Exhibit 99.1
| | | | |
| | | | News Release |
| | |
| CONTACT: | | Bradley S. Adams (Analysts) | | FOR IMMEDIATE RELEASE |
| | (513) 534-0983 | | April 18, 2006 |
| | Debra DeCourcy (Media) | | |
| | (513) 534-4153 | | |
FIFTH THIRD BANCORP REPORTS FIRST QUARTER 2006
EARNINGS OF $ 0.65 PER DILUTED SHARE
Fifth Third Bancorp’s 2006 first quarter earnings per diluted share were $.65 compared to $.60 in the fourth quarter of 2005 and $.72 per diluted share for the same period in 2005. First quarter net income totaled $363 million compared to $332 million last quarter and $405 million in the same quarter last year. Return on average assets (ROA) and return on average equity (ROE) were 1.41 percent and 15.3 percent, respectively, compared to 1.62 percent and 18.0 percent in 2005’s first quarter.
“We are pleased with first quarter trends in deposits, loans, fee income and expenses. They illustrate the strength of our sales force and affiliate model,” stated George A. Schaefer, Jr., President and CEO of Fifth Third Bancorp. “Strong lending results, respectable deposit growth, well-behaved credit trends and excellent results from some of our fee businesses have not been enough to overcome the performance in spread-based revenues. The spread realized from the level of wholesale funding and fixed-rate securities on our balance sheet in prior years has resulted in margin compression and a considerable growth challenge for Fifth Third as short- and long-term interest rates have converged. As a result, earnings per share have decreased 10 percent compared to a year ago. As we look forward, however, we believe these pressures should lessen considerably. Loan growth and repricing remains strong, core noninterest revenue growth is solid, expenses are better controlled and funding costs should level off with interest rate tightening appearing to be nearing an end. A continuation of core trends similar to this quarter should result in a stable margin and improving bottom line performance as we move through 2006 and effectively position Fifth Third to deliver strong performance in 2007 as the margin normalizes.”
“Fifth Third’s focus for the remainder of 2006 will be on continuing to drive deposit growth and market share improvement, maintaining growth in high-quality consumer and commercial loans, enhancing and growing our fee businesses and controlling expenses. I believe that sustained performance in these areas will once again result in value creation for shareholders. The competitive strength of Fifth Third’s employees, demonstrated even in difficult years, combined with an expanded infrastructure make me extremely optimistic about the future. On behalf of our management team, employees and board members, we thank our shareholders for their continued confidence.”
Balance Sheet Trends
Retail transaction account growth and commercial customer additions resulted in good overall deposit trends in the first quarter of 2006. Compared to the first quarter last year, average core deposit balances increased by $3.3 billion, or six percent, and average transaction account balances increased by $1.4 billion, or three percent. Compared to the fourth quarter of 2005, average core deposit balances increased by four percent on an annualized basis and average transaction account balances were essentially unchanged despite the significant seasonal increases in commercial deposits typically seen in the fourth quarter. Fifth Third is continuing to devote significant focus on attracting new deposit accounts and retaining existing accounts in order to fund loan growth.
Loan and lease balances exhibited continued strength with average loans and leases increasing by $6.6 billion, or 10 percent, over first quarter last year and by $1.1 billion, or seven percent on an annualized sequential basis. Average commercial loan and lease balances increased by 12 percent over the same quarter last year and by $1.1 billion, or 11 percent on an annualized sequential basis. Average consumer loan and lease balances, excluding residential mortgage, increased by 12 percent over the same quarter last year and three percent on an annualized sequential basis despite reductions in the consumer lease portfolio and slowing growth in home equity balances.
Net Interest Income
Net interest income on a fully taxable equivalent basis decreased five percent, despite four percent growth in average earning assets, due to a 30 bp decline in the net interest margin compared to the first quarter of 2005. Margin compression resulted primarily from the prolonged and significant flattening of the yield curve, decreases in the net interest rate spread associated with increases in rates paid across deposit and other funding categories and continued mix shifts within the deposit base to higher cost time deposits. Earning asset growth trends relative to the same quarter last year have been muted, despite strong loan growth, by a $3.2 billion reduction in the average available-for-sale securities portfolio. Fifth Third is focused on maintaining recent strong loan growth trends and growing core deposit balances in order to improve the funding mix, more effectively fund future loan growth and improve net interest margin trends.
Compared to the fourth quarter of 2005, net interest income on a fully taxable equivalent basis decreased by $17 million, or nine percent annualized, due to modest growth in average earning assets, day count and 3 bp of contraction in the net interest margin. Based on the forward interest rate curve and a continuation of recent balance sheet trends, Fifth Third currently expects modest margin compression in the second quarter with improving trends later in 2006.
Noninterest Income
Improved performance in certain business line revenue categories resulted in good noninterest income performance in the first quarter of 2006. Overall, noninterest income, excluding operating lease revenues and securities gains and losses, increased by six percent over the same quarter last year. Compared to last quarter, total noninterest income decreased by $19 million due primarily to seasonal factors.
Electronic payment processing revenues increased 15 percent over the same quarter last year. First quarter trends are representative of continuing momentum in attracting new customer relationships moderated by
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slower growth in the level of retail sales transaction volumes. Comparisons to the fourth quarter of 2005 are impacted by the significant seasonal increases in transaction volumes typically seen in the fourth quarter. Fifth Third remains confident in the near and intermediate term growth outlook in this business and continues to see significant opportunities to attract new financial institution customers and retailers.
Sales of retail deposit accounts and corporate treasury management products led to an increase in deposit service revenues of four percent over the same quarter last year. Retail deposit revenue trends continue to improve and increased by five percent over the same quarter last year largely due to growth in the number of deposit accounts. Commercial deposit revenues increased by three percent over the same quarter last year with strong growth in relationships mitigated by the impact of higher interest rates on compensating balances in commercial deposit accounts. Compared to the fourth quarter of 2005, deposit revenues decreased by $7 million due to seasonal factors associated with retail deposit revenues.
Mortgage net service revenue totaled $47 million in the first quarter compared to $41 million in the same quarter last year. Mortgage originations remained strong and totaled $2.2 billion in the first quarter versus $2.5 billion last quarter and $1.9 billion in the first quarter of last year. First quarter mortgage banking net service revenue was comprised of $21 million in total origination fees and loan sales and $26 million in net servicing revenue. Net servicing revenue was comprised of $30 million of gross servicing fees, less $15 million in amortization and plus $11 million of net valuation adjustments on mortgage servicing rights and losses and mark-to-market adjustments on both settled and outstanding free-standing derivative financial instruments to hedge 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 $462 million at March 31, 2006 on a servicing portfolio of $26.4 billion, compared to $433 million last quarter on a servicing portfolio of $25.7 billion.
Corporate banking revenue totaled $76 million in the first quarter this year, an increase of 23 percent over the $62 million delivered in the same quarter last year. Strong growth over the same quarter last year was broad-based highlighted by increases in loan and lease related fees, customer interest rate derivative sales and international revenues. Compared to the fourth quarter of 2005, corporate banking revenue decreased $16 million due to very strong fourth quarter results in loan and lease related fees and customer interest rate derivative sales.
Investment advisory revenues increased modestly compared to the same quarter last year and increased by $4 million compared to the fourth quarter of 2005. The increase in revenue compared to the fourth quarter resulted primarily from seasonal strength in retail brokerage and personal trust. Fifth Third continues to focus its efforts on improving execution in retail brokerage and growing the institutional money management business by improving penetration and cross-sell in our large middle market commercial customer base. Fifth Third Investment Advisors, among the largest money managers in the Midwest, has $33 billion in assets under management and $203 billion in assets under care.
Other noninterest income totaled $80 million in the first quarter, compared to $77 million last quarter and $108 million in the same quarter last year. The decrease in revenue relative to first quarter 2005 resulted primarily from continued runoff in the operating lease portfolio and declines in several other subcategories including consumer loan and lease fees, bank owned life insurance and student loan sales.
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Credit Quality
First quarter credit quality trends improved significantly from fourth quarter 2005 levels. Net charge-offs as a percentage of average loans and leases were 42 bp in the first quarter, compared to 67 bp last quarter and 40 bp in the first quarter of 2005. Net charge-offs were $73 million in the first quarter, compared to $63 million in the same quarter last year and $117 million in the fourth quarter of 2005. Fourth quarter 2005 net charge-offs included approximately $27 million in losses to bankrupt commercial airline carriers and an approximate $15 million increase in consumer loan and lease losses associated with increased personal bankruptcies declared prior to the recently enacted reform legislation. Nonperforming assets were 51 bp of total loans and leases and other real estate owned at March 31, 2006, compared to 52 bp last quarter and 53 bp in the year ago first quarter. Overall, the level of nonperforming loans and net charge-offs remains a small percentage of the total loan and lease portfolio. The provision for loan and lease losses totaled $78 million in the first quarter compared to $67 million in the same quarter last year and $134 million in the fourth quarter of 2005. The allowance for loan and lease losses represents 1.05 percent of total loans and leases outstanding as of March 31, 2006, compared to 1.06 percent last quarter and 1.11 percent in the same quarter last year.
Noninterest Expense
Total noninterest expense increased by four percent over the same quarter last year and decreased by 17 percent annualized from fourth quarter 2005 levels. The increase in expenses compared to the same quarter last year was primarily due to increases in sales force headcount and occupancy expenditures related to the addition of de-novo banking centers. Compared to the fourth quarter of 2005, total noninterest expense decreased by $32 million. First quarter expense trends were controlled overall with comparisons to last quarter impacted by a significant seasonal increase in employee benefit related expenses in the first quarter, reductions in volume related bankcard expenditures and approximately $19 million in previously disclosed fourth quarter 2005 fraud and tax-related expenses.
Fifth Third expects growth in noninterest expenses in 2006 to continue to be modest with management focus in light of current revenue trends. Cost savings initiatives will be somewhat mitigated by continuing investment in certain high opportunity markets, including the expected addition of approximately 50 net new banking centers in 2006, in order to provide greater convenience to our customers and drive deposit and loan growth. Fifth Third’s efficiency ratio was 54.7 percent in the first quarter compared to 55.6 percent last quarter and 51.6 percent in the first quarter of 2005.
Conference Call
Fifth Third will host a conference call to discuss these first quarter financial results at 8:30 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: 7896649#).
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Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $105.0 billion in assets, operates 19 affiliates with 1,132 full-service Banking Centers, including 120 Bank Mart® locations open seven days a week inside select grocery stores and 2,025 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania and Missouri. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors and Fifth Third Processing Solutions. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2006, has $203 billion in assets under care, of which it manages $33 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed atwww.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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5
Quarterly Financial Review for March 31, 2006
Table of Contents
6
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | |
| | | For the Three Months Ended | | % Change | |
| | | March 2006 | | December 2005 | | March 2005 | | Yr/Yr | | | Seq | |
Income Statement Data | | | | | | | | | | | | |
Net interest income (a) | | $718 | | $735 | | $759 | | (5% | ) | | (2% | ) |
Noninterest income | | 617 | | 636 | | 607 | | 2% | | | (3% | ) |
Total revenue (a) | | 1,335 | | 1,371 | | 1,366 | | (2% | ) | | (3% | ) |
Provision for loan and lease losses | | 78 | | 134 | | 67 | | 16% | | | (42% | ) |
Noninterest expense | | 731 | | 763 | | 705 | | 4% | | | (4% | ) |
Net income | | 363 | | 332 | | 405 | | (10% | ) | | 9% | |
| | | | | |
Common Share Data | | | | | | | | | | | | |
Earnings per share, basic | | $0.66 | | $0.60 | | $0.73 | | (10% | ) | | 10% | |
Earnings per share, diluted | | 0.65 | | 0.60 | | 0.72 | | (10% | ) | | 8% | |
Cash dividends per common share | | 0.38 | | 0.38 | | 0.35 | | 9% | | | - | |
Book value per share | | 17.01 | | 17.00 | | 16.04 | | 6% | | | - | |
Dividend payout ratio | | 58.5% | | 63.3% | | 48.6% | | 20% | | | (8% | ) |
Market price per share: | | | | | | | | | | | | |
High | | $41.43 | | $42.50 | | $48.12 | | (14% | ) | | (3% | ) |
Low | | 36.30 | | 35.04 | | 42.05 | | (14% | ) | | 4% | |
End of period | | 39.36 | | 37.72 | | 42.98 | | (8% | ) | | 4% | |
Common shares outstanding (in thousands) | | 556,501 | | 555,623 | | 554,055 | | - | | | - | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | |
Basic | | 554,398 | | 553,591 | | 556,362 | | - | | | - | |
Diluted | | 556,869 | | 556,322 | | 561,659 | | (1% | ) | | - | |
Market capitalization | | $21,904 | | $20,958 | | $23,813 | | (8% | ) | | 5% | |
Price/earnings ratio (b) | | 14.52 | | 13.57 | | 16.22 | | (10% | ) | | 7% | |
| | | | | |
Financial Ratios | | | | | | | | | | | | |
Return on average assets | | 1.41% | | 1.27% | | 1.62% | | (13% | ) | | 11% | |
Return on average equity | | 15.3% | | 13.9% | | 18.0% | | (15% | ) | | 10% | |
Noninterest income as a percent of total revenue | | 46% | | 46% | | 44% | | 5% | | | - | |
Average equity as a percent of average assets | | 9.17% | | 9.12% | | 9.02% | | 2% | | | 1% | |
Net interest margin (a) | | 3.08% | | 3.11% | | 3.38% | | (9% | ) | | (1% | ) |
Efficiency (a) | | 54.7% | | 55.6% | | 51.6% | | 6% | | | (2% | ) |
Effective tax rate | | 30.7% | | 28.9% | | 30.9% | | (1% | ) | | 6% | |
| | | | | |
Credit Quality | | | | | | | | | | | | |
Net losses charged off | | $73 | | $117 | | $63 | | 16% | | | (38% | ) |
Net losses charged off as a percent of
average loans and leases | | 0.42% | | 0.67% | | 0.40% | | 5% | | | (37% | ) |
Allowance for loan and lease losses as a
percent of loans and leases | | 1.05% | | 1.06% | | 1.11% | | (5% | ) | | (1% | ) |
Allowance for credit losses as a percent
of loans and leases | | 1.14% | | 1.16% | | 1.21% | | (6% | ) | | (2% | ) |
Nonperforming assets as a percent of loans, leases
and other assets, including other real estate owned | | 0.51% | | 0.52% | | 0.53% | | (4% | ) | | (2% | ) |
| | | | | |
Average Balances | | | | | | | | | | | | |
Loans and leases, including held for sale | | $71,634 | | $70,489 | | $65,076 | | 10% | | | 2% | |
Total securities and other short-term investments | | 22,917 | | 23,274 | | 26,119 | | (12% | ) | | (2% | ) |
Total assets | | 104,736 | | 103,988 | | 101,009 | | 4% | | | 1% | |
Transaction deposits | | 48,951 | | 48,937 | | 47,581 | | 3% | | | - | |
Core deposits | | 58,700 | | 58,080 | | 55,368 | | 6% | | | 1% | |
Interest-bearing deposits | | 53,746 | | 52,038 | | 49,763 | | 8% | | | 3% | |
Short-term borrowings | | 9,271 | | 9,179 | | 9,878 | | (6% | ) | | 1% | |
Long-term debt | | 15,132 | | 15,956 | | 15,604 | | (3% | ) | | (5% | ) |
Shareholders’ equity | | 9,601 | | 9,480 | | 9,108 | | 5% | | | 1% | |
| | | | | |
Regulatory Capital Ratios (c) | | | | | | | | | | | | |
Tier I capital | | 8.39% | | 8.38% | | 8.40% | | - | | | - | |
Total risk-based capital | | 10.41% | | 10.45% | | 10.78% | | (3% | ) | | - | |
Tier I leverage | | 8.24% | | 8.08% | | 7.62% | | 8% | | | 2% | |
| | | | | |
Operations | | | | | | | | | | | | |
Banking centers | | 1,132 | | 1,119 | | 1,092 | | 4% | | | 1% | |
ATMs | | 2,025 | | 2,024 | | 1,988 | | 2% | | | - | |
Full-time equivalent employees | | 21,497 | | 21,681 | | 21,287 | | 1% | | | (1% | ) |
| (a) | Presented on a fully taxable equivalent basis |
| (b) | Based on the most recent twelve-month diluted earnings per share and end of period stock prices |
| (c) | Current period regulatory capital ratios are estimates |
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Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| | | | | | | | | | |
| | | For the Three Months Ended |
| | | March 2006 | | December
2005 | | September
2005 | | June 2005 | | March 2005 |
Income Statement Data | | | | | | | | | | |
Net interest income (a) | | $718 | | $735 | | $745 | | $758 | | $759 |
Noninterest income | | 617 | | 636 | | 622 | | 635 | | 607 |
Total revenue (a) | | 1,335 | | 1,371 | | 1,367 | | 1,393 | | 1,366 |
Provision for loan and lease losses | | 78 | | 134 | | 69 | | 60 | | 67 |
Noninterest expense | | 731 | | 763 | | 732 | | 728 | | 705 |
Net income | | 363 | | 332 | | 395 | | 417 | | 405 |
| | | | | |
Common Share Data | | | | | | | | | | |
Earnings per share, basic | | $0.66 | | $0.60 | | $0.71 | | $0.75 | | $0.73 |
Earnings per share, diluted | | 0.65 | | 0.60 | | 0.71 | | 0.75 | | 0.72 |
Cash dividends per common share | | 0.38 | | 0.38 | | 0.38 | | 0.35 | | 0.35 |
Book value per share | | 17.01 | | 17.00 | | 16.93 | | 16.82 | | 16.04 |
Dividend payout ratio | | 58.5% | | 63.3% | | 53.5% | | 46.7% | | 48.6% |
Market price per share: | | | | | | | | | | |
High | | $41.43 | | $42.50 | | $43.99 | | $44.67 | | $48.12 |
Low | | 36.30 | | 35.04 | | 36.38 | | 40.24 | | 42.05 |
End of period | | 39.36 | | 37.72 | | 36.75 | | 41.17 | | 42.98 |
Common shares outstanding (in thousands) | | 556,501 | | 555,623 | | 554,400 | | 555,938 | | 554,055 |
Average common shares outstanding (in thousands): | | | | | | | | | | |
Basic | | 554,398 | | 553,591 | | 553,855 | | 553,872 | | 556,362 |
Diluted | | 556,869 | | 556,322 | | 557,681 | | 558,176 | | 561,659 |
Market capitalization | | $21,904 | | $20,958 | | $20,374 | | $22,888 | | $23,813 |
Price/earnings ratio (b) | | 14.52 | | 13.57 | | 14.76 | | 15.77 | | 16.22 |
| | | | | |
Financial Ratios | | | | | | | | | | |
Return on average assets | | 1.41% | | 1.27% | | 1.51% | | 1.63% | | 1.62% |
Return on average equity | | 15.3% | | 13.9% | | 16.6% | | 18.1% | | 18.0% |
Noninterest income as a percent of total revenue | | 46% | | 46% | | 46% | | 46% | | 44% |
Average equity as a percent of average assets | | 9.17% | | 9.12% | | 9.11% | | 8.98% | | 9.02% |
Net interest margin (a) | | 3.08% | | 3.11% | | 3.16% | | 3.29% | | 3.38% |
Efficiency (a) | | 54.7% | | 55.6% | | 53.5% | | 52.2% | | 51.6% |
Effective tax rate | | 30.7% | | 28.9% | | 29.2% | | 30.1% | | 30.9% |
| | | | | |
Credit Quality | | | | | | | | | | |
Net losses charged off | | $73 | | $117 | | $64 | | $55 | | $63 |
Net losses charged off as a percent of
average loans and leases | | 0.42% | | 0.67% | | 0.38% | | 0.34% | | 0.40% |
Allowance for loan and lease losses as a
percent of loans and leases | | 1.05% | | 1.06% | | 1.06% | | 1.09% | | 1.11% |
Allowance for credit losses as a percent of loans and leases | | 1.14% | | 1.16% | | 1.16% | | 1.20% | | 1.21% |
Nonperforming assets as a percent of loans, leases
and other assets, including other real estate owned | | 0.51% | | 0.52% | | 0.51% | | 0.51% | | 0.53% |
| | | | | |
Average Balances | | | | | | | | | | |
Loans and leases, including held for sale | | $71,634 | | $70,489 | | $68,556 | | $66,762 | | $65,076 |
Total securities and other short-term investments | | 22,917 | | 23,274 | | 24,915 | | 25,716 | | 26,119 |
Total assets | | 104,736 | | 103,988 | | 103,699 | | 102,765 | | 101,009 |
Transaction deposits | | 48,951 | | 48,937 | | 47,568 | | 47,624 | | 47,581 |
Core deposits | | 58,700 | | 58,080 | | 56,298 | | 55,910 | | 55,368 |
Interest-bearing deposits | | 53,746 | | 52,038 | | 50,402 | | 49,858 | | 49,763 |
Short-term borrowings | | 9,271 | | 9,179 | | 9,620 | | 9,372 | | 9,878 |
Long-term debt | | 15,132 | | 15,956 | | 16,914 | | 17,049 | | 15,604 |
Shareholders’ equity | | 9,601 | | 9,480 | | 9,451 | | 9,224 | | 9,108 |
| | | | | |
Regulatory Capital Ratios (c) | | | | | | | | | | |
Tier I capital | | 8.39% | | 8.38% | | 8.45% | | 8.48% | | 8.40% |
Total risk-based capital | | 10.41% | | 10.45% | | 10.57% | | 10.80% | | 10.78% |
Tier I leverage | | 8.24% | | 8.08% | | 7.93% | | 7.76% | | 7.62% |
| | | | | |
Operations | | | | | | | | | | |
Banking centers | | 1,132 | | 1,119 | | 1,106 | | 1,098 | | 1,092 |
ATMs | | 2,025 | | 2,024 | | 1,996 | | 1,994 | | 1,988 |
Full-time equivalent employees | | 21,497 | | 21,681 | | 21,674 | | 21,594 | | 21,287 |
| (a) | Presented on a fully taxable equivalent basis |
| (b) | Based on the most recent twelve-month diluted earnings per share and end of period stock prices |
| (c) | Current period regulatory capital ratios are estimates |
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Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
| | | | | | | | | | | | |
| | | For the Three Months Ended | | % Change | |
| | | March 2006 | | December 2005 | | March 2005 | | Yr/Yr | | | Seq | |
Interest Income | | | | | | | | | | | | |
Interest and fees on loans and leases | | $1,146 | | $1,098 | | $867 | | 32% | | | 4% | |
Interest on securities: | | | | | | | | | | | | |
Taxable | | 242 | | 243 | | 267 | | (9% | ) | | - | |
Exempt from income taxes | | 8 | | 9 | | 10 | | (20% | ) | | (11% | ) |
Total interest on securities | | 250 | | 252 | | 277 | | (10% | ) | | (1% | ) |
Interest on other short-term investments | | 2 | | 2 | | 1 | | 100% | | | - | |
Total interest income | | 1,398 | | 1,352 | | 1,145 | | 22% | | | 3% | |
| | | | | |
Interest Expense | | | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | | | |
Interest checking | | 99 | | 94 | | 63 | | 57% | | | 5% | |
Savings | | 76 | | 67 | | 27 | | 181% | | | 13% | |
Money market | | 55 | | 50 | | 25 | | 120% | | | 10% | |
Other time | | 89 | | 81 | | 52 | | 71% | | | 10% | |
Certificates - $100,000 and over | | 48 | | 40 | | 25 | | 92% | | | 20% | |
Foreign office | | 44 | | 37 | | 27 | | 63% | | | 19% | |
Total interest on deposits | | 411 | | 369 | | 219 | | 88% | | | 11% | |
Interest on federal funds purchased | | 51 | | 49 | | 25 | | 104% | | | 4% | |
Interest on short-term bank notes | | - | | - | | 5 | | (100% | ) | | NM | |
Interest on other short-term borrowings | | 44 | | 36 | | 27 | | 63% | | | 22% | |
Interest on long-term debt | | 181 | | 170 | | 118 | | 53% | | | 6% | |
Total interest expense | | 687 | | 624 | | 394 | | 74% | | | 10% | |
| | | | | |
Net Interest Income | | 711 | | 728 | | 751 | | (5% | ) | | (2% | ) |
| | | | | |
Provision for loan and lease losses | | 78 | | 134 | | 67 | | 16% | | | (42% | ) |
Net interest income after provision for loan and lease losses | | 633 | | 594 | | 684 | | (7% | ) | | 7% | |
| | | | | |
Noninterest Income | | | | | | | | | | | | |
Electronic payment processing revenue | | 196 | | 204 | | 171 | | 15% | | | (4% | ) |
Service charges on deposits | | 126 | | 133 | | 121 | | 4% | | | (5% | ) |
Mortgage banking net revenue | | 47 | | 42 | | 41 | | 15% | | | 12% | |
Investment advisory revenue | | 91 | | 87 | | 90 | | 1% | | | 5% | |
Corporate banking revenue | | 76 | | 92 | | 62 | | 23% | | | (17% | ) |
Other noninterest income | | 80 | | 77 | | 108 | | (26% | ) | | 4% | |
Securities gains (losses), net | | 1 | | 1 | | 14 | | (93% | ) | | - | |
Total noninterest income | | 617 | | 636 | | 607 | | 2% | | | (3% | ) |
| | | | | |
Noninterest Expense | | | | | | | | | | | | |
Salaries, wages and incentives | | 284 | | 287 | | 265 | | 7% | | | (1% | ) |
Employee benefits | | 87 | | 65 | | 82 | | 6% | | | 34% | |
Equipment expense | | 27 | | 29 | | 25 | | 8% | | | (7% | ) |
Net occupancy expense | | 58 | | 59 | | 54 | | 7% | | | (2% | ) |
Other noninterest expense | | 275 | | 323 | | 279 | | (1% | ) | | (15% | ) |
Total noninterest expense | | 731 | | 763 | | 705 | | 4% | | | (4% | ) |
Income before income taxes and cumulative effect | | 519 | | 467 | | 586 | | (11% | ) | | 11% | |
Applicable income taxes | | 160 | | 135 | | 181 | | (12% | ) | | 19% | |
Income before cumulative effect | | 359 | | 332 | | 405 | | (11% | ) | | 8% | |
Cumulative effect of change in accounting principle, net of
tax (b) | | 4 | | - | | - | | NM | | | NM | |
Net income | | $363 | | $332 | | $405 | | (10% | ) | | 9% | |
Net income available to common shareholders (a) | | $363 | | $332 | | $404 | | (10% | ) | | 9% | |
| (a) | Dividends on preferred stock are $.185 million for all quarters presented |
| (b) | Reflects a benefit of $3.5 million (net of $1.7 million of tax) for the adoption of SFAS No. 123(R) as of January 1, 2006 due to the recognition of an estimate of forfeiture experience to be realized for all stock-based awards |
9
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income (Taxable Equivalent)
$ in millions
(unaudited)
| | | | | | | | | | |
| | | For the Three Months Ended |
| | | March 2006 | | December 2005 | | September 2005 | | June 2005 | | March 2005 |
Interest Income | | | | | | | | | | |
Interest and fees on loans and leases | | $1,146 | | $1,098 | | $1,017 | | $936 | | $867 |
Interest on securities: | | | | | | | | | | |
Taxable | | 242 | | 243 | | 255 | | 268 | | 267 |
Exempt from income taxes | | 8 | | 9 | | 10 | | 10 | | 10 |
Total interest on securities | | 250 | | 252 | | 265 | | 278 | | 277 |
Interest on other short-term investments | | 2 | | 2 | | 1 | | 1 | | 1 |
Total interest income | | 1,398 | | 1,352 | | 1,283 | | 1,215 | | 1,145 |
Taxable equivalent adjustment | | 7 | | 7 | | 8 | | 8 | | 8 |
Total interest income (taxable equivalent) | | 1,405 | | 1,359 | | 1,291 | | 1,223 | | 1,153 |
| | | | | |
Interest Expense | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | |
Interest checking | | 99 | | 94 | | 86 | | 71 | | 63 |
Savings | | 76 | | 67 | | 48 | | 35 | | 27 |
Money market | | 55 | | 50 | | 37 | | 28 | | 25 |
Other time | | 89 | | 81 | | 68 | | 61 | | 52 |
Certificates - $100,000 and over | | 48 | | 40 | | 34 | | 29 | | 25 |
Foreign office | | 44 | | 37 | | 34 | | 29 | | 27 |
Total interest on deposits | | 411 | | 369 | | 307 | | 253 | | 219 |
Interest on federal funds purchased | | 51 | | 49 | | 35 | | 29 | | 25 |
Interest on short-term bank notes | | - | | - | | - | | 2 | | 5 |
Interest on other short-term borrowings | | 44 | | 36 | | 41 | | 34 | | 27 |
Interest on long-term debt | | 181 | | 170 | | 163 | | 147 | | 118 |
Total interest expense | | 687 | | 624 | | 546 | | 465 | | 394 |
| | | | | |
Net interest income (taxable equivalent) | | 718 | | 735 | | 745 | | 758 | | 759 |
| | | | | |
Provision for loan and lease losses | | 78 | | 134 | | 69 | | 60 | | 67 |
Net interest income (taxable equivalent) after
provision for loan and lease losses | | 640 | | 601 | | 676 | | 698 | | 692 |
| | | | | |
Noninterest Income | | | | | | | | | | |
Electronic payment processing revenue | | 196 | | 204 | | 190 | | 183 | | 171 |
Service charges on deposits | | 126 | | 133 | | 137 | | 132 | | 121 |
Mortgage banking net revenue | | 47 | | 42 | | 45 | | 46 | | 41 |
Investment advisory revenue | | 91 | | 87 | | 89 | | 92 | | 90 |
Corporate banking revenue | | 76 | | 92 | | 71 | | 74 | | 62 |
Other noninterest income | | 80 | | 77 | | 82 | | 93 | | 108 |
Securities gains (losses), net | | 1 | | 1 | | 8 | | 15 | | 14 |
Total noninterest income | | 617 | | 636 | | 622 | | 635 | | 607 |
| | | | | |
Noninterest Expense | | | | | | | | | | |
Salaries, wages and incentives | | 284 | | 287 | | 285 | | 295 | | 265 |
Employee benefits | | 87 | | 65 | | 70 | | 67 | | 82 |
Equipment expense | | 27 | | 29 | | 26 | | 25 | | 25 |
Net occupancy expense | | 58 | | 59 | | 54 | | 54 | | 54 |
Other noninterest expense | | 275 | | 323 | | 297 | | 287 | | 279 |
Total noninterest expense | | 731 | | 763 | | 732 | | 728 | | 705 |
Income before income taxes and cumulative effect (taxable equivalent) | | 526 | | 474 | | 566 | | 605 | | 594 |
Taxable equivalent adjustment | | 7 | | 7 | | 8 | | 8 | | 8 |
Income before income taxes and cumulative effect | | 519 | | 467 | | 558 | | 597 | | 586 |
Applicable income taxes | | 160 | | 135 | | 163 | | 180 | | 181 |
Income before cumulative effect | | 359 | | 332 | | 395 | | 417 | | 405 |
Cumulative effect of change in accounting principle, net of tax (b) | | 4 | | - | | - | | - | | - |
Net income | | $363 | | $332 | | $395 | | $417 | | $405 |
Net income available to common shareholders (a) | | $363 | | $332 | | $395 | | $417 | | $404 |
| (a) | Dividends on preferred stock are $.185 million for all quarters presented |
| (b) | Reflects a benefit of $3.5 million (net of $1.7 million of tax) for the adoption of SFAS No. 123(R) as of January 1, 2006 due to the recognition of an estimate of forfeiture experience to be realized for all stock-based awards |
10
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | As of | | | % Change | |
| | | March 2006 | | | December 2005 | | | March 2005 | | | Yr/Yr | | | Annual Seq | |
Assets | | | | | | | | | | | | | | | |
Cash and due from banks | | $2,494 | | | $3,078 | | | $2,420 | | | 3% | | | (77% | ) |
Available-for-sale and other securities (a) | | 21,276 | | | 21,924 | | | 25,101 | | | (15% | ) | | (12% | ) |
Held-to-maturity securities (b) | | 365 | | | 389 | | | 303 | | | 20% | | | (25% | ) |
Trading securities | | 156 | | | 117 | | | 128 | | | 22% | | | 135% | |
Other short-term investments | | 159 | | | 158 | | | 1,213 | | | (87% | ) | | 3% | |
Loans held for sale | | 744 | | | 1,304 | | | 809 | | | (8% | ) | | (174% | ) |
Portfolio loans and leases: | | | | | | | | | | | | | | | |
Commercial loans | | 19,878 | | | 19,174 | | | 17,500 | | | 14% | | | 15% | |
Construction loans | | 6,600 | | | 7,037 | | | 5,922 | | | 11% | | | (25% | ) |
Commercial mortgage loans | | 9,861 | | | 9,188 | | | 9,048 | | | 9% | | | 30% | |
Commercial lease financing | | 4,911 | | | 4,852 | | | 4,533 | | | 8% | | | 5% | |
Residential mortgage loans | | 7,708 | | | 7,152 | | | 7,416 | | | 4% | | | 32% | |
Consumer loans | | 22,210 | | | 22,084 | | | 19,698 | | | 13% | | | 2% | |
Consumer lease financing | | 1,577 | | | 1,751 | | | 2,099 | | | (25% | ) | | (40% | ) |
Unearned income | | (1,323 | ) | | (1,313 | ) | | (1,314 | ) | | 1% | | | 3% | |
Portfolio loans and leases | | 71,422 | | | 69,925 | | | 64,902 | | | 10% | | | 9% | |
Allowance for loan and lease losses | | (749 | ) | | (744 | ) | | (717 | ) | | 4% | | | 3% | |
Portfolio loans and leases, net | | 70,673 | | | 69,181 | | | 64,185 | | | 10% | | | 9% | |
Bank premises and equipment | | 1,798 | | | 1,726 | | | 1,529 | | | 18% | | | 17% | |
Operating lease equipment | | 137 | | | 143 | | | 224 | | | (39% | ) | | (17% | ) |
Goodwill | | 2,194 | | | 2,169 | | | 2,167 | | | 1% | | | 5% | |
Intangible assets | | 189 | | | 208 | | | 243 | | | (22% | ) | | (37% | ) |
Servicing rights | | 468 | | | 441 | | | 378 | | | 24% | | | 25% | |
Other assets | | 4,391 | | | 4,387 | | | 4,013 | | | 9% | | | - | |
Total assets | | $105,044 | | | $105,225 | | | $102,713 | | | 2% | | | (1% | ) |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Demand | | $14,134 | | | $14,609 | | | $13,960 | | | 1% | | | (13% | ) |
Interest checking | | 17,511 | | | 18,282 | | | 19,722 | | | (11% | ) | | (17% | ) |
Savings | | 11,902 | | | 11,276 | | | 9,711 | | | 23% | | | 23% | |
Money market | | 6,399 | | | 6,129 | | | 4,777 | | | 34% | | | 18% | |
Other time | | 10,105 | | | 9,313 | | | 8,017 | | | 26% | | | 34% | |
Certificates - $100,000 and over | | 5,085 | | | 4,343 | | | 3,867 | | | 31% | | | 69% | |
Foreign office | | 3,874 | | | 3,482 | | | 5,257 | | | (26% | ) | | 46% | |
Total deposits | | 69,010 | | | 67,434 | | | 65,311 | | | 6% | | | 9% | |
Federal funds purchased | | 3,715 | | | 5,323 | | | 2,669 | | | 39% | | | (123% | ) |
Short-term bank notes | | - | | | - | | | 775 | | | (100% | ) | | NM | |
Other short-term borrowings | | 4,472 | | | 4,246 | | | 4,925 | | | (9% | ) | | 22% | |
Accrued taxes, interest and expenses | | 2,169 | | | 2,142 | | | 2,273 | | | (5% | ) | | 5% | |
Other liabilities | | 1,463 | | | 1,407 | | | 1,551 | | | (6% | ) | | 16% | |
Long-term debt | | 14,746 | | | 15,227 | | | 16,321 | | | (10% | ) | | (13% | ) |
Total liabilities | | 95,575 | | | 95,779 | | | 93,825 | | | 2% | | | (1% | ) |
Total shareholders’ equity (c) | | 9,469 | | | 9,446 | | | 8,888 | | | 7% | | | 1% | |
Total liabilities and shareholders’ equity | | $105,044 | | | $105,225 | | | $102,713 | | | 2% | | | (1% | ) |
(a) Amortized cost | | $22,127 | | | $22,533 | | | $25,558 | | | (13% | ) | | (7% | ) |
(b) Market values | | 365 | | | 389 | | | 303 | | | 20% | | | (25% | ) |
(c) Common shares, stated value $2.22 per share (in thousands): | | | | | | | | | | | | | |
Authorized | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | | | - | | | - | |
Outstanding, excluding treasury | | 556,501 | | | 555,623 | | | 554,055 | | | - | | | 1% | |
Treasury | | 26,926 | | | 27,804 | | | 29,372 | | | (8% | ) | | (13% | ) |
11
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | As of | |
| | | March 2006 | | | December 2005 | | | September 2005 | | | June 2005 | | | March 2005 | |
Assets | | | | | | | | | | | | | | | |
Cash and due from banks | | $2,494 | | | $3,078 | | | $3,372 | | | $2,781 | | | $2,420 | |
Available-for-sale and other securities (a) | | 21,276 | | | 21,924 | | | 22,537 | | | 24,647 | | | 25,101 | |
Held-to-maturity securities (b) | | 365 | | | 389 | | | 332 | | | 307 | | | 303 | |
Trading securities | | 156 | | | 117 | | | 105 | | | 84 | | | 128 | |
Other short-term investments | | 159 | | | 158 | | | 113 | | | 113 | | | 1,213 | |
Loans held for sale | | 744 | | | 1,304 | | | 1,237 | | | 783 | | | 809 | |
Portfolio loans and leases: | | | | | | | | | | | | | | | |
Commercial loans | | 19,878 | | | 19,174 | | | 18,591 | | | 18,013 | | | 17,500 | |
Construction loans | | 6,600 | | | 7,037 | | | 6,529 | | | 6,201 | | | 5,922 | |
Commercial mortgage loans | | 9,861 | | | 9,188 | | | 9,138 | | | 9,091 | | | 9,048 | |
Commercial lease financing | | 4,911 | | | 4,852 | | | 4,731 | | | 4,639 | | | 4,533 | |
Residential mortgage loans | | 7,708 | | | 7,152 | | | 7,353 | | | 7,042 | | | 7,416 | |
Consumer loans | | 22,210 | | | 22,084 | | | 21,786 | | | 20,610 | | | 19,698 | |
Consumer lease financing | | 1,577 | | | 1,751 | | | 1,910 | | | 1,994 | | | 2,099 | |
Unearned income | | (1,323 | ) | | (1,313 | ) | | (1,284 | ) | | (1,294 | ) | | (1,314 | ) |
Portfolio loans and leases | | 71,422 | | | 69,925 | | | 68,754 | | | 66,296 | | | 64,902 | |
Allowance for loan and lease losses | | (749 | ) | | (744 | ) | | (727 | ) | | (722 | ) | | (717 | ) |
Portfolio loans and leases, net | | 70,673 | | | 69,181 | | | 68,027 | | | 65,574 | | | 64,185 | |
Bank premises and equipment | | 1,798 | | | 1,726 | | | 1,643 | | | 1,581 | | | 1,529 | |
Operating lease equipment | | 137 | | | 143 | | | 159 | | | 161 | | | 224 | |
Goodwill | | 2,194 | | | 2,169 | | | 2,176 | | | 2,178 | | | 2,167 | |
Intangible assets | | 189 | | | 208 | | | 220 | | | 231 | | | 243 | |
Servicing rights | | 468 | | | 441 | | | 417 | | | 378 | | | 378 | |
Other assets | | 4,391 | | | 4,387 | | | 4,270 | | | 4,342 | | | 4,013 | |
Total assets | | $105,044 | | | $105,225 | | | $104,608 | | | $103,160 | | | $102,713 | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Demand | | $14,134 | | | $14,609 | | | $14,294 | | | $14,393 | | | $13,960 | |
Interest checking | | 17,511 | | | 18,282 | | | 18,169 | | | 18,811 | | | 19,722 | |
Savings | | 11,902 | | | 11,276 | | | 10,437 | | | 9,653 | | | 9,711 | |
Money market | | 6,399 | | | 6,129 | | | 5,855 | | | 4,732 | | | 4,777 | |
Other time | | 10,105 | | | 9,313 | | | 8,867 | | | 8,513 | | | 8,017 | |
Certificates - $100,000 and over | | 5,085 | | | 4,343 | | | 4,195 | | | 3,986 | | | 3,867 | |
Foreign office | | 3,874 | | | 3,482 | | | 3,678 | | | 3,089 | | | 5,257 | |
Total deposits | | 69,010 | | | 67,434 | | | 65,495 | | | 63,177 | | | 65,311 | |
Federal funds purchased | | 3,715 | | | 5,323 | | | 3,548 | | | 4,523 | | | 2,669 | |
Short-term bank notes | | - | | | - | | | - | | | - | | | 775 | |
Other short-term borrowings | | 4,472 | | | 4,246 | | | 6,075 | | | 4,972 | | | 4,925 | |
Accrued taxes, interest and expenses | | 2,169 | | | 2,142 | | | 2,136 | | | 2,456 | | | 2,273 | |
Other liabilities | | 1,463 | | | 1,407 | | | 1,447 | | | 1,185 | | | 1,551 | |
Long-term debt | | 14,746 | | | 15,227 | | | 16,522 | | | 17,494 | | | 16,321 | |
Total liabilities | | 95,575 | | | 95,779 | | | 95,223 | | | 93,807 | | | 93,825 | |
Total shareholders’ equity (c) | | 9,469 | | | 9,446 | | | 9,385 | | | 9,353 | | | 8,888 | |
Total liabilities and shareholders’ equity | | $105,044 | | | $105,225 | | | $104,608 | | | $103,160 | | | $102,713 | |
(a) Amortized cost | | $22,127 | | | $22,533 | | | $22,993 | | | $24,814 | | | $25,558 | |
(b) Market values | | 365 | | | 389 | | | 332 | | | 307 | | | 303 | |
(c) Common shares, stated value $2.22 per share (in thousands): | | | | | | | | | | | | | |
Authorized | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | |
Outstanding, excluding treasury | | 556,501 | | | 555,623 | | | 554,400 | | | 555,938 | | | 554,055 | |
Treasury | | 26,926 | | | 27,804 | | | 29,027 | | | 27,489 | | | 29,372 | |
12
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
$ in millions
(unaudited)
| | | | | | |
| | | For the Three Months Ended | |
| | | March 2006 | | | March 2005 | |
Total shareholders’ equity, beginning | | $9,446 | | | $8,924 | |
Net income | | 363 | | | 405 | |
Other comprehensive income, net of tax: | | | | | | |
Change in unrealized gains and (losses): | | | | | | |
Available-for-sale securities | | (158 | ) | | (223 | ) |
Qualifying cash flow hedges | | 3 | | | 9 | |
Change in additional pension liability | | - | | | 60 | |
Comprehensive income | | 208 | | | 251 | |
Cash dividends declared: | | | | | | |
Common stock | | (211 | ) | | (194 | ) |
Preferred stock (a) | | - | | | - | |
Stock-based awards exercised, including treasury shares issued | | 15 | | | 26 | |
Stock-based compensation expense | | 9 | | | 18 | |
Loans repaid (issued) related to exercise of stock-based awards, net | | 3 | | | 2 | |
Change in corporate tax benefit related to stock-based compensation | | (1 | ) | | 3 | |
Shares acquired for treasury | | - | | | (1,640 | ) |
Shares issued in business combination | | - | | | 1,498 | |
Other | | - | | | - | |
Total shareholders’ equity, ending | | $9,469 | | | $8,888 | |
| (a) | Dividends on preferred stock are $.185 million for all quarters presented |
13
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | % Change | |
| | | March 2006 | | | December 2005 | | | March 2005 | | | Yr/Yr | | | Annual Seq | |
Assets | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | $71,634 | | | $70,489 | | | $65,076 | | | 10% | | | 7% | |
Taxable securities | | 22,116 | | | 22,376 | | | 24,935 | | | (11% | ) | | (5% | ) |
Tax exempt securities | | 644 | | | 698 | | | 856 | | | (25% | ) | | (31% | ) |
Other short-term investments | | 157 | | | 200 | | | 328 | | | (52% | ) | | (87% | ) |
Total interest-earning assets | | 94,551 | | | 93,763 | | | 91,195 | | | 4% | | | 3% | |
Cash and due from banks | | 2,668 | | | 2,847 | | | 2,619 | | | 2% | | | (25% | ) |
Other assets | | 8,261 | | | 8,105 | | | 7,909 | | | 4% | | | 8% | |
Allowance for loan and lease losses | | (744 | ) | | (727 | ) | | (714 | ) | | 4% | | | 9% | |
Total assets | | $104,736 | | | $103,988 | | | $101,009 | | | 4% | | | 3% | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | $17,603 | | | $17,828 | | | $19,972 | | | (12% | ) | | (5% | ) |
Savings | | 11,588 | | | 11,036 | | | 9,339 | | | 24% | | | 20% | |
Money market | | 6,086 | | | 5,974 | | | 4,786 | | | 27% | | | 8% | |
Other time | | 9,749 | | | 9,143 | | | 7,787 | | | 25% | | | 27% | |
Certificates - $100,000 and over | | 4,670 | | | 4,354 | | | 3,539 | | | 32% | | | 29% | |
Foreign office | | 4,050 | | | 3,703 | | | 4,340 | | | (7% | ) | | 38% | |
Federal funds purchased | | 4,553 | | | 4,771 | | | 4,170 | | | 9% | | | (19% | ) |
Short-term bank notes | | - | | | - | | | 775 | | | (100% | ) | | NM | |
Other short-term borrowings | | 4,718 | | | 4,408 | | | 4,933 | | | (4% | ) | | 29% | |
Long-term debt | | 15,132 | | | 15,956 | | | 15,604 | | | (3% | ) | | (21% | ) |
Total interest-bearing liabilities | | 78,149 | | | 77,173 | | | 75,245 | | | 4% | | | 5% | |
Demand deposits | | 13,674 | | | 14,099 | | | 13,484 | | | 1% | | | (12% | ) |
Other liabilities | | 3,312 | | | 3,236 | | | 3,172 | | | 4% | | | 10% | |
Total liabilities | | 95,135 | | | 94,508 | | | 91,901 | | | 4% | | | 3% | |
Shareholders’ equity | | 9,601 | | | 9,480 | | | 9,108 | | | 5% | | | 5% | |
Total liabilities and shareholders’ equity | | $104,736 | | | $103,988 | | | $101,009 | | | 4% | | | 3% | |
| | | | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | |
Basic | | 554,398 | | | 553,591 | | | 556,362 | | | - | | | 1% | |
Diluted | | 556,869 | | | 556,322 | | | 561,659 | | | (1% | ) | | - | |
| | | | | |
Yield Analysis | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | 6.51% | | | 6.20% | | | 5.42% | | | | | | | |
Taxable securities | | 4.44% | | | 4.31% | | | 4.34% | | | | | | | |
Tax exempt securities | | 7.59% | | | 7.51% | | | 7.36% | | | | | | | |
Other short-term investments | | 4.98% | | | 4.41% | | | 1.56% | | | | | | | |
Total interest-earning assets | | 6.03% | | | 5.75% | | | 5.13% | | | | | | | |
| | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | 2.28% | | | 2.10% | | | 1.27% | | | | | | | |
Savings | | 2.67% | | | 2.41% | | | 1.15% | | | | | | | |
Money market | | 3.64% | | | 3.32% | | | 2.14% | | | | | | | |
Other time | | 3.74% | | | 3.50% | | | 2.72% | | | | | | | |
Certificates - $100,000 and over | | 4.15% | | | 3.66% | | | 2.92% | | | | | | | |
Foreign office | | 4.39% | | | 3.92% | | | 2.48% | | | | | | | |
Federal funds purchased | | 4.50% | | | 4.04% | | | 2.41% | | | | | | | |
Short-term bank notes | | - | | | - | | | 2.53% | | | | | | | |
Other short-term borrowings | | 3.82% | | | 3.27% | | | 2.18% | | | | | | | |
Long-term debt | | 4.85% | | | 4.25% | | | 3.10% | | | | | | | |
Total interest-bearing liabilities | | 3.57% | | | 3.21% | | | 2.12% | | | | | | | |
| | | | | |
Ratios: | | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | 3.08% | | | 3.11% | | | 3.38% | | | | | | | |
Net interest rate spread (taxable equivalent) | | 2.46% | | | 2.54% | | | 3.01% | | | | | | | |
Interest-bearing liabilities to interest-earning assets | | 82.65% | | | 82.31% | | | 82.51% | | | | | | | |
14
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | March 2006 | | | December 2005 | | | September 2005 | | | June 2005 | | | March 2005 | |
Assets | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | $71,634 | | | $70,489 | | | $68,556 | | | $66,762 | | | $65,076 | |
Taxable securities | | 22,116 | | | 22,376 | | | 24,013 | | | 24,771 | | | 24,935 | |
Tax exempt securities | | 644 | | | 698 | | | 787 | | | 815 | | | 856 | |
Other short-term investments | | 157 | | | 200 | | | 115 | | | 130 | | | 328 | |
Total interest-earning assets | | 94,551 | | | 93,763 | | | 93,471 | | | 92,478 | | | 91,195 | |
Cash and due from banks | | 2,668 | | | 2,847 | | | 2,742 | | | 2,822 | | | 2,619 | |
Other assets | | 8,261 | | | 8,105 | | | 8,207 | | | 8,182 | | | 7,909 | |
Allowance for loan and lease losses | | (744 | ) | | (727 | ) | | (721 | ) | | (717 | ) | | (714 | ) |
Total assets | | $104,736 | | | $103,988 | | | $103,699 | | | $102,765 | | | $101,009 | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | $17,603 | | | $17,828 | | | $18,498 | | | $19,267 | | | $19,972 | |
Savings | | 11,588 | | | 11,036 | | | 9,939 | | | 9,697 | | | 9,339 | |
Money market | | 6,086 | | | 5,974 | | | 5,154 | | | 4,755 | | | 4,786 | |
Other time | | 9,749 | | | 9,143 | | | 8,730 | | | 8,286 | | | 7,787 | |
Certificates - $100,000 and over | | 4,670 | | | 4,354 | | | 4,156 | | | 3,946 | | | 3,539 | |
Foreign office | | 4,050 | | | 3,703 | | | 3,925 | | | 3,907 | | | 4,340 | |
Federal funds purchased | | 4,553 | | | 4,771 | | | 4,001 | | | 3,952 | | | 4,170 | |
Short-term bank notes | | - | | | - | | | - | | | 230 | | | 775 | |
Other short-term borrowings | | 4,718 | | | 4,408 | | | 5,619 | | | 5,190 | | | 4,933 | |
Long-term debt | | 15,132 | | | 15,956 | | | 16,914 | | | 17,049 | | | 15,604 | |
Total interest-bearing liabilities | | 78,149 | | | 77,173 | | | 76,936 | | | 76,279 | | | 75,245 | |
Demand deposits | | 13,674 | | | 14,099 | | | 13,977 | | | 13,905 | | | 13,484 | |
Other liabilities | | 3,312 | | | 3,236 | | | 3,335 | | | 3,357 | | | 3,172 | |
Total liabilities | | 95,135 | | | 94,508 | | | 94,248 | | | 93,541 | | | 91,901 | |
Shareholders’ equity | | 9,601 | | | 9,480 | | | 9,451 | | | 9,224 | | | 9,108 | |
Total liabilities and shareholders’ equity | | $104,736 | | | $103,988 | | | $103,699 | | | $102,765 | | | $101,009 | |
| | | | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | |
Basic | | 554,398 | | | 553,591 | | | 553,855 | | | 553,872 | | | 556,362 | |
Diluted | | 556,869 | | | 556,322 | | | 557,681 | | | 558,176 | | | 561,659 | |
| | | | | |
Yield Analysis | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | 6.51% | | | 6.20% | | | 5.90% | | | 5.64% | | | 5.42% | |
Taxable securities | | 4.44% | | | 4.31% | | | 4.22% | | | 4.33% | | | 4.34% | |
Tax exempt securities | | 7.59% | | | 7.51% | | | 7.42% | | | 7.29% | | | 7.36% | |
Other short-term investments | | 4.98% | | | 4.41% | | | 3.49% | | | 3.28% | | | 1.56% | |
Total interest-earning assets | | 6.03% | | | 5.75% | | | 5.48% | | | 5.30% | | | 5.13% | |
| | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | 2.28% | | | 2.10% | | | 1.84% | | | 1.49% | | | 1.27% | |
Savings | | 2.67% | | | 2.41% | | | 1.90% | | | 1.44% | | | 1.15% | |
Money market | | 3.64% | | | 3.32% | | | 2.82% | | | 2.37% | | | 2.14% | |
Other time | | 3.74% | | | 3.50% | | | 3.14% | | | 2.93% | | | 2.72% | |
Certificates - $100,000 and over | | 4.15% | | | 3.66% | | | 3.28% | | | 2.92% | | | 2.92% | |
Foreign office | | 4.39% | | | 3.92% | | | 3.41% | | | 2.98% | | | 2.48% | |
Federal funds purchased | | 4.50% | | | 4.04% | | | 3.50% | | | 2.97% | | | 2.41% | |
Short-term bank notes | | - | | | - | | | - | | | 2.84% | | | 2.53% | |
Other short-term borrowings | | 3.82% | | | 3.27% | | | 2.92% | | | 2.63% | | | 2.18% | |
Long-term debt | | 4.85% | | | 4.25% | | | 3.80% | | | 3.46% | | | 3.10% | |
Total interest-bearing liabilities | | 3.57% | | | 3.21% | | | 2.82% | | | 2.44% | | | 2.12% | |
| | | | | |
Ratios: | | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | 3.08% | | | 3.11% | | | 3.16% | | | 3.29% | | | 3.38% | |
Net interest rate spread (taxable equivalent) | | 2.46% | | | 2.54% | | | 2.66% | | | 2.86% | | | 3.01% | |
Interest-bearing liabilities to interest-earning assets | | 82.65% | | | 82.31% | | | 82.31% | | | 82.48% | | | 82.51% | |
15
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
| | | | | | | | | | |
| | | For the Three Months Ended |
| | | March 2006 | | December 2005 | | September 2005 | | June 2005 | | March 2005 |
Average Loans and Leases (including unearned income) | | | | | | | | | | |
Commercial: | | | | | | | | | | |
Commercial loans | | $19,461 | | $18,909 | | $18,203 | | $17,768 | | $18,073 |
Commercial mortgage | | 9,441 | | 9,159 | | 9,095 | | 9,042 | | 8,385 |
Commercial construction | | 6,211 | | 6,051 | | 5,700 | | 5,467 | | 4,870 |
Commercial leases | | 3,686 | | 3,611 | | 3,537 | | 3,436 | | 3,393 |
Subtotal - commercial | | 38,799 | | 37,730 | | 36,535 | | 35,713 | | 34,721 |
Consumer: | | | | | | | | | | |
Residential mortgage | | 8,351 | | 8,444 | | 8,271 | | 8,453 | | 8,417 |
Residential construction | | 706 | | 673 | | 624 | | 576 | | 468 |
Credit card | | 855 | | 825 | | 778 | | 755 | | 830 |
Home equity | | 12,072 | | 11,884 | | 11,702 | | 11,325 | | 10,909 |
Other consumer loans | | 9,311 | | 9,251 | | 8,868 | | 8,089 | | 7,752 |
Consumer leases | | 1,540 | | 1,682 | | 1,778 | | 1,851 | | 1,979 |
Subtotal - consumer | | 32,835 | | 32,759 | | 32,021 | | 31,049 | | 30,355 |
Total average loans and leases | | $71,634 | | $70,489 | | $68,556 | | $66,762 | | $65,076 |
| | | | | |
End of Period Loans and Leases Serviced | | | | | | | | | | |
Commercial: | | | | | | | | | | |
Commercial loans | | $19,878 | | $19,174 | | $18,591 | | $18,013 | | $17,500 |
Commercial mortgage | | 9,861 | | 9,188 | | 9,138 | | 9,091 | | 9,048 |
Commercial construction | | 5,883 | | 6,342 | | 5,880 | | 5,590 | | 5,365 |
Commercial leases | | 3,726 | | 3,695 | | 3,619 | | 3,527 | | 3,416 |
Subtotal - commercial | | 39,348 | | 38,399 | | 37,228 | | 36,221 | | 35,329 |
Consumer: | | | | | | | | | | |
Residential mortgage | | 7,708 | | 7,152 | | 7,353 | | 7,042 | | 7,416 |
Residential construction | | 717 | | 695 | | 649 | | 611 | | 557 |
Credit card | | 851 | | 866 | | 805 | | 749 | | 790 |
Home equity | | 12,087 | | 12,000 | | 11,766 | | 11,521 | | 11,085 |
Other consumer loans | | 9,272 | | 9,218 | | 9,215 | | 8,340 | | 7,824 |
Consumer leases | | 1,439 | | 1,595 | | 1,738 | | 1,812 | | 1,901 |
Subtotal - consumer | | 32,074 | | 31,526 | | 31,526 | | 30,075 | | 29,573 |
Total portfolio loans and leases | | 71,422 | | 69,925 | | 68,754 | | 66,296 | | 64,902 |
| | | | | |
Loans held for sale | | 744 | | 1,304 | | 1,237 | | 783 | | 809 |
| | | | | |
Operating lease equipment | | 137 | | 143 | | 159 | | 161 | | 224 |
| | | | | |
Loans and Leases Serviced for Others: | | | | | | | | | | |
Residential mortgage (a) | | 26,399 | | 25,669 | | 24,525 | | 24,497 | | 23,341 |
Commercial mortgage (b) | | 2,183 | | 2,126 | | 2,095 | | 2,067 | | 2,043 |
Commercial loans (c) | | 3,182 | | 2,744 | | 2,528 | | 2,346 | | 2,351 |
Commercial leases (b) | | 271 | | 264 | | 240 | | 269 | | 271 |
Consumer loans (d) | | 774 | | 871 | | 972 | | 1,089 | | 1,192 |
Total loans and leases serviced for others | | 32,809 | | 31,674 | | 30,360 | | 30,268 | | 29,198 |
Total loans and leases serviced | | $105,112 | | $103,046 | | $100,510 | | $97,508 | | $95,133 |
| (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 |
16
Fifth Third Bancorp and Subsidiaries
Regulatory Capital (a)
$ in millions
(unaudited)
| | | | | | | | | | | | | | | |
| | | As of | |
| | | March 2006 | | | December 2005 | | | September 2005 | | | June 2005 | | | March 2005 | |
Tier I capital: | | | | | | | | | | | | | | | |
Shareholders’ equity | | $9,469 | | | $9,446 | | | $9,385 | | | $9,353 | | | $8,888 | |
Goodwill and certain other intangibles | | (2,356 | ) | | (2,377 | ) | | (2,396 | ) | | (2,409 | ) | | (2,410 | ) |
Unrealized (gains) losses | | 561 | | | 405 | | | 310 | | | 127 | | | 314 | |
Other | | 760 | | | 735 | | | 731 | | | 712 | | | 717 | |
Total tier I capital | | $8,434 | | | $8,209 | | | $8,030 | | | $7,783 | | | $7,509 | |
Total risk-based capital: | | | | | | | | | | | | | | | |
Tier I capital | | $8,434 | | | $8,209 | | | $8,030 | | | $7,783 | | | $7,509 | |
Qualifying allowance for credit losses | | 840 | | | 838 | | | 823 | | | 819 | | | 809 | |
Qualifying subordinated notes | | 1,193 | | | 1,193 | | | 1,193 | | | 1,312 | | | 1,316 | |
Total risk-based capital | | $10,467 | | | $10,240 | | | $10,046 | | | $9,914 | | | $9,634 | |
Risk-weighted assets | | $100,524 | | | $97,994 | | | $95,083 | | | $91,791 | | | $89,401 | |
Ratios: | | | | | | | | | | | | | | | |
Average shareholders’ equity to average assets | | 9.17% | | | 9.12% | | | 9.11% | | | 8.98% | | | 9.02% | |
Regulatory capital: | | | | | | | | | | | | | | | |
Tier I capital | | 8.39% | | | 8.38% | | | 8.45% | | | 8.48% | | | 8.40% | |
Total risk-based capital | | 10.41% | | | 10.45% | | | 10.57% | | | 10.80% | | | 10.78% | |
Tier I leverage | | 8.24% | | | 8.08% | | | 7.93% | | | 7.76% | | | 7.62% | |
| (a) | Current period regulatory capital data and ratios are estimated |
17
Fifth Third Bancorp and Subsidiaries
Asset Quality
$ in millions
(unaudited)
| | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | March 2006 | | | December 2005 | | | September 2005 | | | June 2005 | | | March 2005 | |
Summary of Credit Loss Experience | | | | | | | | | | | | | | | |
Losses charged off: | | | | | | | | | | | | | | | |
Commercial loans | | ($35 | ) | | ($35 | ) | | ($24 | ) | | ($24 | ) | | ($16 | ) |
Commercial mortgage loans | | (2 | ) | | (3 | ) | | (5 | ) | | (3 | ) | | (2 | ) |
Construction loans | | - | | | (3 | ) | | (1 | ) | | - | | | (1 | ) |
Residential mortgage loans | | (4 | ) | | (5 | ) | | (3 | ) | | (5 | ) | | (5 | ) |
Consumer loans | | (50 | ) | | (58 | ) | | (41 | ) | | (40 | ) | | (42 | ) |
Commercial lease financing | | (1 | ) | | (28 | ) | | (1 | ) | | - | | | (8 | ) |
Consumer lease financing | | (4 | ) | | (5 | ) | | (4 | ) | | (4 | ) | | (6 | ) |
Total losses | | (96 | ) | | (137 | ) | | (79 | ) | | (76 | ) | | (80 | ) |
| | | | | |
Recoveries of losses previously charged off: | | | | | | | | | | | | | | | |
Commercial loans | | 3 | | | 10 | | | 5 | | | 6 | | | 3 | |
Commercial mortgage loans | | - | | | 1 | | | - | | | 1 | | | 1 | |
Construction loans | | - | | | - | | | - | | | - | | | 1 | |
Residential mortgage loans | | - | | | - | | | - | | | - | | | - | |
Consumer loans | | 15 | | | 8 | | | 9 | | | 12 | | | 11 | |
Commercial lease financing | | 2 | | | - | | | - | | | 1 | | | - | |
Consumer lease financing | | 3 | | | 1 | | | 1 | | | 1 | | | 1 | |
Total recoveries | | 23 | | | 20 | | | 15 | | | 21 | | | 17 | |
| | | | | |
Net losses charged off: | | | | | | | | | | | | | | | |
Commercial loans | | (32 | ) | | (25 | ) | | (19 | ) | | (18 | ) | | (13 | ) |
Commercial mortgage loans | | (2 | ) | | (2 | ) | | (5 | ) | | (2 | ) | | (1 | ) |
Construction loans | | - | | | (3 | ) | | (1 | ) | | - | | | - | |
Residential mortgage loans | | (4 | ) | | (5 | ) | | (3 | ) | | (5 | ) | | (5 | ) |
Consumer loans | | (35 | ) | | (50 | ) | | (32 | ) | | (28 | ) | | (31 | ) |
Commercial lease financing | | 1 | | | (28 | ) | | (1 | ) | | 1 | | | (8 | ) |
Consumer lease financing | | (1 | ) | | (4 | ) | | (3 | ) | | (3 | ) | | (5 | ) |
Total net losses charged off | | ($73 | ) | | ($117 | ) | | ($64 | ) | | ($55 | ) | | ($63 | ) |
| | | | | |
Allowance for loan and lease losses, beginning | | $744 | | | $727 | | | $722 | | | $717 | | | $713 | |
Total net losses charged off | | (73 | ) | | (117 | ) | | (64 | ) | | (55 | ) | | (63 | ) |
Provision for loan and lease losses | | 78 | | | 134 | | | 69 | | | 60 | | | 67 | |
Allowance for loan and lease losses, ending | | $749 | | | $744 | | | $727 | | | $722 | | | $717 | |
| | | | | |
Reserve for unfunded commitments, beginning | | $70 | | | $69 | | | $71 | | | $67 | | | $72 | |
Provision for unfunded commitments | | (1 | ) | | 1 | | | (2 | ) | | 4 | | | (6 | ) |
Acquisitions | | - | | | - | | | - | | | - | | | 1 | |
Reserve for unfunded commitments, ending | | $69 | | | $70 | | | $69 | | | $71 | | | $67 | |
| | | | | |
Components of allowance for credit losses: | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | | $749 | | | $744 | | | $727 | | | $722 | | | $717 | |
Reserve for unfunded commitments | | 69 | | | 70 | | | 69 | | | 71 | | | 67 | |
Total allowance for credit losses | | $818 | | | $814 | | | $796 | | | $793 | | | $784 | |
| | | | | |
Nonperforming Assets and Delinquent Loans | | | | | | | | | | | | | | | |
Nonaccrual loans and leases (a) | | $291 | | | $294 | | | $285 | | | $273 | | | $268 | |
Renegotiated loans and leases | | - | | | - | | | 1 | | | 1 | | | 1 | |
Other assets, including other real estate owned | | 73 | | | 67 | | | 65 | | | 66 | | | 74 | |
Total nonperforming assets | | $364 | | | $361 | | | $351 | | | $340 | | | $343 | |
Ninety days past due loans and leases (a) | | $160 | | | $155 | | | $156 | | | $129 | | | $129 | |
| | | | | |
Ratios | | | | | | | | | | | | | | | |
Net losses charged off as a percent of average loans and leases | | 0.42% | | | 0.67% | | | 0.38% | | | 0.34% | | | 0.40% | |
Allowance for loan and lease losses as a percent of loans and leases | | 1.05% | | | 1.06% | | | 1.06% | | | 1.09% | | | 1.11% | |
Allowance for credit losses as a percent of loans and leases | | 1.14% | | | 1.16% | | | 1.16% | | | 1.20% | | | 1.21% | |
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | | 0.51% | | | 0.52% | | | 0.51% | | | 0.51% | | | 0.53% | |
| (a) | Nonaccrual includes $33 million and Ninety Days Past Due includes $46 million of residential mortgage loans as of March 31, 2006 |
18
