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Exhibit 99.1
| News Release | ||||
CONTACT: | Bradley S. Adams (Analysts) | FOR IMMEDIATE RELEASE | ||
(513) 534-0983 | July 14, 2005 | |||
Stephanie L. Hagen (Media) | ||||
(513) 534-6957 | ||||
FIFTH THIRD BANCORP REPORTS SECOND QUARTER 2005
EARNINGS OF $0.75 PER DILUTED SHARE
Fifth Third Bancorp’s 2005 second quarter earnings per diluted share were $.75 compared to $.79 per diluted share for the same period in 2004. Second quarter net income totaled $417 million compared to $448 million in the same quarter last year. Return on average assets (ROA) and return on average equity (ROE) were 1.63 percent and 18.1 percent, respectively, compared to 1.91 percent and 21.0 percent in 2004’s second quarter. In addition to the first quarter 2005 acquisition of First National Bankshares of Florida, Inc. (“First National”), second quarter earnings and balance sheet comparisons to the prior year are impacted by a previously disclosed $148 million gain on the sale of certain third party merchant contracts and a charge of $78 million related to the early retirement of debt realized in the second quarter of 2004.
“We continue to focus on increasing our revenue and net income run-rate,” stated George A. Schaefer, Jr., President and CEO of Fifth Third Bancorp. “Despite the interest rate driven difficulties in our industry, we continue to be very pleased with the successes achieved in the hiring of experienced sales people and the recent stronger performance in certain businesses. Our lending businesses remain strong, credit quality trends are extremely favorable and noninterest revenues showed improvement this quarter on most fronts including excellent overall results from Fifth Third Processing Solutions. The combination of recent decreases in long-term interest rates, deposit growth trends below our expectations, and mix shifts within the deposit base to higher cost time deposits all negatively impacted our spread based revenues this quarter. This remains both our largest source of frustration and greatest opportunity for improved performance in the near term. Our efforts are firmly focused on continuing recent improvement in net account growth, offering greater value to our customers and improving our banking center and sales force distribution networks. Higher interest rates combined with good loan and deposit growth from these efforts will drive improvement in both the net interest margin and spread based revenues.”
“Fifth Third has historically approached delivering shareholder value through a combination of both organic and acquisition driven growth strategies. More recently, we have been focused largely on investing in an organic growth model as demonstrated by the hiring of more than 2,400 sales people and the opening of 105 net new locations since the beginning of 2004 excluding acquisitions and relocations. The decision to heavily invest in an organic expansion of this magnitude over the past two years, which resulted at least partially from the lack of attractively priced acquisition opportunities, has been costly in its initial stages. We believe that these investments are beginning to deliver the type of returns our long-term shareholders expect from us and a continuation of these efforts remains the best path to building a high quality franchise in each of our markets.
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This focus, combined with a strong capital position, diversified business mix, granular loan portfolio, and, most importantly, a proven sales culture in our affiliate bank model, position Fifth Third for improving performance as we move through the remainder of the year and into 2006.”
Noninterest Income
Fifth Third Processing Solutions, our electronic payment processing division, delivered a 21 percent increase in revenues over the same quarter last year and a 28 percent increase on an annualized sequential basis. Second quarter results are representative of continuing strong trends from both merchant processing and financial institutions and corresponding impacts on processing volumes. Fifth Third continues to see significant opportunities to attract new retailers and financial institution customers.
Deposit service revenues rebounded strongly from first quarter levels on improved retail related service revenues. Compared to the same quarter last year, deposit service revenues were essentially unchanged with growth in the number of consumer and commercial account relationships offset by the impacts of higher interest rates on compensating balances in commercial deposit accounts.
Investment Advisory revenues decreased by six percent over the same quarter last year and increased by six percent on an annualized sequential basis. The decrease in service revenue relative to the same quarter last year resulted primarily from declines in retail brokerage related revenues. The increase in revenue compared to the first quarter resulted primarily from a broader product menu in our private client area. Fifth Third continues to focus its efforts on growing the institutional money management business by penetrating our large middle market commercial customer base with retirement and wealth planning services. Fifth Third Investment Advisors, among the largest money managers in the Midwest, has $33 billion in assets under management and $187 billion in assets under care.
Mortgage net service revenue totaled $46 million in the second quarter compared to $41 million last quarter and $61 million in 2004’s second quarter. Mortgage originations totaled $2.6 billion in the second quarter versus $1.9 billion last quarter and $2.8 billion in the second quarter of last year. Second quarter mortgage banking net service revenue was comprised of $65 million in total mortgage banking fees and loan sales, plus $18 million of gains and mark-to-market adjustments on both settled and outstanding free-standing derivative financial instruments and less $37 million in amortization and valuation adjustments on mortgage servicing rights. The mark-to-market adjustments and settlement of free-standing derivative financial instruments and corresponding valuation adjustments resulted from interest rate volatility and the resulting impact of changing prepayment speeds on the mortgage servicing portfolio. The mortgage servicing asset, net of the valuation reserve, was $368 million at June 30, 2005 on a servicing portfolio of $24.5 billion, compared to $367 million last quarter on a servicing portfolio of $23.3 billion.
Other noninterest income totaled $156 million in the second quarter, a 16 percent annualized increase from first quarter levels, primarily attributable to strong growth across numerous subcategories including cardholder fees, commercial banking revenue, customer interest rate derivative sales and consumer loan and lease fees. Comparisons to the same quarter last year are impacted by the previously disclosed $148 million gain on the sale of certain third party merchant contracts. Exclusive of the impact of this transaction, other noninterest income increased by 30 percent over the same quarter last year; a comparison being provided to supplement fundamental trends in other noninterest income. Compared to the same quarter last year, cardholder fees increased by 28 percent, commercial banking revenues increased by 21 percent, institutional fixed income trading and sales increased by 23 percent and customer interest rate derivative sales increased by 195 percent.
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Balance Sheet Trends
Very strong retail and commercial account growth, mitigated by mix shifts within the deposit base and the impacts of compensating balances, resulted in mixed deposit trends in the second quarter. Compared to the same quarter last year, average core deposit balances increased $7.8 billion, or 16 percent, highlighted by 13 percent growth in average demand deposits, 34 percent growth in average savings and money market deposits and 42 percent growth in consumer time deposits. Average interest checking deposits were largely unchanged from the same quarter last year with net account growth offset by certain high balance account attrition and balance migration to higher cost deposit products. Average transaction deposits increased by 13 percent over the same quarter last year. Deposit comparisons to prior year periods are impacted by the first quarter 2005 acquisition of First National and the second quarter 2004 acquisition of Franklin Financial Corporation. Exclusive of the impact of these transactions, average transaction account balances increased by six percent over the same quarter last year and average core deposits increased nine percent over the same quarter last year; comparisons being provided to supplement an understanding of the fundamental deposit trends. Compared to the first quarter of this year, average transaction account balances were essentially unchanged and average core deposits increased by four percent on an annualized basis, highlighted by 13 percent annualized growth in demand deposits and 26 percent annualized growth in consumer time deposits. Fifth Third expects deposit pricing to continue to be very competitive with market conditions and is continuing to devote significant focus on retaining existing accounts and attracting new accounts.
Loan and lease balances exhibited continued strength with period end loans and leases increasing by $1.4 billion from last quarter, or nine percent on an annualized sequential basis. On an average basis, total loans and leases, including held for sale, increased by 19 percent over the same quarter last year and by 10 percent on an annualized sequential basis. Period end commercial loan and lease balances increased by 21 percent over the same quarter last year and by $892 million, or 10 percent on an annualized sequential basis. Period end consumer loan and lease balances, excluding residential mortgage, increased by 10 percent over the same quarter last year and by $876 million, or 16 percent on an annualized sequential basis. Loan and lease comparisons to prior year periods are impacted by the addition of approximately $3.9 billion in total loans in conjunction with the acquisition of First National. Exclusive of the impact of this transaction, period end commercial loan and lease balances increased 12 percent and period end consumer loan and lease balances, excluding residential mortgage, increased eight percent over last year; comparisons being provided to supplement an understanding of fundamental lending trends.
Net Interest Income
Compared to the second quarter of 2004, net interest income on a fully taxable equivalent basis decreased two percent despite six percent growth in average earning assets due to a 25 basis point (bp) decline in the net interest margin. Margin and net interest income trends and comparisons to prior year periods are impacted by the first quarter 2005 acquisition of First National, including a modestly negative impact to net interest income from purchase accounting loan and deposit net amortization, common stock repurchase activity and the impact of balance sheet initiatives undertaken in the fourth quarter of 2004 to reduce the risks associated with increasing interest rates. Compared to the first quarter of 2005, net interest income on a fully taxable equivalent basis was essentially unchanged despite six percent annualized growth in average earning assets due to nine bp of contraction in the net interest margin. Margin contraction from seasonally high first quarter levels resulted from decreases in the net interest rate spread associated with the growth in earning assets relative to the growth in core
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deposits, mix shifts within the deposit base to higher cost time deposits and the recent flattening of the yield curve. Fifth Third is focused on improving core deposit trends in order to fund future loan growth and improve net interest margin trends. Margin trends in 2005 will depend on the speed and timing of further short-term interest rate increases, the level of intermediate-term interest rates and the degree and mix of earning asset and deposit growth.
Credit Quality
Credit quality metrics and trends improved in the second quarter and remain at historically strong levels. Net charge-offs as a percentage of average loans and leases were 34 bp in the second quarter, compared to 40 bp last quarter and 43 bp in the second quarter of 2004. Nonperforming assets were 51 bp of total loans and leases and other real estate owned at June 30, 2005, compared to 53 bp last quarter and 50 bp posted a year ago. Overall, the level of nonperforming loans and net charge-offs remains a small percentage of the total loan and lease portfolio. Net charge-offs were $55 million in the second quarter, compared to $59 million in the same quarter last year and $63 million in the first quarter of 2005. The provision for loan and lease losses totaled $60 million in the second quarter compared to $90 million in the same quarter last year and $67 million in the first quarter of 2005. The allowance for loan and lease losses represents 1.09 percent of total loans and leases outstanding as of June 30, 2005, compared to 1.11 percent last quarter and 1.31 in the same quarter last year. Comparisons to the level of prior year allowance for loan and lease losses are impacted by the first quarter 2005 acquisition of First National. The loan and lease assets of First National were recorded on Fifth Third’s balance sheet at their respective fair values as of January 1, 2005. Estimated credit impairment was included in this determination of fair value; therefore, the previously existing allowance for loan and lease losses did not carryover to the allowance for loan and lease losses on Fifth Third’s balance sheet. Although realistic about the difficulty in precisely estimating credit quality metrics, Fifth Third expects credit quality trends in 2005 to remain strong.
Noninterest Expense
Total noninterest expense increased by $23 million, or 13 percent on an annualized basis, from last quarter and decreased by $14 million, or two percent from the same quarter last year. Comparison to the prior year period is impacted by the $78 million charge related to the early retirement of approximately $1 billion of Federal Home Loan Bank advances in the second quarter of 2004 and $5 million in increased intangible amortization resulting from the first quarter 2005 acquisition of First National. Exclusive of the impact of the debt termination charge, total noninterest expense increased by 10 percent over the same quarter last year on increased information technology expenditures and significant investments in the sales force and retail distribution network as evidenced by the increase in headcount and the corresponding increases in the employee-related and net occupancy expense captions; a comparison being provided to supplement an understanding of fundamental noninterest expense trends. Comparisons to last quarter are impacted by $7 million in acquisition related expenses realized in the first quarter of 2005. Exclusive of the impact of these expenses, noninterest expense increased 17 percent on an annualized basis primarily due to a $30 million increase in salaries, wages and incentives associated with headcount increases and approximately $8 million in severance expenses realized in the second quarter. Fifth Third expects growth in noninterest expenses in future quarters to stabilize around current levels as cost savings initiatives continue to be realized. These cost savings initiatives will be mitigated
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by continued growth in headcount, occupancy and information technology to improve efficiency, provide greater convenience to our customers and drive deposit and loan growth. Fifth Third’s second quarter efficiency ratio was 52.2 percent, compared to 51.6 percent last quarter and 48.8 percent in the second quarter of last year.
Conference Call
Fifth Third will host a conference call to discuss these second quarter financial results at 9:00 a.m. (Eastern Time) today. Investors, analysts and other interested parties may dial into the conference call at 877-309-0967 for domestic access and 706-679-3977 for international access (password: Fifth Third). A replay of the conference call will be available for approximately seven days by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode: 7701879#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $103.2 billion in assets as of June 30, 2005. The Company currently operates 17 affiliates with 1,100 full-service Banking Centers, including 128 Bank Mart® locations open seven days a week inside select grocery stores and 1,998 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia and Pennsylvania. The financial strength of Fifth Third’s Ohio and Michigan banks continues to be recognized by rating agencies with deposit ratings of AA- and Aa1 from Standard & Poor’s and Moody’s, respectively. Additionally, Fifth Third Bancorp continues to maintain the highest short-term ratings available at A-1+ and Prime-1 and is recognized by Moody’s with one of the highest senior debt ratings for any U.S. bank holding company of Aa2. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors and Fifth Third Processing Solutions. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded through the NASDAQ® National Market System under the symbol “FITB.”
This press release may contain forward-looking statements about Fifth Third Bancorp and/or the company as combined with acquired entities within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent risks and uncertainties. This press release may contain certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Bancorp and/or the combined company including statements preceded by, followed by or that include the words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions increase significantly; (2) changes in the interest rate environment reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (4) general economic conditions, either national or in the states in which the Bancorp, one or more acquired entities and/or the combined company do business, are less favorable than expected; (5) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (6) changes and trends in the securities markets; (7) legislative or regulatory changes or actions, or significant litigation, adversely affect the Bancorp, one or more acquired entities and/or the combined company or the businesses in which the Bancorp, one or more acquired entities and/or the combined company are engaged; (8) difficulties in combining the operations of acquired entities and (9) the impact of reputational risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity. The Bancorp undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this press release.
# # #
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FIFTH THIRD BANCORP AND SUBSIDIARIES Quarterly Financial Review for June 30, 2005 | Page | |
Earnings Review: | ||
| 7-8 | ||
| 9-10 | ||
| 11 | ||
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent) | 12 | |
| 12 | ||
Financial Condition: | ||
| 13 | ||
| 14 | ||
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates | 15-16 | |
| 17 | ||
| 18-19 | ||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Financial Highlights
(unaudited)
| For the Three Months Ended | |||||||||
| June 30, 2005 | June 30, 2004 | Percent Change | |||||||
Earnings ($ in millions, except per share data) | |||||||||
Net interest income (taxable equivalent) | $ | 758 | 771 | (1.8 | ) | ||||
Net income | 417 | 448 | (6.8 | ) | |||||
Earnings Per Share | |||||||||
Basic | 0.75 | 0.80 | (6.3 | ) | |||||
Diluted | 0.75 | 0.79 | (5.1 | ) | |||||
Key Ratios (percent) | |||||||||
Return on average assets | 1.63 | % | 1.91 | (14.7 | ) | ||||
Return on average shareholders’ equity | 18.1 | 21.0 | (13.8 | ) | |||||
Net interest margin (taxable equivalent) | 3.29 | 3.54 | (7.1 | ) | |||||
Efficiency | 52.2 | 48.8 | 7.0 | ||||||
Average equity as a percent of average assets | 8.98 | 9.08 | (1.1 | ) | |||||
Regulatory capital (a): | |||||||||
Tier 1 capital | 8.69 | 10.59 | (17.9 | ) | |||||
Total risk-based capital | 11.06 | 12.83 | (13.8 | ) | |||||
Tier 1 leverage | 7.78 | 8.97 | (13.3 | ) | |||||
Common Stock Data | |||||||||
Cash dividends per common share | $ | 0.35 | 0.32 | 9.4 | |||||
Book value per share | 16.82 | 14.97 | 12.4 | ||||||
Market price per share: | |||||||||
High | 44.67 | 57.00 | (21.6 | ) | |||||
Low | 40.24 | 51.13 | (21.3 | ) | |||||
End of period | 41.17 | 53.78 | (23.4 | ) | |||||
Price/Earnings ratio (b) | 15.77 | 17.75 | (11.2 | ) | |||||
(a) June 30, 2005 regulatory capital ratios are estimated.
(b) Based on the most recent twelve-month earnings per diluted share and end of period stock prices.
| For the Six Months Ended | |||||||||
| June 30, 2005 | June 30, 2004 | Percent Change | |||||||
Earnings ($ in millions, except per share data) | |||||||||
Net interest income (taxable equivalent) | $ | 1,517 | 1,530 | (0.9 | ) | ||||
Net income | 822 | 878 | (6.4 | ) | |||||
Earnings Per Share | |||||||||
Basic | 1.48 | 1.56 | (5.1 | ) | |||||
Diluted | 1.47 | 1.54 | (4.5 | ) | |||||
Key Ratios (percent) | |||||||||
Return on average assets | 1.63 | % | 1.90 | (14.2 | ) | ||||
Return on average shareholders’ equity | 18.1 | 20.4 | (11.3 | ) | |||||
Net interest margin (taxable equivalent) | 3.33 | 3.57 | (6.7 | ) | |||||
Efficiency | 51.9 | 47.8 | 8.6 | ||||||
Average equity as a percent of average assets | 9.00 | 9.31 | (3.3 | ) | |||||
Common Stock Data | |||||||||
Cash dividends per common share | $ | 0.70 | 0.64 | 9.4 | |||||
Market price per share: | |||||||||
High | 48.12 | 60.00 | (19.8 | ) | |||||
Low | 40.24 | 51.13 | (21.3 | ) | |||||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Financial Highlights
(unaudited)
Values Per Share
| Book Value Per Share | Market Price Range Per Share | ||||||||||||||
| March 31 | June 30 | September 30 | December 31 | Low | High | ||||||||||
2000 | $ | 10.07 | 10.42 | 10.82 | 11.83 | $ | 29.33 | $ | 60.88 | ||||||
2001 | 12.33 | 12.40 | 12.97 | 13.31 | 45.69 | 64.77 | |||||||||
2002 | 13.59 | 14.31 | 14.69 | 14.98 | 55.26 | 69.70 | |||||||||
2003 | 15.31 | 15.25 | 15.24 | 15.29 | 47.05 | 62.15 | |||||||||
2004 | 15.77 | 14.97 | 16.11 | 16.00 | 45.32 | 60.00 | |||||||||
2005 | 16.04 | 16.82 | 40.24 | 48.12 | |||||||||||
| For the Three Months Ended | Year-to-Date | ||||||||||||||
| Earnings Per Share | March 31 | June 30 | September 30 | December 31 | |||||||||||
2000 | $ | 0.43 | 0.39 | 0.51 | 0.53 | $ | 1.86 | ||||||||
2001 | 0.49 | 0.18 | 0.44 | 0.63 | 1.74 | ||||||||||
2002 | 0.63 | 0.65 | 0.67 | 0.69 | 2.64 | ||||||||||
2003 | 0.68 | 0.72 | 0.73 | 0.78 | 2.91 | ||||||||||
2004 | 0.76 | 0.80 | 0.84 | 0.31 | 2.72 | ||||||||||
2005 | 0.73 | 0.75 | 1.48 | ||||||||||||
| For the Three Months Ended | Year-to-Date | ||||||||||||||
| Earnings Per Diluted Share | March 31 | June 30 | September 30 | December 31 | |||||||||||
2000 | $ | 0.43 | 0.38 | 0.50 | 0.52 | $ | 1.83 | ||||||||
2001 | 0.48 | 0.18 | 0.43 | 0.61 | 1.70 | ||||||||||
2002 | 0.62 | 0.64 | 0.66 | 0.67 | 2.59 | ||||||||||
2003 | 0.67 | 0.71 | 0.72 | 0.77 | 2.87 | ||||||||||
2004 | 0.75 | 0.79 | 0.83 | 0.31 | 2.68 | ||||||||||
2005 | 0.72 | 0.75 | 1.47 | ||||||||||||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in millions, except per share data)
| For the Three Months Ended | |||||
| June 30, 2005 | June 30, 2004 | ||||
Interest income | |||||
Interest and fees on loans and leases | $ | 936 | 683 | ||
Interest on securities: | |||||
Taxable | 268 | 305 | |||
Exempt from income taxes | 10 | 11 | |||
Total interest on securities | 278 | 316 | |||
Interest on other short-term investments | 1 | 1 | |||
Total interest income | 1,215 | 1,000 | |||
Interest expense | |||||
Interest on deposits: | |||||
Interest checking | 71 | 35 | |||
Savings | 35 | 11 | |||
Money market | 28 | 6 | |||
Other time | 61 | 38 | |||
Certificates - $100,000 and over | 29 | 11 | |||
Foreign office | 29 | 11 | |||
Total interest on deposits | 253 | 112 | |||
Interest on federal funds purchased | 29 | 17 | |||
Interest on short-term bank notes | 2 | 3 | |||
Interest on other short-term borrowings | 34 | 17 | |||
Interest on long-term debt | 147 | 89 | |||
Total interest expense | 465 | 238 | |||
Net interest income | 750 | 762 | |||
Provision for loan and lease losses | 60 | 90 | |||
Net interest income after provision for loan and lease losses | 690 | 672 | |||
Noninterest income | |||||
Electronic payment processing revenue | 180 | 148 | |||
Service charges on deposits | 132 | 131 | |||
Mortgage banking net revenue | 46 | 61 | |||
Investment advisory revenue | 91 | 97 | |||
Other noninterest income | 156 | 268 | |||
Operating lease revenue | 15 | 44 | |||
Securities gains, net | 15 | - | |||
Total noninterest income | 635 | 749 | |||
Noninterest expense | |||||
Salaries, wages and incentives | 295 | 254 | |||
Employee benefits | 67 | 66 | |||
Equipment expense | 25 | 19 | |||
Net occupancy expense | 54 | 47 | |||
Operating lease expense | 10 | 32 | |||
Other noninterest expense | 277 | 324 | |||
Total noninterest expense | 728 | 742 | |||
Income before income taxes | 597 | 679 | |||
Applicable income taxes | 180 | 231 | |||
Net income | $ | 417 | 448 | ||
Net income available to common shareholders (a) | $ | 417 | 448 | ||
Earnings per share | $0.75 | 0.80 | |||
Earnings per diluted share | $0.75 | 0.79 | |||
(a) Dividend on Preferred Stock is $.185 million for the three months ended June 30, 2005 and 2004.
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in millions, except per share data)
| For the Six Months Ended | |||||
| June 30, 2005 | June 30, 2004 | ||||
Interest income | |||||
Interest and fees on loans and leases | $ | 1,803 | 1,352 | ||
Interest on securities: | |||||
Taxable | 534 | 614 | |||
Exempt from income taxes | 20 | 23 | |||
Total interest on securities | 554 | 637 | |||
Interest on other short-term investments | 2 | 2 | |||
Total interest income | 2,359 | 1,991 | |||
Interest expense | |||||
Interest on deposits: | |||||
Interest checking | 134 | 72 | |||
Savings | 61 | 21 | |||
Money market | 53 | 13 | |||
Other time | 113 | 78 | |||
Certificates - $100,000 and over | 54 | 20 | |||
Foreign Office | 56 | 26 | |||
Total interest on deposits | 471 | 230 | |||
Interest on federal funds purchased | 54 | 35 | |||
Interest on short-term bank notes | 6 | 4 | |||
Interest on other short-term borrowings | 61 | 33 | |||
Interest on long-term debt | 267 | 177 | |||
Total interest expense | 859 | 479 | |||
Net interest income | 1,500 | 1,512 | |||
Provision for loan and lease losses | 127 | 177 | |||
Net interest income after provision for loan and lease losses | 1,373 | 1,335 | |||
Noninterest income | |||||
Electronic payment processing revenue | 348 | 297 | |||
Service charges on deposits | 253 | 254 | |||
Mortgage banking net revenue | 87 | 105 | |||
Investment advisory revenue | 180 | 190 | |||
Other noninterest income | 309 | 409 | |||
Operating lease revenue | 35 | 95 | |||
Securities gains, net | 30 | 26 | |||
Total noninterest income | 1,242 | 1,376 | |||
Noninterest expense | |||||
Salaries, wages and incentives | 561 | 500 | |||
Employee benefits | 148 | 141 | |||
Equipment expense | 50 | 39 | |||
Net occupancy expense | 108 | 93 | |||
Operating lease expense | 26 | 70 | |||
Other noninterest expense | 539 | 548 | |||
Total noninterest expense | 1,432 | 1,391 | |||
Income from before income taxes | 1,183 | 1,320 | |||
Applicable income taxes | 361 | 442 | |||
Net income | $ | 822 | 878 | ||
Net income available to common shareholders (a) | $ | 821 | 878 | ||
Earnings per share | $1.48 | 1.56 | |||
Earnings per diluted share | $1.47 | 1.54 | |||
(a) Dividend on Preferred Stock is $.370 million for the six months ended June 30, 2005 and 2004.
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Consolidated Statements of Changes in Shareholders’ Equity
(unaudited) ($ in millions, except per share data)
| For the Three Months Ended | |||||||
| June 30, 2005 | June 30, 2004 | ||||||
Total shareholders’ equity, beginning | $ | 8,888 | 8,864 | ||||
Net income | 417 | 448 | |||||
Other comprehensive income, net of tax: | |||||||
Change in unrealized gains (losses) on available-for-sale securities, | 188 | (653 | ) | ||||
Comprehensive income | 605 | (205 | ) | ||||
Cash dividends declared: | |||||||
Common stock (2005 - $.35 per share and 2004 - $.32 per share) | (195 | ) | (180 | ) | |||
Preferred stock (a) | - | - | |||||
Stock options exercised, including treasury shares issued | 15 | 34 | |||||
Stock-based compensation expense | 19 | 20 | |||||
Loans repaid (issued) related to the exercise of stock options, net | 2 | (1 | ) | ||||
Excess corporate tax benefit related to stock-based compensation | 12 | 3 | |||||
Shares purchased | (5 | ) | (459 | ) | |||
Acquisitions | 11 | 317 | |||||
Other | 1 | - | |||||
Total shareholders’ equity, ending | $ | 9,353 | 8,393 | ||||
(a) Dividend on Preferred Stock is $.185 million for the three months ended June 30, 2005 and 2004.
| For the Six Months Ended | |||||||
| June 30, 2005 | June 30, 2004 | ||||||
Total shareholders’ equity, beginning | $ | 8,924 | 8,667 | ||||
Net income | 822 | 878 | |||||
Other comprehensive income, net of tax: | |||||||
Change in unrealized gains and (losses) on available-for-sale securities, | 34 | (433 | ) | ||||
Comprehensive income | 856 | 445 | |||||
Cash dividends declared: | |||||||
Common stock (2005 - $.70 per share and 2004 - $.64 per share) | (389 | ) | (360 | ) | |||
Preferred stock (b) | - | - | |||||
Stock options exercised, including treasury shares issued | 40 | 64 | |||||
Stock-based compensation expense | 37 | 43 | |||||
Loans repaid (issued) related to the exercise of stock options, net | 4 | (1 | ) | ||||
Excess corporate tax benefit related to stock-based compensation | 14 | 3 | |||||
Shares purchased | (1,645 | ) | (784 | ) | |||
Acquisitions | 1,509 | 317 | |||||
Other | 3 | (1 | ) | ||||
Total shareholders’ equity, ending | $ | 9,353 | 8,393 | ||||
(b) Dividend on Preferred Stock is $.370 million for the six months ended June 30, 2005 and 2004.
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income (Taxable Equivalent)
(unaudited) ($ in millions)
| For the Three Months Ended | |||||||||||
| June 30, 2005 | March 31, 2005 | December 31, 2004 | September 30, 2004 | June 30, 2004 | |||||||
Interest income | $ | 1,215 | 1,145 | 1,081 | 1,043 | 1,000 | |||||
Taxable equivalent adjustment | 8 | 8 | 9 | 9 | 9 | ||||||
Interest income (taxable equivalent) | 1,223 | 1,153 | 1,090 | 1,052 | 1,009 | ||||||
Interest expense | 465 | 394 | 338 | 286 | 238 | ||||||
Net interest income (taxable equivalent) | 758 | 759 | 752 | 766 | 771 | ||||||
Provision for loan and lease losses | 60 | 67 | 65 | 26 | 90 | ||||||
Net interest income after provision for loan and lease losses (taxable equivalent) | 698 | 692 | 687 | 740 | 681 | ||||||
Noninterest income | 635 | 607 | 479 | 611 | 749 | ||||||
Noninterest expense | 728 | 705 | 935 | 648 | 742 | ||||||
Income before income taxes (taxable equivalent) | 605 | 594 | 231 | 703 | 688 | ||||||
Applicable income taxes | 180 | 181 | 46 | 223 | 231 | ||||||
Taxable equivalent adjustment | 8 | 8 | 9 | 9 | 9 | ||||||
Net income | $417 | 405 | 176 | 471 | 448 | ||||||
Net income available to common shareholders (a) | $417 | 404 | 176 | 471 | 448 | ||||||
(a) Dividend on Preferred Stock is $.185 million for all quarters presented.
Noninterest Income and Noninterest Expense
(unaudited) ($ in millions)
| For the Three Months Ended | |||||||||||
| June 30, 2005 | March 31, 2005 | December 31, 2004 | September 30, 2004 | June 30, 2004 | |||||||
Noninterest income | |||||||||||
Electronic payment processing revenue | $180 | 168 | 173 | 152 | 148 | ||||||
Service charges on deposits | 132 | 121 | 126 | 134 | 131 | ||||||
Mortgage banking net revenue | 46 | 41 | 24 | 49 | 61 | ||||||
Investment advisory revenue | 91 | 90 | 82 | 88 | 97 | ||||||
Other noninterest income | 156 | 153 | 125 | 137 | 268 | ||||||
Operating lease revenue | 15 | 20 | 27 | 35 | 44 | ||||||
Securities gains (losses), net | 15 | 14 | (78 | ) | 16 | - | |||||
Total noninterest income | $635 | 607 | 479 | 611 | 749 | ||||||
Noninterest expense | |||||||||||
Salaries, wages and incentives | $295 | 265 | 266 | 252 | 254 | ||||||
Employee benefits | 67 | 82 | 56 | 64 | 66 | ||||||
Equipment expense | 25 | 25 | 23 | 22 | 19 | ||||||
Net occupancy expense | 54 | 54 | 48 | 45 | 47 | ||||||
Operating lease expense | 10 | 15 | 20 | 24 | 32 | ||||||
Other noninterest expense (a) | 277 | 264 | 522 | 241 | 324 | ||||||
Total noninterest expense | $728 | 705 | 935 | 648 | 742 | ||||||
Full-time equivalent employees | 21,594 | 21,287 | 19,659 | 19,061 | 18,937 | ||||||
Banking centers | 1,098 | 1,092 | 1,011 | 1,005 | 992 | ||||||
| (a) | Includes intangible amortization expense of $12 million, $12 million, $7 million, $7 million and $6 million for the three months ended June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004, respectively. |
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited) ($ in millions, except share data)
| As of | ||||||
| June 30, 2005 | June 30, 2004 | |||||
Assets | ||||||
Cash and due from banks | $2,781 | 2,358 | ||||
Available-for-sale securities (a) | 24,647 | 30,180 | ||||
Held-to-maturity securities (b) | 307 | 212 | ||||
Trading securities | 84 | 97 | ||||
Other short-term investments | 113 | 258 | ||||
Loans held for sale | 783 | 577 | ||||
Loans and leases: | ||||||
Commercial loans | 18,013 | 15,244 | ||||
Construction loans | 6,201 | 4,108 | ||||
Commercial mortgage loans | 9,091 | 7,541 | ||||
Commercial lease financing | 4,639 | 4,472 | ||||
Residential mortgage loans | 7,042 | 5,873 | ||||
Consumer loans | 20,610 | 18,301 | ||||
Consumer lease financing | 1,994 | 2,559 | ||||
Unearned income | (1,294 | ) | (1,419 | ) | ||
Total loans and leases | 66,296 | 56,679 | ||||
Allowance for loan and lease losses | (722 | ) | (744 | ) | ||
Total loans and leases, net | 65,574 | 55,935 | ||||
Bank premises and equipment | 1,581 | 1,168 | ||||
Operating lease equipment | 161 | 525 | ||||
Accrued interest receivable | 451 | 397 | ||||
Goodwill | 2,178 | 979 | ||||
Intangible assets | 231 | 164 | ||||
Servicing rights | 378 | 358 | ||||
Other assets | 3,891 | 2,474 | ||||
Total assets | $103,160 | 95,682 | ||||
Liabilities | ||||||
Deposits: | ||||||
Demand | $14,393 | 13,037 | ||||
Interest checking | 18,811 | 19,243 | ||||
Savings | 9,653 | 7,973 | ||||
Money market | 4,732 | 2,854 | ||||
Other time | 8,513 | 6,019 | ||||
Certificates - $100,000 and over | 3,986 | 2,825 | ||||
Foreign office | 3,089 | 5,957 | ||||
Total deposits | 63,177 | 57,908 | ||||
Federal funds purchased | 4,523 | 3,851 | ||||
Short-term bank notes | - | 1,275 | ||||
Other short-term borrowings | 4,972 | 6,391 | ||||
Accrued taxes, interest and expenses | 2,456 | 1,971 | ||||
Other liabilities | 1,185 | 1,118 | ||||
Long-term debt | 17,494 | 14,775 | ||||
Total liabilities | 93,807 | 87,289 | ||||
Total shareholders’ equity(c) | 9,353 | 8,393 | ||||
Total liabilities and shareholders’ equity | $103,160 | 95,682 | ||||
| (a) | Amortized cost: June 30, 2005 - $24,814 and June 30, 2004 - $30,857. |
| (b) | Market values: June 30, 2005 - $307 and June 30, 2004 - $212. |
(c) Common Shares: Stated value $2.22 per share; authorized 1,300,000,000; outstanding June 30, 2005 - 555,938,071 (excluding 27,489,033 treasury shares) and June 30, 2004 - 560,804,042 (excluding 22,647,649 treasury shares).
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Loans and Leases Serviced
(unaudited) ($ in millions)
| As of | |||||||||||
| June 30, 2005 | March 31, 2005 | December 31, 2004 | September 30, 2004 | June 30, 2004 | |||||||
Commercial | |||||||||||
Commercial loans | $ | 18,013 | 17,500 | 16,058 | 15,259 | 15,244 | |||||
Mortgage | 9,091 | 9,048 | 7,636 | 7,644 | 7,541 | ||||||
Construction | 5,590 | 5,365 | 4,348 | 4,077 | 3,768 | ||||||
Lease financing | 3,527 | 3,416 | 3,426 | 3,357 | 3,275 | ||||||
Subtotal | 36,221 | 35,329 | 31,468 | 30,337 | 29,828 | ||||||
Consumer | |||||||||||
Consumer loans | 19,861 | 18,909 | 18,080 | 17,829 | 17,522 | ||||||
Mortgage & construction | 7,653 | 7,973 | 7,366 | 6,852 | 6,213 | ||||||
Credit card | 749 | 790 | 843 | 809 | 779 | ||||||
Lease financing | 1,812 | 1,901 | 2,051 | 2,209 | 2,337 | ||||||
Subtotal | 30,075 | 29,573 | 28,340 | 27,699 | 26,851 | ||||||
Total loans and leases | 66,296 | 64,902 | 59,808 | 58,036 | 56,679 | ||||||
Loans held for sale | 783 | 809 | 559 | 452 | 577 | ||||||
Operating lease equipment | 161 | 224 | 304 | 394 | 525 | ||||||
Loans and Leases Serviced for Others | |||||||||||
Residential mortgage (a) | 24,497 | 23,341 | 23,026 | 23,458 | 23,943 | ||||||
Commercial mortgage (b) | 2,067 | 2,043 | 2,045 | 2,091 | 2,104 | ||||||
Commercial loans (c) | 2,346 | 2,351 | 1,941 | 2,033 | 1,913 | ||||||
Commercial leases (b) | 269 | 271 | 323 | 220 | 217 | ||||||
Consumer loans (d) | 1,089 | 1,192 | 1,298 | 1,407 | 1,511 | ||||||
Total loans and leases serviced for others | 30,268 | 29,198 | 28,633 | 29,209 | 29,688 | ||||||
Total loans and leases serviced | $ | 97,508 | 95,133 | 89,304 | 88,091 | 87,469 | |||||
| (a) | Fifth Third sells certain residential mortgage loans, primarily conforming and fixed-rate in nature, and retains servicing responsibilities. |
| (b) | Fifth Third sells certain commercial mortgage loans and commercial leases and retains servicing responsibilities. |
| (c) | Fifth Third transfers, subject to credit recourse and with servicing retained, certain investment grade commercial loans to an unconsolidated qualified special purpose entity, which is wholly-owned by an independent third party. |
| (d) | Fifth Third sells certain consumer loans and retains servicing responsibilities. |
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in millions)
| For the Three Months Ended | ||||||||||||
| June 30, 2005 | June 30, 2004 | |||||||||||
| Average Balance | Average Yield/Rate | Average Balance | Average Yield/Rate | |||||||||
Assets | ||||||||||||
Interest-earning assets: | ||||||||||||
Loans and leases | $ 66,762 | 5.64 | % | $ 56,325 | 4.90 | % | ||||||
Taxable securities | 24,771 | 4.33 | 29,987 | 4.10 | ||||||||
Tax exempt securities | 815 | 7.29 | 920 | 7.59 | ||||||||
Other short-term investments | 130 | 3.28 | 266 | 0.98 | ||||||||
Total interest-earning assets | 92,478 | 5.30 | 87,498 | 4.64 | ||||||||
Cash and due from banks | 2,822 | 2,106 | ||||||||||
Other assets | 8,182 | 5,447 | ||||||||||
Allowance for loan and lease losses | (717 | ) | (720 | ) | ||||||||
Total assets | $ 102,765 | $ 94,331 | ||||||||||
Liabilities | ||||||||||||
Interest-bearing liabilities: | ||||||||||||
Interest checking | $ 19,267 | 1.49 | % | $ 19,268 | 0.74 | % | ||||||
Savings | 9,697 | 1.44 | 7,803 | 0.59 | ||||||||
Money market | 4,755 | 2.37 | 2,965 | 0.83 | ||||||||
Other time | 8,286 | 2.93 | 5,822 | 2.57 | ||||||||
Certificates-$100,000 and over | 3,946 | 2.92 | 2,836 | 1.61 | ||||||||
Foreign office | 3,907 | 2.98 | 4,488 | 1.02 | ||||||||
Federal funds purchased | 3,952 | 2.97 | 6,689 | 1.03 | ||||||||
Short-term bank notes | 230 | 2.84 | 1,045 | 1.07 | ||||||||
Other short-term borrowings | 5,190 | 2.63 | 7,441 | 0.92 | ||||||||
Long-term debt | 17,049 | 3.46 | 12,317 | 2.88 | ||||||||
Total interest-bearing liabilities | 76,279 | 2.44 | 70,674 | 1.36 | ||||||||
Demand deposits | 13,905 | 12,251 | ||||||||||
Other liabilities | 3,357 | 2,840 | ||||||||||
Total liabilities | 93,541 | 85,765 | ||||||||||
Shareholders’ equity | 9,224 | 8,566 | ||||||||||
Total liabilities and shareholders’ equity | $ 102,765 | $ 94,331 | ||||||||||
Average common shares outstanding: | ||||||||||||
Basic | 553,871,720 | 560,976,289 | ||||||||||
Diluted | 558,176,454 | 568,715,944 | ||||||||||
Ratios: | ||||||||||||
Net interest margin (taxable equivalent) | 3.29 | % | 3.54 | % | ||||||||
Net interest rate spread (taxable equivalent) | 2.86 | % | 3.28 | % | ||||||||
Interest-bearing liabilities to interest-earning assets | 82.48 | % | 80.77 | % | ||||||||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields (Taxable Equivalent) and Rates
(unaudited) ($ in millions)
| For the Six Months Ended | ||||||||||||
| June 30, 2005 | June 30, 2004 | |||||||||||
| Average Balance | Average Yield/Rate | Average Balance | Average Yield/Rate | |||||||||
Assets | ||||||||||||
Interest-earning assets: | ||||||||||||
Loans and leases | $ 65,924 | 5.53 | % | $ 55,507 | 4.92 | % | ||||||
Taxable securities | 24,852 | 4.33 | 29,420 | 4.20 | ||||||||
Tax exempt securities | 835 | 7.32 | 958 | 7.42 | ||||||||
Other short-term investments | 229 | 2.06 | 248 | 0.94 | ||||||||
Total interest-earning assets | 91,840 | 5.22 | 86,133 | 4.69 | ||||||||
Cash and due from banks | 2,721 | 2,076 | ||||||||||
Other assets | 8,046 | 5,638 | ||||||||||
Allowance for loan and lease losses | (716 | ) | (710 | ) | ||||||||
Total assets | $ 101,891 | $ 93,137 | ||||||||||
Liabilities | ||||||||||||
Interest-bearing liabilities: | ||||||||||||
Interest checking | $ 19,618 | 1.38 | % | $ 19,410 | 0.75 | % | ||||||
Savings | 9,519 | 1.30 | 7,549 | 0.54 | ||||||||
Money market | 4,770 | 2.26 | 3,057 | 0.84 | ||||||||
Other time | 8,038 | 2.83 | 5,802 | 2.69 | ||||||||
Certificates-$100,000 and over | 3,744 | 2.92 | 2,524 | 1.62 | ||||||||
Foreign office deposits | 4,122 | 2.72 | 5,212 | 1.02 | ||||||||
Federal funds purchased | 4,060 | 2.68 | 6,941 | 1.01 | ||||||||
Short-term bank notes | 501 | 2.60 | 773 | 1.05 | ||||||||
Other short-term borrowings | 5,062 | 2.41 | 7,139 | 0.90 | ||||||||
Long-term debt | 16,331 | 3.29 | 11,304 | 3.16 | ||||||||
Total interest-bearing liabilities | 75,765 | 2.29 | 69,711 | 1.38 | ||||||||
Demand deposits | 13,696 | 11,826 | ||||||||||
Other liabilities | 3,264 | 2,928 | ||||||||||
Total liabilities | 92,725 | 84,465 | ||||||||||
Shareholders’ equity | 9,166 | 8,672 | ||||||||||
Total liabilities and shareholders’ equity | $ 101,891 | $ 93,137 | ||||||||||
Average common shares outstanding: | ||||||||||||
Basic | 555,109,748 | 562,279,783 | ||||||||||
Diluted | 559,908,031 | 570,164,208 | ||||||||||
Ratios: | ||||||||||||
Net interest margin (taxable equivalent) | 3.33 | % | 3.57 | % | ||||||||
Net interest rate spread (taxable equivalent) | 2.93 | % | 3.31 | % | ||||||||
Interest-bearing liabilities to interest-earning assets | 82.50 | % | 80.93 | % | ||||||||
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Regulatory Capital
(unaudited) ($ in millions)
| June 30, 2005 (a) | March 31, 2005 | December 31, 2004 | September 30, 2004 | June 30, 2004 | ||||||||||||
Tier 1 capital: | ||||||||||||||||
Shareholders’ equity | $ | 9,353 | 8,888 | 8,924 | 9,040 | 8,393 | ||||||||||
Goodwill and certain other intangibles | (2,409 | ) | (2,410 | ) | (1,129 | ) | (1,137 | ) | (1,143 | ) | ||||||
Unrealized losses/(gains) | 126 | 314 | 101 | 146 | 491 | |||||||||||
Other | 729 | 717 | 626 | 617 | 605 | |||||||||||
Total tier 1 capital | $ | 7,799 | 7,509 | 8,522 | 8,666 | 8,346 | ||||||||||
Total risk-based capital: | ||||||||||||||||
Tier 1 capital | $ | 7,799 | 7,509 | 8,522 | 8,666 | 8,346 | ||||||||||
Qualifying allowances for credit losses | 818 | 809 | 806 | 806 | 831 | |||||||||||
Qualifying subordinated notes | 1,316 | 1,316 | 848 | 868 | 932 | |||||||||||
Total risk-based capital | $ | 9,933 | 9,634 | 10,176 | 10,340 | 10,109 | ||||||||||
Risk-weighted assets | $ | 89,780 | 89,401 | 82,633 | 80,749 | 78,779 | ||||||||||
Ratios: | ||||||||||||||||
Average equity as a percent of average assets | 8.98 | % | 9.02 | 9.51 | 9.21 | 9.08 | ||||||||||
Regulatory capital: | ||||||||||||||||
Tier 1 capital | 8.69 | % | 8.40 | 10.31 | 10.73 | 10.59 | ||||||||||
Total risk-based capital | 11.06 | % | 10.78 | 12.31 | 12.81 | 12.83 | ||||||||||
Tier 1 leverage | 7.78 | % | 7.62 | 8.89 | 9.13 | 8.97 | ||||||||||
(a) June 30, 2005 regulatory capital data and ratios are estimated.
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FIFTH THIRD BANCORP AND SUBSIDIARIES
Asset Quality
(unaudited) ($ in millions)
| For the Three Months Ended | |||||||||||||||
| Summary of Loan and Lease Losses | June 30, 2005 | March 31, 2005 | December 31, 2004 | September 30, 2004 | June 30, 2004 | ||||||||||
Losses charged off: | |||||||||||||||
Commercial, financial and agricultural loans | $(24 | ) | (16 | ) | (19 | ) | (24 | ) | (21 | ) | |||||
Real estate - commercial mortgage loans | (3 | ) | (2 | ) | (7 | ) | (1 | ) | (2 | ) | |||||
Real estate - construction loans | - | (1 | ) | (3 | ) | - | (3 | ) | |||||||
Real estate - residential mortgage loans | (5 | ) | (5 | ) | (4 | ) | (3 | ) | (3 | ) | |||||
Consumer loans | (40 | ) | (42 | ) | (42 | ) | (37 | ) | (38 | ) | |||||
Lease financing | (4 | ) | (14 | ) | (9 | ) | (7 | ) | (9 | ) | |||||
Total losses | (76 | ) | (80 | ) | (84 | ) | (72 | ) | (76 | ) | |||||
Recoveries of losses previously charged off: | |||||||||||||||
Commercial, financial and agricultural loans | 6 | 3 | 4 | 3 | 3 | ||||||||||
Real estate - commercial mortgage loans | 1 | 1 | 1 | 1 | 1 | ||||||||||
Real estate - construction loans | - | 1 | - | - | - | ||||||||||
Real estate - residential mortgage loans | - | - | - | - | - | ||||||||||
Consumer loans | 12 | 11 | 12 | 9 | 11 | ||||||||||
Lease financing | 2 | 1 | 2 | 2 | 2 | ||||||||||
Total recoveries | 21 | 17 | 19 | 15 | 17 | ||||||||||
Net losses charged off: | |||||||||||||||
Commercial, financial and agricultural loans | (18 | ) | (13 | ) | (15 | ) | (21 | ) | (18 | ) | |||||
Real estate - commercial mortgage loans | (2 | ) | (1 | ) | (6 | ) | - | (1 | ) | ||||||
Real estate - construction loans | - | - | (3 | ) | - | (3 | ) | ||||||||
Real estate - residential mortgage loans | (5 | ) | (5 | ) | (4 | ) | (3 | ) | (3 | ) | |||||
Consumer loans | (28 | ) | (31 | ) | (30 | ) | (28 | ) | (27 | ) | |||||
Lease financing | (2 | ) | (13 | ) | (7 | ) | (5 | ) | (7 | ) | |||||
Total net losses charged off | $(55 | ) | (63 | ) | (65 | ) | (57 | ) | (59 | ) | |||||
Allowance for loan and lease losses rollforward: | |||||||||||||||
Allowance for loan and lease losses, beginning | $717 | 713 | 713 | 744 | 713 | ||||||||||
Total net losses charged off | (55 | ) | (63 | ) | (65 | ) | (57 | ) | (59 | ) | |||||
Provision for loan and lease losses | 60 | 67 | 65 | 26 | 90 | ||||||||||
Allowance for loan and lease losses, ending | $722 | 717 | 713 | 713 | 744 | ||||||||||
Reserve for unfunded commitments rollforward: | |||||||||||||||
Reserve for unfunded commitments, beginning | $67 | 72 | 72 | 68 | 70 | ||||||||||
Provision for unfunded commitments | 4 | (6 | ) | - | 4 | (2 | ) | ||||||||
Acquisitions | - | 1 | - | - | - | ||||||||||
Reserve for unfunded commitments, ending | $71 | 67 | 72 | 72 | 68 | ||||||||||
Components of allowance for credit losses: | |||||||||||||||
Allowance for loan and lease losses | $722 | 717 | 713 | 713 | 744 | ||||||||||
Reserve for unfunded commitments | 71 | 67 | 72 | 72 | 68 | ||||||||||
Total allowance for credit losses | $793 | 784 | 785 | 785 | 812 | ||||||||||
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Table of Contents
| As of | ||||||||||||
| Nonperforming and Underperforming Assets | June 30, 2005 | March 31, 2005 | December 31, 2004 | September 30, 2004 | June 30, 2004 | |||||||
Nonaccrual loans and leases (a) | $ 273 | 268 | 228 | 207 | 216 | |||||||
Renegotiated loans and leases | 1 | 1 | 1 | 3 | 3 | |||||||
Other assets, including other real estate owned | 66 | 74 | 74 | 72 | 64 | |||||||
Total nonperforming assets | 340 | 343 | 303 | 282 | 283 | |||||||
Ninety days past due loans and leases (a) | 129 | 129 | 142 | 137 | 132 | |||||||
Total underperforming assets | $ 469 | 472 | 445 | 419 | 415 | |||||||
Average loans and leases (b) | $ | 65,649 | 64,269 | 58,714 | 57,160 | 54,960 | ||||||
Loans and leases (b) | $ | 66,296 | 64,902 | 59,808 | 58,036 | 56,679 | ||||||
Ratios: | ||||||||||||
Net losses charged off as a percent of average loans and leases | 0.34 | % | 0.40 | 0.44 | 0.40 | 0.43 | ||||||
Allowance for loan and lease losses as a percent of loans and leases | 1.09 | % | 1.11 | 1.19 | 1.23 | 1.31 | ||||||
Allowance for credit losses as a percent of loans and leases | 1.20 | % | 1.21 | 1.31 | 1.35 | 1.43 | ||||||
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | 0.51 | % | 0.53 | 0.51 | 0.48 | 0.50 | ||||||
Underperforming assets as a percent of loans, leases and other assets, including other real estate owned | 0.71 | % | 0.73 | 0.74 | 0.72 | 0.73 | ||||||
| (a) | Nonaccrual includes $23 million and Ninety Days Past Due includes $41 million of residential mortgage loans as of June 30, 2005. |
| (b) | Excludes loans held for sale. |
19