||
Ratios: | ||||||||||||||||||||
Average shareholders’ equity to average assets | 11.38 | % | 11.52 | % | 11.69 | % | 11.93 | % | 11.84 | % | ||||||||||
Regulatory Capital Ratios: | ||||||||||||||||||||
Fifth Third Bancorp | ||||||||||||||||||||
CET1 capital(b) | 10.91 | % | 10.82 | % | 10.61 | % | 10.59 | % | 10.63 | % | ||||||||||
Tier I risk-based capital(b) | 12.02 | % | 11.95 | % | 11.74 | % | 11.72 | % | 11.76 | % | ||||||||||
Total risk-based capital(b) | 15.21 | % | 15.25 | % | 15.16 | % | 15.16 | % | 15.22 | % | ||||||||||
Tier I leverage | 10.24 | % | 10.11 | % | 10.01 | % | 9.97 | % | 10.07 | % | ||||||||||
Fifth Third Bank | ||||||||||||||||||||
Tier I risk-based capital(b) | 12.43 | % | 12.39 | % | 12.06 | % | 12.30 | % | 12.24 | % | ||||||||||
Total risk-based capital(b) | 14.10 | % | 14.15 | % | 13.88 | % | 14.14 | % | 14.08 | % | ||||||||||
Tier I leverage | 10.63 | % | 10.51 | % | 10.32 | % | 10.50 | % | 10.50 | % |
(a) | Current period regulatory capital data and ratios are estimated. |
(b) | Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts ofoff-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting weighted values are added together resulting in the total risk-weighted assets. |
28
Table of Contents
Fifth Third Bancorp and Subsidiaries
Summary of Credit Loss Experience
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Average portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | $ | 42,292 | $ | 41,782 | $ | 41,438 | $ | 41,302 | $ | 41,601 | ||||||||||
Commercial mortgage loans | 6,514 | 6,582 | 6,751 | 6,807 | 6,845 | |||||||||||||||
Commercial construction loans | 4,743 | 4,671 | 4,660 | 4,533 | 4,306 | |||||||||||||||
Commercial leases | 3,847 | 3,960 | 4,016 | 4,072 | 4,036 | |||||||||||||||
Residential mortgage loans | 15,581 | 15,575 | 15,590 | 15,523 | 15,417 | |||||||||||||||
Home equity | 6,672 | 6,889 | 7,066 | 7,207 | 7,385 | |||||||||||||||
Automobile loans | 8,968 | 9,064 | 9,175 | 9,267 | 9,410 | |||||||||||||||
Credit card | 2,221 | 2,224 | 2,202 | 2,140 | 2,080 | |||||||||||||||
Other consumer loans | 1,719 | 1,587 | 1,352 | 1,055 | 892 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total average portfolio loans and leases | $ | 92,557 | $ | 92,334 | $ | 92,250 | $ | 91,906 | $ | 91,972 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Lossescharged-off: | ||||||||||||||||||||
Commercial and industrial loans | ($ | 51 | ) | ($ | 33 | ) | ($ | 34 | ) | ($ | 30 | ) | ($ | 34 | ) | |||||
Commercial mortgage loans | (3 | ) | (2 | ) | (1 | ) | (3 | ) | (6 | ) | ||||||||||
Commercial leases | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Residential mortgage loans | (4 | ) | (4 | ) | (3 | ) | (2 | ) | (4 | ) | ||||||||||
Home equity | (5 | ) | (7 | ) | (8 | ) | (6 | ) | (9 | ) | ||||||||||
Automobile loans | (13 | ) | (17 | ) | (15 | ) | (13 | ) | (12 | ) | ||||||||||
Credit card | (29 | ) | (28 | ) | (23 | ) | (23 | ) | (24 | ) | ||||||||||
Other consumer loans | (13 | ) | (12 | ) | (9 | ) | (8 | ) | (5 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total lossescharged-off | ($ | 118 | ) | ($ | 103 | ) | ($ | 94 | ) | ($ | 85 | ) | ($ | 95 | ) | |||||
Recoveries of losses previouslycharged-off: | ||||||||||||||||||||
Commercial and industrial loans | $ | 4 | $ | 5 | $ | 2 | $ | 3 | $ | 16 | ||||||||||
Commercial mortgage loans | 1 | 1 | 2 | — | 1 | |||||||||||||||
Commercial leases | — | — | — | — | — | |||||||||||||||
Residential mortgage loans | 2 | 1 | 2 | 3 | 2 | |||||||||||||||
Home equity | 3 | 2 | 4 | 3 | 4 | |||||||||||||||
Automobile loans | 5 | 6 | 5 | 5 | 6 | |||||||||||||||
Credit card | 3 | 3 | 3 | 3 | 2 | |||||||||||||||
Other consumer loans | 6 | 4 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total recoveries of losses previouslycharged-off | $ | 24 | $ | 22 | $ | 18 | $ | 17 | $ | 31 | ||||||||||
Net lossescharged-off: | ||||||||||||||||||||
Commercial and industrial loans | ($ | 47 | ) | ($ | 28 | ) | ($ | 32 | ) | ($ | 27 | ) | ($ | 18 | ) | |||||
Commercial mortgage loans | (2 | ) | (1 | ) | 1 | (3 | ) | (5 | ) | |||||||||||
Commercial leases | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Residential mortgage loans | (2 | ) | (3 | ) | (1 | ) | 1 | (2 | ) | |||||||||||
Home equity | (2 | ) | (5 | ) | (4 | ) | (3 | ) | (5 | ) | ||||||||||
Automobile loans | (8 | ) | (11 | ) | (10 | ) | (8 | ) | (6 | ) | ||||||||||
Credit card | (26 | ) | (25 | ) | (20 | ) | (20 | ) | (22 | ) | ||||||||||
Other consumer loans | (7 | ) | (8 | ) | (9 | ) | (8 | ) | (5 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net lossescharged-off | ($ | 94 | ) | ($ | 81 | ) | ($ | 76 | ) | ($ | 68 | ) | ($ | 64 | ) | |||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net lossescharged-off as a percent of average portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | 0.44 | % | 0.27 | % | 0.31 | % | 0.26 | % | 0.17 | % | ||||||||||
Commercial mortgage loans | 0.11 | % | 0.06 | % | (0.09 | %) | 0.16 | % | 0.33 | % | ||||||||||
Commercial leases | 0.00 | % | 0.00 | % | 0.08 | % | 0.01 | % | 0.06 | % | ||||||||||
Residential mortgage loans | 0.05 | % | 0.06 | % | 0.03 | % | (0.02 | %) | 0.04 | % | ||||||||||
Home equity | 0.12 | % | 0.26 | % | 0.25 | % | 0.18 | % | 0.27 | % | ||||||||||
Automobile loans | 0.33 | % | 0.50 | % | 0.45 | % | 0.35 | % | 0.27 | % | ||||||||||
Credit card | 4.73 | % | 4.65 | % | 3.74 | % | 3.75 | % | 4.22 | % | ||||||||||
Other consumer loans | 1.85 | % | 2.16 | % | 2.38 | % | 2.80 | % | 2.31 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net lossescharged-off as a percent of average portfolio loans and leases | 0.41 | % | 0.36 | % | 0.33 | % | 0.29 | % | 0.28 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
29
Table of Contents
Fifth Third Bancorp and Subsidiaries
Asset Quality
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Allowance for Credit Losses |
| |||||||||||||||||||
Allowance for loan and lease losses, beginning | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | $ | 1,238 | ||||||||||
Total net lossescharged-off | (94 | ) | (81 | ) | (76 | ) | (68 | ) | (64 | ) | ||||||||||
Provision for loan and lease losses | 33 | 23 | 67 | 67 | 52 | |||||||||||||||
Deconsolidation of a variable interest entity | — | — | — | (20 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Allowance for loan and lease losses, ending | $ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Reserve for unfunded commitments, beginning | $ | 151 | $ | 161 | $ | 157 | $ | 162 | $ | 159 | ||||||||||
(Benefit from) provision for unfunded commitments | (20 | ) | (10 | ) | 4 | (5 | ) | 3 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Reserve for unfunded commitments, ending | $ | 131 | $ | 151 | $ | 161 | $ | 157 | $ | 162 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Components of allowance for credit losses: |
| |||||||||||||||||||
Allowance for loan and lease losses | $ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
Reserve for unfunded commitments | 131 | 151 | 161 | 157 | 162 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total allowance for credit losses | $ | 1,208 | $ | 1,289 | $ | 1,357 | $ | 1,362 | $ | 1,388 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Nonperforming Assets and Delinquent Loans | ||||||||||||||||||||
Nonaccrual portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | $ | 99 | $ | 155 | $ | 144 | $ | 144 | $ | 225 | ||||||||||
Commercial mortgage loans | 8 | 9 | 12 | 14 | 15 | |||||||||||||||
Commercial leases | 25 | 4 | — | 1 | 1 | |||||||||||||||
Residential mortgage loans | 13 | 16 | 17 | 19 | 19 | |||||||||||||||
Home equity | 54 | 55 | 56 | 56 | 52 | |||||||||||||||
Automobile loans | 3 | — | — | — | — | |||||||||||||||
Other consumer loans | 1 | 1 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total nonaccrual portfolio loans and leases (excludes restructured loans) | 203 | 240 | 229 | 234 | �� | 312 | ||||||||||||||
Nonaccrual restructured portfolio commercial loans and leases | 173 | 154 | 150 | 214 | 244 | |||||||||||||||
Nonaccrual restructured portfolio consumer loans and leases | 61 | 58 | 58 | 58 | 58 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total nonaccrual portfolio loans and leases | 437 | 452 | 437 | 506 | 614 | |||||||||||||||
Repossessed property | 7 | 9 | 9 | 10 | 11 | |||||||||||||||
OREO | 36 | 43 | 43 | 39 | 37 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total nonperforming portfolio assets | 480 | 504 | 489 | 555 | 662 | |||||||||||||||
Nonaccrual loans held for sale | 5 | 5 | 5 | 18 | 7 | |||||||||||||||
Nonaccrual restructured loans held for sale | 18 | 19 | 1 | 2 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total nonperforming assets | $ | 503 | $ | 528 | $ | 495 | $ | 575 | $ | 670 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Restructured portfolio consumer loans and leases (accrual) | $ | 1,029 | $ | 916 | $ | 927 | $ | 929 | $ | 933 | ||||||||||
Restructured portfolio commercial loans and leases (accrual) | $ | 111 | $ | 249 | $ | 249 | $ | 232 | $ | 224 | ||||||||||
Loans 90 days past due (accrual): |
| |||||||||||||||||||
Commercial and industrial loans | $ | 4 | $ | 7 | $ | 3 | $ | 3 | $ | 3 | ||||||||||
Commercial mortgage loans | — | 1 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial loans | 4 | 8 | 3 | 3 | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential mortgage loans | 44 | 62 | 57 | 43 | 45 | |||||||||||||||
Automobile loans | 10 | 9 | 10 | 10 | 7 | |||||||||||||||
Credit card | 31 | 28 | 27 | 21 | 20 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total consumer loans | 85 | 99 | 94 | 74 | 72 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans 90 days past due (accrual)(b) | $ | 89 | $ | 107 | $ | 97 | $ | 77 | $ | 75 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios |
| |||||||||||||||||||
Net lossescharged-off as a percent of average portfolio loans and leases | 0.41 | % | 0.36 | % | 0.33 | % | 0.29 | % | 0.28 | % | ||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||
As a percent of portfolio loans and leases | 1.17 | % | 1.24 | % | 1.30 | % | 1.31 | % | 1.34 | % | ||||||||||
As a percent of nonperforming portfolio loans and leases(a) | 247 | % | 252 | % | 274 | % | 238 | % | 200 | % | ||||||||||
As a percent of nonperforming portfolio assets(a) | 224 | % | 226 | % | 245 | % | 217 | % | 185 | % | ||||||||||
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(a) | 0.47 | % | 0.49 | % | 0.48 | % | 0.55 | % | 0.67 | % | ||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(a) | 0.52 | % | 0.55 | % | 0.53 | % | 0.60 | % | 0.72 | % | ||||||||||
Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property | 0.54 | % | 0.57 | % | 0.53 | % | 0.62 | % | 0.73 | % | ||||||||||
Allowance for credit losses as a percent of nonperforming assets | 252 | % | 256 | % | 278 | % | 245 | % | 210 | % |
(a) | Excludes nonaccrual loans held for sale. |
(b) | Excludes loans held for sale. |
30
Table of Contents
Use ofNon-GAAP Financial Measures
In addition to GAAP measures, management considers variousNon-GAAP measures when evaluating the performance of the business, including: “taxable equivalent net interest income,” “adjusted taxable equivalent net interest income,” “taxable equivalent net interest margin,” “adjusted taxable equivalent net interest margin,” “adjusted yield on interest-earning assets,” “efficiency ratio,” “taxable equivalent net interest rate spread,” “taxable equivalent income before income taxes,” “noninterest income excluding certain items,” “tangible net income available to common shareholders,” “average tangible common equity,” “tangible common equity ratio,” “tangible common equity ratio (excluding unrealized gains/ losses)” “tangible common equity ratio (including unrealized gains/ losses)” “tangible equity,” “tangible book value per share,” and certain ratios derived from these measures.
The taxable equivalent basis adjusts for thetax-favored status of income from certain loans and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison between taxable andnon-taxable amounts.
Noninterest income excluding certain items is provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted noninterest income. Adjusted taxable equivalent net interest income and adjusted taxable equivalent net interest margin are provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted net interest income.
Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding unrealized gains/losses), in addition to capital ratios defined by the U.S. banking agencies. These calculations are intended to complement the capital ratios defined by the U.S. banking agencies for both absolute and comparative purposes. These ratios are not formally defined by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to beNon-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding unrealized gains/losses on certain assets and liabilities enables investors and others to assess the Bancorp’s use of equity without the effects of gains or losses some of which are uncertain and providing the tangible common equity ratio including unrealized gains/losses enables investors and others to assess the Bancorp’s use of equity if all unrealized gains or losses were to be monetized.
Management believes tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of a business as it calculates the return available to common shareholders and book value of common stock without the impact of intangible assets and their related amortization. This is useful for evaluating the performance of a business consistently, whether acquired or developed internally, compared to other companies in the industry who present similar measures.
Please note that althoughNon-GAAP financial measures provide useful insight, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures.
Please see page 32 for Reg. G reconciliations of all historicalNon-GAAP measures used in this release to the most directly comparable GAAP measures.
31
Table of Contents
Fifth Third Bancorp and Subsidiaries
Regulation GNon-GAAP Reconciliation
$ and shares in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 | March 2018 | December 2017 | September 2017 | June 2017 | ||||||||||||||||
Net interest income (U.S. GAAP) | $ | 1,020 | $ | 996 | $ | 956 | $ | 970 | $ | 939 | ||||||||||
Add: Taxable equivalent adjustment | 4 | 3 | 7 | 7 | 6 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Taxable equivalent net interest income (a) | 1,024 | 999 | 963 | 977 | 945 | |||||||||||||||
Net interest income (U.S. GAAP) (annualized) (b) | 4,091 | 4,039 | 3,793 | 3,848 | 3,766 | |||||||||||||||
Taxable equivalent net interest income (annualized) (c) | 4,107 | 4,052 | 3,821 | 3,876 | 3,790 | |||||||||||||||
Taxable equivalent net interest income | 1,024 | 999 | 963 | 977 | 945 | |||||||||||||||
Add: Leveraged lease remeasurement | — | — | 27 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Adjusted taxable equivalent net interest income (d) | 1,024 | 999 | 990 | 977 | 945 | |||||||||||||||
Adjusted taxable equivalent net interest income (annualized) (e) | 4,107 | 4,052 | 3,928 | 3,876 | 3,790 | |||||||||||||||
Interest income (U.S. GAAP) | 1,269 | 1,206 | 1,144 | 1,152 | 1,106 | |||||||||||||||
Add: Taxable equivalent adjustment | 4 | 3 | 7 | 7 | 6 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Taxable equivalent interest income | 1,273 | 1,209 | 1,151 | 1,159 | 1,112 | |||||||||||||||
Taxable equivalent interest income (annualized) (f) | 5,106 | 4,903 | 4,566 | 4,598 | 4,460 | |||||||||||||||
Taxable equivalent interest income | 1,273 | 1,209 | 1,151 | 1,159 | 1,112 | |||||||||||||||
Add: Leveraged lease remeasurement | — | — | 27 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Adjusted taxable equivalent interest income (g) | 1,273 | 1,209 | 1,178 | 1,159 | 1,112 | |||||||||||||||
Adjusted taxable equivalent interest income (annualized) (h) | 5,106 | 4,903 | 4,674 | 4,598 | 4,460 | |||||||||||||||
Interest expense (annualized) (i) | 999 | 852 | 746 | 722 | 670 | |||||||||||||||
Noninterest income (j) | 743 | 909 | 577 | 1,561 | 564 | |||||||||||||||
Noninterest expense (k) | 1,037 | 1,046 | 1,073 | 975 | 957 | |||||||||||||||
Average interest-earning assets (l) | 128,167 | 127,546 | 126,621 | 126,443 | 126,134 | |||||||||||||||
Average interest-bearing liabilities (m) | 89,222 | 87,607 | 84,820 | 85,328 | 85,320 | |||||||||||||||
Net interest margin (U.S. GAAP) (b) / (l) | 3.19 | % | 3.17 | % | 3.00 | % | 3.04 | % | 2.99 | % | ||||||||||
Taxable equivalent net interest margin (c) / (l) | 3.21 | % | 3.18 | % | 3.02 | % | 3.07 | % | 3.01 | % | ||||||||||
Adjusted taxable equivalent net interest margin (e) / (l) | 3.21 | % | 3.18 | % | 3.10 | % | 3.07 | % | 3.01 | % | ||||||||||
Adjusted taxable equivalent yield on interest-earnings assets | 3.98 | % | 3.85 | % | 3.69 | % | 3.64 | % | 3.54 | % | ||||||||||
Taxable equivalent efficiency ratio (k) / (a) + (j) | 58.7 | % | 54.8 | % | 69.7 | % | 38.4 | % | 63.4 | % | ||||||||||
Taxable equivalent net interest rate spread (f) / (l) - (i) / (m) | 2.86 | % | 2.88 | % | 2.73 | % | 2.79 | % | 2.75 | % | ||||||||||
Income before income taxes (U.S. GAAP) | $ | 693 | $ | 836 | $ | 393 | $ | 1,489 | $ | 494 | ||||||||||
Add: Taxable equivalent adjustment | 4 | 3 | 7 | 7 | 6 | |||||||||||||||
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Taxable equivalent income before income taxes | $ | 697 | $ | 839 | $ | 400 | $ | 1,496 | $ | 500 | ||||||||||
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| |||||||||||
Net income available to common shareholders (U.S. GAAP) | 563 | 689 | 486 | 999 | 344 | |||||||||||||||
Add: Intangible amortization, net of tax | 1 | 1 | — | — | — | |||||||||||||||
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| |||||||||||
Tangible net income available to common shareholders | 564 | 690 | 486 | 999 | 344 | |||||||||||||||
Tangible net income available to common shareholders (annualized) (n) | 2,262 | 2,798 | 1,928 | 3,963 | 1,380 | |||||||||||||||
Average Bancorp shareholders’ equity (U.S. GAAP) | 16,108 | 16,313 | 16,493 | 16,820 | 16,615 | |||||||||||||||
Less: Average preferred stock | (1,331 | ) | (1,331 | ) | (1,331 | ) | (1,331 | ) | (1,331 | ) | ||||||||||
Average goodwill | (2,462 | ) | (2,455 | ) | (2,437 | ) | (2,423 | ) | (2,424 | ) | ||||||||||
Average intangible assets and other servicing rights | (30 | ) | (27 | ) | (25 | ) | (18 | ) | (18 | ) | ||||||||||
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Average tangible common equity (o) | 12,285 | 12,500 | 12,700 | 13,048 | 12,842 | |||||||||||||||
Total Bancorp shareholders’ equity (U.S. GAAP) | 16,232 | 16,184 | 16,365 | 16,360 | 16,419 | |||||||||||||||
Less: Preferred stock | (1,331 | ) | (1,331 | ) | (1,331 | ) | (1,331 | ) | (1,331 | ) | ||||||||||
Goodwill | (2,462 | ) | (2,462 | ) | (2,445 | ) | (2,423 | ) | (2,423 | ) | ||||||||||
Intangible assets and other servicing rights | (30 | ) | (30 | ) | (27 | ) | (18 | ) | (18 | ) | ||||||||||
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Tangible common equity, including unrealized gains / losses (p) | 12,409 | 12,361 | 12,562 | 12,588 | 12,647 | |||||||||||||||
Less: Accumulated other comprehensive income | 552 | 389 | (73 | ) | (185 | ) | (163 | ) | ||||||||||||
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Tangible common equity, excluding unrealized gains / losses (q) | 12,961 | 12,750 | 12,489 | 12,403 | 12,484 | |||||||||||||||
Add: Preferred stock | 1,331 | 1,331 | 1,331 | 1,331 | 1,331 | |||||||||||||||
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Tangible equity (r) | 14,292 | 14,081 | 13,820 | 13,734 | 13,815 | |||||||||||||||
Total assets (U.S. GAAP) | 140,695 | 141,500 | 142,193 | 142,264 | 141,067 | |||||||||||||||
Less: Goodwill | (2,462 | ) | (2,462 | ) | (2,445 | ) | (2,423 | ) | (2,423 | ) | ||||||||||
Intangible assets and other servicing rights | (30 | ) | (30 | ) | (27 | ) | (18 | ) | (18 | ) | ||||||||||
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Tangible assets, including unrealized gains / losses (s) | 138,203 | 139,008 | 139,721 | 139,823 | 138,626 | |||||||||||||||
Less: Accumulated other comprehensive income / loss, before tax | 699 | 492 | (92 | ) | (285 | ) | (251 | ) | ||||||||||||
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Tangible assets, excluding unrealized gains / losses (t) | $ | 138,902 | $ | 139,500 | $ | 139,629 | $ | 139,538 | $ | 138,375 | ||||||||||
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Common shares outstanding (u) | 678 | 685 | 694 | 705 | 739 | |||||||||||||||
Ratios: | ||||||||||||||||||||
Return on average tangible common equity (n) / (o) | 18.4 | % | 22.4 | % | 15.2 | % | 30.4 | % | 10.7 | % | ||||||||||
Tangible equity (r) / (t) | 10.29 | % | 10.09 | % | 9.90 | % | 9.84 | % | 9.98 | % | ||||||||||
Tangible common equity (excluding unrealized gains/losses) (q) / (t) | 9.33 | % | 9.14 | % | 8.94 | % | 8.89 | % | 9.02 | % | ||||||||||
Tangible common equity (including unrealized gains/losses) (p) / (s) | 8.98 | % | 8.89 | % | 8.99 | % | 9.00 | % | 9.12 | % | ||||||||||
Tangible book value per share (p) / (u) | $ | 18.30 | $ | 18.05 | $ | 18.10 | $ | 17.86 | $ | 17.11 |
32
Table of Contents
Fifth Third Bancorp and Subsidiaries
Segment Presentation
$ in millions
(unaudited)
For the three months ended June 30, 2018 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | ||||||||||||||||||
Taxable equivalent net interest income(a) | $ | 431 | $ | 499 | $ | 59 | $ | 45 | ($ | 10 | ) | $ | 1,024 | |||||||||||
(Provision for) benefit from loan and lease losses | 10 | (47 | ) | (8 | ) | 11 | 1 | (33 | ) | |||||||||||||||
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Net interest income after provision for loan and lease losses | 441 | 452 | 51 | 56 | (9 | ) | 991 | |||||||||||||||||
Total noninterest income | 229 | 167 | 52 | 109 | 186 | 743 | ||||||||||||||||||
Total noninterest expense | (358 | ) | (432 | ) | (107 | ) | (123 | ) | (17 | ) | (1,037 | ) | ||||||||||||
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Income (loss) before income taxes | 312 | 187 | (4 | ) | 42 | 160 | 697 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (23 | ) | (40 | ) | 1 | (9 | ) | (40 | ) | (111 | ) | |||||||||||||
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Net income (loss) | 289 | 147 | (3 | ) | 33 | 120 | 586 | |||||||||||||||||
For the three months ended March 31, 2018 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | ||||||||||||||||||
Taxable equivalent net interest income(a) | $ | 422 | $ | 466 | $ | 59 | $ | 43 | $ | 9 | $ | 999 | ||||||||||||
(Provision for) benefit from loan and lease losses | 20 | (44 | ) | (12 | ) | (16 | ) | 29 | (23 | ) | ||||||||||||||
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Net interest income after provision for loan and lease losses | 442 | 422 | 47 | 27 | 38 | 976 | ||||||||||||||||||
Total noninterest income | 219 | 184 | 46 | 116 | 344 | 909 | ||||||||||||||||||
Total noninterest expense | (384 | ) | (437 | ) | (106 | ) | (131 | ) | 12 | (1,046 | ) | |||||||||||||
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Income (loss) before income taxes | 277 | 169 | (13 | ) | 12 | 394 | 839 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (18 | ) | (35 | ) | 3 | (3 | ) | (82 | ) | (135 | ) | |||||||||||||
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Net income (loss) | 259 | 134 | (10 | ) | 9 | 312 | 704 | |||||||||||||||||
For the three months ended December 31, 2017(d) | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | ||||||||||||||||||
Taxable equivalent net interest income(a) | $ | 397 | $ | 464 | $ | 61 | $ | 40 | $ | 1 | $ | 963 | ||||||||||||
Provision for loan and lease losses | (13 | ) | (37 | ) | (10 | ) | (4 | ) | (3 | ) | (67 | ) | ||||||||||||
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Net interest income after provision for loan and lease losses | 384 | 427 | 51 | 36 | (2 | ) | 896 | |||||||||||||||||
Total noninterest income | 192 | 194 | 54 | 107 | 30 | 577 | ||||||||||||||||||
Total noninterest expense | (410 | ) | (432 | ) | (101 | ) | (124 | ) | (6 | ) | (1,073 | ) | ||||||||||||
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Income before income taxes | 166 | 189 | 4 | 19 | 22 | 400 | ||||||||||||||||||
Applicable income tax expense(a) | (23 | ) | (66 | ) | (2 | ) | (7 | ) | 207 | 109 | ||||||||||||||
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Net income | 143 | 123 | 2 | 12 | 229 | 509 | ||||||||||||||||||
For the three months ended September 30, 2017(d) | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | ||||||||||||||||||
Taxable equivalent net interest income(a) | $ | 429 | $ | 453 | $ | 59 | $ | 38 | ($ | 2 | ) | $ | 977 | |||||||||||
(Provision for) benefit from loan and lease losses | 3 | (35 | ) | (8 | ) | 1 | (28 | ) | (67 | ) | ||||||||||||||
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| |||||||||||||
Net interest income after provision for loan and lease losses | 432 | 418 | 51 | 39 | (30 | ) | 910 | |||||||||||||||||
Total noninterest income | 216 | 191 | 68 | 101 | 985 | 1,561 | ||||||||||||||||||
Total noninterest expense | (341 | ) | (419 | ) | (101 | ) | (111 | ) | (3 | ) | (975 | ) | ||||||||||||
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| |||||||||||||
Income before income taxes | 307 | 190 | 18 | 29 | 952 | 1,496 | ||||||||||||||||||
Applicable income tax expense(a) | (63 | ) | (66 | ) | (6 | ) | (10 | ) | (337 | ) | (482 | ) | ||||||||||||
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| |||||||||||||
Net income | 244 | 124 | 12 | 19 | 615 | 1,014 |
For the three months ended June 30, 2017(d) | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | ||||||||||||||||||
Taxable equivalent net interest income(a) | $ | 421 | $ | 437 | $ | 59 | $ | 37 | ($ | 9 | ) | $ | 945 | |||||||||||
(Provision for) benefit from loan and lease losses | (22 | ) | (39 | ) | (7 | ) | 1 | 15 | (52 | ) | ||||||||||||||
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| |||||||||||||
Net interest income after provision for loan and lease losses | 399 | 398 | 52 | 38 | 6 | 893 | ||||||||||||||||||
Total noninterest income | 228 | 189 | 62 | 101 | (16 | ) | 564 | |||||||||||||||||
Total noninterest expense | (330 | ) | (416 | ) | (109 | ) | (113 | ) | 11 | (957 | ) | |||||||||||||
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|
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| |||||||||||||
Income before income taxes | 297 | 171 | 5 | 26 | 1 | 500 | ||||||||||||||||||
Applicable income tax benefit(a) | (60 | ) | (60 | ) | (2 | ) | (9 | ) | (2 | ) | (133 | ) | ||||||||||||
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| |||||||||||||
Net income | 237 | 111 | 3 | 17 | (1 | ) | 367 |
(a) | Includes taxable equivalent adjustments of $4 million, $3 million, $7 million, $7 million and $6 million for the three months ended June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017, respectively. |
(b) | Branch Banking provides a full range of deposit and loan and lease products to individuals and small businesses through full-service banking centers. |
(c) | Consumer Lending includes the Bancorp’s residential mortgage, home equity, automobile and other indirect lending activities. |
(d) | Prior period balances have been adjusted to reflect changes in internal expense allocation methodologies. |
33