Exhibit 99.1
| | | | |
| | | | News Release |
| | |
| CONTACT: | | Jeff Richardson (Analysts) | | FOR IMMEDIATE RELEASE |
| | (513) 534-0983 | | October 19, 2006 |
| | Jim Eglseder (Analysts) | | |
| | (513) 534-8424 | | |
| | Debra DeCourcy, APR (Media) | | |
| | (513) 534-4153 | | |
FIFTH THIRD BANCORP REPORTS THIRD QUARTER 2006
EARNINGS OF $ 0.68 PER DILUTED SHARE
Fifth Third Bancorp’s third quarter 2006 earnings per diluted share were $0.68 compared to $0.69 in the second quarter of 2006 and $0.71 per diluted share for the same period in 2005. Third quarter net income totaled $377 million compared with $382 million last quarter and $395 million in the same quarter last year.
“Third quarter results reflect a net interest margin that has begun to stabilize given moderation of short-term interest rate increases and our disciplined efforts to improve our balance sheet positioning,” said George A. Schaefer, Jr., Chairman and CEO of Fifth Third Bancorp. “Additionally, noninterest income growth was within our expectations and expense control was solid, though we continue to invest in better distribution throughout our footprint. Credit costs remained relatively stable with previous quarters, though we recognize at this point in the credit cycle that some modest deterioration over time is to be expected. We remain focused on the long-term interests of our shareholders and believe we are making the right decisions to improve our franchise and position it for sustainable long-term growth. “
Net Interest Income
Net interest income on a taxable equivalent basis increased slightly from last quarter despite a two bps decline in the net interest margin. Earning assets remained relatively flat reflecting an $819 million reduction in the available-for-sale securities portfolio. Margin compression lessened during the quarter on the moderation in short-term rate increases, and was less than initially expected due to better demand deposit trends in the latter part of the quarter.
Net interest income decreased three percent compared with the third quarter 2005 on two percent growth in average earning assets, reflecting a 17 bps decline in the net interest margin. 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 mix shift within the deposit base to higher cost deposit categories. Despite strong loan growth, earning asset growth trends relative to the same quarter last year have been muted by a $3.5 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.
Noninterest Income
Noninterest income increased by one percent compared with last quarter and six percent over the same quarter last year. Strong performance in electronic payment processing and corporate banking revenues were mitigated by trends in deposit service charges and mortgage banking revenue.
Electronic payment processing (EPP) revenue increased three percent sequentially largely reflecting strong growth in the merchant business, mitigated by the effects of slower consumer spending on EFT revenue. EPP revenue increased 15 percent over the same quarter last year on strong increases in EFT revenue and slower growth in the merchant business. Growth in the merchant business is expected to increase as national merchant contract additions announced throughout 2006 begin to be fully realized. Fifth Third remains confident in the near and intermediate term growth outlook in this business and continues to see significant opportunities in attracting new financial institution customers and retailers.
Deposit service revenue was stable compared with last quarter and declined two percent compared with the same quarter last year. Retail deposit revenue increased by four percent sequentially while commercial deposit revenue declined by five percent sequentially. Sequential growth in commercial relationships was more than mitigated by the impact of higher interest rates on earnings credits for compensating balances in deposit accounts. Compared with the same quarter last year, solid retail deposit account growth was offset by lower average balances, and higher earnings credit rates on commercial deposit accounts more than offset new account additions and treasury management product sales.
Investment advisory revenue declined eight percent versus a seasonally strong second quarter that reflected annually assessed trust and tax related fees. Results were flat compared with the same quarter last year. Fifth Third continues to focus its efforts on improving execution in retail brokerage and retail mutual funds, and on growing the institutional money management business by improving penetration and cross-sell in our large middle market commercial customer base.
Corporate banking revenue totaled $79 million in the third quarter, a decline of four percent sequentially, primarily reflecting lower fees associated with letters of credit. Revenue increased 11 percent over the $71 million earned in the same quarter last year, highlighted by increases in institutional fees and other commercial fees.
Mortgage banking net revenue totaled $36 million, reflecting $21 million in total origination fees and loan sales and $15 million in net servicing revenue, compared with $41 million last quarter and $45 million a year ago. Mortgage originations were $2.3 billion in the third quarter versus $2.6 billion last quarter and $2.9 billion in the third quarter of 2005. Net servicing revenue included $30 million of gross servicing fees, less $18 million in amortization, plus $3 million in net MSR valuation adjustment. The net MSR valuation adjustment included mark-to-market adjustments, settlement of free-standing derivative financial instruments, and corresponding valuation adjustments, resulting 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 $498 million at quarter end on a servicing portfolio of $27.8 billion, compared with $483 million last quarter on a servicing portfolio of $27.1 billion.
Other noninterest income totaled $87 million in the third quarter, compared with $76 million last quarter and $82 million in the same quarter last year. The increases reflect net gains totaling $10.5 million from the sale of three Indiana branches announced in May 2006 and the sale of $23 million of out-of-footprint credit card receivables, both
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completed in September. Strength in cardholder and loan fees otherwise offset the effect of runoff in the consumer lease portfolio.
Net securities gains totaled $19 million in the third quarter, compared with $14 million last quarter and $8 million in the same quarter last year. Third quarter 2006 net securities gains included a $53 million gain from sale of MasterCard, Inc. shares. Results also included $34 million of losses on investment securities.
Noninterest Expense
Total noninterest expense increased by $8 million or one percent from second quarter 2006 levels and by five percent over the same quarter last year. Comparisons reflect an $11 million charge in the third quarter associated with the early extinguishment of debt in the form of a $300 million structured repurchase agreement. Sequential comparisons also reflect an additional $8 million of pension settlement expenses, similar to the level experienced in the third quarter of last year. Second quarter expenses included $9 million of expense related to the April 2006 issuance of stock-based awards to retirement-eligible employees. Excluding the above-mentioned items, noninterest expense was flat sequentially and increased three percent compared with last year. The remaining increase versus the year ago quarter primarily reflected higher volume-related bankcard expenditures and occupancy expenditures related to the addition of de-novo banking centers. Fifth Third’s efficiency ratio was 55.5 percent in the third quarter compared to 55.3 percent last quarter and 53.5 percent in the third quarter of 2005.
Balance Sheet Trends
Average core deposits were relatively stable with second quarter levels, declining one percent on lower interest checking, demand and money market deposits, largely offset by growth in retail CDs and savings deposits. Compared with the third quarter last year, average core deposits rose five percent on growth in savings, retail CDs and money market accounts. Fifth Third continues to devote significant focus on attracting new deposit accounts and retaining existing accounts in order to fund loan growth.
Average loan and lease balances grew one percent sequentially, or five percent annualized. Average loans and leases increased by $5.4 billion, or eight percent, over third quarter last year. Commercial loans grew ten percent compared with the year ago and consumer loans grew five percent. Excluding run-off in the consumer lease portfolio totaling $524 million, loans and leases grew nine percent versus last year.
Credit Quality
Net charge-offs as a percentage of average loans and leases were 43 bps in the third quarter, compared with 37 bps last quarter and 38 bps in the third quarter of 2005. Net charge-offs were $79 million in the third quarter, compared with $64 million in the same quarter last year and $67 million in the second quarter of 2006. Gross charge-offs were $96 million, or 53 bps of loans and leases, consistent with levels in the prior two quarters. Recoveries were $17 million in the third quarter, down $12 million from high second quarter recovery levels. Nonperforming assets were 56 bps of total loans and leases and other real estate owned at quarter end, up 7 bps sequentially, with the net increase largely driven by two credits totaling $32 million. Nonperforming assets were 49 bps last quarter and 51 bps in the third quarter a year ago. Overall, the level of nonperforming loans and net charge-offs continues to represent a relatively small percentage of the total loan and lease portfolio. The provision for loan and lease losses totaled $87 million in the third quarter compared
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with $71 million last quarter and $69 million in the same quarter last year. The allowance for loan and lease losses represents 1.04 percent of total loans and leases outstanding as of quarter end, compared with 1.04 percent last quarter and 1.06 percent in the same quarter last year.
Conference Call
Fifth Third will host a conference call to discuss these third 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: 7132813#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $105.8 billion in assets, operates 19 affiliates with 1,145 full-service Banking Centers, including 115 Bank Mart® locations open seven days a week inside select grocery stores and 2,114 Jeanie® ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania and Missouri. Fifth Third operates five main businesses: Commercial Banking, Branch Banking, Consumer Lending, Investment Advisors and Fifth Third Processing Solutions. Fifth Third is among the largest money managers in the Midwest and, as of September 30, 2006, has $215 billion in assets under care, of which it manages $32 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 Global Select Market System under the symbol “FITB.”
This report may contain forward-looking statements about the Registrant 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 report may contain certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Registrant 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 Registrant, 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 Registrant, one or more acquired entities and/or the combined company or the businesses in which the Registrant, 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. Additional information concerning factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements is available in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the United States Securities and Exchange Commission (SEC). Copies of this filing are available at no cost on the SEC’s Web site atwww.sec.gov or on the Registrant’s Web site atwww.53.com. The Registrant undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this report.
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4
Quarterly Financial Review for September 30, 2006
Table of Contents
5
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | % Change | | | Year to Date | | % Change | |
| | | September
2006 | | June
2006 | | September
2005 | | Yr/Yr | | | Seq | | | September
2006 | | September
2005 | | Yr/Yr | |
Income Statement Data | | | | | | | | | | | | | | | | | | | |
Net interest income (a) | | $719 | | $716 | | $745 | | (3% | ) | | - | | | $2,154 | | $2,262 | | (5% | ) |
Noninterest income | | 662 | | 655 | | 622 | | 6% | | | 1% | | | 1,934 | | 1,864 | | 4% | |
Total revenue (a) | | 1,381 | | 1,371 | | 1,367 | | 1% | | | 1% | | | 4,088 | | 4,126 | | (1% | ) |
Provision for loan and lease losses | | 87 | | 71 | | 69 | | 26% | | | 22% | | | 236 | | 197 | | 20% | |
Noninterest expense | | 767 | | 759 | | 732 | | 5% | | | 1% | | | 2,257 | | 2,164 | | 4% | |
Net income | | 377 | | 382 | | 395 | | (5% | ) | | (1% | ) | | 1,123 | | 1,217 | | (8% | ) |
| | | | | | | | |
Common Share Data | | | | | | | | | | | | | | | | | | | |
Earnings per share, basic | | $0.68 | | $0.69 | | $0.71 | | (4% | ) | | (1% | ) | | $2.02 | | $2.19 | | (8% | ) |
Earnings per share, diluted | | 0.68 | | 0.69 | | 0.71 | | (4% | ) | | (1% | ) | | 2.01 | | 2.18 | | (8% | ) |
Cash dividends per common share | | 0.40 | | 0.40 | | 0.38 | | 5% | | | - | | | 1.18 | | 1.08 | | 9% | |
Book value per share | | 17.96 | | 17.13 | | 16.93 | | 6% | | | 5% | | | 17.96 | | 16.93 | | 6% | |
Dividend payout ratio | | 58.8% | | 58.0% | | 53.5% | | 10% | | | 1% | | | 58.7% | | 49.5% | | 19% | |
Market price per share: | | | | | | | | | | | | | | | | | | | |
High | | $40.18 | | $41.02 | | $43.99 | | (9% | ) | | (2% | ) | | $41.43 | | $48.12 | | (14% | ) |
Low | | 35.95 | | 35.86 | | 36.38 | | (1% | ) | | - | | | 35.86 | | 36.38 | | (1% | ) |
End of period | | 38.08 | | 36.95 | | 36.75 | | 4% | | | 3% | | | 38.08 | | 36.75 | | 4% | |
Common shares outstanding (in thousands) | | 558,066 | | 557,894 | | 554,400 | | 1% | | | - | | | 558,066 | | 554,400 | | 1% | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | | | | | |
Basic | | 555,565 | | 554,978 | | 553,855 | | - | | | - | | | 554,985 | | 554,687 | | - | |
Diluted | | 557,949 | | 557,489 | | 557,681 | | - | | | - | | | 557,440 | | 559,158 | | - | |
Market capitalization | | $21,251 | | $20,614 | | $20,374 | | 4% | | | 3% | | | $21,251 | | $20,374 | | 4% | |
Price/earnings ratio (b) | | 14.53 | | 13.94 | | 14.76 | | (2% | ) | | 4% | | | 14.53 | | 14.76 | | (2% | ) |
| | | | | | | | |
Financial Ratios | | | | | | | | | | | | | | | | | | | |
Return on average assets | | 1.41% | | 1.45% | | 1.51% | | (7% | ) | | (3% | ) | | 1.42% | | 1.59% | | (11% | ) |
Return on average equity | | 15.1% | | 16.0% | | 16.6% | | (9% | ) | | (6% | ) | | 15.5% | | 17.6% | | (12% | ) |
Noninterest income as a percent of total revenue | | 48% | | 48% | | 46% | | 4% | | | - | | | 47% | | 45% | | 4% | |
Average equity as a percent of average assets | | 9.33% | | 9.09% | | 9.11% | | 2% | | | 3% | | | 9.19% | | 9.04% | | 2% | |
Tangible equity | | 7.40% | | 6.92% | | 6.84% | | 8% | | | 7% | | | 7.40% | | 6.84% | | 8% | |
Net interest margin (a) | | 2.99% | | 3.01% | | 3.16% | | (5% | ) | | (1% | ) | | 3.03% | | 3.27% | | (7% | ) |
Efficiency (a) | | 55.5% | | 55.3% | | 53.5% | | 4% | | | - | | | 55.2% | | 52.4% | | 5% | |
Effective tax rate | | 27.6% | | 28.5% | | 29.2% | | (5% | ) | | (3% | ) | | 28.9% | | 30.1% | | (4% | ) |
| | | | | | | | |
Credit Quality | | | | | | | | | | | | | | | | | | | |
Net losses charged off | | $79 | | $67 | | $64 | | 23% | | | 18% | | | $219 | | $183 | | 20% | |
Net losses charged off as a percent of average loans and leases | | 0.43% | | 0.37% | | 0.38% | | 13% | | | 16% | | | 0.41% | | 0.37% | | 11% | |
Allowance for loan and lease losses as a percent of loans and leases | | 1.04% | | 1.04% | | 1.06% | | (2% | ) | | - | | | 1.04% | | 1.06% | | (2% | ) |
Allowance for credit losses as a percent of loans and leases | | 1.14% | | 1.14% | | 1.16% | | (2% | ) | | - | | | 1.14% | | 1.16% | | (2% | ) |
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | | 0.56% | | 0.49% | | 0.51% | | 10% | | | 14% | | | 0.56% | | 0.51% | | 10% | |
| | | | | | | | |
Average Balances | | | | | | | | | | | | | | | | | | | |
Loans and leases, including held for sale | | $73,938 | | $73,093 | | $68,556 | | 8% | | | 1% | | | $72,896 | | $66,812 | | 9% | |
Total securities and other short-term investments | | 21,582 | | 22,439 | | 24,915 | | (13% | ) | | (4% | ) | | 22,309 | | 25,578 | | (13% | ) |
Total assets | | 105,868 | | 105,741 | | 103,699 | | 2% | | | - | | | 105,452 | | 102,501 | | 3% | |
Transaction deposits | | 48,543 | | 49,282 | | 47,568 | | 2% | | | (1% | ) | | 48,923 | | 47,591 | | 3% | |
Core deposits | | 59,337 | | 59,731 | | 56,298 | | 5% | | | (1% | ) | | 59,257 | | 55,862 | | 6% | |
Wholesale funding | | 33,040 | | 32,903 | | 34,615 | | (5% | ) | | - | | | 33,022 | | 34,089 | | (3% | ) |
Shareholders’ equity | | 9,878 | | 9,607 | | 9,451 | | 5% | | | 3% | | | 9,696 | | 9,262 | | 5% | |
| | | | | | | | |
Regulatory Capital Ratios (c) | | | | | | | | | | | | | | | | | | | |
Tier I capital | | 8.59% | | 8.52% | | 8.42% | | 2% | | | 1% | | | 8.59% | | 8.42% | | 2% | |
Total risk-based capital | | 10.55% | | 10.45% | | 10.54% | | - | | | 1% | | | 10.55% | | 10.54% | | - | |
Tier I leverage | | 8.54% | | 8.38% | | 7.93% | | 8% | | | 2% | | | 8.54% | | 7.93% | | 8% | |
| | | | | | | | |
Operations | | | | | | | | | | | | | | | | | | | |
Banking centers | | 1,145 | | 1,138 | | 1,106 | | 4% | | | 1% | | | 1,145 | | 1,106 | | 4% | |
ATMs | | 2,114 | | 2,034 | | 1,996 | | 6% | | | 4% | | | 2,114 | | 1,996 | | 6% | |
Full-time equivalent employees | | 21,301 | | 21,230 | | 21,674 | | (2% | ) | | - | | | 21,301 | | 21,674 | | (2% | ) |
| (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 |
6
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| | | | | | | | | | |
| | | For the Three Months Ended |
| | | September
2006 | | June
2006 | | March
2006 | | December
2005 | | September
2005 |
Income Statement Data | | | | | | | | | | |
Net interest income (a) | | $719 | | $716 | | $718 | | $735 | | $745 |
Noninterest income | | 662 | | 655 | | 617 | | 636 | | 622 |
Total revenue (a) | | 1,381 | | 1,371 | | 1,335 | | 1,371 | | 1,367 |
Provision for loan and lease losses | | 87 | | 71 | | 78 | | 134 | | 69 |
Noninterest expense | | 767 | | 759 | | 731 | | 763 | | 732 |
Net income | | 377 | | 382 | | 363 | | 332 | | 395 |
| | | | | |
Common Share Data | | | | | | | | | | |
Earnings per share, basic | | $0.68 | | $0.69 | | $0.66 | | $0.60 | | $0.71 |
Earnings per share, diluted | | 0.68 | | 0.69 | | 0.65 | | 0.60 | | 0.71 |
Cash dividends per common share | | 0.40 | | 0.40 | | 0.38 | | 0.38 | | 0.38 |
Book value per share | | 17.96 | | 17.13 | | 17.01 | | 17.00 | | 16.93 |
Dividend payout ratio | | 58.8% | | 58.0% | | 58.5% | | 63.3% | | 53.5% |
Market price per share: | | | | | | | | | | |
High | | $40.18 | | $41.02 | | $41.43 | | $42.50 | | $43.99 |
Low | | 35.95 | | 35.86 | | 36.30 | | 35.04 | | 36.38 |
End of period | | 38.08 | | 36.95 | | 39.36 | | 37.72 | | 36.75 |
Common shares outstanding (in thousands) | | 558,066 | | 557,894 | | 556,501 | | 555,623 | | 554,400 |
Average common shares outstanding (in thousands): | | | | | | | | | | |
Basic | | 555,565 | | 554,978 | | 554,398 | | 553,591 | | 553,855 |
Diluted | | 557,949 | | 557,489 | | 556,869 | | 556,322 | | 557,681 |
Market capitalization | | $21,251 | | $20,614 | | $21,904 | | $20,958 | | $20,374 |
Price/earnings ratio (b) | | 14.53 | | 13.94 | | 14.52 | | 13.57 | | 14.76 |
| | | | | |
Financial Ratios | | | | | | | | | | |
Return on average assets | | 1.41% | | 1.45% | | 1.41% | | 1.27% | | 1.51% |
Return on average equity | | 15.1% | | 16.0% | | 15.3% | | 13.9% | | 16.6% |
Noninterest income as a percent of total revenue | | 48% | | 48% | | 46% | | 46% | | 46% |
Average equity as a percent of average assets | | 9.33% | | 9.09% | | 9.17% | | 9.12% | | 9.11% |
Tangible equity | | 7.40% | | 6.92% | | 6.90% | | 6.87% | | 6.84% |
Net interest margin (a) | | 2.99% | | 3.01% | | 3.08% | | 3.11% | | 3.16% |
Efficiency (a) | | 55.5% | | 55.3% | | 54.7% | | 55.6% | | 53.5% |
Effective tax rate | | 27.6% | | 28.5% | | 30.7% | | 28.9% | | 29.2% |
| | | | | |
Credit Quality | | | | | | | | | | |
Net losses charged off | | $79 | | $67 | | $73 | | $117 | | $64 |
Net losses charged off as a percent of average loans and leases | | 0.43% | | 0.37% | | 0.42% | | 0.67% | | 0.38% |
Allowance for loan and lease losses as a percent of loans and leases | | 1.04% | | 1.04% | | 1.05% | | 1.06% | | 1.06% |
Allowance for credit losses as a percent of loans and leases | | 1.14% | | 1.14% | | 1.14% | | 1.16% | | 1.16% |
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | | 0.56% | | 0.49% | | 0.51% | | 0.52% | | 0.51% |
| | | | | |
Average Balances | | | | | | | | | | |
Loans and leases, including held for sale | | $73,938 | | $73,093 | | $71,634 | | $70,489 | | $68,556 |
Total securities and other short-term investments | | 21,582 | | 22,439 | | 22,917 | | 23,274 | | 24,915 |
Total assets | | 105,868 | | 105,741 | | 104,736 | | 103,988 | | 103,699 |
Transaction deposits | | 48,543 | | 49,282 | | 48,951 | | 48,937 | | 47,568 |
Core deposits | | 59,337 | | 59,731 | | 58,700 | | 58,080 | | 56,298 |
Wholesale funding | | 33,040 | | 32,903 | | 33,123 | | 33,192 | | 34,615 |
Shareholders’ equity | | 9,878 | | 9,607 | | 9,601 | | 9,480 | | 9,451 |
| | | | | |
Regulatory Capital Ratios (c) | | | | | | | | | | |
Tier I capital | | 8.59% | | 8.52% | | 8.51% | | 8.35% | | 8.42% |
Total risk-based capital | | 10.55% | | 10.45% | | 10.49% | | 10.42% | | 10.54% |
Tier I leverage | | 8.54% | | 8.38% | | 8.24% | | 8.08% | | 7.93% |
| | | | | |
Operations | | | | | | | | | | |
Banking centers | | 1,145 | | 1,138 | | 1,132 | | 1,119 | | 1,106 |
ATMs | | 2,114 | | 2,034 | | 2,025 | | 2,024 | | 1,996 |
Full-time equivalent employees | | 21,301 | | 21,230 | | 21,497 | | 21,681 | | 21,674 |
| (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 |
7
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
| | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | % Change | | | Year to Date | | % Change | |
| | | September
2006 | | June
2006 | | September
2005 | | Yr/Yr | | | Seq | | | September
2006 | | September
2005 | | Yr/Yr | |
Interest Income | | | | | | | | | | | | | | | | | | | |
Interest and fees on loans and leases | | $1,294 | | $1,227 | | $1,017 | | 27% | | | 5% | | | $3,668 | | $2,821 | | 30% | |
Interest on securities: | | | | | | | | | | | | | | | | | | | |
Taxable | | 231 | | 239 | | 255 | | (9% | ) | | (4% | ) | | 712 | | 789 | | (10% | ) |
Exempt from income taxes | | 7 | | 8 | | 10 | | (26% | ) | | (4% | ) | | 23 | | 30 | | (25% | ) |
Total interest on securities | | 238 | | 247 | | 265 | | (10% | ) | | (4% | ) | | 735 | | 819 | | (10% | ) |
Interest on other short-term investments | | 2 | | 3 | | 1 | | 125% | | | (10% | ) | | 7 | | 3 | | 102% | |
Total interest income | | 1,534 | | 1,477 | | 1,283 | | 20% | | | 4% | | | 4,410 | | 3,643 | | 21% | |
Interest Expense | | | | | | | | | | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | | | | | | | | | | |
Interest checking | | 102 | | 102 | | 86 | | 19% | | | 1% | | | 303 | | 220 | | 38% | |
Savings | | 95 | | 87 | | 48 | | 100% | | | 9% | | | 259 | | 109 | | 137% | |
Money market | | 69 | | 64 | | 37 | | 88% | | | 7% | | | 188 | | 90 | | 109% | |
Other time | | 116 | | 105 | | 68 | | 71% | | | 11% | | | 308 | | 182 | | 70% | |
Certificates - $100,000 and over | | 81 | | 61 | | 34 | | 137% | | | 32% | | | 191 | | 89 | | 115% | |
Foreign office | | 47 | | 52 | | 34 | | 38% | | | (10% | ) | | 143 | | 89 | | 60% | |
Total interest on deposits | | 510 | | 471 | | 307 | | 66% | | | 8% | | | 1,392 | | 779 | | 79% | |
Interest on federal funds purchased | | 61 | | 48 | | 35 | | 73% | | | 27% | | | 160 | | 89 | | 79% | |
Interest on short-term bank notes | | - | | - | | - | | NM | | | NM | | | - | | 6 | | (100% | ) |
Interest on other short-term borrowings | | 45 | | 52 | | 41 | | 9% | | | (13% | ) | | 142 | | 102 | | 39% | |
Interest on long-term debt | | 205 | | 196 | | 163 | | 26% | | | 4% | | | 582 | | 429 | | 35% | |
Total interest expense | | 821 | | 767 | | 546 | | 50% | | | 7% | | | 2,276 | | 1,405 | | 62% | |
Net Interest Income | | 713 | | 710 | | 737 | | (3% | ) | | 1% | | | 2,134 | | 2,238 | | (5% | ) |
Provision for loan and lease losses | | 87 | | 71 | | 69 | | 26% | | | 22% | | | 236 | | 197 | | 20% | |
Net interest income after provision for loan and lease losses | | 626 | | 639 | | 668 | | (6% | ) | | (2% | ) | | 1,898 | | 2,041 | | (7% | ) |
Noninterest Income | | | | | | | | | | | | | | | | | | | |
Electronic payment processing revenue | | 218 | | 211 | | 190 | | 15% | | | 3% | | | 626 | | 544 | | 15% | |
Service charges on deposits | | 134 | | 135 | | 137 | | (2% | ) | | - | | | 395 | | 390 | | 1% | |
Mortgage banking net revenue | | 36 | | 41 | | 45 | | (19% | ) | | (12% | ) | | 125 | | 132 | | (6% | ) |
Investment advisory revenue | | 89 | | 96 | | 89 | | (1% | ) | | (8% | ) | | 276 | | 271 | | 2% | |
Corporate banking revenue | | 79 | | 82 | | 71 | | 11% | | | (4% | ) | | 236 | | 207 | | 14% | |
Other noninterest income | | 87 | | 76 | | 82 | | 6% | | | 15% | | | 242 | | 282 | | (14% | ) |
Securities gains (losses), net | | 19 | | 14 | | 8 | | 128% | | | 30% | | | 34 | | 38 | | (10% | ) |
Total noninterest income | | 662 | | 655 | | 622 | | 6% | | | 1% | | | 1,934 | | 1,864 | | 4% | |
Noninterest Expense | | | | | | | | | | | | | | | | | | | |
Salaries, wages and incentives | | 288 | | 303 | | 285 | | 1% | | | (5% | ) | | 875 | | 846 | | 3% | |
Employee benefits | | 74 | | 69 | | 70 | | 6% | | | 7% | | | 230 | | 218 | | 6% | |
Equipment expense | | 34 | | 29 | | 26 | | 30% | | | 17% | | | 90 | | 76 | | 18% | |
Net occupancy expense | | 63 | | 59 | | 54 | | 16% | | | 6% | | | 180 | | 162 | | 11% | |
Other noninterest expense | | 308 | | 299 | | 297 | | 4% | | | 3% | | | 882 | | 862 | | 2% | |
Total noninterest expense | | 767 | | 759 | | 732 | | 5% | | | 1% | | | 2,257 | | 2,164 | | 4% | |
Income before income taxes and cumulative effect | | 521 | | 535 | | 558 | | (7% | ) | | (3% | ) | | 1,575 | | 1,741 | | (10% | ) |
Applicable income taxes | | 144 | | 153 | | 163 | | (12% | ) | | (6% | ) | | 456 | | 524 | | (13% | ) |
Income before cumulative effect | | 377 | | 382 | | 395 | | (5% | ) | | (1% | ) | | 1,119 | | 1,217 | | (8% | ) |
Cumulative effect of change in accounting principle, net of tax (b) | | - | | - | | - | | NM | | | NM | | | 4 | | - | | NM | |
Net income | | $377 | | $382 | | $395 | | (5% | ) | | (1% | ) | | $1,123 | | $1,217 | | (8% | ) |
Net income available to common shareholders (a) | | $377 | | $382 | | $395 | | (5% | ) | | (1% | ) | | $1,122 | | $1,217 | | (8% | ) |
| (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 |
8
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income (Taxable Equivalent)
$ in millions
(unaudited)
| | | | | | | | | | |
| | | For the Three Months Ended |
| | | September
2006 | | June
2006 | | March
2006 | | December
2005 | | September
2005 |
Interest Income | | | | | | | | | | |
Interest and fees on loans and leases | | $1,294 | | $1,227 | | $1,146 | | $1,098 | | $1,017 |
Interest on securities: | | | | | | | | | | |
Taxable | | 231 | | 239 | | 242 | | 243 | | 255 |
Exempt from income taxes | | 7 | | 8 | | 8 | | 9 | | 10 |
Total interest on securities | | 238 | | 247 | | 250 | | 252 | | 265 |
Interest on other short-term investments | | 2 | | 3 | | 2 | | 2 | | 1 |
Total interest income | | 1,534 | | 1,477 | | 1,398 | | 1,352 | | 1,283 |
Taxable equivalent adjustment | | 6 | | 6 | | 7 | | 7 | | 8 |
Total interest income (taxable equivalent) | | 1,540 | | 1,483 | | 1,405 | | 1,359 | | 1,291 |
Interest Expense | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | |
Interest checking | | 102 | | 102 | | 99 | | 94 | | 86 |
Savings | | 95 | | 87 | | 76 | | 67 | | 48 |
Money market | | 69 | | 64 | | 55 | | 50 | | 37 |
Other time | | 116 | | 105 | | 89 | | 81 | | 68 |
Certificates - $100,000 and over | | 81 | | 61 | | 48 | | 40 | | 34 |
Foreign office | | 47 | | 52 | | 44 | | 37 | | 34 |
Total interest on deposits | | 510 | | 471 | | 411 | | 369 | | 307 |
Interest on federal funds purchased | | 61 | | 48 | | 51 | | 49 | | 35 |
Interest on short-term bank notes | | - | | - | | - | | - | | - |
Interest on other short-term borrowings | | 45 | | 52 | | 44 | | 36 | | 41 |
Interest on long-term debt | | 205 | | 196 | | 181 | | 170 | | 163 |
Total interest expense | | 821 | | 767 | | 687 | | 624 | | 546 |
Net interest income (taxable equivalent) | | 719 | | 716 | | 718 | | 735 | | 745 |
Provision for loan and lease losses | | 87 | | 71 | | 78 | | 134 | | 69 |
Net interest income (taxable equivalent) after provision for loan and lease losses | | 632 | | 645 | | 640 | | 601 | | 676 |
Noninterest Income | | | | | | | | | | |
Electronic payment processing revenue | | 218 | | 211 | | 196 | | 204 | | 190 |
Service charges on deposits | | 134 | | 135 | | 126 | | 133 | | 137 |
Mortgage banking net revenue | | 36 | | 41 | | 47 | | 42 | | 45 |
Investment advisory revenue | | 89 | | 96 | | 91 | | 87 | | 89 |
Corporate banking revenue | | 79 | | 82 | | 76 | | 92 | | 71 |
Other noninterest income | | 87 | | 76 | | 80 | | 77 | | 82 |
Securities gains (losses), net | | 19 | | 14 | | 1 | | 1 | | 8 |
Total noninterest income | | 662 | | 655 | | 617 | | 636 | | 622 |
Noninterest Expense | | | | | | | | | | |
Salaries, wages and incentives | | 288 | | 303 | | 284 | | 287 | | 285 |
Employee benefits | | 74 | | 69 | | 87 | | 65 | | 70 |
Equipment expense | | 34 | | 29 | | 27 | | 29 | | 26 |
Net occupancy expense | | 63 | | 59 | | 58 | | 59 | | 54 |
Other noninterest expense | | 308 | | 299 | | 275 | | 323 | | 297 |
Total noninterest expense | | 767 | | 759 | | 731 | | 763 | | 732 |
Income before income taxes and cumulative effect (taxable equivalent) | | 527 | | 541 | | 526 | | 474 | | 566 |
Taxable equivalent adjustment | | 6 | | 6 | | 7 | | 7 | | 8 |
Income before income taxes and cumulative effect | | 521 | | 535 | | 519 | | 467 | | 558 |
Applicable income taxes | | 144 | | 153 | | 160 | | 135 | | 163 |
Income before cumulative effect | | 377 | | 382 | | 359 | | 332 | | 395 |
Cumulative effect of change in accounting principle, net of tax (b) | | - | | - | | 4 | | - | | - |
Net income | | $377 | | $382 | | $363 | | $332 | | $395 |
Net income available to common shareholders (a) | | $377 | | $382 | | $363 | | $332 | | $395 |
| (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 Balance Sheets
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | As of | | | % Change | |
| | | September
2006 | | | June
2006 | | | September
2005 | | | Yr/Yr | | | Annual
Seq | |
Assets | | | | | | | | | | | | | | | |
Cash and due from banks | | $2,399 | | | $2,670 | | | $3,372 | | | (29% | ) | | (40% | ) |
Available-for-sale and other securities (a) | | 19,514 | | | 20,345 | | | 22,537 | | | (13% | ) | | (16% | ) |
Held-to-maturity securities (b) | | 359 | | | 358 | | | 332 | | | 8% | | | 2% | |
Trading securities | | 164 | | | 173 | | | 105 | | | 56% | | | (20% | ) |
Other short-term investments | | 125 | | | 207 | | | 113 | | | 10% | | | (158% | ) |
Loans held for sale | | 872 | | | 931 | | | 1,237 | | | (29% | ) | | (25% | ) |
Portfolio loans and leases: | | | | | | | | | | | | | | | |
Commercial loans | | 21,150 | | | 20,618 | | | 18,591 | | | 14% | | | 10% | |
Construction loans | | 6,597 | | | 6,698 | | | 6,529 | | | 1% | | | (6% | ) |
Commercial mortgage loans | | 9,879 | | | 9,792 | | | 9,138 | | | 8% | | | 4% | |
Commercial lease financing | | 4,895 | | | 4,899 | | | 4,731 | | | 3% | | | - | |
Residential mortgage loans | | 8,093 | | | 7,875 | | | 7,353 | | | 10% | | | 11% | |
Consumer loans | | 22,834 | | | 22,556 | | | 21,786 | | | 5% | | | 5% | |
Consumer lease financing | | 1,287 | | | 1,420 | | | 1,910 | | | (33% | ) | | (37% | ) |
Unearned income | | (1,255 | ) | | (1,281 | ) | | (1,284 | ) | | (2% | ) | | (8% | ) |
Portfolio loans and leases | | 73,480 | | | 72,577 | | | 68,754 | | | 7% | | | 5% | |
Allowance for loan and lease losses | | (761 | ) | | (753 | ) | | (727 | ) | | 5% | | | 4% | |
Portfolio loans and leases, net | | 72,719 | | | 71,824 | | | 68,027 | | | 7% | | | 5% | |
Bank premises and equipment | | 1,902 | | | 1,853 | | | 1,643 | | | 16% | | | 11% | |
Operating lease equipment | | 142 | | | 150 | | | 159 | | | (11% | ) | | (20% | ) |
Goodwill | | 2,193 | | | 2,194 | | | 2,176 | | | 1% | | | - | |
Intangible assets | | 175 | | | 185 | | | 220 | | | (20% | ) | | (22% | ) |
Servicing rights | | 504 | | | 489 | | | 417 | | | 21% | | | 12% | |
Other assets | | 4,760 | | | 4,732 | | | 4,270 | | | 11% | | | 2% | |
Total assets | | $105,828 | | | $106,111 | | | $104,608 | | | 1% | | | (1% | ) |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Demand | | $13,883 | | | $14,078 | | | $14,294 | | | (3% | ) | | (5% | ) |
Interest checking | | 15,855 | | | 16,788 | | | 18,169 | | | (13% | ) | | (22% | ) |
Savings | | 12,392 | | | 12,061 | | | 10,437 | | | 19% | | | 11% | |
Money market | | 6,462 | | | 6,505 | | | 5,855 | | | 10% | | | (3% | ) |
Other time | | 10,818 | | | 10,627 | | | 8,867 | | | 22% | | | 7% | |
Certificates - $100,000 and over | | 6,871 | | | 5,691 | | | 4,195 | | | 64% | | | 82% | |
Foreign office | | 2,362 | | | 4,773 | | | 3,678 | | | (36% | ) | | (200% | ) |
Total deposits | | 68,643 | | | 70,523 | | | 65,495 | | | 5% | | | (11% | ) |
Federal funds purchased | | 5,434 | | | 2,493 | | | 3,548 | | | 53% | | | 468% | |
Short-term bank notes | | - | | | - | | | - | | | NM | | | NM | |
Other short-term borrowings | | 3,833 | | | 5,275 | | | 6,075 | | | (37% | ) | | (108% | ) |
Accrued taxes, interest and expenses | | 2,156 | | | 1,995 | | | 2,136 | | | 1% | | | 32% | |
Other liabilities | | 1,570 | | | 1,767 | | | 1,447 | | | 9% | | | (44% | ) |
Long-term debt | | 14,170 | | | 14,502 | | | 16,522 | | | (14% | ) | | (9% | ) |
Total liabilities | | 95,806 | | | 96,555 | | | 95,223 | | | 1% | | | (3% | ) |
Total shareholders’ equity (c) | | 10,022 | | | 9,556 | | | 9,385 | | | 7% | | | 19% | |
Total liabilities and shareholders’ equity | | $105,828 | | | $106,111 | | | $104,608 | | | 1% | | | (1% | ) |
(a) Amortized cost | | $20,103 | | | $21,376 | | | $22,993 | | | (13% | ) | | (24% | ) |
(b) Market values | | 359 | | | 358 | | | 332 | | | 8% | | | 2% | |
(c) Common shares, stated value $2.22 per share (in thousands): | | | | | | | | | | | | | |
Authorized | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | | | - | | | - | |
Outstanding, excluding treasury | | 558,066 | | | 557,894 | | | 554,400 | | | 1% | | | - | |
Treasury | | 25,361 | | | 25,533 | | | 29,027 | | | (13% | ) | | (3% | ) |
10
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | As of | |
| | | September
2006 | | | June
2006 | | | March
2006 | | | December
2005 | | | September
2005 | |
Assets | | | | | | | | | | | | | | | |
Cash and due from banks | | $2,399 | | | $2,670 | | | $2,494 | | | $3,078 | | | $3,372 | |
Available-for-sale and other securities (a) | | 19,514 | | | 20,345 | | | 21,276 | | | 21,924 | | | 22,537 | |
Held-to-maturity securities (b) | | 359 | | | 358 | | | 365 | | | 389 | | | 332 | |
Trading securities | | 164 | | | 173 | | | 156 | | | 117 | | | 105 | |
Other short-term investments | | 125 | | | 207 | | | 159 | | | 158 | | | 113 | |
Loans held for sale | | 872 | | | 931 | | | 744 | | | 1,304 | | | 1,237 | |
Portfolio loans and leases: | | | | | | | | | | | | | | | |
Commercial loans | | 21,150 | | | 20,618 | | | 19,878 | | | 19,174 | | | 18,591 | |
Construction loans | | 6,597 | | | 6,698 | | | 6,600 | | | 7,037 | | | 6,529 | |
Commercial mortgage loans | | 9,879 | | | 9,792 | | | 9,861 | | | 9,188 | | | 9,138 | |
Commercial lease financing | | 4,895 | | | 4,899 | | | 4,911 | | | 4,852 | | | 4,731 | |
Residential mortgage loans | | 8,093 | | | 7,875 | | | 7,708 | | | 7,152 | | | 7,353 | |
Consumer loans | | 22,834 | | | 22,556 | | | 22,210 | | | 22,084 | | | 21,786 | |
Consumer lease financing | | 1,287 | | | 1,420 | | | 1,577 | | | 1,751 | | | 1,910 | |
Unearned income | | (1,255 | ) | | (1,281 | ) | | (1,323 | ) | | (1,313 | ) | | (1,284 | ) |
Portfolio loans and leases | | 73,480 | | | 72,577 | | | 71,422 | | | 69,925 | | | 68,754 | |
Allowance for loan and lease losses | | (761 | ) | | (753 | ) | | (749 | ) | | (744 | ) | | (727 | ) |
Portfolio loans and leases, net | | 72,719 | | | 71,824 | | | 70,673 | | | 69,181 | | | 68,027 | |
Bank premises and equipment | | 1,902 | | | 1,853 | | | 1,798 | | | 1,726 | | | 1,643 | |
Operating lease equipment | | 142 | | | 150 | | | 137 | | | 143 | | | 159 | |
Goodwill | | 2,193 | | | 2,194 | | | 2,194 | | | 2,169 | | | 2,176 | |
Intangible assets | | 175 | | | 185 | | | 189 | | | 208 | | | 220 | |
Servicing rights | | 504 | | | 489 | | | 468 | | | 441 | | | 417 | |
Other assets | | 4,760 | | | 4,732 | | | 4,391 | | | 4,387 | | | 4,270 | |
Total assets | | $105,828 | | | $106,111 | | | $105,044 | | | $105,225 | | | $104,608 | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Demand | | $13,883 | | | $14,078 | | | $14,134 | | | $14,609 | | | $14,294 | |
Interest checking | | 15,855 | | | 16,788 | | | 17,511 | | | 18,282 | | | 18,169 | |
Savings | | 12,392 | | | 12,061 | | | 11,902 | | | 11,276 | | | 10,437 | |
Money market | | 6,462 | | | 6,505 | | | 6,399 | | | 6,129 | | | 5,855 | |
Other time | | 10,818 | | | 10,627 | | | 10,105 | | | 9,313 | | | 8,867 | |
Certificates - $100,000 and over | | 6,871 | | | 5,691 | | | 5,085 | | | 4,343 | | | 4,195 | |
Foreign office | | 2,362 | | | 4,773 | | | 3,874 | | | 3,482 | | | 3,678 | |
Total deposits | | 68,643 | | | 70,523 | | | 69,010 | | | 67,434 | | | 65,495 | |
Federal funds purchased | | 5,434 | | | 2,493 | | | 3,715 | | | 5,323 | | | 3,548 | |
Short-term bank notes | | - | | | - | | | - | | | - | | | - | |
Other short-term borrowings | | 3,833 | | | 5,275 | | | 4,472 | | | 4,246 | | | 6,075 | |
Accrued taxes, interest and expenses | | 2,156 | | | 1,995 | | | 2,169 | | | 2,142 | | | 2,136 | |
Other liabilities | | 1,570 | | | 1,767 | | | 1,463 | | | 1,407 | | | 1,447 | |
Long-term debt | | 14,170 | | | 14,502 | | | 14,746 | | | 15,227 | | | 16,522 | |
Total liabilities | | 95,806 | | | 96,555 | | | 95,575 | | | 95,779 | | | 95,223 | |
Total shareholders’ equity (c) | | 10,022 | | | 9,556 | | | 9,469 | | | 9,446 | | | 9,385 | |
Total liabilities and shareholders’ equity | | $105,828 | | | $106,111 | | | $105,044 | | | $105,225 | | | $104,608 | |
(a) Amortized cost | | $20,103 | | | $21,376 | | | $22,127 | | | $22,533 | | | $22,993 | |
(b) Market values | | 359 | | | 358 | | | 365 | | | 389 | | | 332 | |
(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 | | 558,066 | | | 557,894 | | | 556,501 | | | 555,623 | | | 554,400 | |
Treasury | | 25,361 | | | 25,533 | | | 26,926 | | | 27,804 | | | 29,027 | |
11
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
$ in millions
(unaudited)
| | | | | | | | | | | | |
| | | For the Three Months Ended | | | Year to Date | |
| | | September
2006 | | | September
2005 | | | September
2006 | | | September
2005 | |
Total shareholders’ equity, beginning | | $9,556 | | | $9,353 | | | $9,446 | | | $8,924 | |
Net income | | 377 | | | 395 | | | 1,123 | | | 1,217 | |
Other comprehensive income, net of tax: | | | | | | | | | | | | |
Change in unrealized gains and (losses): | | | | | | | | | | | | |
Available-for-sale securities | | 288 | | | (189 | ) | | 13 | | | (224 | ) |
Qualifying cash flow hedges | | 3 | | | 7 | | | 8 | | | 16 | |
Change in additional pension liability | | - | | | - | | | - | | | 60 | |
Comprehensive income | | 668 | | | 213 | | | 1,144 | | | 1,069 | |
Cash dividends declared: | | | | | | | | | | | | |
Common stock | | (223 | ) | | (210 | ) | | (658 | ) | | (599 | ) |
Preferred stock (a) | | - | | | - | | | (1 | ) | | (1 | ) |
Stock-based awards exercised, including treasury shares issued | | 6 | | | 15 | | | 30 | | | 55 | |
Stock-based compensation expense | | 17 | | | 16 | | | 55 | | | 53 | |
Loans repaid (issued) related to exercise of stock-based awards, net | | 2 | | | 3 | | | 7 | | | 8 | |
Change in corporate tax benefit related to stock-based compensation | | (1 | ) | | - | | | (1 | ) | | 15 | |
Shares acquired for treasury | | - | | | (3 | ) | | (1 | ) | | (1,648 | ) |
Shares issued in business combination | | - | | | - | | | - | | | 1,509 | |
Other | | (3 | ) | | (2 | ) | | 1 | | | - | |
Total shareholders’ equity, ending | | $10,022 | | | $9,385 | | | $10,022 | | | $9,385 | |
| (a) | Dividends on preferred stock are $.185 million for all quarters presented |
12
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | % Change | |
| | | September
2006 | | | June 2006 | | | September
2005 | | | Yr/Yr | | | Annual
Seq | |
Assets | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | $73,938 | | | $73,093 | | | $68,556 | | | 8% | | | 5% | |
Taxable securities | | 20,836 | | | 21,642 | | | 24,013 | | | (13% | ) | | (15% | ) |
Tax exempt securities | | 587 | | | 616 | | | 787 | | | (25% | ) | | (18% | ) |
Other short-term investments | | 159 | | | 181 | | | 115 | | | 38% | | | (47% | ) |
Total interest-earning assets | | 95,520 | | | 95,532 | | | 93,471 | | | 2% | | | - | |
Cash and due from banks | | 2,355 | | | 2,564 | | | 2,742 | | | (14% | ) | | (32% | ) |
Other assets | | 8,745 | | | 8,393 | | | 8,207 | | | 7% | | | 17% | |
Allowance for loan and lease losses | | (752 | ) | | (748 | ) | | (721 | ) | | 4% | | | 2% | |
Total assets | | $105,868 | | | $105,741 | | | $103,699 | | | 2% | | | - | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | $16,251 | | | $17,025 | | | $18,498 | | | (12% | ) | | (18% | ) |
Savings | | 12,279 | | | 12,064 | | | 9,939 | | | 24% | | | 7% | |
Money market | | 6,371 | | | 6,429 | | | 5,154 | | | 24% | | | (4% | ) |
Other time | | 10,794 | | | 10,449 | | | 8,730 | | | 24% | | | 13% | |
Certificates - $100,000 and over | | 6,415 | | | 5,316 | | | 4,156 | | | 54% | | | 82% | |
Foreign office | | 3,668 | | | 4,382 | | | 3,925 | | | (7% | ) | | (65% | ) |
Federal funds purchased | | 4,546 | | | 3,886 | | | 4,001 | | | 14% | | | 67% | |
Short-term bank notes | | - | | | - | | | - | | | NM | | | NM | |
Other short-term borrowings | | 4,056 | | | 4,854 | | | 5,619 | | | (28% | ) | | (65% | ) |
Long-term debt | | 14,355 | | | 14,465 | | | 16,914 | | | (15% | ) | | (3% | ) |
Total interest-bearing liabilities | | 78,735 | | | 78,870 | | | 76,936 | | | 2% | | | (1% | ) |
Demand deposits | | 13,642 | | | 13,764 | | | 13,977 | | | (2% | ) | | (4% | ) |
Other liabilities | | 3,613 | | | 3,500 | | | 3,335 | | | 8% | | | 13% | |
Total liabilities | | 95,990 | | | 96,134 | | | 94,248 | | | 2% | | | (1% | ) |
Shareholders’ equity | | 9,878 | | | 9,607 | | | 9,451 | | | 5% | | | 11% | |
Total liabilities and shareholders’ equity | | $105,868 | | | $105,741 | | | $103,699 | | | 2% | | | - | |
| | | | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | |
Basic | | 555,565 | | | 554,978 | | | 553,855 | | | - | | | - | |
Diluted | | 557,949 | | | 557,489 | | | 557,681 | | | - | | | - | |
| | | | | |
Yield Analysis | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | 6.96% | | | 6.75% | | | 5.90% | | | | | | | |
Taxable securities | | 4.39% | | | 4.43% | | | 4.22% | | | | | | | |
Tax exempt securities | | 7.29% | | | 7.33% | | | 7.42% | | | | | | | |
Other short-term investments | | 5.69% | | | 5.60% | | | 3.49% | | | | | | | |
Total interest-earning assets | | 6.40% | | | 6.23% | | | 5.48% | | | | | | | |
| | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | 2.49% | | | 2.39% | | | 1.84% | | | | | | | |
Savings | | 3.08% | | | 2.90% | | | 1.90% | | | | | | | |
Money market | | 4.30% | | | 4.01% | | | 2.82% | | | | | | | |
Other time | | 4.24% | | | 4.00% | | | 3.14% | | | | | | | |
Certificates - $100,000 and over | | 5.03% | | | 4.64% | | | 3.28% | | | | | | | |
Foreign office | | 5.05% | | | 4.77% | | | 3.41% | | | | | | | |
Federal funds purchased | | 5.33% | | | 4.97% | | | 3.50% | | | | | | | |
Short-term bank notes | | - | | | - | | | - | | | | | | | |
Other short-term borrowings | | 4.42% | | | 4.31% | | | 2.92% | | | | | | | |
Long-term debt | | 5.66% | | | 5.45% | | | 3.80% | | | | | | | |
Total interest-bearing liabilities | | 4.14% | | | 3.90% | | | 2.82% | | | | | | | |
| | | | | |
Ratios: | | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | 2.99% | | | 3.01% | | | 3.16% | | | | | | | |
Net interest rate spread (taxable equivalent) | | 2.26% | | | 2.33% | | | 2.66% | | | | | | | |
Interest-bearing liabilities to interest-earning assets | | 82.43% | | | 82.56% | | | 82.31% | | | | | | | |
13
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | |
| | | Year to Date | | | % Change | |
| | | September 2006 | | | September 2005 | | | Yr/Yr | |
Assets | | | | | | | | | |
Interest-earning assets: | | | | | | | | | |
Loans and leases | | $72,896 | | | $66,812 | | | 9% | |
Taxable securities | | 21,527 | | | 24,569 | | | (12% | ) |
Tax exempt securities | | 616 | | | 819 | | | (25% | ) |
Other short-term investments | | 166 | | | 190 | | | (13% | ) |
Total interest-earning assets | | 95,205 | | | 92,390 | | | 3% | |
Cash and due from banks | | 2,528 | | | 2,728 | | | (7% | ) |
Other assets | | 8,467 | | | 8,101 | | | 5% | |
Allowance for loan and lease losses | | (748 | ) | | (718 | ) | | 4% | |
Total assets | | $105,452 | | | $102,501 | | | 3% | |
| | | |
Liabilities | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | |
Interest checking | | $16,955 | | | $19,240 | | | (12% | ) |
Savings | | 11,979 | | | 9,660 | | | 24% | |
Money market | | 6,296 | | | 4,900 | | | 29% | |
Other time | | 10,334 | | | 8,271 | | | 25% | |
Certificates - $100,000 and over | | 5,473 | | | 3,883 | | | 41% | |
Foreign office | | 4,032 | | | 4,056 | | | (1% | ) |
Federal funds purchased | | 4,328 | | | 4,040 | | | 7% | |
Short-term bank notes | | - | | | 332 | | | (100% | ) |
Other short-term borrowings | | 4,540 | | | 5,250 | | | (14% | ) |
Long-term debt | | 14,649 | | | 16,528 | | | (11% | ) |
Total interest-bearing liabilities | | 78,586 | | | 76,160 | | | 3% | |
Demand deposits | | 13,693 | | | 13,791 | | | (1% | ) |
Other liabilities | | 3,477 | | | 3,288 | | | 6% | |
Total liabilities | | 95,756 | | | 93,239 | | | 3% | |
Shareholders’ equity | | 9,696 | | | 9,262 | | | 5% | |
Total liabilities and shareholders’ equity | | $105,452 | | | $102,501 | | | 3% | |
| | | |
Average common shares outstanding (in thousands): | | | | | | | | | |
Basic | | 554,985 | | | 554,687 | | | - | |
Diluted | | 557,440 | | | 559,158 | | | - | |
| | | |
Yield Analysis | | | | | | | | | |
Interest-earning assets: | | | | | | | | | |
Loans and leases | | 6.74% | | | 5.66% | | | | |
Taxable securities | | 4.42% | | | 4.30% | | | | |
Tax exempt securities | | 7.41% | | | 7.35% | | | | |
Other short-term investments | | 5.44% | | | 2.35% | | | | |
Total interest-earning assets | | 6.22% | | | 5.31% | | | | |
| | | |
Interest-bearing liabilities: | | | | | | | | | |
Interest checking | | 2.39% | | | 1.53% | | | | |
Savings | | 2.89% | | | 1.51% | | | | |
Money market | | 3.99% | | | 2.46% | | | | |
Other time | | 4.00% | | | 2.94% | | | | |
Certificates - $100,000 and over | | 4.66% | | | 3.05% | | | | |
Foreign office | | 4.73% | | | 2.94% | | | | |
Federal funds purchased | | 4.93% | | | 2.96% | | | | |
Short-term bank notes | | - | | | 2.60% | | | | |
Other short-term borrowings | | 4.18% | | | 2.60% | | | | |
Long-term debt | | 5.31% | | | 3.47% | | | | |
Total interest-bearing liabilities | | 3.87% | | | 2.47% | | | | |
| | | |
Ratios: | | | | | | | | | |
Net interest margin (taxable equivalent) | | 3.03% | | | 3.27% | | | | |
Net interest rate spread (taxable equivalent) | | 2.35% | | | 2.84% | | | | |
Interest-bearing liabilities to interest-earning assets | | 82.54% | | | 82.43% | | | | |
14
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | September
2006 | | | June
2006 | | | March
2006 | | | December
2005 | | | September
2005 | |
Assets | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | $73,938 | | | $73,093 | | | $71,634 | | | $70,489 | | | $68,556 | |
Taxable securities | | 20,836 | | | 21,642 | | | 22,116 | | | 22,376 | | | 24,013 | |
Tax exempt securities | | 587 | | | 616 | | | 644 | | | 698 | | | 787 | |
Other short-term investments | | 159 | | | 181 | | | 157 | | | 200 | | | 115 | |
Total interest-earning assets | | 95,520 | | | 95,532 | | | 94,551 | | | 93,763 | | | 93,471 | |
Cash and due from banks | | 2,355 | | | 2,564 | | | 2,668 | | | 2,847 | | | 2,742 | |
Other assets | | 8,745 | | | 8,393 | | | 8,261 | | | 8,105 | | | 8,207 | |
Allowance for loan and lease losses | | (752 | ) | | (748 | ) | | (744 | ) | | (727 | ) | | (721 | ) |
Total assets | | $105,868 | | | $105,741 | | | $104,736 | | | $103,988 | | | $103,699 | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | $16,251 | | | $17,025 | | | $17,603 | | | $17,828 | | | $18,498 | |
Savings | | 12,279 | | | 12,064 | | | 11,588 | | | 11,036 | | | 9,939 | |
Money market | | 6,371 | | | 6,429 | | | 6,086 | | | 5,974 | | | 5,154 | |
Other time | | 10,794 | | | 10,449 | | | 9,749 | | | 9,143 | | | 8,730 | |
Certificates - $100,000 and over | | 6,415 | | | 5,316 | | | 4,670 | | | 4,354 | | | 4,156 | |
Foreign office | | 3,668 | | | 4,382 | | | 4,050 | | | 3,703 | | | 3,925 | |
Federal funds purchased | | 4,546 | | | 3,886 | | | 4,553 | | | 4,771 | | | 4,001 | |
Short-term bank notes | | - | | | - | | | - | | | - | | | - | |
Other short-term borrowings | | 4,056 | | | 4,854 | | | 4,718 | | | 4,408 | | | 5,619 | |
Long-term debt | | 14,355 | | | 14,465 | | | 15,132 | | | 15,956 | | | 16,914 | |
Total interest-bearing liabilities | | 78,735 | | | 78,870 | | | 78,149 | | | 77,173 | | | 76,936 | |
Demand deposits | | 13,642 | | | 13,764 | | | 13,674 | | | 14,099 | | | 13,977 | |
Other liabilities | | 3,613 | | | 3,500 | | | 3,312 | | | 3,236 | | | 3,335 | |
Total liabilities | | 95,990 | | | 96,134 | | | 95,135 | | | 94,508 | | | 94,248 | |
Shareholders’ equity | | 9,878 | | | 9,607 | | | 9,601 | | | 9,480 | | | 9,451 | |
Total liabilities and shareholders’ equity | | $105,868 | | | $105,741 | | | $104,736 | | | $103,988 | | | $103,699 | |
| | | | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | |
Basic | | 555,565 | | | 554,978 | | | 554,398 | | | 553,591 | | | 553,855 | |
Diluted | | 557,949 | | | 557,489 | | | 556,869 | | | 556,322 | | | 557,681 | |
| | | | | |
Yield Analysis | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | |
Loans and leases | | 6.96% | | | 6.75% | | | 6.51% | | | 6.20% | | | 5.90% | |
Taxable securities | | 4.39% | | | 4.43% | | | 4.44% | | | 4.31% | | | 4.22% | |
Tax exempt securities | | 7.29% | | | 7.33% | | | 7.59% | | | 7.51% | | | 7.42% | |
Other short-term investments | | 5.69% | | | 5.60% | | | 4.98% | | | 4.41% | | | 3.49% | |
Total interest-earning assets | | 6.40% | | | 6.23% | | | 6.03% | | | 5.75% | | | 5.48% | |
| | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | |
Interest checking | | 2.49% | | | 2.39% | | | 2.28% | | | 2.10% | | | 1.84% | |
Savings | | 3.08% | | | 2.90% | | | 2.67% | | | 2.41% | | | 1.90% | |
Money market | | 4.30% | | | 4.01% | | | 3.64% | | | 3.32% | | | 2.82% | |
Other time | | 4.24% | | | 4.00% | | | 3.74% | | | 3.50% | | | 3.14% | |
Certificates - $100,000 and over | | 5.03% | | | 4.64% | | | 4.15% | | | 3.66% | | | 3.28% | |
Foreign office | | 5.05% | | | 4.77% | | | 4.39% | | | 3.92% | | | 3.41% | |
Federal funds purchased | | 5.33% | | | 4.97% | | | 4.50% | | | 4.04% | | | 3.50% | |
Short-term bank notes | | - | | | - | | | - | | | - | | | - | |
Other short-term borrowings | | 4.42% | | | 4.31% | | | 3.82% | | | 3.27% | | | 2.92% | |
Long-term debt | | 5.66% | | | 5.45% | | | 4.85% | | | 4.25% | | | 3.80% | |
Total interest-bearing liabilities | | 4.14% | | | 3.90% | | | 3.57% | | | 3.21% | | | 2.82% | |
| | | | | |
Ratios: | | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | 2.99% | | | 3.01% | | | 3.08% | | | 3.11% | | | 3.16% | |
Net interest rate spread (taxable equivalent) | | 2.26% | | | 2.33% | | | 2.46% | | | 2.54% | | | 2.66% | |
Interest-bearing liabilities to interest-earning assets | | 82.43% | | | 82.56% | | | 82.65% | | | 82.31% | | | 82.31% | |
15
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
| | | | | | | | | | |
| | | For the Three Months Ended |
| | | September
2006 | | June
2006 | | March
2006 | | December
2005 | | September
2005 |
Average Loans and Leases (including unearned income) | | | | | | | | | | |
Commercial: | | | | | | | | | | |
Commercial loans | | $20,769 | | $20,239 | | $19,461 | | $18,909 | | $18,203 |
Commercial mortgage | | 9,833 | | 9,980 | | 9,441 | | 9,159 | | 9,095 |
Commercial construction | | 5,913 | | 5,840 | | 6,211 | | 6,051 | | 5,700 |
Commercial leases | | 3,740 | | 3,729 | | 3,686 | | 3,611 | | 3,537 |
Subtotal - commercial | | 40,255 | | 39,788 | | 38,799 | | 37,730 | | 36,535 |
Consumer: | | | | | | | | | | |
Residential mortgage | | 8,967 | | 8,756 | | 8,351 | | 8,444 | | 8,271 |
Residential construction | | 733 | | 735 | | 706 | | 673 | | 624 |
Credit card | | 979 | | 897 | | 855 | | 825 | | 778 |
Home equity | | 12,366 | | 12,193 | | 12,072 | | 11,884 | | 11,702 |
Other consumer loans | | 9,384 | | 9,340 | | 9,311 | | 9,251 | | 8,868 |
Consumer leases | | 1,254 | | 1,384 | | 1,540 | | 1,682 | | 1,778 |
Subtotal - consumer | | 33,683 | | 33,305 | | 32,835 | | 32,759 | | 32,021 |
Total average loans and leases | | $73,938 | | $73,093 | | $71,634 | | $70,489 | | $68,556 |
| | | | | |
End of Period Loans and Leases Serviced | | | | | | | | | | |
Commercial: | | | | | | | | | | |
Commercial loans | | $21,150 | | $20,618 | | $19,878 | | $19,174 | | $18,591 |
Commercial mortgage | | 9,879 | | 9,792 | | 9,861 | | 9,188 | | 9,138 |
Commercial construction | | 5,879 | | 5,950 | | 5,883 | | 6,342 | | 5,880 |
Commercial leases | | 3,751 | | 3,740 | | 3,726 | | 3,695 | | 3,619 |
Subtotal - commercial | | 40,659 | | 40,100 | | 39,348 | | 38,399 | | 37,228 |
Consumer: | | | | | | | | | | |
Residential mortgage | | 8,093 | | 7,875 | | 7,708 | | 7,152 | | 7,353 |
Residential construction | | 718 | | 748 | | 717 | | 695 | | 649 |
Credit card | | 986 | | 945 | | 851 | | 866 | | 805 |
Home equity | | 12,429 | | 12,277 | | 12,087 | | 12,000 | | 11,766 |
Other consumer loans | | 9,420 | | 9,334 | | 9,272 | | 9,218 | | 9,215 |
Consumer leases | | 1,175 | | 1,298 | | 1,439 | | 1,595 | | 1,738 |
Subtotal - consumer | | 32,821 | | 32,477 | | 32,074 | | 31,526 | | 31,526 |
Total portfolio loans and leases | | 73,480 | | 72,577 | | 71,422 | | 69,925 | | 68,754 |
| | | | | |
Loans held for sale | | 872 | | 931 | | 744 | | 1,304 | | 1,237 |
| | | | | |
Operating lease equipment | | 142 | | 150 | | 137 | | 143 | | 159 |
| | | | | |
Loans and Leases Serviced for Others: | | | | | | | | | | |
Residential mortgage (a) | | 27,823 | | 27,057 | | 26,399 | | 25,669 | | 24,525 |
Commercial mortgage (b) | | 756 | | 890 | | 2,183 | | 2,126 | | 2,095 |
Commercial loans (c) | | 3,404 | | 3,332 | | 3,182 | | 2,744 | | 2,528 |
Commercial leases (b) | | 256 | | 258 | | 271 | | 264 | | 240 |
Consumer loans (d) | | 596 | | 677 | | 774 | | 871 | | 972 |
Total loans and leases serviced for others | | 32,835 | | 32,214 | | 32,809 | | 31,674 | | 30,360 |
Total loans and leases serviced | | $107,329 | | $105,872 | | $105,112 | | $103,046 | | $100,510 |
| (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 primarily 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 | |
| | | September
2006 | | | June 2006 | | | March
2006 | | | December
2005 | | | September
2005 | |
Tier I capital: | | | | | | | | | | | | | | | |
Shareholders’ equity | | $10,022 | | | $9,556 | | | $9,469 | | | $9,446 | | | $9,385 | |
Goodwill and certain other intangibles | | (2,368 | ) | | (2,351 | ) | | (2,357 | ) | | (2,377 | ) | | (2,396 | ) |
Unrealized (gains) losses | | 379 | | | 674 | | | 561 | | | 405 | | | 310 | |
Other | | 799 | | | 781 | | | 761 | | | 735 | | | 731 | |
Total tier I capital | | $8,832 | | | $8,660 | | | $8,434 | | | $8,209 | | | $8,030 | |
Total risk-based capital: | | | | | | | | | | | | | | | |
Tier I capital | | $8,832 | | | $8,660 | | | $8,434 | | | $8,209 | | | $8,030 | |
Qualifying allowance for credit losses | | 857 | | | 849 | | | 840 | | | 838 | | | 823 | |
Qualifying subordinated notes | | 1,150 | | | 1,108 | | | 1,126 | | | 1,193 | | | 1,193 | |
Total risk-based capital | | $10,839 | | | $10,617 | | | $10,400 | | | $10,240 | | | $10,046 | |
Risk-weighted assets | | $102,777 | | | $101,605 | | | $99,123 | | | $98,293 | | | $95,316 | |
Ratios: | | | | | | | | | | | | | | | |
Average shareholders’ equity to average assets | | 9.33% | | | 9.09% | | | 9.17% | | | 9.12% | | | 9.11% | |
Regulatory capital: | | | | | | | | | | | | | | | |
Tier I capital | | 8.59% | | | 8.52% | | | 8.51% | | | 8.35% | | | 8.42% | |
Total risk-based capital | | 10.55% | | | 10.45% | | | 10.49% | | | 10.42% | | | 10.54% | |
Tier I leverage | | 8.54% | | | 8.38% | | | 8.24% | | | 8.08% | | | 7.93% | |
| (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 | |
| | | September
2006 | | | June
2006 | | | March
2006 | | | December
2005 | | | September
2005 | |
Summary of Credit Loss Experience | | | | | | | | | | | | | | | |
Losses charged off: | | | | | | | | | | | | | | | |
Commercial loans | | ($29 | ) | | ($31 | ) | | ($35 | ) | | ($35 | ) | | ($24 | ) |
Commercial mortgage loans | | (8 | ) | | (5 | ) | | (2 | ) | | (3 | ) | | (5 | ) |
Construction loans | | (1 | ) | | (3 | ) | | - | | | (3 | ) | | (1 | ) |
Residential mortgage loans | | (5 | ) | | (6 | ) | | (4 | ) | | (5 | ) | | (3 | ) |
Consumer loans | | (50 | ) | | (46 | ) | | (50 | ) | | (58 | ) | | (41 | ) |
Commercial lease financing | | - | | | (2 | ) | | (1 | ) | | (28 | ) | | (1 | ) |
Consumer lease financing | | (3 | ) | | (3 | ) | | (4 | ) | | (5 | ) | | (4 | ) |
Total losses | | (96 | ) | | (96 | ) | | (96 | ) | | (137 | ) | | (79 | ) |
| | | | | |
Recoveries of losses previously charged off: | | | | | | | | | | | | | | | |
Commercial loans | | 4 | | | 9 | | | 3 | | | 10 | | | 5 | |
Commercial mortgage loans | | 1 | | | 1 | | | - | | | 1 | | | - | |
Construction loans | | - | | | - | | | - | | | - | | | - | |
Residential mortgage loans | | - | | | - | | | - | | | - | | | - | |
Consumer loans | | 10 | | | 16 | | | 15 | | | 8 | | | 9 | |
Commercial lease financing | | 1 | | | 1 | | | 2 | | | - | | | - | |
Consumer lease financing | | 1 | | | 2 | | | 3 | | | 1 | | | 1 | |
Total recoveries | | 17 | | | 29 | | | 23 | | | 20 | | | 15 | |
| | | | | |
Net losses charged off: | | | | | | | | | | | | | | | |
Commercial loans | | (25 | ) | | (22 | ) | | (32 | ) | | (25 | ) | | (19 | ) |
Commercial mortgage loans | | (7 | ) | | (4 | ) | | (2 | ) | | (2 | ) | | (5 | ) |
Construction loans | | (1 | ) | | (3 | ) | | - | | | (3 | ) | | (1 | ) |
Residential mortgage loans | | (5 | ) | | (6 | ) | | (4 | ) | | (5 | ) | | (3 | ) |
Consumer loans | | (40 | ) | | (30 | ) | | (35 | ) | | (50 | ) | | (32 | ) |
Commercial lease financing | | 1 | | | (1 | ) | | 1 | | | (28 | ) | | (1 | ) |
Consumer lease financing | | (2 | ) | | (1 | ) | | (1 | ) | | (4 | ) | | (3 | ) |
Total net losses charged off | | ($79 | ) | | ($67 | ) | | ($73 | ) | | ($117 | ) | | ($64 | ) |
| | | | | |
Allowance for loan and lease losses, beginning | | $753 | | | $749 | | | $744 | | | $727 | | | $722 | |
Total net losses charged off | | (79 | ) | | (67 | ) | | (73 | ) | | (117 | ) | | (64 | ) |
Provision for loan and lease losses | | 87 | | | 71 | | | 78 | | | 134 | | | 69 | |
Allowance for loan and lease losses, ending | | $761 | | | $753 | | | $749 | | | $744 | | | $727 | |
| | | | | |
Reserve for unfunded commitments, beginning | | $74 | | | $69 | | | $70 | | | $69 | | | $71 | |
Provision for unfunded commitments | | 2 | | | 5 | | | (1 | ) | | 1 | | | (2 | ) |
Acquisitions | | - | | | - | | | - | | | - | | | - | |
Reserve for unfunded commitments, ending | | $76 | | | $74 | | | $69 | | | $70 | | | $69 | |
| | | | | |
Components of allowance for credit losses: | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | | $761 | | | $753 | | | $749 | | | $744 | | | $727 | |
Reserve for unfunded commitments | | 76 | | | 74 | | | 69 | | | 70 | | | 69 | |
Total allowance for credit losses | | $837 | | | $827 | | | $818 | | | $814 | | | $796 | |
| | | | | |
Nonperforming Assets and Delinquent Loans | | | | | | | | | | | | | | | |
Nonaccrual loans and leases (a) | | $320 | | | $281 | | | $291 | | | $294 | | | $285 | |
Renegotiated loans and leases | | - | | | - | | | - | | | - | | | 1 | |
Other assets, including other real estate owned | | 91 | | | 77 | | | 73 | | | 67 | | | 65 | |
Total nonperforming assets | | $411 | | | $358 | | | $364 | | | $361 | | | $351 | |
Ninety days past due loans and leases (a) | | $196 | | | $191 | | | $160 | | | $155 | | | $156 | |
| | | | | |
Ratios | | | | | | | | | | | | | | | |
Net losses charged off as a percent of average loans and leases | | 0.43% | | | 0.37% | | | 0.42% | | | 0.67% | | | 0.38% | |
Allowance for loan and lease losses as a percent of loans and leases | | 1.04% | | | 1.04% | | | 1.05% | | | 1.06% | | | 1.06% | |
Allowance for credit losses as a percent of loans and leases | | 1.14% | | | 1.14% | | | 1.14% | | | 1.16% | | | 1.16% | |
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | | 0.56% | | | 0.49% | | | 0.51% | | | 0.52% | | | 0.51% | |
| (a) | Nonaccrual includes $29 million and Ninety Days Past Due includes $54 million of residential mortgage loans as of September 30, 2006. |
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