Fifth Third Announces Fourth Quarter 2020 Results
Reported diluted earnings per share of $0.78
Reported results included a negative $0.10 impact from certain items on page 2
Key Financial Data | Key Highlights | |||||||||||||||||||||||||
$ millions for all balance sheet and income statement items | ||||||||||||||||||||||||||
4Q20 | 3Q20 | 4Q19 | –CET1 approx. 84 bps above target; positioned to initiate repurchases up to $180 million in 1Q21 –Solid credit quality, with stable NCOs and declines in NPAs; reserve coverage reflects improved macroeconomic environment and credit results –Completed divestitures of property & casualty insurance and 401(k) recordkeeping businesses as well as facility exits to help deliver $200 million of annual expense savings –Closed acquisition of Hammond Hanlon Camp LLC, expanding our healthcare advisory expertise –Made $2.8 billion commitment to accelerate racial equity, equality and inclusion, including 4Q20 donation of $25 million 4Q20 compared to 3Q20 –NII up 1%; Reported NIM stable, with ~8 bps expansion to underlying NIM excl. excess cash and all PPP impacts(f) –Noninterest income up 9%, and up 16% excl. certain items(a) reflecting record commercial banking revenue –Noninterest expense up 6% (up 3% excl. certain items and after impact of non-qualified deferred compensation(a)) reflecting strong business performance | |||||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||||||||
Net income available to common shareholders | $569 | $562 | $701 | |||||||||||||||||||||||
Net interest income (U.S. GAAP) | 1,182 | 1,170 | 1,228 | |||||||||||||||||||||||
Net interest income (FTE)(a) | 1,185 | 1,173 | 1,232 | |||||||||||||||||||||||
Noninterest income | 787 | 722 | 1,035 | |||||||||||||||||||||||
Noninterest expense | 1,236 | 1,161 | 1,160 | |||||||||||||||||||||||
Per Share Data | ||||||||||||||||||||||||||
Earnings per share, basic | $0.79 | $0.78 | $0.97 | |||||||||||||||||||||||
Earnings per share, diluted | 0.78 | 0.78 | 0.96 | |||||||||||||||||||||||
Book value per share | 29.46 | 29.25 | 27.41 | |||||||||||||||||||||||
Tangible book value per share(a) | 23.28 | 23.06 | 21.13 | |||||||||||||||||||||||
Balance Sheet & Credit Quality | ||||||||||||||||||||||||||
Average portfolio loans and leases | $109,362 | $113,362 | $109,787 | |||||||||||||||||||||||
Average deposits | 158,626 | 155,911 | 126,116 | |||||||||||||||||||||||
Net charge-off ratio(b) | 0.43 | % | 0.35 | % | 0.41 | % | ||||||||||||||||||||
Nonperforming asset ratio(c) | 0.79 | 0.84 | 0.62 | |||||||||||||||||||||||
Financial Ratios | ||||||||||||||||||||||||||
Return on average assets | 1.18 | % | 1.14 | % | 1.72 | % | ||||||||||||||||||||
Return on average common equity | 10.8 | 10.7 | 14.2 | |||||||||||||||||||||||
Return on average tangible common equity(a) | 13.9 | 13.8 | 18.7 | |||||||||||||||||||||||
CET1 capital(d)(e) | 10.34 | 10.14 | 9.75 | |||||||||||||||||||||||
Net interest margin(a) | 2.58 | 2.58 | 3.27 | |||||||||||||||||||||||
Efficiency(a) | 62.7 | 61.3 | 51.2 | |||||||||||||||||||||||
Other than the Quarterly Financial Review tables beginning on page 13, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis. | ||||||||||||||||||||||||||
CEO Commentary |
"Fifth Third delivered strong financial performance in 2020 despite the challenging operating environment brought on by the pandemic. We also delivered strong fourth quarter results, improving return metrics, and solid credit quality compared to the prior quarter. Our robust capital and liquidity levels further improved this quarter, indicative of our balance sheet strength which will serve us well this year and beyond.
Focused execution on our key strategic priorities and our disciplined approach to credit risk management continue to drive strong financial results while also generating improved outcomes for customers. As we recently announced, we have taken actions to drive efficiencies and improve the long-term profitability of the bank as we navigate the interest rate environment by streamlining our operations, including divesting less profitable businesses, while still investing in areas of growth and profitability.
We remain committed to generating sustainable long-term value for shareholders and anticipate that we will continue improving our relative performance as a top performing regional bank.
I am very proud of the way our employees have continually risen to the occasion in support of our customers and each other during these challenging times in our society. Fifth Third continues to be a source of strength for our customers and our communities, and we remain committed to equality, equity, and inclusion for all.”
-Greg D. Carmichael, Chairman and CEO
Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed Loyd (513) 534-6397 January 21, 2021
Income Statement Highlights | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
December | September | December | ||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Income | ||||||||||||||||||||||||||||||||||||||||||||
Net interest income (NII)(a) | $1,185 | $1,173 | $1,232 | 1% | (4)% | |||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for credit losses | (13) | (15) | 162 | (13)% | NM | |||||||||||||||||||||||||||||||||||||||
Noninterest income | 787 | 722 | 1,035 | 9% | (24)% | |||||||||||||||||||||||||||||||||||||||
Noninterest expense | 1,236 | 1,161 | 1,160 | 6% | 7% | |||||||||||||||||||||||||||||||||||||||
Income before income taxes(a) | $749 | $749 | $945 | - | (21)% | |||||||||||||||||||||||||||||||||||||||
Taxable equivalent adjustment | $3 | $3 | $4 | — | (25)% | |||||||||||||||||||||||||||||||||||||||
Applicable income tax expense | 142 | 165 | 207 | (14)% | (31)% | |||||||||||||||||||||||||||||||||||||||
Net income | $604 | $581 | $734 | 4% | (18)% | |||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | 35 | 19 | 33 | 84% | 6% | |||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders | $569 | $562 | $701 | 1% | (19)% | |||||||||||||||||||||||||||||||||||||||
Earnings per share, diluted | $0.78 | $0.78 | $0.96 | - | (19)% | |||||||||||||||||||||||||||||||||||||||
Fifth Third Bancorp (NASDAQ®: FITB) today reported fourth quarter 2020 net income of $604 million compared to net income of $581 million in the prior quarter and $734 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $569 million, or $0.78 per diluted share, compared to $562 million, or $0.78 per diluted share, in the prior quarter and $701 million, or $0.96 per diluted share, in the year-ago quarter.
Diluted earnings per share impact of certain items - 4Q20 | |||||||||||||||||
(after-tax impacts(g); $ in millions, except per share data) | |||||||||||||||||
Valuation of Visa total return swap (noninterest income) | $(23) | ||||||||||||||||
Net business acquisition and disposition charges1 | (21) | ||||||||||||||||
Fifth Third Foundation contribution expense | (19) | ||||||||||||||||
Branch and non-branch real estate charges (noninterest expense) | (16) | ||||||||||||||||
COVID-19 related expenses(h) | (4) | ||||||||||||||||
Tax benefit due to one-time state tax adjustments | 13 | ||||||||||||||||
After-tax impact(g) of certain items | $(70) | ||||||||||||||||
Diluted earnings per share impact of certain items2 | $(0.10) | ||||||||||||||||
1Includes a $12MM after-tax charge to noninterest expense and an $8MM after-tax charge to noninterest income; 2Diluted earnings per share impact reflects 722.096 million average diluted shares outstanding; Note: totals may not foot due to rounding | |||||||||||||||||
Reported full year 2020 net income was $1.4 billion compared to full year 2019 net income of $2.5 billion. Full year 2020 net income available to common shareholders was $1.3 billion, or $1.83 per diluted share, compared to 2019 full year net income available to common shareholders of $2.4 billion, or $3.33 per diluted share. Full year 2019 results were impacted by approximately $900 million related to pre-tax revenue associated with Worldpay/FIS.
2
Net Interest Income | ||||||||||||||||||||||||||||||||||||||||||||
(FTE; $ in millions)(a) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
December | September | December | ||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Interest Income | ||||||||||||||||||||||||||||||||||||||||||||
Interest income | $1,318 | $1,332 | $1,563 | (1)% | (16)% | |||||||||||||||||||||||||||||||||||||||
Interest expense | 133 | 159 | 331 | (16)% | (60)% | |||||||||||||||||||||||||||||||||||||||
Net interest income (NII) | $1,185 | $1,173 | $1,232 | 1% | (4)% | |||||||||||||||||||||||||||||||||||||||
Average Yield/Rate Analysis | bps Change | |||||||||||||||||||||||||||||||||||||||||||
Yield on interest-earning assets | 2.87 | % | 2.93 | % | 4.15 | % | (6) | (128) | ||||||||||||||||||||||||||||||||||||
Rate paid on interest-bearing liabilities | 0.45 | % | 0.51 | % | 1.22 | % | (6) | (77) | ||||||||||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||||||||||||||
Net interest rate spread | 2.42 | % | 2.42 | % | 2.93 | % | — | (51) | ||||||||||||||||||||||||||||||||||||
Net interest margin (NIM) | 2.58 | % | 2.58 | % | 3.27 | % | — | (69) | ||||||||||||||||||||||||||||||||||||
Table in previous quarters disclosed NII and NIM excluding the impact of purchase accounting. |
Compared to the prior quarter, NII increased $12 million, or 1%, reflecting lower core deposit and wholesale borrowing costs, approximately $10 million in accelerated PPP fees recognized upon loan forgiveness, and elevated investment portfolio prepayment penalty proceeds, partially offset by the impact of lower commercial loan balances and a decline in mortgage rates. Compared to the prior quarter, NIM was stable. Lower core deposit costs, accelerated PPP fees recognized upon loan forgiveness, elevated investment portfolio prepayment penalty proceeds, and lower CD balances were offset by the unfavorable impact of increased cash balances. Fourth quarter 2020 NIM was negatively impacted by approximately 56 bps due to the impact of PPP and excess liquidity compared to historical balances, compared to 48 bps in the prior quarter.
Compared to the year-ago quarter, NII decreased $47 million, or 4%, primarily reflecting lower market rates and lower commercial loan balances, partially offset by lower deposit costs, the favorable impact of previously executed cash flow hedges, and growth from PPP loans. Compared to the year-ago quarter, NIM decreased 69 bps, primarily reflecting the impact of elevated cash balances and lower market rates, partially offset by benefits from lower core deposit and wholesale borrowing costs, as well as the favorable impact of previously executed cash flow hedges.
3
Noninterest Income | |||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | |||||||||||||||||||||||||||||||||
December | September | December | |||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | |||||||||||||||||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||||||||||||
Service charges on deposits | $146 | $144 | $149 | 1% | (2)% | ||||||||||||||||||||||||||||||
Commercial banking revenue | 141 | 125 | 127 | 13% | 11% | ||||||||||||||||||||||||||||||
Mortgage banking net revenue | 25 | 76 | 73 | (67)% | (66)% | ||||||||||||||||||||||||||||||
Wealth and asset management revenue | 133 | 132 | 129 | 1% | 3% | ||||||||||||||||||||||||||||||
Card and processing revenue | 92 | 92 | 95 | - | (3)% | ||||||||||||||||||||||||||||||
Leasing business revenue | 69 | 77 | 71 | (10)% | (3)% | ||||||||||||||||||||||||||||||
Other noninterest income | 168 | 26 | 382 | 546% | (56)% | ||||||||||||||||||||||||||||||
Securities gains, net | 14 | 51 | 10 | (73)% | 40% | ||||||||||||||||||||||||||||||
Securities losses, net - non-qualifying hedges | |||||||||||||||||||||||||||||||||||
on mortgage servicing rights | (1) | (1) | (1) | - | - | ||||||||||||||||||||||||||||||
Total noninterest income | $787 | $722 | $1,035 | 9% | (24)% | ||||||||||||||||||||||||||||||
Reported noninterest income increased $65 million, or 9%, from the prior quarter, and decreased $248 million, or 24%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below. Reported results in the current quarter include securities gains, including approximately $13 million attributable to mark-to-market impacts related to non-qualified deferred compensation assets (more than offset by $19 million in noninterest expense).
Noninterest Income excluding certain items | |||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | ||||||||||||||||||||||||||||
December | September | December | |||||||||||||||||||||||||||
2020 | 2020 | 2019 | |||||||||||||||||||||||||||
Noninterest Income excluding certain items | |||||||||||||||||||||||||||||
Noninterest income (U.S. GAAP) | $787 | $722 | $1,035 | ||||||||||||||||||||||||||
Valuation of Visa total return swap | 30 | 22 | 44 | ||||||||||||||||||||||||||
Net business dispositions charge | 11 | — | — | ||||||||||||||||||||||||||
Branch and non-branch real estate charges | — | 10 | — | ||||||||||||||||||||||||||
Gain recognized from Worldpay TRA transaction | — | — | (345) | ||||||||||||||||||||||||||
Securities gains, net | (14) | (51) | (10) | ||||||||||||||||||||||||||
Noninterest income excluding certain items(a) | $814 | $703 | $724 | ||||||||||||||||||||||||||
Compared to the prior quarter, noninterest income excluding certain items increased $111 million, or 16%. Compared to the year-ago quarter, noninterest income excluding certain items increased $90 million, or 12%.
Compared to the prior quarter, service charges on deposits increased $2 million, or 1%, reflecting an increase in consumer deposit fees. Commercial banking revenue increased $16 million, or 13%, primarily driven by increases in M&A advisory fees and loan syndication revenue, partially offset by lower corporate bond fees. Mortgage banking net revenue decreased $51 million, or 67%, primarily driven by lower origination fees and gains on loan sales resulting from a decrease in origination volumes, margin compression, the decision to retain certain mortgages originated during the quarter, and an unfavorable MSR net valuation adjustment. Current quarter mortgage originations of $3.9 billion decreased 13% compared to the prior quarter. Wealth and asset management revenue increased $1 million, or 1%, primarily driven by higher personal asset management revenue and brokerage fees, partially offset by lower institutional trust fees. Card and processing revenue was flat, as an increase in credit transaction volume was offset by higher rewards. Leasing business revenue decreased $8 million, or 10%, primarily driven by a seasonal decrease in business solutions revenue. Other noninterest income results were driven by the recognition of tax receivable agreement revenue of $74 million as well as private equity income.
4
Compared to the year-ago quarter, service charges on deposits decreased $3 million, or 2%, as a decline in consumer deposit fees was partially offset by an increase in commercial deposit fees. Commercial banking revenue increased $14 million, or 11%, reflecting an increase in M&A advisory fees and corporate bond fees, partially offset by lower loan syndication revenue. Mortgage banking net revenue decreased $48 million, or 66%, primarily driven by an unfavorable MSR net valuation adjustment and an increase in MSR decay resulting from higher prepayment speeds. Wealth and asset management revenue increased $4 million, or 3%, primarily driven by higher personal asset management revenue and brokerage fees. Card and processing revenue decreased by $3 million, or 3%, primarily reflecting lower commercial and consumer card spend volumes, partially offset by lower rewards. Leasing business revenue decreased $2 million, or 3%, primarily reflecting lower operating lease revenue. Other noninterest income results were driven by the recognition of tax receivable agreement revenue as well as private equity income.
Noninterest Expense | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
December | September | December | ||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||||||||||||||||||
Compensation and benefits | $679 | $637 | $576 | 7% | 18% | |||||||||||||||||||||||||||||||||||||||
Net occupancy expense | 98 | 90 | 84 | 9% | 17% | |||||||||||||||||||||||||||||||||||||||
Technology and communications | 90 | 89 | 103 | 1% | (13)% | |||||||||||||||||||||||||||||||||||||||
Equipment expense | 34 | 33 | 33 | 3% | 3% | |||||||||||||||||||||||||||||||||||||||
Card and processing expense | 31 | 29 | 33 | 7% | (6)% | |||||||||||||||||||||||||||||||||||||||
Leasing business expense | 37 | 35 | 36 | 6% | 3% | |||||||||||||||||||||||||||||||||||||||
Marketing expense | 30 | 23 | 44 | 30% | (32)% | |||||||||||||||||||||||||||||||||||||||
Intangible amortization expense | 12 | 12 | 14 | — | (14)% | |||||||||||||||||||||||||||||||||||||||
Other noninterest expense | 225 | 213 | 237 | 6% | (5)% | |||||||||||||||||||||||||||||||||||||||
Total noninterest expense | $1,236 | $1,161 | $1,160 | 6% | 7% | |||||||||||||||||||||||||||||||||||||||
Reported noninterest expense increased $75 million, or 6%, from the prior quarter, and increased $76 million, or 7%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below.
Noninterest Expense excluding certain items | |||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | ||||||||||||||||||||||||||||
December | September | December | |||||||||||||||||||||||||||
2020 | 2020 | 2019 | |||||||||||||||||||||||||||
Noninterest Expense excluding certain items | |||||||||||||||||||||||||||||
Noninterest expense (U.S. GAAP) | $1,236 | $1,161 | $1,160 | ||||||||||||||||||||||||||
Fifth Third Foundation contribution | (25) | — | (20) | ||||||||||||||||||||||||||
Branch and non-branch real estate charges | (21) | (9) | — | ||||||||||||||||||||||||||
Business acquisition and merger-related charges | (16) | — | (9) | ||||||||||||||||||||||||||
COVID-19 related expenses(h) | (5) | (5) | — | ||||||||||||||||||||||||||
Restructuring severance expense | — | (19) | — | ||||||||||||||||||||||||||
Noninterest expense excluding certain items(a) | $1,169 | $1,128 | $1,131 | ||||||||||||||||||||||||||
Table in prior quarters included the impact of intangible amortization |
Compared to the prior quarter, noninterest expense excluding certain items increased $41 million, or 4%, primarily due to an increase in compensation and benefits expense reflecting strong business performance and the mark-to-market impacts of approximately $19 million in non-qualified deferred compensation expense in the current quarter compared to a $7 million expense in the prior quarter, partially offset by lower other noninterest expense. Compared to the year-ago quarter, noninterest expense excluding certain items increased $38 million, or 3%, primarily reflecting an increase in compensation and benefits expense, partially offset by lower marketing expense and other noninterest expense.
5
Average Interest-Earning Assets | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
December | September | December | ||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Average Portfolio Loans and Leases | ||||||||||||||||||||||||||||||||||||||||||||
Commercial loans and leases: | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial loans | $50,387 | $54,004 | $50,938 | (7)% | (1)% | |||||||||||||||||||||||||||||||||||||||
Commercial mortgage loans | 10,727 | 11,069 | 10,831 | (3)% | (1)% | |||||||||||||||||||||||||||||||||||||||
Commercial construction loans | 5,820 | 5,534 | 5,334 | 5% | 9% | |||||||||||||||||||||||||||||||||||||||
Commercial leases | 2,932 | 2,966 | 3,384 | (1)% | (13)% | |||||||||||||||||||||||||||||||||||||||
Total commercial loans and leases | $69,866 | $73,573 | $70,487 | (5)% | (1)% | |||||||||||||||||||||||||||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage loans | $16,016 | $16,618 | $16,697 | (4)% | (4)% | |||||||||||||||||||||||||||||||||||||||
Home equity | 5,315 | 5,581 | 6,147 | (5)% | (14)% | |||||||||||||||||||||||||||||||||||||||
Indirect secured consumer loans | 13,272 | 12,599 | 11,281 | 5% | 18% | |||||||||||||||||||||||||||||||||||||||
Credit card | 2,042 | 2,134 | 2,496 | (4)% | (18)% | |||||||||||||||||||||||||||||||||||||||
Other consumer loans | 2,851 | 2,857 | 2,679 | — | 6% | |||||||||||||||||||||||||||||||||||||||
Total consumer loans | $39,496 | $39,789 | $39,300 | (1)% | — | |||||||||||||||||||||||||||||||||||||||
Total average portfolio loans and leases | $109,362 | $113,362 | $109,787 | (4)% | — | |||||||||||||||||||||||||||||||||||||||
Average Loans and Leases Held for Sale | ||||||||||||||||||||||||||||||||||||||||||||
Commercial loans and leases held for sale | $54 | $55 | $43 | (2)% | 26% | |||||||||||||||||||||||||||||||||||||||
Consumer loans held for sale | 2,048 | 1,196 | 1,156 | 71% | 77% | |||||||||||||||||||||||||||||||||||||||
Total average loans and leases held for sale | $2,102 | $1,251 | $1,199 | 68% | 75% | |||||||||||||||||||||||||||||||||||||||
Securities and other short-term investments | $70,954 | $66,091 | $38,326 | 7% | 85% | |||||||||||||||||||||||||||||||||||||||
Total average interest-earning assets | $182,418 | $180,704 | $149,312 | 1% | 22% | |||||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, total average portfolio loans and leases decreased 4%, primarily driven by a decline in C&I and residential mortgage balances, partially offset by an increase in indirect secured consumer loans (predominantly indirect automobile). Average commercial portfolio loans and leases decreased 5%, reflecting lower C&I revolving line of credit utilization and term loan balances, as well as a decline in commercial mortgage loans, partially offset by growth in commercial construction balances. Average consumer portfolio loans decreased 1%, as lower residential mortgage and home equity balances were partially offset by higher indirect secured consumer loans.
Compared to the year-ago quarter, total average portfolio loans and leases were flat as growth in both indirect secured consumer loans and commercial construction loans were offset by declines in home equity and residential mortgage balances, as well as lower C&I balances impacted by lower revolving line of credit utilization. Average commercial portfolio loans and leases decreased 1%, due to a decline in C&I loan balances reflecting lower revolving line of credit utilization, and the expected decline in commercial leases, partially offset by PPP loans and growth in commercial construction loans. Average consumer portfolio loans were flat, as higher indirect secured consumer loans were offset by lower home equity, residential mortgage balances, and credit card balances.
Total period-end commercial portfolio loans and leases of $69 billion decreased $2 billion, or 3%, from the prior quarter, and decreased $1 billion, or 1%, from the year-ago quarter. The sequential decline reflected lower C&I revolving line of credit utilization and term loan balances in the current quarter. Period-end commercial revolving line utilization was 32%, compared to 33% in the prior quarter and 36% in the year-ago quarter. Period-end consumer portfolio loans were relatively stable compared to the third quarter, as continued growth in indirect secured consumer loans was partially offset by declines in residential mortgage and home equity balances. Period-end loans and leases held for sale increased $2.2 billion sequentially, primarily attributable to the purchase of $2.1 billion in government guaranteed loans related to GNMA early buyouts associated with CARES Act forbearance plans.
6
Average available-for-sale debt and other securities of $35.0 billion decreased 1% compared to the prior quarter and 1% compared to the year-ago quarter. Average other short-term investments (which includes interest-bearing cash) of $35.0 billion increased $5.2 billion compared to the prior quarter and increased $33.0 billion compared to the year-ago quarter.
Average Deposits | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
December | September | December | ||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Average Deposits | ||||||||||||||||||||||||||||||||||||||||||||
Demand | $56,365 | $50,414 | $35,710 | 12% | 58% | |||||||||||||||||||||||||||||||||||||||
Interest checking | 47,664 | 49,800 | 38,628 | (4)% | 23% | |||||||||||||||||||||||||||||||||||||||
Savings | 17,658 | 17,013 | 14,274 | 4% | 24% | |||||||||||||||||||||||||||||||||||||||
Money market | 31,205 | 31,151 | 27,429 | — | 14% | |||||||||||||||||||||||||||||||||||||||
Foreign office(i) | 161 | 189 | 244 | (15)% | (34)% | |||||||||||||||||||||||||||||||||||||||
Total transaction deposits | $153,053 | $148,567 | $116,285 | 3% | 32% | |||||||||||||||||||||||||||||||||||||||
Other time | 3,273 | 3,711 | 5,507 | (12)% | (41)% | |||||||||||||||||||||||||||||||||||||||
Total core deposits | $156,326 | $152,278 | $121,792 | 3% | 28% | |||||||||||||||||||||||||||||||||||||||
Certificates - $100,000 and over | 2,300 | 3,633 | 4,072 | (37)% | (44)% | |||||||||||||||||||||||||||||||||||||||
Other deposits | — | — | 252 | NM | (100)% | |||||||||||||||||||||||||||||||||||||||
Total average deposits | $158,626 | $155,911 | $126,116 | 2% | 26% | |||||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, average core deposits increased 3%, driven by growth in demand and savings deposits, partially offset by declines in interest checking and other time deposits. Average demand deposits represented 36% of total core deposits in the current quarter compared to 33% in the prior quarter. Average commercial transaction deposits increased 3% and average consumer transaction deposits increased 2%.
Compared to the year-ago quarter, average core deposits increased 28%, reflecting double-digit growth in all deposit captions except other time and foreign office deposits. Average commercial transaction deposits increased 49% and average consumer transaction deposits increased 16%.
The period end loan-to-core deposit ratio was 69% in the current quarter, compared to 72% in the prior quarter and 89% in the year-ago quarter. Excluding PPP loans of $4.8 billion in the current quarter and $5.2 billion in the prior quarter, the period end loan-to-core deposit ratio was 66% in the current quarter, compared to 69% in the prior quarter.
Average Wholesale Funding | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
December | September | December | ||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Average Wholesale Funding | ||||||||||||||||||||||||||||||||||||||||||||
Certificates - $100,000 and over | $2,300 | $3,633 | $4,072 | (37)% | (44)% | |||||||||||||||||||||||||||||||||||||||
Other deposits | — | — | 252 | NM | (100)% | |||||||||||||||||||||||||||||||||||||||
Federal funds purchased | 307 | 273 | 1,174 | 12% | (74)% | |||||||||||||||||||||||||||||||||||||||
Other short-term borrowings | 1,091 | 1,626 | 1,133 | (33)% | (4)% | |||||||||||||||||||||||||||||||||||||||
Long-term debt | 15,018 | 16,230 | 14,860 | (7)% | 1% | |||||||||||||||||||||||||||||||||||||||
Total average wholesale funding | $18,716 | $21,762 | $21,491 | (14)% | (13)% | |||||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, average wholesale funding decreased 14%, driven by lower jumbo CD balances, as well as the full-quarter impact of debt redemption that occurred at the end of the third quarter. Compared to the year-ago quarter, average wholesale funding decreased 13%, reflecting decreases in jumbo CD balances and federal funds borrowings.
7
Credit Quality Summary | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | As of and For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||
December | September | June | March | December | ||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||
Total nonaccrual portfolio loans and leases (NPLs) | $834 | $891 | $700 | $647 | $618 | |||||||||||||||||||||||||||||||||||||||
Repossessed property | 9 | 7 | 4 | 10 | 10 | |||||||||||||||||||||||||||||||||||||||
OREO | 21 | 33 | 43 | 52 | 52 | |||||||||||||||||||||||||||||||||||||||
Total nonperforming portfolio loans and leases and OREO (NPAs) | $864 | $931 | $747 | $709 | $680 | |||||||||||||||||||||||||||||||||||||||
NPL ratio(j) | 0.77 | % | 0.80 | % | 0.61 | % | 0.55 | % | 0.56 | % | ||||||||||||||||||||||||||||||||||
NPA ratio(c) | 0.79 | % | 0.84 | % | 0.65 | % | 0.60 | % | 0.62 | % | ||||||||||||||||||||||||||||||||||
Total loans and leases 30-89 days past due (accrual) | $357 | $323 | $381 | $409 | $364 | |||||||||||||||||||||||||||||||||||||||
Total loans and leases 90 days past due (accrual) | 163 | 139 | 136 | 151 | 130 | |||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses (ALLL), beginning | $2,574 | $2,696 | $2,348 | $1,202 | $1,143 | |||||||||||||||||||||||||||||||||||||||
Impact of CECL adoption | — | — | — | 643 | — | |||||||||||||||||||||||||||||||||||||||
Total net losses charged-off | (118) | (101) | (130) | (122) | (113) | |||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for loan and lease losses | (3) | (21) | 478 | 625 | 172 | |||||||||||||||||||||||||||||||||||||||
ALLL, ending | $2,453 | $2,574 | $2,696 | $2,348 | $1,202 | |||||||||||||||||||||||||||||||||||||||
Reserve for unfunded commitments, beginning | $182 | $176 | $169 | $144 | $154 | |||||||||||||||||||||||||||||||||||||||
Impact of CECL adoption | — | — | — | 10 | — | |||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for the reserve for unfunded commitments | (10) | 6 | 7 | 15 | (10) | |||||||||||||||||||||||||||||||||||||||
Reserve for unfunded commitments, ending | $172 | $182 | $176 | $169 | $144 | |||||||||||||||||||||||||||||||||||||||
Total allowance for credit losses (ACL) | $2,625 | $2,756 | $2,872 | $2,517 | $1,346 | |||||||||||||||||||||||||||||||||||||||
ACL ratios: | ||||||||||||||||||||||||||||||||||||||||||||
As a % of portfolio loans and leases | 2.41 | % | 2.49 | % | 2.50 | % | 2.13 | % | 1.23 | % | ||||||||||||||||||||||||||||||||||
As a % of nonperforming portfolio loans and leases | 315 | % | 309 | % | 410 | % | 389 | % | 218 | % | ||||||||||||||||||||||||||||||||||
As a % of nonperforming portfolio assets | 304 | % | 296 | % | 385 | % | 355 | % | 198 | % | ||||||||||||||||||||||||||||||||||
ALLL as a % of portfolio loans and leases | 2.25 | % | 2.32 | % | 2.34 | % | 1.99 | % | 1.10 | % | ||||||||||||||||||||||||||||||||||
Total losses charged-off | $(154) | $(135) | $(163) | $(159) | $(152) | |||||||||||||||||||||||||||||||||||||||
Total recoveries of losses previously charged-off | 36 | 34 | 33 | 37 | 39 | |||||||||||||||||||||||||||||||||||||||
Total net losses charged-off | $(118) | $(101) | $(130) | $(122) | $(113) | |||||||||||||||||||||||||||||||||||||||
Net charge-off ratio (NCO ratio)(b) | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | 0.41 | % | ||||||||||||||||||||||||||||||||||
Commercial NCO ratio | 0.40 | % | 0.33 | % | 0.40 | % | 0.32 | % | 0.20 | % | ||||||||||||||||||||||||||||||||||
Consumer NCO ratio | 0.47 | % | 0.40 | % | 0.52 | % | 0.66 | % | 0.78 | % | ||||||||||||||||||||||||||||||||||
Nonperforming portfolio loans and leases were $834 million in the current quarter, with the resulting NPL ratio of 0.77%. Compared to the prior quarter, NPLs decreased $57 million with the NPL ratio decreasing 3 bps. Compared to the year-ago quarter, NPLs increased $216 million with the NPL ratio increasing 21 bps.
Nonperforming portfolio assets were $864 million in the current quarter, with the resulting NPA ratio of 0.79%. Compared to the prior quarter, NPAs decreased $67 million with the NPA ratio decreasing 5 bps. Compared to the year-ago quarter, NPAs increased $184 million with the NPA ratio increasing 17 bps.
8
The benefit from credit losses totaled $13 million in the current quarter. The allowance for credit loss ratio represented 2.41% of total portfolio loans and leases in the current quarter, compared with 2.49% in the prior quarter and 1.23% in the year-ago quarter (under the incurred loss methodology). In the current quarter, the allowance for credit losses represented 315% of nonperforming portfolio loans and leases and 304% of nonperforming portfolio assets. The allowance for loan and lease losses ratio represented 2.25% of total portfolio loans and leases in the current quarter.
Net charge-offs were $118 million in the current quarter, with the resulting NCO ratio of 0.43%. Compared to the prior quarter, net charge-offs increased $17 million and the NCO ratio increased 8 bps. Compared to the year-ago quarter, net charge-offs increased $5 million and the NCO ratio increased 2 bps.
Capital Position | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of and For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
December | September | June | March | December | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital Position | ||||||||||||||||||||||||||||||||||||||||||||||||||
Average total Bancorp shareholders' equity as a % of average assets | 11.34 | % | 11.33 | % | 11.30% | 12.63% | 12.58 | % | ||||||||||||||||||||||||||||||||||||||||||
Tangible equity(a) | 8.18 | % | 8.09 | % | 7.68% | 8.41% | 9.52 | % | ||||||||||||||||||||||||||||||||||||||||||
Tangible common equity (excluding AOCI)(a) | 7.11 | % | 6.99 | % | 6.77% | 7.41% | 8.44 | % | ||||||||||||||||||||||||||||||||||||||||||
Tangible common equity (including AOCI)(a) | 8.29 | % | 8.31 | % | 8.13% | 8.65% | 9.08 | % | ||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Ratios(e) | ||||||||||||||||||||||||||||||||||||||||||||||||||
CET1 capital(d) | 10.34 | % | 10.14 | % | 9.72% | 9.37% | 9.75 | % | ||||||||||||||||||||||||||||||||||||||||||
Tier I risk-based capital(d) | 11.83 | % | 11.64 | % | 10.96% | 10.56% | 10.99 | % | ||||||||||||||||||||||||||||||||||||||||||
Total risk-based capital(d) | 15.08 | % | 14.93 | % | 14.24% | 13.59% | 13.84 | % | ||||||||||||||||||||||||||||||||||||||||||
Tier I leverage | 8.49 | % | 8.37 | % | 8.16% | 9.37% | 9.54 | % | ||||||||||||||||||||||||||||||||||||||||||
Capital ratios remained strong this quarter. The CET1 capital ratio was 10.34%, the tangible common equity to tangible assets ratio was 7.11% excluding AOCI, and 8.29% including AOCI. The Tier I risk-based capital ratio was 11.83%, the Total risk-based capital ratio was 15.08%, and the Tier I leverage ratio was 8.49%. Certain capital ratios, including the Tier I leverage ratio, continued to be impacted by the increase in assets since the onset of the pandemic, predominantly from growth in 0% risk-weighted assets resulting from an increase in interest-bearing cash as well as PPP loans.
On December 18, 2020, the Federal Reserve announced results of the second round of stress tests under the 2020 Comprehensive Capital Analysis and Review (CCAR) process, and stated that it is extending the time period for notifying banks whether Stress Capital Buffer requirements will be recalculated through March 31, 2021. Additionally, the Federal Reserve announced it is authorizing CCAR banks to initiate share repurchases in the first quarter of 2021, subject to payout limits such that capital distributions consisting of common dividends and share repurchases cannot exceed average net income over the prior four quarters. Based on the four quarters of net income and common dividends ended the fourth quarter of 2020, Fifth Third has the capacity to execute up to approximately $180 million in share repurchases in the first quarter of 2021 (which includes approximately $20 million in repurchases to offset employee compensation issuances), which may be completed through an accelerated share repurchase agreement or open market repurchases.
9
Tax Rate
The effective tax rate was 19.1% compared with 22.1% in the prior quarter and 22.0% in the year-ago quarter. The tax rate in the current quarter reflected favorable one-time state tax adjustments of $13 million.
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 at www.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, which will be available for 30 days.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. As of December 31, 2020, the Company had $205 billion in assets and operates 1,134 full-service Banking Centers, and 2,397 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina and South Carolina. In total, Fifth Third provides its customers with access to approximately 52,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2020, had $434 billion in assets under care, of which it managed $54 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
Earnings Release End Notes
(a)Non-GAAP measure; see discussion of non-GAAP reconciliation beginning on page 26.
(b)Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis.
(c)Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO.
(d)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(e)Current period regulatory capital ratios are estimated.
(f)Fourth quarter 2020 underlying NIM calculated by reducing average interest-earning assets approximately $32.5 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $5.1 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $41 million), resulting in an underlying NIM of approximately 3.14%; Third quarter 2020 underlying NIM calculated by reducing average interest-earning assets approximately $27.3 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $5.2 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $33 million), resulting in an underlying NIM of approximately 3.06%.
(g)Assumes a 23% tax rate.
(h)COVID-19 related expenses include incremental costs incurred for enhanced cleaning measures, personal protective equipment, and other supplies in response to the COVID-19 pandemic.
(i)Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.
(j)Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO.
10
FORWARD-LOOKING STATEMENTS
This release contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “potential,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K as updated by our filings with the U.S. Securities and Exchange Commission (“SEC”). When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. We undertake no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this document.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) effects of the global COVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft, misappropriation or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Third’s capital plan; (21) regulation of Fifth Third’s derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates; (28) changes and trends in capital markets; (29) fluctuation of Fifth Third’s stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (35) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (36) potential dilution from future acquisitions; (37) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (38) results of investments or acquired entities; (39) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (40) inaccuracies or other failures from the use of models; (41) effects of critical accounting policies and judgments or the use of inaccurate estimates; (42) weather-related events, other natural disasters, or health emergencies; and (43) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity.
You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.
# # #
11
Quarterly Financial Review for December 31, 2020
Table of Contents
Financial Highlights | 13-14 | ||||||||||
Consolidated Statements of Income | 15-16 | ||||||||||
Consolidated Balance Sheets | 17-18 | ||||||||||
Consolidated Statements of Changes in Equity | 19 | ||||||||||
Average Balance Sheet and Yield Analysis | 20-21 | ||||||||||
Summary of Loans and Leases | 22 | ||||||||||
Regulatory Capital | 23 | ||||||||||
Summary of Credit Loss Experience | 24 | ||||||||||
Asset Quality | 25 | ||||||||||
Non-GAAP Reconciliation | 26-28 | ||||||||||
Segment Presentation | 29 | ||||||||||
12
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||||||||
Financial Highlights | % / bps | % / bps | |||||||||||||||||||||||||||
$ in millions, except per share data | For the Three Months Ended | Change | Year to Date | Change | |||||||||||||||||||||||||
(unaudited) | December | September | December | December | December | ||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | 2020 | 2019 | Yr/Yr | ||||||||||||||||||||||
Income Statement Data | |||||||||||||||||||||||||||||
Net interest income | $1,182 | $1,170 | $1,228 | 1% | (4%) | $4,782 | $4,797 | — | |||||||||||||||||||||
Net interest income (FTE)(a) | 1,185 | 1,173 | 1,232 | 1% | (4%) | 4,795 | 4,814 | — | |||||||||||||||||||||
Noninterest income | 787 | 722 | 1,035 | 9% | (24%) | 2,830 | 3,536 | (20%) | |||||||||||||||||||||
Total revenue (FTE)(a) | 1,972 | 1,895 | 2,267 | 4% | (13%) | 7,625 | 8,350 | (9%) | |||||||||||||||||||||
Provision for (benefit from) credit losses | (13) | (15) | 162 | (13%) | NM | 1,097 | 471 | 133% | |||||||||||||||||||||
Noninterest expense | 1,236 | 1,161 | 1,160 | 6% | 7% | 4,718 | 4,660 | 1% | |||||||||||||||||||||
Net income | 604 | 581 | 734 | 4% | (18%) | 1,427 | 2,512 | (43%) | |||||||||||||||||||||
Net income available to common shareholders | 569 | 562 | 701 | 1% | (19%) | 1,323 | 2,419 | (45%) | |||||||||||||||||||||
Earnings Per Share Data | |||||||||||||||||||||||||||||
Net income allocated to common shareholders | $567 | $560 | $696 | 1% | (19%) | $1,317 | $2,398 | (45%) | |||||||||||||||||||||
Average common shares outstanding (in thousands): | |||||||||||||||||||||||||||||
Basic | 715,482 | 715,102 | 715,137 | — | — | 714,730 | 710,434 | 1% | |||||||||||||||||||||
Diluted | 722,096 | 718,894 | 724,968 | — | — | 719,735 | 720,065 | — | |||||||||||||||||||||
Earnings per share, basic | $0.79 | $0.78 | $0.97 | 1% | (19%) | $1.84 | $3.38 | (46%) | |||||||||||||||||||||
Earnings per share, diluted | 0.78 | 0.78 | 0.96 | - | (19%) | 1.83 | 3.33 | (45%) | |||||||||||||||||||||
Common Share Data | |||||||||||||||||||||||||||||
Cash dividends per common share | $0.27 | $0.27 | $0.24 | — | 13% | $1.08 | $0.94 | 15% | |||||||||||||||||||||
Book value per share | 29.46 | 29.25 | 27.41 | 1% | 7% | 29.46 | 27.41 | 7% | |||||||||||||||||||||
Market price per share | 27.57 | 21.32 | 30.74 | 29% | (10%) | 27.57 | 30.74 | (10%) | |||||||||||||||||||||
Common shares outstanding (in thousands) | 712,760 | 712,328 | 708,916 | — | 1% | 712,760 | 708,916 | 1% | |||||||||||||||||||||
Market capitalization | $19,651 | $15,187 | $21,792 | 29% | (10%) | $19,651 | $21,792 | (10%) | |||||||||||||||||||||
Financial Ratios | |||||||||||||||||||||||||||||
Return on average assets | 1.18 | % | 1.14 | % | 1.72 | % | 4 | (54) | 0.73 | % | 1.53 | % | (80) | ||||||||||||||||
Return on average common equity | 10.8 | % | 10.7 | % | 14.2 | % | 10 | (340) | 6.4 | % | 13.1 | % | (670) | ||||||||||||||||
Return on average tangible common equity(a) | 13.9 | % | 13.8 | % | 18.7 | % | 10 | (480) | 8.4 | % | 17.1 | % | (870) | ||||||||||||||||
Noninterest income as a percent of total revenue(a) | 40 | % | 38 | % | 46 | % | 200 | (600) | 37 | % | 42 | % | (500) | ||||||||||||||||
Dividend payout | 34.2 | % | 34.6 | % | 24.7 | % | (40) | 950 | 58.7 | % | 27.8 | % | 3,090 | ||||||||||||||||
Average total Bancorp shareholders' equity as a percent of average assets | 11.34 | % | 11.33 | % | 12.58 | % | 1 | (124) | 11.61 | % | 12.14 | % | (53) | ||||||||||||||||
Tangible common equity(a) | 7.11 | % | 6.99 | % | 8.44 | % | 12 | (133) | 7.11 | % | 8.44 | % | (133) | ||||||||||||||||
Net interest margin (FTE)(a) | 2.58 | % | 2.58 | % | 3.27 | % | — | (69) | 2.78 | % | 3.31 | % | (53) | ||||||||||||||||
Efficiency (FTE)(a) | 62.7 | % | 61.3 | % | 51.2 | % | 140 | 1,150 | 61.9 | % | 55.8 | % | 610 | ||||||||||||||||
Effective tax rate | 19.1 | % | 22.1 | % | 22.0 | % | (300) | (290) | 20.6 | % | 21.6 | % | (100) | ||||||||||||||||
Credit Quality | |||||||||||||||||||||||||||||
Net losses charged-off | $118 | $101 | $113 | 17 | % | 4 | % | $471 | $369 | 28 | % | ||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.43 | % | 0.35 | % | 0.41 | % | 8 | 2 | 0.42 | % | 0.35 | % | 7 | ||||||||||||||||
ALLL as a percent of portfolio loans and leases | 2.25 | % | 2.32 | % | 1.10 | % | (7) | 115 | 2.25 | % | 1.10 | % | 115 | ||||||||||||||||
ACL as a percent of portfolio loans and leases(g) | 2.41 | % | 2.49 | % | 1.23 | % | (8) | 118 | 2.41 | % | 1.23 | % | 118 | ||||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO | 0.79 | % | 0.84 | % | 0.62 | % | (5) | 17 | 0.79 | % | 0.62 | % | 17 | ||||||||||||||||
Average Balances | |||||||||||||||||||||||||||||
Loans and leases, including held for sale | $111,464 | $114,613 | $110,986 | (3%) | — | $114,411 | $107,794 | 6% | |||||||||||||||||||||
Securities and other short-term investments | 70,954 | 66,091 | 38,326 | 7% | 85% | 58,277 | 37,610 | 55% | |||||||||||||||||||||
Assets | 203,930 | 202,533 | 169,327 | 1% | 20% | 194,230 | 163,936 | 18% | |||||||||||||||||||||
Transaction deposits(b) | 153,053 | 148,567 | 116,285 | 3% | 32% | 140,505 | 111,130 | 26% | |||||||||||||||||||||
Core deposits(c) | 156,326 | 152,278 | 121,792 | 3% | 28% | 144,623 | 116,600 | 24% | |||||||||||||||||||||
Wholesale funding(d) | 18,716 | 21,762 | 21,491 | (14%) | (13%) | 21,506 | 22,451 | (4%) | |||||||||||||||||||||
Bancorp shareholders' equity | 23,126 | 22,952 | 21,304 | 1% | 9% | 22,555 | 19,902 | 13% | |||||||||||||||||||||
Regulatory Capital Ratios(e) | |||||||||||||||||||||||||||||
CET1 capital(f) | 10.34 | % | 10.14 | % | 9.75 | % | 20 | 59 | 10.34 | % | 9.75 | % | 59 | ||||||||||||||||
Tier I risk-based capital(f) | 11.83 | % | 11.64 | % | 10.99 | % | 19 | 84 | 11.83 | % | 10.99 | % | 84 | ||||||||||||||||
Total risk-based capital(f) | 15.08 | % | 14.93 | % | 13.84 | % | 15 | 124 | 15.08 | % | 13.84 | % | 124 | ||||||||||||||||
Tier I leverage | 8.49 | % | 8.37 | % | 9.54 | % | 12 | (105) | 8.49 | % | 9.54 | % | (105) | ||||||||||||||||
Operations | |||||||||||||||||||||||||||||
Banking centers | 1,134 | 1,122 | 1,149 | 1% | (1%) | 1,134 | 1,149 | (1%) | |||||||||||||||||||||
ATMs | 2,397 | 2,414 | 2,481 | (1%) | (3%) | 2,397 | 2,481 | (3%) | |||||||||||||||||||||
Full-time equivalent employees | 19,872 | 20,283 | 19,869 | (2%) | — | 19,872 | 19,869 | — |
(a)Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 26.
(b)Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.
(c)Includes transaction deposits plus other time deposits.
(d)Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt.
(e)Current period regulatory capital ratios are estimates.
(f)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(g)The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments.
13
Fifth Third Bancorp and Subsidiaries | ||||||||||||||||||||
Financial Highlights | ||||||||||||||||||||
$ in millions, except per share data | For the Three Months Ended | |||||||||||||||||||
(unaudited) | December | September | June | March | December | |||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Net interest income | $1,182 | $1,170 | $1,200 | $1,229 | $1,228 | |||||||||||||||
Net interest income (FTE)(a) | 1,185 | 1,173 | 1,203 | 1,233 | 1,232 | |||||||||||||||
Noninterest income | 787 | 722 | 650 | 671 | 1,035 | |||||||||||||||
Total revenue (FTE)(a) | 1,972 | 1,895 | 1,853 | 1,904 | 2,267 | |||||||||||||||
(Benefit from) provision for credit losses | (13) | (15) | 485 | 640 | 162 | |||||||||||||||
Noninterest expense | 1,236 | 1,161 | 1,121 | 1,200 | 1,160 | |||||||||||||||
Net income | 604 | 581 | 195 | 46 | 734 | |||||||||||||||
Net income available to common shareholders | 569 | 562 | 163 | 29 | 701 | |||||||||||||||
Earnings Per Share Data | ||||||||||||||||||||
Net income allocated to common shareholders | $567 | $560 | $162 | $28 | $696 | |||||||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||
Basic | 715,482 | 715,102 | 714,767 | 713,556 | 715,137 | |||||||||||||||
Diluted | 722,096 | 718,894 | 717,572 | 720,363 | 724,968 | |||||||||||||||
Earnings per share, basic | $0.79 | $0.78 | $0.23 | $0.04 | $0.97 | |||||||||||||||
Earnings per share, diluted | 0.78 | 0.78 | 0.23 | 0.04 | 0.96 | |||||||||||||||
Common Share Data | ||||||||||||||||||||
Cash dividends per common share | $0.27 | $0.27 | $0.27 | $0.27 | $0.24 | |||||||||||||||
Book value per share | 29.46 | 29.25 | 28.88 | 28.26 | 27.41 | |||||||||||||||
Market value per share | 27.57 | 21.32 | 19.28 | 14.85 | 30.74 | |||||||||||||||
Common shares outstanding (in thousands) | 712,760 | 712,328 | 712,202 | 711,306 | 708,916 | |||||||||||||||
Market capitalization | $19,651 | $15,187 | $13,731 | $10,563 | $21,792 | |||||||||||||||
Financial Ratios | ||||||||||||||||||||
Return on average assets | 1.18 | % | 1.14 | % | 0.40 | % | 0.11 | % | 1.72 | % | ||||||||||
Return on average common equity | 10.8 | % | 10.7 | % | 3.2 | % | 0.6 | % | 14.2 | % | ||||||||||
Return on average tangible common equity(a) | 13.9 | % | 13.8 | % | 4.3 | % | 1.0 | % | 18.7 | % | ||||||||||
Noninterest income as a percent of total revenue(a) | 40 | % | 38 | % | 35 | % | 35 | % | 46 | % | ||||||||||
Dividend payout | 34.2 | % | 34.6 | % | 117.4 | % | 675.0 | % | 24.7 | % | ||||||||||
Average total Bancorp shareholders' equity as a percent of average assets | 11.34 | % | 11.33 | % | 11.30 | % | 12.63 | % | 12.58 | % | ||||||||||
Tangible common equity(a) | 7.11 | % | 6.99 | % | 6.77 | % | 7.41 | % | 8.44 | % | ||||||||||
Net interest margin (FTE)(a) | 2.58 | % | 2.58 | % | 2.75 | % | 3.28 | % | 3.27 | % | ||||||||||
Efficiency (FTE)(a) | 62.7 | % | 61.3 | % | 60.5 | % | 63.0 | % | 51.2 | % | ||||||||||
Effective tax rate | 19.1 | % | 22.1 | % | 19.9 | % | 22.6 | % | 22.0 | % | ||||||||||
Credit Quality | ||||||||||||||||||||
Net losses charged-off | $118 | $101 | $130 | $122 | $113 | |||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | 0.41 | % | ||||||||||
ALLL as a percent of portfolio loans and leases | 2.25 | % | 2.32 | % | 2.34 | % | 1.99 | % | 1.10 | % | ||||||||||
ACL as a percent of portfolio loans and leases(g) | 2.41 | % | 2.49 | % | 2.50 | % | 2.13 | % | 1.23 | % | ||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO | 0.79 | % | 0.84 | % | 0.65 | % | 0.60 | % | 0.62 | % | ||||||||||
Average Balances | ||||||||||||||||||||
Loans and leases, including held for sale | $111,464 | $114,613 | $119,418 | $112,180 | $110,986 | |||||||||||||||
Securities and other short-term investments | 70,954 | 66,091 | 56,806 | 39,033 | 38,326 | |||||||||||||||
Assets | 203,930 | 202,533 | 198,387 | 171,871 | 169,327 | |||||||||||||||
Transaction deposits(b) | 153,053 | 148,567 | 142,079 | 118,096 | 116,285 | |||||||||||||||
Core deposits(c) | 156,326 | 152,278 | 146,500 | 123,177 | 121,792 | |||||||||||||||
Wholesale funding(d) | 18,716 | 21,762 | 23,739 | 21,832 | 21,491 | |||||||||||||||
Bancorp shareholders' equity | 23,126 | 22,952 | 22,421 | 21,713 | 21,304 | |||||||||||||||
Regulatory Capital Ratios(e) | ||||||||||||||||||||
CET1 capital(f) | 10.34 | % | 10.14 | % | 9.72 | % | 9.37 | % | 9.75 | % | ||||||||||
Tier I risk-based capital(f) | 11.83 | % | 11.64 | % | 10.96 | % | 10.56 | % | 10.99 | % | ||||||||||
Total risk-based capital(f) | 15.08 | % | 14.93 | % | 14.24 | % | 13.59 | % | 13.84 | % | ||||||||||
Tier I leverage | 8.49 | % | 8.37 | % | 8.16 | % | 9.37 | % | 9.54 | % | ||||||||||
Operations | ||||||||||||||||||||
Banking centers | 1,134 | 1,122 | 1,122 | 1,123 | 1,149 | |||||||||||||||
ATMs | 2,397 | 2,414 | 2,456 | 2,464 | 2,481 | |||||||||||||||
Full-time equivalent employees | 19,872 | 20,283 | 20,340 | 20,182 | 19,869 |
(a)Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 26.
(b)Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.
(c)Includes transaction deposits plus other time deposits.
(d)Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt.
(e)Current period regulatory capital ratios are estimates.
(f)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(g)The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments.
14
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||||||||||||||
$ in millions | For the Three Months Ended | % Change | Year to Date | % Change | |||||||||||||||||||||||||
(unaudited) | December | September | December | December | December | ||||||||||||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | 2020 | 2019 | Yr/Yr | ||||||||||||||||||||||
Interest Income | |||||||||||||||||||||||||||||
Interest and fees on loans and leases | $1,028 | $1,047 | $1,252 | (2%) | (18%) | $4,424 | $5,051 | (12%) | |||||||||||||||||||||
Interest on securities | 278 | 274 | 299 | 1% | (7%) | 1,119 | 1,162 | (4%) | |||||||||||||||||||||
Interest on other short-term investments | 9 | 8 | 8 | 13% | 13% | 29 | 41 | (29%) | |||||||||||||||||||||
Total interest income | 1,315 | 1,329 | 1,559 | (1%) | (16%) | 5,572 | 6,254 | (11%) | |||||||||||||||||||||
Interest Expense | |||||||||||||||||||||||||||||
Interest on deposits | 27 | 46 | 201 | (41%) | (87%) | 322 | 892 | (64%) | |||||||||||||||||||||
Interest on federal funds purchased | — | — | 5 | NM | (100%) | 2 | 29 | (93%) | |||||||||||||||||||||
Interest on other short-term borrowings | 1 | 5 | 5 | (80%) | (80%) | 14 | 28 | (50%) | |||||||||||||||||||||
Interest on long-term debt | 105 | 108 | 120 | (3%) | (13%) | 452 | 508 | (11%) | |||||||||||||||||||||
Total interest expense | 133 | 159 | 331 | (16%) | (60%) | 790 | 1,457 | (46%) | |||||||||||||||||||||
Net Interest Income | 1,182 | 1,170 | 1,228 | 1% | (4%) | 4,782 | 4,797 | — | |||||||||||||||||||||
Provision for (benefit from) credit losses | (13) | (15) | 162 | (13%) | NM | 1,097 | 471 | 133% | |||||||||||||||||||||
Net Interest Income After Provision for Credit Losses | 1,195 | 1,185 | 1,066 | 1% | 12% | 3,685 | 4,326 | (15%) | |||||||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||||||
Service charges on deposits | 146 | 144 | 149 | 1% | (2%) | 559 | 565 | (1%) | |||||||||||||||||||||
Commercial banking revenue | 141 | 125 | 127 | 13% | 11% | 528 | 460 | 15% | |||||||||||||||||||||
Mortgage banking net revenue | 25 | 76 | 73 | (67%) | (66%) | 320 | 287 | 11% | |||||||||||||||||||||
Wealth and asset management revenue | 133 | 132 | 129 | 1% | 3% | 520 | 487 | 7% | |||||||||||||||||||||
Card and processing revenue | 92 | 92 | 95 | - | (3%) | 352 | 360 | (2%) | |||||||||||||||||||||
Leasing business revenue | 69 | 77 | 71 | (10%) | (3%) | 276 | 270 | 2% | |||||||||||||||||||||
Other noninterest income | 168 | 26 | 382 | 546% | (56%) | 211 | 1,064 | (80%) | |||||||||||||||||||||
Securities gains, net | 14 | 51 | 10 | (73%) | 40% | 62 | 40 | 55% | |||||||||||||||||||||
Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights | (1) | (1) | (1) | - | - | 2 | 3 | (33%) | |||||||||||||||||||||
Total noninterest income | 787 | 722 | 1,035 | 9% | (24%) | 2,830 | 3,536 | (20%) | |||||||||||||||||||||
Noninterest Expense | |||||||||||||||||||||||||||||
Compensation and benefits | 679 | 637 | 576 | 7% | 18% | 2,590 | 2,418 | 7% | |||||||||||||||||||||
Net occupancy expense | 98 | 90 | 84 | 9% | 17% | 350 | 332 | 5% | |||||||||||||||||||||
Technology and communications | 90 | 89 | 103 | 1% | (13%) | 362 | 422 | (14%) | |||||||||||||||||||||
Equipment expense | 34 | 33 | 33 | 3% | 3% | 130 | 129 | 1% | |||||||||||||||||||||
Card and processing expense | 31 | 29 | 33 | 7% | (6%) | 121 | 130 | (7%) | |||||||||||||||||||||
Leasing business expense | 37 | 35 | 36 | 6% | 3% | 140 | 133 | 5% | |||||||||||||||||||||
Marketing expense | 30 | 23 | 44 | 30% | (32%) | 104 | 162 | (36%) | |||||||||||||||||||||
Other noninterest expense | 237 | 225 | 251 | 5% | (6%) | 921 | 934 | (1%) | |||||||||||||||||||||
Total noninterest expense | 1,236 | 1,161 | 1,160 | 6% | 7% | 4,718 | 4,660 | 1% | |||||||||||||||||||||
Income Before Income Taxes | 746 | 746 | 941 | - | (21%) | 1,797 | 3,202 | (44%) | |||||||||||||||||||||
Applicable income tax expense | 142 | 165 | 207 | (14%) | (31%) | 370 | 690 | (46%) | |||||||||||||||||||||
Net Income | 604 | 581 | 734 | 4% | (18%) | 1,427 | 2,512 | (43%) | |||||||||||||||||||||
Dividends on preferred stock | 35 | 19 | 33 | 84% | 6% | 104 | 93 | 12% | |||||||||||||||||||||
Net Income Available to Common Shareholders | $569 | $562 | $701 | 1% | (19%) | $1,323 | $2,419 | (45%) |
15
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||
(unaudited) | December | September | June | March | December | ||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||
Interest Income | |||||||||||||||||
Interest and fees on loans and leases | $1,028 | $1,047 | $1,115 | $1,235 | $1,252 | ||||||||||||
Interest on securities | 278 | 274 | 283 | 283 | 299 | ||||||||||||
Interest on other short-term investments | 9 | 8 | 5 | 7 | 8 | ||||||||||||
Total interest income | 1,315 | 1,329 | 1,403 | 1,525 | 1,559 | ||||||||||||
Interest Expense | |||||||||||||||||
Interest on deposits | 27 | 46 | 83 | 166 | 201 | ||||||||||||
Interest on federal funds purchased | — | — | — | 2 | 5 | ||||||||||||
Interest on other short-term borrowings | 1 | 5 | 2 | 6 | 5 | ||||||||||||
Interest on long-term debt | 105 | 108 | 118 | 122 | 120 | ||||||||||||
Total interest expense | 133 | 159 | 203 | 296 | 331 | ||||||||||||
Net Interest Income | 1,182 | 1,170 | 1,200 | 1,229 | 1,228 | ||||||||||||
(Benefit from) provision for credit losses | (13) | (15) | 485 | 640 | 162 | ||||||||||||
Net Interest Income After Provision for Credit Losses | 1,195 | 1,185 | 715 | 589 | 1,066 | ||||||||||||
Noninterest Income | |||||||||||||||||
Service charges on deposits | 146 | 144 | 122 | 148 | 149 | ||||||||||||
Commercial banking revenue | 141 | 125 | 137 | 124 | 127 | ||||||||||||
Mortgage banking net revenue | 25 | 76 | 99 | 120 | 73 | ||||||||||||
Wealth and asset management revenue | 133 | 132 | 120 | 134 | 129 | ||||||||||||
Card and processing revenue | 92 | 92 | 82 | 86 | 95 | ||||||||||||
Leasing business revenue | 69 | 77 | 57 | 73 | 71 | ||||||||||||
Other noninterest income | 168 | 26 | 12 | 7 | 382 | ||||||||||||
Securities gains (losses), net | 14 | 51 | 21 | (24) | 10 | ||||||||||||
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights | (1) | (1) | — | 3 | (1) | ||||||||||||
Total noninterest income | 787 | 722 | 650 | 671 | 1,035 | ||||||||||||
Noninterest Expense | |||||||||||||||||
Compensation and benefits | 679 | 637 | 627 | 647 | 576 | ||||||||||||
Net occupancy expense | 98 | 90 | 82 | 82 | 84 | ||||||||||||
Technology and communications | 90 | 89 | 90 | 93 | 103 | ||||||||||||
Equipment expense | 34 | 33 | 32 | 32 | 33 | ||||||||||||
Card and processing expense | 31 | 29 | 29 | 31 | 33 | ||||||||||||
Leasing business expense | 37 | 35 | 33 | 35 | 36 | ||||||||||||
Marketing expense | 30 | 23 | 20 | 31 | 44 | ||||||||||||
Other noninterest expense | 237 | 225 | 208 | 249 | 251 | ||||||||||||
Total noninterest expense | 1,236 | 1,161 | 1,121 | 1,200 | 1,160 | ||||||||||||
Income Before Income Taxes | 746 | 746 | 244 | 60 | 941 | ||||||||||||
Applicable income tax expense | 142 | 165 | 49 | 14 | 207 | ||||||||||||
Net Income | 604 | 581 | 195 | 46 | 734 | ||||||||||||
Dividends on preferred stock | 35 | 19 | 32 | 17 | 33 | ||||||||||||
Net Income Available to Common Shareholders | $569 | $562 | $163 | $29 | $701 |
16
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||
$ in millions, except per share data | As of | % Change | |||||||||||||||
(unaudited) | December | September | December | ||||||||||||||
2020 | 2020 | 2019 | Seq | Yr/Yr | |||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $3,147 | $2,996 | $3,278 | 5% | (4%) | ||||||||||||
Other short-term investments | 33,399 | 31,285 | 1,950 | 7% | 1,613% | ||||||||||||
Available-for-sale debt and other securities(a) | 37,513 | 37,425 | 36,028 | — | 4% | ||||||||||||
Held-to-maturity securities(b) | 11 | 15 | 17 | (27%) | (35%) | ||||||||||||
Trading debt securities | 560 | 704 | 297 | (20%) | 89% | ||||||||||||
Equity securities | 313 | 277 | 564 | 13% | (45%) | ||||||||||||
Loans and leases held for sale | 4,563 | 2,323 | 1,400 | 96% | 226% | ||||||||||||
Portfolio loans and leases: | |||||||||||||||||
Commercial and industrial loans | 49,843 | 51,695 | 50,542 | (4%) | (1%) | ||||||||||||
Commercial mortgage loans | 10,602 | 10,878 | 10,963 | (3%) | (3%) | ||||||||||||
Commercial construction loans | 5,815 | 5,656 | 5,090 | 3% | 14% | ||||||||||||
Commercial leases | 2,915 | 3,021 | 3,363 | (4%) | (13%) | ||||||||||||
Total commercial loans and leases | 69,175 | 71,250 | 69,958 | (3%) | (1%) | ||||||||||||
Residential mortgage loans | 15,928 | 16,158 | 16,724 | (1%) | (5%) | ||||||||||||
Home equity | 5,183 | 5,455 | 6,083 | (5%) | (15%) | ||||||||||||
Indirect secured consumer loans | 13,653 | 12,925 | 11,538 | 6% | 18% | ||||||||||||
Credit card | 2,007 | 2,087 | 2,532 | (4%) | (21%) | ||||||||||||
Other consumer loans | 3,014 | 2,856 | 2,723 | 6% | 11% | ||||||||||||
Total consumer loans | 39,785 | 39,481 | 39,600 | 1% | — | ||||||||||||
Portfolio loans and leases | 108,960 | 110,731 | 109,558 | (2%) | (1%) | ||||||||||||
Allowance for loan and lease losses | (2,453) | (2,574) | (1,202) | (5%) | 104% | ||||||||||||
Portfolio loans and leases, net | 106,507 | 108,157 | 108,356 | (2%) | (2%) | ||||||||||||
Bank premises and equipment | 2,088 | 2,090 | 1,995 | — | 5% | ||||||||||||
Operating lease equipment | 777 | 818 | 848 | (5%) | (8%) | ||||||||||||
Goodwill | 4,258 | 4,261 | 4,252 | — | — | ||||||||||||
Intangible assets | 139 | 157 | 201 | (11%) | (31%) | ||||||||||||
Servicing rights | 656 | 660 | 993 | (1%) | (34%) | ||||||||||||
Other assets | 10,749 | 10,828 | 9,190 | (1%) | 17% | ||||||||||||
Total Assets | $204,680 | $201,996 | $169,369 | 1% | 21% | ||||||||||||
Liabilities | |||||||||||||||||
Deposits: | |||||||||||||||||
Demand | $57,711 | $51,896 | $35,968 | 11% | 60% | ||||||||||||
Interest checking | 47,270 | 49,566 | 40,409 | (5%) | 17% | ||||||||||||
Savings | 18,258 | 17,221 | 14,248 | 6% | 28% | ||||||||||||
Money market | 30,650 | 31,192 | 27,277 | (2%) | 12% | ||||||||||||
Foreign office | 143 | 160 | 221 | (11%) | (35%) | ||||||||||||
Other time | 3,023 | 3,337 | 5,237 | (9%) | (42%) | ||||||||||||
Certificates $100,000 and over | 2,026 | 3,311 | 3,702 | (39%) | (45%) | ||||||||||||
Total deposits | 159,081 | 156,683 | 127,062 | 2% | 25% | ||||||||||||
Federal funds purchased | 300 | 251 | 260 | 20% | 15% | ||||||||||||
Other short-term borrowings | 1,192 | 1,196 | 1,011 | — | 18% | ||||||||||||
Accrued taxes, interest and expenses | 2,614 | 2,500 | 2,441 | 5% | 7% | ||||||||||||
Other liabilities | 3,409 | 3,292 | 2,422 | 4% | 41% | ||||||||||||
Long-term debt | 14,973 | 15,123 | 14,970 | (1%) | — | ||||||||||||
Total Liabilities | 181,569 | 179,045 | 148,166 | 1% | 23% | ||||||||||||
Equity | |||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | — | — | ||||||||||||
Preferred stock | 2,116 | 2,116 | 1,770 | - | 20% | ||||||||||||
Capital surplus | 3,635 | 3,624 | 3,599 | — | 1% | ||||||||||||
Retained earnings | 18,384 | 18,010 | 18,315 | 2% | — | ||||||||||||
Accumulated other comprehensive income | 2,601 | 2,831 | 1,192 | (8%) | 118% | ||||||||||||
Treasury stock | (5,676) | (5,681) | (5,724) | — | (1%) | ||||||||||||
Total Equity | 23,111 | 22,951 | 21,203 | 1% | 9% | ||||||||||||
Total Liabilities and Equity | $204,680 | $201,996 | $169,369 | 1% | 21% | ||||||||||||
(a) Amortized cost | $34,982 | $34,693 | $34,966 | 1% | — | ||||||||||||
(b) Market values | 11 | 15 | 17 | (27%) | (35%) | ||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | |||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | — | — | ||||||||||||
Outstanding, excluding treasury | 712,760 | 712,328 | 708,916 | — | 1 | % | |||||||||||
Treasury | 211,132 | 211,565 | 214,977 | — | (2 | %) |
17
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||
$ in millions, except per share data | As of | ||||||||||||||||
(unaudited) | December | September | June | March | December | ||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $3,147 | $2,996 | $3,221 | $3,282 | $3,278 | ||||||||||||
Other short-term investments | 33,399 | 31,285 | 28,243 | 6,319 | 1,950 | ||||||||||||
Available-for-sale debt and other securities(a) | 37,513 | 37,425 | 38,599 | 38,645 | 36,028 | ||||||||||||
Held-to-maturity securities(b) | 11 | 15 | 16 | 17 | 17 | ||||||||||||
Trading debt securities | 560 | 704 | 526 | 433 | 297 | ||||||||||||
Equity securities | 313 | 277 | 273 | 459 | 564 | ||||||||||||
Loans and leases held for sale | 4,563 | 2,323 | 912 | 1,630 | 1,400 | ||||||||||||
Portfolio loans and leases: | |||||||||||||||||
Commercial and industrial loans | 49,843 | 51,695 | 55,661 | 58,250 | 50,542 | ||||||||||||
Commercial mortgage loans | 10,602 | 10,878 | 11,233 | 11,160 | 10,963 | ||||||||||||
Commercial construction loans | 5,815 | 5,656 | 5,479 | 5,462 | 5,090 | ||||||||||||
Commercial leases | 2,915 | 3,021 | 3,061 | 3,123 | 3,363 | ||||||||||||
Total commercial loans and leases | 69,175 | 71,250 | 75,434 | 77,995 | 69,958 | ||||||||||||
Residential mortgage loans | 15,928 | 16,158 | 16,457 | 16,701 | 16,724 | ||||||||||||
Home equity | 5,183 | 5,455 | 5,681 | 5,963 | 6,083 | ||||||||||||
Indirect secured consumer loans | 13,653 | 12,925 | 12,395 | 12,050 | 11,538 | ||||||||||||
Credit card | 2,007 | 2,087 | 2,211 | 2,417 | 2,532 | ||||||||||||
Other consumer loans | 3,014 | 2,856 | 2,875 | 2,911 | 2,723 | ||||||||||||
Total consumer loans | 39,785 | 39,481 | 39,619 | 40,042 | 39,600 | ||||||||||||
Portfolio loans and leases | 108,960 | 110,731 | 115,053 | 118,037 | 109,558 | ||||||||||||
Allowance for loan and lease losses | (2,453) | (2,574) | (2,696) | (2,348) | (1,202) | ||||||||||||
Portfolio loans and leases, net | 106,507 | 108,157 | 112,357 | 115,689 | 108,356 | ||||||||||||
Bank premises and equipment | 2,088 | 2,090 | 2,053 | 2,009 | 1,995 | ||||||||||||
Operating lease equipment | 777 | 818 | 809 | 819 | 848 | ||||||||||||
Goodwill | 4,258 | 4,261 | 4,261 | 4,261 | 4,252 | ||||||||||||
Intangible assets | 139 | 157 | 171 | 184 | 201 | ||||||||||||
Servicing rights | 656 | 660 | 676 | 685 | 993 | ||||||||||||
Other assets | 10,749 | 10,828 | 10,789 | 10,959 | 9,190 | ||||||||||||
Total Assets | $204,680 | $201,996 | $202,906 | $185,391 | $169,369 | ||||||||||||
Liabilities | |||||||||||||||||
Deposits: | |||||||||||||||||
Demand | $57,711 | $51,896 | $49,359 | $39,533 | $35,968 | ||||||||||||
Interest checking | 47,270 | 49,566 | 51,586 | 44,520 | 40,409 | ||||||||||||
Savings | 18,258 | 17,221 | 16,896 | 15,557 | 14,248 | ||||||||||||
Money market | 30,650 | 31,192 | 30,881 | 27,775 | 27,277 | ||||||||||||
Foreign office | 143 | 160 | 191 | 177 | 221 | ||||||||||||
Other time | 3,023 | 3,337 | 3,913 | 4,683 | 5,237 | ||||||||||||
Certificates $100,000 and over | 2,026 | 3,311 | 4,120 | 2,816 | 3,702 | ||||||||||||
Total deposits | 159,081 | 156,683 | 156,946 | 135,061 | 127,062 | ||||||||||||
Federal funds purchased | 300 | 251 | 262 | 1,625 | 260 | ||||||||||||
Other short-term borrowings | 1,192 | 1,196 | 1,285 | 4,542 | 1,011 | ||||||||||||
Accrued taxes, interest and expenses | 2,614 | 2,500 | 2,582 | 2,432 | 2,441 | ||||||||||||
Other liabilities | 3,409 | 3,292 | 3,169 | 3,576 | 2,422 | ||||||||||||
Long-term debt | 14,973 | 15,123 | 16,327 | 16,282 | 14,970 | ||||||||||||
Total Liabilities | 181,569 | 179,045 | 180,571 | 163,518 | 148,166 | ||||||||||||
Equity | |||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | 2,051 | 2,051 | ||||||||||||
Preferred stock | 2,116 | 2,116 | 1,770 | 1,770 | 1,770 | ||||||||||||
Capital surplus | 3,635 | 3,624 | 3,603 | 3,597 | 3,599 | ||||||||||||
Retained earnings | 18,384 | 18,010 | 17,643 | 17,677 | 18,315 | ||||||||||||
Accumulated other comprehensive income | 2,601 | 2,831 | 2,951 | 2,477 | 1,192 | ||||||||||||
Treasury stock | (5,676) | (5,681) | (5,683) | (5,699) | (5,724) | ||||||||||||
Total Equity | 23,111 | 22,951 | 22,335 | 21,873 | 21,203 | ||||||||||||
Total Liabilities and Equity | $204,680 | $201,996 | $202,906 | $185,391 | $169,369 | ||||||||||||
(a) Amortized cost | $34,982 | $34,693 | $35,780 | $36,428 | $34,966 | ||||||||||||
(b) Market values | 11 | 15 | 16 | 17 | 17 | ||||||||||||
(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 | 712,760 | 712,328 | 712,202 | 711,306 | 708,916 | ||||||||||||
Treasury | 211,132 | 211,565 | 211,690 | 212,586 | 214,977 |
18
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Consolidated Statements of Changes in Equity | |||||||||||||||||||||||
$ in millions | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
For the Three Months Ended | Year to Date | ||||||||||||||||||||||
December | December | December | December | ||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Total Equity, Beginning | $22,951 | $21,404 | $21,203 | $16,250 | |||||||||||||||||||
Net income | 604 | 734 | 1,427 | 2,512 | |||||||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||||||
Change in unrealized gains (losses): | |||||||||||||||||||||||
Available-for-sale debt securities | (153) | (346) | 1,119 | 1,039 | |||||||||||||||||||
Qualifying cash flow hedges | (68) | (96) | 296 | 262 | |||||||||||||||||||
Change in accumulated other comprehensive income related to employee benefit plans | (5) | (1) | (2) | 3 | |||||||||||||||||||
Change in other | (4) | — | (4) | — | |||||||||||||||||||
Comprehensive income | 374 | 291 | 2,836 | 3,816 | |||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||
Common stock | (195) | (173) | (780) | (691) | |||||||||||||||||||
Preferred stock | (35) | (33) | (104) | (93) | |||||||||||||||||||
Issuance of preferred stock | — | — | 346 | 439 | |||||||||||||||||||
Impact of stock transactions under stock compensation plans, net | 16 | 13 | 82 | 72 | |||||||||||||||||||
Shares acquired for treasury | — | (300) | — | (1,763) | |||||||||||||||||||
Impact of acquisition | — | — | — | 3,159 | |||||||||||||||||||
Other | — | 1 | — | 4 | |||||||||||||||||||
Impact of cumulative effect of change in accounting principles | — | — | (472) | 10 | |||||||||||||||||||
Total Equity, Ending | $23,111 | $21,203 | $23,111 | $21,203 | |||||||||||||||||||
19
Fifth Third Bancorp and Subsidiaries | ||||||||||||||||||||||||||
Average Balance Sheet and Yield/Rate Analysis | For the Three Months Ended | |||||||||||||||||||||||||
$ in millions | December | September | December | |||||||||||||||||||||||
(unaudited) | 2020 | 2020 | 2019 | |||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||
Balance | Yield/Rate | Balance | Yield/Rate | Balance | Yield/Rate | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||
Loans and leases: | ||||||||||||||||||||||||||
Commercial and industrial loans(a) | $50,437 | 3.50 | % | $54,056 | 3.35 | % | $50,980 | 4.32 | % | |||||||||||||||||
Commercial mortgage loans(a) | 10,731 | 3.17 | % | 11,071 | 3.12 | % | 10,832 | 4.48 | % | |||||||||||||||||
Commercial construction loans(a) | 5,820 | 3.19 | % | 5,534 | 3.18 | % | 5,334 | 4.88 | % | |||||||||||||||||
Commercial leases(a) | 2,932 | 3.33 | % | 2,966 | 3.44 | % | 3,384 | 3.30 | % | |||||||||||||||||
Total commercial loans and leases | 69,920 | 3.42 | % | 73,627 | 3.30 | % | 70,530 | 4.34 | % | |||||||||||||||||
Residential mortgage loans | 18,065 | 3.33 | % | 17,814 | 3.48 | % | 17,853 | 3.57 | % | |||||||||||||||||
Home equity | 5,315 | 3.64 | % | 5,581 | 3.59 | % | 6,147 | 4.80 | % | |||||||||||||||||
Indirect secured consumer loans | 13,272 | 3.70 | % | 12,599 | 3.93 | % | 11,281 | 4.16 | % | |||||||||||||||||
Credit card | 2,042 | 11.75 | % | 2,134 | 11.37 | % | 2,496 | 12.37 | % | |||||||||||||||||
Other consumer loans | 2,850 | 6.38 | % | 2,858 | 6.46 | % | 2,679 | 7.75 | % | |||||||||||||||||
Total consumer loans | 41,544 | 4.11 | % | 40,986 | 4.25 | % | 40,456 | 4.74 | % | |||||||||||||||||
Total loans and leases | 111,464 | 3.68 | % | 114,613 | 3.64 | % | 110,986 | 4.49 | % | |||||||||||||||||
Securities: | ||||||||||||||||||||||||||
Taxable securities | 35,506 | 3.10 | % | 36,147 | 3.01 | % | 36,255 | 3.27 | % | |||||||||||||||||
Tax exempt securities(a) | 459 | 2.21 | % | 153 | 2.99 | % | 57 | 4.44 | % | |||||||||||||||||
Other short-term investments | 34,989 | 0.10 | % | 29,791 | 0.10 | % | 2,014 | 1.65 | % | |||||||||||||||||
Total interest-earning assets | 182,418 | 2.87 | % | 180,704 | 2.93 | % | 149,312 | 4.15 | % | |||||||||||||||||
Cash and due from banks | 2,969 | 2,944 | 3,063 | |||||||||||||||||||||||
Other assets | 21,116 | 21,583 | 18,096 | |||||||||||||||||||||||
Allowance for loan and lease losses | (2,573) | (2,698) | (1,144) | |||||||||||||||||||||||
Total Assets | $203,930 | $202,533 | $169,327 | |||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Interest checking deposits | $47,664 | 0.08 | % | $49,800 | 0.10 | % | $38,628 | 0.88 | % | |||||||||||||||||
Savings deposits | 17,658 | 0.03 | % | 17,013 | 0.04 | % | 14,274 | 0.14 | % | |||||||||||||||||
Money market deposits | 31,205 | 0.06 | % | 31,151 | 0.14 | % | 27,429 | 0.89 | % | |||||||||||||||||
Foreign office deposits | 161 | 0.07 | % | 189 | 0.06 | % | 244 | 0.95 | % | |||||||||||||||||
Other time deposits | 3,273 | 0.58 | % | 3,711 | 0.95 | % | 5,507 | 1.75 | % | |||||||||||||||||
Total interest-bearing core deposits | 99,961 | 0.08 | % | 101,864 | 0.13 | % | 86,082 | 0.82 | % | |||||||||||||||||
Certificates $100,000 and over | 2,300 | 1.17 | % | 3,633 | 1.26 | % | 4,072 | 2.14 | % | |||||||||||||||||
Other deposits | — | — | — | — | 252 | 1.75 | % | |||||||||||||||||||
Federal funds purchased | 307 | 0.18 | % | 273 | 0.20 | % | 1,174 | 1.74 | % | |||||||||||||||||
Other short-term borrowings | 1,091 | 0.35 | % | 1,626 | 1.28 | % | 1,133 | 1.89 | % | |||||||||||||||||
Long-term debt | 15,018 | 2.76 | % | 16,230 | 2.62 | % | 14,860 | 3.22 | % | |||||||||||||||||
Total interest-bearing liabilities | 118,677 | 0.45 | % | 123,626 | 0.51 | % | 107,573 | 1.22 | % | |||||||||||||||||
Demand deposits | 56,365 | 50,414 | 35,710 | |||||||||||||||||||||||
Other liabilities | 5,762 | 5,541 | 4,740 | |||||||||||||||||||||||
Total Liabilities | 180,804 | 179,581 | 148,023 | |||||||||||||||||||||||
Total Equity | 23,126 | 22,952 | 21,304 | |||||||||||||||||||||||
Total Liabilities and Equity | $203,930 | $202,533 | $169,327 | |||||||||||||||||||||||
Ratios: | ||||||||||||||||||||||||||
Net interest margin (FTE)(b) | 2.58 | % | 2.58 | % | 3.27 | % | ||||||||||||||||||||
Net interest rate spread (FTE)(b) | 2.42 | % | 2.42 | % | 2.93 | % | ||||||||||||||||||||
Interest-bearing liabilities to interest-earning assets | 65.06 | % | 68.41 | % | 72.05 | % | ||||||||||||||||||||
(a) Average Yield/Rate of these assets are presented on an FTE basis. | ||||||||||||||||||||||||||
(b) Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 26. |
20
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Average Balance Sheet and Yield/Rate Analysis | Year to Date | ||||||||||||||||
$ in millions | December | December | |||||||||||||||
(unaudited) | 2020 | 2019 | |||||||||||||||
Average | Average | Average | Average | ||||||||||||||
Balance | Yield/Rate | Balance | Yield/Rate | ||||||||||||||
Assets | |||||||||||||||||
Interest-earning assets: | |||||||||||||||||
Loans and leases: | |||||||||||||||||
Commercial and industrial loans(a) | $53,814 | 3.63 | % | $50,168 | 4.61 | % | |||||||||||
Commercial mortgage loans(a) | 11,011 | 3.54 | % | 9,905 | 4.81 | % | |||||||||||
Commercial construction loans(a) | 5,509 | 3.65 | % | 5,174 | 5.37 | % | |||||||||||
Commercial leases(a) | 3,038 | 3.43 | % | 3,578 | 3.31 | % | |||||||||||
Total commercial loans and leases | 73,372 | 3.61 | % | 68,825 | 4.63 | % | |||||||||||
Residential mortgage loans | 17,828 | 3.49 | % | 17,337 | 3.66 | % | |||||||||||
Home equity | 5,679 | 3.90 | % | 6,286 | 5.16 | % | |||||||||||
Indirect secured consumer loans | 12,454 | 3.93 | % | 10,345 | 4.08 | % | |||||||||||
Credit card | 2,230 | 11.64 | % | 2,437 | 12.49 | % | |||||||||||
Other consumer loans | 2,848 | 6.76 | % | 2,564 | 7.63 | % | |||||||||||
Total consumer loans | 41,039 | 4.35 | % | 38,969 | 4.83 | % | |||||||||||
Total loans and leases | 114,411 | 3.88 | % | 107,794 | 4.70 | % | |||||||||||
Securities: | |||||||||||||||||
Taxable securities | 36,109 | 3.08 | % | 35,429 | 3.28 | % | |||||||||||
Tax exempt securities(a) | 233 | 2.61 | % | 41 | 3.97 | % | |||||||||||
Other short-term investments | 21,935 | 0.13 | % | 2,140 | 1.91 | % | |||||||||||
Total interest-earning assets | 172,688 | 3.23 | % | 145,404 | 4.31 | % | |||||||||||
Cash and due from banks | 2,978 | 2,748 | |||||||||||||||
Other assets | 20,933 | 16,903 | |||||||||||||||
Allowance for loan and lease losses | (2,369) | (1,119) | |||||||||||||||
Total Assets | $194,230 | $163,936 | |||||||||||||||
Liabilities | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||
Interest checking deposits | $46,890 | 0.27 | % | $36,658 | 1.08 | % | |||||||||||
Savings deposits | 16,440 | 0.06 | % | 14,041 | 0.16 | % | |||||||||||
Money market deposits | 29,879 | 0.29 | % | 25,879 | 1.05 | % | |||||||||||
Foreign office deposits | 185 | 0.21 | % | 209 | 0.63 | % | |||||||||||
Other time deposits | 4,118 | 1.14 | % | 5,470 | 1.79 | % | |||||||||||
Total interest-bearing core deposits | 97,512 | 0.28 | % | 82,257 | 0.96 | % | |||||||||||
Certificates $100,000 and over | 3,337 | 1.49 | % | 4,504 | 2.14 | % | |||||||||||
Other deposits | 71 | 0.76 | % | 265 | 2.27 | % | |||||||||||
Federal funds purchased | 385 | 0.58 | % | 1,267 | 2.26 | % | |||||||||||
Other short-term borrowings | 1,709 | 0.81 | % | 1,046 | 2.67 | % | |||||||||||
Long-term debt | 16,004 | 2.82 | % | 15,369 | 3.30 | % | |||||||||||
Total interest-bearing liabilities | 119,018 | 0.66 | % | 104,708 | 1.39 | % | |||||||||||
Demand deposits | 47,111 | 34,343 | |||||||||||||||
Other liabilities | 5,546 | 4,897 | |||||||||||||||
Total Liabilities | 171,675 | 143,948 | |||||||||||||||
Total Equity | 22,555 | 19,988 | |||||||||||||||
Total Liabilities and Equity | $194,230 | $163,936 | |||||||||||||||
Ratios: | |||||||||||||||||
Net interest margin (FTE)(b) | 2.78 | % | 3.31 | % | |||||||||||||
Net interest rate spread (FTE)(b) | 2.57 | % | 2.92 | % | |||||||||||||
Interest-bearing liabilities to interest-earning assets | 68.92 | % | 72.01 | % | |||||||||||||
(a) Average Yield/Rate of these assets are presented on an FTE basis. | |||||||||||||||||
(b) Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 26. |
21
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Summary of Loans and Leases | |||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||
(unaudited) | December | September | June | March | December | ||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||
Average Portfolio Loans and Leases | |||||||||||||||||
Commercial loans and leases: | |||||||||||||||||
Commercial and industrial loans | $50,387 | $54,004 | $59,040 | $51,586 | $50,938 | ||||||||||||
Commercial mortgage loans | 10,727 | 11,069 | 11,222 | 11,019 | 10,831 | ||||||||||||
Commercial construction loans | 5,820 | 5,534 | 5,548 | 5,132 | 5,334 | ||||||||||||
Commercial leases | 2,932 | 2,966 | 3,056 | 3,201 | 3,384 | ||||||||||||
Total commercial loans and leases | 69,866 | 73,573 | 78,866 | 70,938 | 70,487 | ||||||||||||
Consumer loans: | |||||||||||||||||
Residential mortgage loans | 16,016 | 16,618 | 16,561 | 16,732 | 16,697 | ||||||||||||
Home equity | 5,315 | 5,581 | 5,820 | 6,006 | 6,147 | ||||||||||||
Indirect secured consumer loans | 13,272 | 12,599 | 12,124 | 11,809 | 11,281 | ||||||||||||
Credit card | 2,042 | 2,134 | 2,248 | 2,498 | 2,496 | ||||||||||||
Other consumer loans | 2,851 | 2,857 | 2,887 | 2,796 | 2,679 | ||||||||||||
Total consumer loans | 39,496 | 39,789 | 39,640 | 39,841 | 39,300 | ||||||||||||
Total average portfolio loans and leases | $109,362 | $113,362 | $118,506 | $110,779 | $109,787 | ||||||||||||
Average Loans and Leases Held for Sale | |||||||||||||||||
Average commercial loans and leases held for sale | $54 | $55 | $68 | $108 | $43 | ||||||||||||
Average consumer loans held for sale | 2,048 | 1,196 | 844 | 1,293 | 1,156 | ||||||||||||
Average loans and leases held for sale | $2,102 | $1,251 | $912 | $1,401 | $1,199 | ||||||||||||
End of Period Portfolio Loans and Leases | |||||||||||||||||
Commercial loans and leases: | |||||||||||||||||
Commercial and industrial loans | $49,843 | $51,695 | $55,661 | $58,250 | $50,542 | ||||||||||||
Commercial mortgage loans | 10,602 | 10,878 | 11,233 | 11,160 | 10,963 | ||||||||||||
Commercial construction loans | 5,815 | 5,656 | 5,479 | 5,462 | 5,090 | ||||||||||||
Commercial leases | 2,915 | 3,021 | 3,061 | 3,123 | 3,363 | ||||||||||||
Total commercial loans and leases | 69,175 | 71,250 | 75,434 | 77,995 | 69,958 | ||||||||||||
Consumer loans: | |||||||||||||||||
Residential mortgage loans | 15,928 | 16,158 | 16,457 | 16,701 | 16,724 | ||||||||||||
Home equity | 5,183 | 5,455 | 5,681 | 5,963 | 6,083 | ||||||||||||
Indirect secured consumer loans | 13,653 | 12,925 | 12,395 | 12,050 | 11,538 | ||||||||||||
Credit card | 2,007 | 2,087 | 2,211 | 2,417 | 2,532 | ||||||||||||
Other consumer loans | 3,014 | 2,856 | 2,875 | 2,911 | 2,723 | ||||||||||||
Total consumer loans | 39,785 | 39,481 | 39,619 | 40,042 | 39,600 | ||||||||||||
Total portfolio loans and leases | $108,960 | $110,731 | $115,053 | $118,037 | $109,558 | ||||||||||||
End of Period Loans and Leases Held for Sale | |||||||||||||||||
Commercial loans and leases held for sale | $98 | $59 | $72 | $65 | $136 | ||||||||||||
Consumer loans held for sale | 4,465 | 2,264 | 840 | 1,565 | 1,264 | ||||||||||||
Loans and leases held for sale | $4,563 | $2,323 | $912 | $1,630 | $1,400 | ||||||||||||
Operating lease equipment | $777 | $818 | $809 | $819 | $848 | ||||||||||||
Loans and Leases Serviced for Others(a) | |||||||||||||||||
Commercial and industrial loans | $979 | $903 | $967 | $947 | $922 | ||||||||||||
Commercial mortgage loans | 653 | 585 | 592 | 545 | 454 | ||||||||||||
Commercial construction loans | 601 | 623 | 536 | 462 | 397 | ||||||||||||
Commercial leases | 569 | 584 | 582 | 302 | 322 | ||||||||||||
Residential mortgage loans | 68,800 | 73,521 | 78,804 | 81,901 | 80,734 | ||||||||||||
Other consumer loans | 50 | 50 | 50 | 50 | 50 | ||||||||||||
Total loans and leases serviced for others | 71,652 | 76,266 | 81,531 | 84,207 | 82,879 | ||||||||||||
Total loans and leases serviced | $185,952 | $190,138 | $198,305 | $204,693 | $194,685 | ||||||||||||
(a) Fifth Third sells certain loans and leases and obtains servicing responsibilities. |
22
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Regulatory Capital | |||||||||||||||||||||||
$ in millions | As of | ||||||||||||||||||||||
(unaudited) | December | September | June | March | December | ||||||||||||||||||
2020(a) | 2020 | 2020 | 2020 | 2019 | |||||||||||||||||||
Regulatory Capital | |||||||||||||||||||||||
CET1 capital | $14,679 | $14,307 | $13,935 | $13,840 | $13,847 | ||||||||||||||||||
Additional tier I capital | 2,116 | 2,115 | 1,769 | 1,769 | 1,769 | ||||||||||||||||||
Tier I capital | 16,795 | 16,422 | 15,704 | 15,609 | 15,616 | ||||||||||||||||||
Tier II capital | 4,614 | 4,645 | 4,703 | 4,472 | 4,045 | ||||||||||||||||||
Total regulatory capital | $21,409 | $21,067 | $20,407 | $20,081 | $19,661 | ||||||||||||||||||
Risk-weighted assets(b) | $141,991 | $141,083 | $143,322 | $147,756 | $142,065 | ||||||||||||||||||
Ratios | |||||||||||||||||||||||
Average total Bancorp shareholders' equity as a percent of average assets | 11.34 | % | 11.33 | % | 11.30 | % | 12.63 | % | 12.58 | % | |||||||||||||
Regulatory Capital Ratios | |||||||||||||||||||||||
Fifth Third Bancorp | |||||||||||||||||||||||
CET1 capital(b) | 10.34 | % | 10.14 | % | 9.72 | % | 9.37 | % | 9.75 | % | |||||||||||||
Tier I risk-based capital(b) | 11.83 | % | 11.64 | % | 10.96 | % | 10.56 | % | 10.99 | % | |||||||||||||
Total risk-based capital(b) | 15.08 | % | 14.93 | % | 14.24 | % | 13.59 | % | 13.84 | % | |||||||||||||
Tier I leverage | 8.49 | % | 8.37 | % | 8.16 | % | 9.37 | % | 9.54 | % | |||||||||||||
Fifth Third Bank | |||||||||||||||||||||||
Tier I risk-based capital(b) | 12.27 | % | 12.25 | % | 11.76 | % | 11.36 | % | 11.86 | % | |||||||||||||
Total risk-based capital(b) | 14.17 | % | 14.14 | % | 13.65 | % | 13.17 | % | 13.46 | % | |||||||||||||
Tier I leverage | 8.85 | % | 8.85 | % | 8.80 | % | 10.16 | % | 10.36 | % |
(a)Current period regulatory capital data and ratios are estimated.
(b)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
23
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Summary of Credit Loss Experience | |||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||
(unaudited) | December | September | June | March | December | ||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||
Average portfolio loans and leases: | |||||||||||||||||
Commercial and industrial loans | $50,387 | $54,004 | $59,040 | $51,586 | $50,938 | ||||||||||||
Commercial mortgage loans | 10,727 | 11,069 | 11,222 | 11,019 | 10,831 | ||||||||||||
Commercial construction loans | 5,820 | 5,534 | 5,548 | 5,132 | 5,334 | ||||||||||||
Commercial leases | 2,932 | 2,966 | 3,056 | 3,201 | 3,384 | ||||||||||||
Total commercial loans and leases | 69,866 | 73,573 | 78,866 | 70,938 | 70,487 | ||||||||||||
Residential mortgage loans | 16,016 | 16,618 | 16,561 | 16,732 | 16,697 | ||||||||||||
Home equity | 5,315 | 5,581 | 5,820 | 6,006 | 6,147 | ||||||||||||
Indirect secured consumer loans | 13,272 | 12,599 | 12,124 | 11,809 | 11,281 | ||||||||||||
Credit card | 2,042 | 2,134 | 2,248 | 2,498 | 2,496 | ||||||||||||
Other consumer loans | 2,851 | 2,857 | 2,887 | 2,796 | 2,679 | ||||||||||||
Total consumer loans | 39,496 | 39,789 | 39,640 | 39,841 | 39,300 | ||||||||||||
Total average portfolio loans and leases | $109,362 | $113,362 | $118,506 | $110,779 | $109,787 | ||||||||||||
Losses charged-off: | |||||||||||||||||
Commercial and industrial loans | ($44) | ($45) | ($68) | ($54) | ($40) | ||||||||||||
Commercial mortgage loans | (31) | (11) | (2) | (2) | — | ||||||||||||
Commercial leases | — | (10) | (11) | (5) | — | ||||||||||||
Total commercial loans and leases | (75) | (66) | (81) | (61) | (40) | ||||||||||||
Residential mortgage loans | (4) | (1) | (2) | (2) | (4) | ||||||||||||
Home equity | (3) | (4) | (3) | (5) | (12) | ||||||||||||
Indirect secured consumer loans | (19) | (11) | (15) | (21) | (24) | ||||||||||||
Credit card | (31) | (34) | (40) | (42) | (40) | ||||||||||||
Other consumer loans | (22) | (19) | (22) | (28) | (32) | ||||||||||||
Total consumer loans | (79) | (69) | (82) | (98) | (112) | ||||||||||||
Total losses charged-off | ($154) | ($135) | ($163) | ($159) | ($152) | ||||||||||||
Recoveries of losses previously charged-off: | |||||||||||||||||
Commercial and industrial loans | $3 | $3 | $3 | $4 | $4 | ||||||||||||
Commercial mortgage loans | 1 | — | — | — | — | ||||||||||||
Commercial leases | 1 | 2 | — | — | — | ||||||||||||
Total commercial loans and leases | 5 | 5 | 3 | 4 | 4 | ||||||||||||
Residential mortgage loans | 2 | 2 | 1 | 1 | 1 | ||||||||||||
Home equity | 3 | 3 | 2 | 2 | 3 | ||||||||||||
Indirect secured consumer loans | 10 | 8 | 8 | 9 | 8 | ||||||||||||
Credit card | 6 | 5 | 6 | 6 | 7 | ||||||||||||
Other consumer loans | 10 | 11 | 13 | 15 | 16 | ||||||||||||
Total consumer loans | 31 | 29 | 30 | 33 | 35 | ||||||||||||
Total recoveries of losses previously charged-off | $36 | $34 | $33 | $37 | $39 | ||||||||||||
Net losses charged-off: | |||||||||||||||||
Commercial and industrial loans | ($41) | ($42) | ($65) | ($50) | ($36) | ||||||||||||
Commercial mortgage loans | (30) | (11) | (2) | (2) | — | ||||||||||||
Commercial leases | 1 | (8) | (11) | (5) | — | ||||||||||||
Total commercial loans and leases | (70) | (61) | (78) | (57) | (36) | ||||||||||||
Residential mortgage loans | (2) | 1 | (1) | (1) | (3) | ||||||||||||
Home equity | — | (1) | (1) | (3) | (9) | ||||||||||||
Indirect secured consumer loans | (9) | (3) | (7) | (12) | (16) | ||||||||||||
Credit card | (25) | (29) | (34) | (36) | (33) | ||||||||||||
Other consumer loans | (12) | (8) | (9) | (13) | (16) | ||||||||||||
Total consumer loans | (48) | (40) | (52) | (65) | (77) | ||||||||||||
Total net losses charged-off | ($118) | ($101) | ($130) | ($122) | ($113) | ||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized): | |||||||||||||||||
Commercial and industrial loans | 0.33 | % | 0.31 | % | 0.45 | % | 0.39 | % | 0.28 | % | |||||||
Commercial mortgage loans | 1.13 | % | 0.39 | % | 0.07 | % | 0.06 | % | (0.02 | %) | |||||||
Commercial leases | (0.15 | %) | 1.09 | % | 1.47 | % | 0.60 | % | 0.06 | % | |||||||
Total commercial loans and leases | 0.40 | % | 0.33 | % | 0.40 | % | 0.32 | % | 0.20 | % | |||||||
Residential mortgage loans | 0.04 | % | (0.02 | %) | 0.02 | % | 0.02 | % | 0.07 | % | |||||||
Home equity | — | 0.07 | % | 0.07 | % | 0.17 | % | 0.59 | % | ||||||||
Indirect secured consumer loans | 0.28 | % | 0.11 | % | 0.24 | % | 0.43 | % | 0.56 | % | |||||||
Credit card | 4.95 | % | 5.44 | % | 6.17 | % | 5.87 | % | 5.21 | % | |||||||
Other consumer loans | 1.50 | % | 1.05 | % | 1.17 | % | 1.87 | % | 2.51 | % | |||||||
Total consumer loans | 0.47 | % | 0.40 | % | 0.52 | % | 0.66 | % | 0.78 | % | |||||||
Total net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | 0.41 | % |
24
Fifth Third Bancorp and Subsidiaries | ||||||||||||||||||||||||||
Asset Quality | ||||||||||||||||||||||||||
$ in millions | For the Three Months Ended | |||||||||||||||||||||||||
(unaudited) | December | September | June | March | December | |||||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||||
Allowance for Credit Losses | ||||||||||||||||||||||||||
Allowance for loan and lease losses, beginning | $2,574 | $2,696 | $2,348 | $1,202 | $1,143 | |||||||||||||||||||||
Impact of CECL adoption | — | — | — | 643 | — | |||||||||||||||||||||
Total net losses charged-off | (118) | (101) | (130) | (122) | (113) | |||||||||||||||||||||
(Benefit from) provision for loan and lease losses | (3) | (21) | 478 | 625 | 172 | |||||||||||||||||||||
Allowance for loan and lease losses, ending | $2,453 | $2,574 | $2,696 | $2,348 | $1,202 | |||||||||||||||||||||
Reserve for unfunded commitments, beginning | $182 | $176 | $169 | $144 | $154 | |||||||||||||||||||||
Impact of CECL adoption | — | — | — | 10 | — | |||||||||||||||||||||
(Benefit from) provision for the reserve for unfunded commitments | (10) | 6 | 7 | 15 | (10) | |||||||||||||||||||||
Reserve for unfunded commitments, ending | $172 | $182 | $176 | $169 | $144 | |||||||||||||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||||||||
Allowance for loan and lease losses | $2,453 | $2,574 | $2,696 | $2,348 | $1,202 | |||||||||||||||||||||
Reserve for unfunded commitments | 172 | 182 | 176 | 169 | 144 | |||||||||||||||||||||
Total allowance for credit losses | $2,625 | $2,756 | $2,872 | $2,517 | $1,346 | |||||||||||||||||||||
As of | ||||||||||||||||||||||||||
December | September | June | March | December | ||||||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||||
Nonperforming Assets and Delinquent Loans | ||||||||||||||||||||||||||
Nonaccrual portfolio loans and leases: | ||||||||||||||||||||||||||
Commercial and industrial loans | $230 | $266 | $94 | $100 | $118 | |||||||||||||||||||||
Commercial mortgage loans | 82 | 99 | 89 | 83 | 21 | |||||||||||||||||||||
Commercial construction loans | — | — | — | 1 | 1 | |||||||||||||||||||||
Commercial leases | 7 | 16 | 22 | 18 | 26 | |||||||||||||||||||||
Residential mortgage loans | 25 | 30 | 14 | 12 | 13 | |||||||||||||||||||||
Home equity | 52 | 50 | 52 | 54 | 54 | |||||||||||||||||||||
Indirect secured consumer loans | 9 | 8 | 5 | 1 | 1 | |||||||||||||||||||||
Other consumer loans | 2 | 3 | 2 | 2 | 2 | |||||||||||||||||||||
Total nonaccrual portfolio loans and leases (excludes restructured loans) | 407 | 472 | 278 | 271 | 236 | |||||||||||||||||||||
Nonaccrual restructured portfolio commercial loans and leases | 319 | 307 | 282 | 243 | 231 | |||||||||||||||||||||
Nonaccrual restructured portfolio consumer loans and leases(c) | 108 | (d) | 112 | (d) | 140 | 133 | 151 | |||||||||||||||||||
Total nonaccrual portfolio loans and leases | 834 | 891 | 700 | 647 | 618 | |||||||||||||||||||||
Repossessed property | 9 | 7 | 4 | 10 | 10 | |||||||||||||||||||||
OREO | 21 | 33 | 43 | 52 | 52 | |||||||||||||||||||||
Total nonperforming portfolio loans and leases and OREO | 864 | 931 | 747 | 709 | 680 | |||||||||||||||||||||
Nonaccrual loans held for sale | 5 | 10 | 1 | — | — | |||||||||||||||||||||
Nonaccrual restructured loans held for sale | 1 | 1 | 1 | 1 | 7 | |||||||||||||||||||||
Total nonperforming assets | $870 | $942 | $749 | $710 | $687 | |||||||||||||||||||||
Restructured portfolio consumer loans and leases (accrual) | $796 | (e) | $818 | (e) | $963 | $976 | $965 | |||||||||||||||||||
Restructured portfolio commercial loans and leases (accrual) | $92 | $123 | $119 | $63 | $23 | |||||||||||||||||||||
Loans and leases 90 days past due (accrual): | ||||||||||||||||||||||||||
Commercial and industrial loans | $39 | $4 | $10 | $13 | $11 | |||||||||||||||||||||
Commercial mortgage loans | 8 | 26 | 23 | 20 | 15 | |||||||||||||||||||||
Commercial leases | 1 | 2 | — | 10 | — | |||||||||||||||||||||
Total commercial loans and leases | 48 | 32 | 33 | 43 | 26 | |||||||||||||||||||||
Residential mortgage loans(c) | 70 | 67 | 54 | 54 | 50 | |||||||||||||||||||||
Home equity | 2 | 2 | — | — | 1 | |||||||||||||||||||||
Indirect secured consumer loans | 10 | 10 | 12 | 11 | 10 | |||||||||||||||||||||
Credit card | 31 | 27 | 36 | 42 | 42 | |||||||||||||||||||||
Other consumer loans | 2 | 1 | 1 | 1 | 1 | |||||||||||||||||||||
Total consumer loans | 115 | 107 | 103 | 108 | 104 | |||||||||||||||||||||
Total loans and leases 90 days past due (accrual)(b) | $163 | $139 | $136 | $151 | $130 | |||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | 0.41 | % | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||
As a percent of portfolio loans and leases | 2.41 | % | 2.49 | % | 2.50 | % | 2.13 | % | 1.23 | % | ||||||||||||||||
As a percent of nonperforming portfolio loans and leases(a) | 315 | % | 309 | % | 410 | % | 389 | % | 218 | % | ||||||||||||||||
As a percent of nonperforming portfolio assets(a) | 304 | % | 296 | % | 385 | % | 355 | % | 198 | % | ||||||||||||||||
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(a) | 0.77 | % | 0.80 | % | 0.61 | % | 0.55 | % | 0.56 | % | ||||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(a) | 0.79 | % | 0.84 | % | 0.65 | % | 0.60 | % | 0.62 | % | ||||||||||||||||
Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property | 0.77 | % | 0.83 | % | 0.65 | % | 0.59 | % | 0.62 | % | ||||||||||||||||
(a) Excludes nonaccrual loans held for sale. | ||||||||||||||||||||||||||
(b) Excludes loans held for sale. | ||||||||||||||||||||||||||
(c) Excludes government guaranteed residential mortgage loans. | ||||||||||||||||||||||||||
(d) Excludes approximately $3 and $12 of residential mortgage loans that were modified prior to repurchase for the three months ended December 31, 2020 and September 30, 2020, respectively. | ||||||||||||||||||||||||||
(e) Excludes approximately $142 and $125 of residential mortgage loans that were modified prior to repurchase for the three months ended December 31, 2020 and September 30, 2020, respectively. |
25
Use of Non-GAAP Financial Measures
In addition to GAAP measures, management considers various non-GAAP measures when evaluating the performance of the business, including: “net interest income (FTE),” “interest income (FTE),” “net interest margin (FTE),” “net interest rate spread (FTE),” “income before income taxes (FTE),” “tangible net income available to common shareholders,” “average tangible common equity,” “return on average tangible common equity,” “tangible common equity (excluding AOCI),” “tangible common equity (including AOCI),” “tangible equity,” “tangible book value per share,” “adjusted noninterest income,” “noninterest income excluding certain items,” “adjusted noninterest expense,” “noninterest expense excluding certain items,” “pre-provision net revenue,” “adjusted efficiency ratio,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” “adjusted return on average tangible common equity, excluding accumulated other comprehensive income,” “adjusted net interest margin,” “adjusted pre-provision net revenue,” “adjusted return on average assets,” “efficiency ratio (FTE),” “total revenue (FTE),” "noninterest income as a percent of total revenue", and certain ratios derived from these measures. The Bancorp believes these non-GAAP measures provide useful information to investors because these are among the measures used by the Fifth Third management team to evaluate operating performance and to make day-to-day operating decisions.
The FTE basis adjusts for the tax-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 and net interest margin as it provides a relevant comparison between taxable and non-taxable amounts.
The Bancorp believes tangible net income available to common shareholders, average tangible common equity, tangible common equity (excluding AOCI), tangible common equity (including AOCI), tangible equity, tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of the business without the impacts of intangible items, whether acquired or created internally, in a manner comparable to other companies in the industry who present similar measures.
The Bancorp believes noninterest income, noninterest expense, net interest income, net interest margin, pre-provision net revenue, efficiency ratio, noninterest income as a percent of total revenue, return on average common equity, return on average tangible common equity, and return on average assets are important measures that adjust for significant, unusual, or large transactions that may occur in a reporting period which management does not consider indicative of ongoing financial performance and enhances comparability of results with prior periods.
The Bancorp believes noninterest income excluding certain items and noninterest expense excluding certain items are important measures that adjust for certain components that are prone to significant period-to-period changes in order to facilitate the explanation of variances in the noninterest income and noninterest expense line items.
Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding AOCI), in addition to capital ratios defined by U.S. banking agencies. These calculations are intended to complement the capital ratios defined by 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 be non-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding AOCI on certain assets and liabilities enables investors and others to assess the Bancorp’s use of equity without the effects of changes in AOCI, some of which are uncertain; providing the tangible common equity ratio including AOCI enables investors and others to assess the Bancorp’s use of equity if components of AOCI, such as unrealized gains or losses, were to be monetized.
Please note that although non-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 reconciliations of all historical non-GAAP measures used in this release to the most directly comparable GAAP measures, beginning on the following page.
26
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Non-GAAP Reconciliation | |||||||||||||||||||||||
$ and shares in millions | As of and For the Three Months Ended | ||||||||||||||||||||||
(unaudited) | December | September | June | March | December | ||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||||||||||
Net interest income | $1,182 | $1,170 | $1,200 | $1,229 | $1,228 | ||||||||||||||||||
Add: Taxable equivalent adjustment | 3 | 3 | 3 | 4 | 4 | ||||||||||||||||||
Net interest income (FTE) (a) | 1,185 | 1,173 | 1,203 | 1,233 | 1,232 | ||||||||||||||||||
Net interest income (annualized) (b) | 4,702 | 4,655 | 4,826 | 4,943 | 4,872 | ||||||||||||||||||
Net interest income (FTE) (annualized) (c) | 4,714 | 4,667 | 4,838 | 4,959 | 4,888 | ||||||||||||||||||
Interest income | 1,315 | 1,329 | 1,403 | 1,525 | 1,559 | ||||||||||||||||||
Add: Taxable equivalent adjustment | 3 | 3 | 3 | 4 | 4 | ||||||||||||||||||
Interest income (FTE) | 1,318 | 1,332 | 1,406 | 1,529 | 1,563 | ||||||||||||||||||
Interest income (FTE) (annualized) (d) | 5,243 | 5,299 | 5,655 | 6,150 | 6,201 | ||||||||||||||||||
Interest expense (annualized) (e) | 529 | 633 | 816 | 1,191 | 1,313 | ||||||||||||||||||
Average interest-earning assets (f) | 182,418 | 180,704 | 176,224 | 151,213 | 149,312 | ||||||||||||||||||
Average interest-bearing liabilities (g) | 118,677 | 123,626 | 124,478 | 109,244 | 107,573 | ||||||||||||||||||
Net interest margin (b) / (f) | 2.58 | % | 2.58 | % | 2.74 | % | 3.27 | % | 3.26 | % | |||||||||||||
Net interest margin (FTE) (c) / (f) | 2.58 | % | 2.58 | % | 2.75 | % | 3.28 | % | 3.27 | % | |||||||||||||
Net interest rate spread (FTE) (d) / (f) - (e) / (g) | 2.42 | % | 2.42 | % | 2.55 | % | 2.98 | % | 2.93 | % | |||||||||||||
Income before income taxes | $746 | $746 | $244 | $60 | $941 | ||||||||||||||||||
Add: Taxable equivalent adjustment | 3 | 3 | 3 | 4 | 4 | ||||||||||||||||||
Income before income taxes (FTE) | $749 | $749 | $247 | $64 | $945 | ||||||||||||||||||
Net income available to common shareholders | $569 | $562 | $163 | $29 | $701 | ||||||||||||||||||
Add: Intangible amortization, net of tax | 9 | 9 | 9 | 10 | 11 | ||||||||||||||||||
Tangible net income available to common shareholders (h) | 578 | 571 | 172 | 39 | 712 | ||||||||||||||||||
Tangible net income available to common shareholders (annualized) (i) | 2,299 | 2,272 | 692 | 157 | 2,825 | ||||||||||||||||||
Average Bancorp shareholders' equity | 23,126 | 22,952 | 22,421 | 21,713 | 21,304 | ||||||||||||||||||
Less: | Average preferred stock | (2,116) | (2,007) | (1,770) | (1,770) | (1,770) | |||||||||||||||||
Average goodwill | (4,261) | (4,261) | (4,261) | (4,251) | (4,260) | ||||||||||||||||||
Average intangible assets | (151) | (164) | (178) | (193) | (194) | ||||||||||||||||||
Average tangible common equity, including AOCI (j) | 16,598 | 16,520 | 16,212 | 15,499 | 15,080 | ||||||||||||||||||
Less: | Average AOCI | (2,623) | (2,919) | (2,702) | (1,825) | (1,416) | |||||||||||||||||
Average tangible common equity, excluding AOCI (k) | 13,975 | 13,601 | 13,510 | 13,674 | 13,664 | ||||||||||||||||||
Total Bancorp shareholders' equity | 23,111 | 22,951 | 22,335 | 21,873 | 21,203 | ||||||||||||||||||
Less: | Preferred stock | (2,116) | (2,116) | (1,770) | (1,770) | (1,770) | |||||||||||||||||
Goodwill | (4,258) | (4,261) | (4,261) | (4,261) | (4,252) | ||||||||||||||||||
Intangible assets | (139) | (157) | (171) | (184) | (201) | ||||||||||||||||||
Tangible common equity, including AOCI (l) | 16,598 | 16,417 | 16,133 | 15,658 | 14,980 | ||||||||||||||||||
Less: | AOCI | (2,601) | (2,831) | (2,951) | (2,477) | (1,192) | |||||||||||||||||
Tangible common equity, excluding AOCI (m) | 13,997 | 13,586 | 13,182 | 13,181 | 13,788 | ||||||||||||||||||
Add: | Preferred stock | 2,116 | 2,116 | 1,770 | 1,770 | 1,770 | |||||||||||||||||
Tangible equity (n) | 16,113 | 15,702 | 14,952 | 14,951 | 15,558 | ||||||||||||||||||
Total assets | 204,680 | 201,996 | 202,906 | 185,391 | 169,369 | ||||||||||||||||||
Less: | Goodwill | (4,258) | (4,261) | (4,261) | (4,261) | (4,252) | |||||||||||||||||
Intangible assets | (139) | (157) | (171) | (184) | (201) | ||||||||||||||||||
Tangible assets, including AOCI (o) | 200,283 | 197,578 | 198,474 | 180,946 | 164,916 | ||||||||||||||||||
Less: | AOCI, before tax | (3,292) | (3,584) | (3,735) | (3,135) | (1,509) | |||||||||||||||||
Tangible assets, excluding AOCI (p) | $196,991 | $193,994 | $194,739 | $177,811 | $163,407 | ||||||||||||||||||
Common shares outstanding (q) | 713 | 712 | 712 | 711 | 709 | ||||||||||||||||||
Tangible equity (n) / (p) | 8.18 | % | 8.09 | % | 7.68 | % | 8.41 | % | 9.52 | % | |||||||||||||
Tangible common equity (excluding AOCI) (m) / (p) | 7.11 | % | 6.99 | % | 6.77 | % | 7.41 | % | 8.44 | % | |||||||||||||
Tangible common equity (including AOCI) (l) / (o) | 8.29 | % | 8.31 | % | 8.13 | % | 8.65 | % | 9.08 | % | |||||||||||||
Tangible book value per share (l) / (q) | $23.28 | $23.06 | $22.66 | $22.02 | $21.13 |
27
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Non-GAAP Reconciliation | |||||||||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||||||||
(unaudited) | December | September | December | ||||||||||||||||||||
2020 | 2020 | 2019 | |||||||||||||||||||||
Net income (r) | $604 | $581 | $734 | ||||||||||||||||||||
Net income (annualized) (s) | 2,403 | 2,311 | 2,912 | ||||||||||||||||||||
Adjustments (pre-tax items)(a) | |||||||||||||||||||||||
Valuation of Visa total return swap | 30 | 22 | 44 | ||||||||||||||||||||
Net business acquisition, disposition, and merger-related charges | 27 | - | 9 | ||||||||||||||||||||
Fifth Third Foundation contribution | 25 | - | 20 | ||||||||||||||||||||
Branch and non-branch real estate charges | 21 | 19 | - | ||||||||||||||||||||
COVID-19-related expenses(b) | 5 | 5 | - | ||||||||||||||||||||
Restructuring severance expense | - | 19 | - | ||||||||||||||||||||
Provision impact from conversion to a national charter | - | - | 9 | ||||||||||||||||||||
Gain recognized from Worldpay TRA transaction | - | - | (345) | ||||||||||||||||||||
Adjustments, after-tax (t)(a) | 83 | 51 | (202) | ||||||||||||||||||||
Adjustments (tax related items) | |||||||||||||||||||||||
One-time state tax adjustments | (13) | - | - | ||||||||||||||||||||
Adjustments (tax related items) (u) | (13) | ||||||||||||||||||||||
Noninterest income (v) | 787 | 722 | 1,035 | ||||||||||||||||||||
Valuation of Visa total return swap | 30 | 22 | 44 | ||||||||||||||||||||
Net business disposition charges | 11 | - | - | ||||||||||||||||||||
Branch and non-branch real estate charges | - | 10 | - | ||||||||||||||||||||
Gain recognized from Worldpay TRA transaction | - | - | (345) | ||||||||||||||||||||
Adjusted noninterest income (w) | 828 | 754 | 734 | ||||||||||||||||||||
Noninterest expense (x) | 1,236 | 1,161 | 1,160 | ||||||||||||||||||||
Fifth Third Foundation contribution | (25) | - | (20) | ||||||||||||||||||||
Branch and non-branch real estate charges | (21) | (9) | - | ||||||||||||||||||||
Business acquisition and merger-related charges | (16) | - | (9) | ||||||||||||||||||||
COVID-19-related expenses(b) | (5) | (5) | - | ||||||||||||||||||||
Restructuring severance expense | - | (19) | - | ||||||||||||||||||||
Adjusted noninterest expense (y) | 1,169 | 1,128 | 1,131 | ||||||||||||||||||||
Adjusted net income (r) + (t) + (u) | 674 | 632 | 532 | ||||||||||||||||||||
Adjusted net income (annualized) (z) | 2,681 | 2,514 | 2,111 | ||||||||||||||||||||
Adjusted tangible net income available to common shareholders (h) + (t) + (u) | 648 | 622 | 510 | ||||||||||||||||||||
Adjusted tangible net income available to common shareholders (annualized) (aa) | 2,578 | 2,474 | 2,023 | ||||||||||||||||||||
Average assets (ab) | $203,930 | $202,533 | $169,327 | ||||||||||||||||||||
Return on average tangible common equity (i) / (j) | 13.9 | % | 13.8 | % | 18.7 | % | |||||||||||||||||
Return on average tangible common equity excluding AOCI (i) / (k) | 16.5 | % | 16.7 | % | 20.7 | % | |||||||||||||||||
Adjusted return on average tangible common equity, including AOCI (aa) / (j) | 15.5 | % | 15.0 | % | 13.4 | % | |||||||||||||||||
Adjusted return on average tangible common equity, excluding AOCI (aa) / (k) | 18.4 | % | 18.2 | % | 14.8 | % | |||||||||||||||||
Return on average assets (s) / (ab) | 1.18 | % | 1.14 | % | 1.72 | % | |||||||||||||||||
Adjusted return on average assets (z) / (ab) | 1.31 | % | 1.24 | % | 1.25 | % | |||||||||||||||||
Efficiency ratio (x) / [(a) + (v)] | 62.7 | % | 61.3 | % | 51.2 | % | |||||||||||||||||
Adjusted efficiency ratio (y) / [(a) + (w)] | 58.1 | % | 58.5 | % | 57.5 | % | |||||||||||||||||
Total revenue (FTE) (a) + (v) | $1,972 | $1,895 | $2,267 | ||||||||||||||||||||
Pre-provision net revenue (PPNR) (a) + (v) - (x) | $736 | $734 | $1,107 | ||||||||||||||||||||
Adjusted pre-provision net revenue (PPNR) (a) + (w) - (y) | $844 | $799 | $835 | ||||||||||||||||||||
(a) Assumes a 23% tax rate, (b) COVID-19 related expenses include incremental costs incurred for | |||||||||||||||||||||||
enhanced cleaning measures, personal protective equipment, and other supplies in response to the COVID-19 pandemic |
28
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Segment Presentation | |||||||||||||||||||||||
$ in millions | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
For the three months ended December 31, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $397 | $293 | $102 | $23 | $370 | $1,185 | |||||||||||||||||
Benefit from (provision for) credit losses | (212) | (49) | (9) | (2) | 285 | 13 | |||||||||||||||||
Net interest income after benefit from (provision for) credit losses | 185 | 244 | 93 | 21 | 655 | 1,198 | |||||||||||||||||
Noninterest income | 404 | 196 | 22 | 136 | 29 | 787 | |||||||||||||||||
Noninterest expense | (427) | (471) | (135) | (131) | (72) | (1,236) | |||||||||||||||||
Income before income taxes | 162 | (31) | (20) | 26 | 612 | 749 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (24) | 6 | 4 | (5) | (126) | (145) | |||||||||||||||||
Net income | $138 | $(25) | $(16) | $21 | $486 | $604 | |||||||||||||||||
For the three months ended September 30, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $435 | $355 | $98 | $28 | $257 | $1,173 | |||||||||||||||||
Benefit from (provision for) credit losses | (337) | (68) | (2) | — | 422 | 15 | |||||||||||||||||
Net interest income after benefit from (provision for) credit losses | 98 | 287 | 96 | 28 | 679 | 1,188 | |||||||||||||||||
Noninterest income | 318 | 192 | 73 | 132 | 7 | 722 | |||||||||||||||||
Noninterest expense | (411) | (460) | (137) | (133) | (20) | (1,161) | |||||||||||||||||
Income before income taxes | 5 | 19 | 32 | 27 | 666 | 749 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | 7 | (4) | (7) | (6) | (158) | (168) | |||||||||||||||||
Net income | $12 | $15 | $25 | $21 | $508 | $581 | |||||||||||||||||
For the three months ended June 30, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $573 | $513 | $92 | $51 | $(26) | $1,203 | |||||||||||||||||
(Provision for) benefit from credit losses | (457) | (52) | (10) | 1 | 33 | (485) | |||||||||||||||||
Net interest income after (provision for) benefit from credit losses | 116 | 461 | 82 | 52 | 7 | 718 | |||||||||||||||||
Noninterest income | 294 | 167 | 98 | 121 | (30) | 650 | |||||||||||||||||
Noninterest expense | (405) | (454) | (120) | (122) | (20) | (1,121) | |||||||||||||||||
Income (loss) before income taxes | 5 | 174 | 60 | 51 | (43) | 247 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | 7 | (36) | (12) | (11) | — | (52) | |||||||||||||||||
Net income (loss) | $12 | $138 | $48 | $40 | $(43) | $195 | |||||||||||||||||
For the three months ended March 31, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $511 | $505 | $89 | $37 | $91 | $1,233 | |||||||||||||||||
Provision for credit losses | (45) | (62) | (13) | (1) | (519) | (640) | |||||||||||||||||
Net interest income after provision for credit losses | 466 | 443 | 76 | 36 | (428) | 593 | |||||||||||||||||
Noninterest income | 287 | 198 | 124 | 135 | (73) | 671 | |||||||||||||||||
Noninterest expense | (480) | (488) | (122) | (143) | 33 | (1,200) | |||||||||||||||||
Income (loss) before income taxes | 273 | 153 | 78 | 28 | (468) | 64 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (49) | (32) | (17) | (6) | 86 | (18) | |||||||||||||||||
Net income (loss) | $224 | $121 | $61 | $22 | $(382) | $46 | |||||||||||||||||
For the three months ended December 31, 2019 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $603 | $569 | $91 | $41 | $(72) | $1,232 | |||||||||||||||||
Provision for credit losses | (83) | (60) | (15) | — | (4) | (162) | |||||||||||||||||
Net interest income after provision for credit losses | 520 | 509 | 76 | 41 | (76) | 1,070 | |||||||||||||||||
Noninterest income | 324 | 214 | 74 | 129 | 294 | 1,035 | |||||||||||||||||
Noninterest expense | (422) | (485) | (123) | (131) | 1 | (1,160) | |||||||||||||||||
Income before income taxes | 422 | 238 | 27 | 39 | 219 | 945 | |||||||||||||||||
Applicable income tax expense(a) | (81) | (50) | (6) | (8) | (66) | (211) | |||||||||||||||||
Net income | $341 | $188 | $21 | $31 | $153 | $734 | |||||||||||||||||
(a) Includes taxable equivalent adjustments of $3 million, $3 million, $3 million, $4 million and $4 million for the three months ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, 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. |
29