Exhibit 99.1
| | | | |
| | | | | News Release |
| | |
| CONTACT: | | Jeff Richardson (Analysts) | | FOR IMMEDIATE RELEASE |
| | (513) 534-0983 | | January 18, 2007 |
| | Jim Eglseder (Analysts) | | |
| | (513) 534-8424 | | |
| | Debra DeCourcy, APR (Media) | | |
| | (513) 534-4153 | | |
******* 1.17.07 10am DRAFT *******
FIFTH THIRD BANCORP REPORTS 2006 EARNINGS OF $2.13
PER DILUTED SHARE
Fifth Third Bancorp today reported 2006 earnings of $1.2 billion, or $2.13 per diluted share, compared with $1.5 billion or $2.77 per diluted share in 2005. Fourth quarter 2006 earnings were $66 million, or $0.12 per diluted share, compared with $377 million or $0.68 per diluted share in the third quarter of 2006 and $332 million or $0.60 per diluted share for the same period in 2005.
Fourth quarter and full year results were negatively affected by the balance sheet actions announced in November that were taken to improve our asset/liability profile and reduce leverage. These actions resulted in an aggregate pre-tax loss of $454 million. More detail regarding these actions is provided below.
“Fourth quarter results reflect an improved net interest margin and solid performance in many of our businesses,” said George A. Schaefer, Jr., Chairman and CEO of Fifth Third Bancorp. “While the actions undertaken this quarter to improve our balance sheet position significantly reduced 2006 bottom line results, this was the right thing to do for our company. Core deposit growth was solid and noninterest income trends were within our expectations. Expense growth was modest, particularly given the effect of expenses related to the balance sheet actions, and credit costs were in line with our expectations for the quarter. We continue to believe that credit cost trends should remain manageable but increases are likely, reflecting a beginning of a turn in the credit cycle.
We are optimistic about our outlook for 2007. In addition to continued momentum in loan and deposit growth, we built 83 new banking center locations in 2006 including 51 de novos, and continued to invest significantly in information technology and in expanding our sales force. Our tangible capital levels are among the very strongest in the industry. We have a terrific management team that is committed to the long-term interests of the Company, to building shareholder value, and to taking the actions necessary to produce strong, sustainable long-term growth. ”
Balance Sheet Actions and Trends
On November 20, 2006, Fifth Third Bancorp’s Board of Directors approved certain actions to improve our asset/liability profile. These actions were intended to reduce the size of our available-for-sale securities portfolio to a size that was more consistent with our liquidity, collateral and interest rate risk management requirements; improve the composition of our balance sheet with a lower concentration in fixed-rate assets; lower wholesale borrowings to reduce leverage; and better position the company for an uncertain economic and interest rate environment.
These actions included: (i) sales of $11.3 billion in available-for-sale securities, with a weighted-average yield of approximately 4.30%; (ii) reinvestment of approximately $2.8 billion in available-for-sale securities that are more efficient when used as collateral; (iii) repayment of $8.5 billion in wholesale borrowings at a weighted average rate paid of 5.30%; and (iv) the termination of approximately $1.1 billion of repurchase and reverse repurchase agreements. At the time, these actions were expected to result in an aggregate pre-tax loss of approximately $500 million. Following the execution of these actions, actual pre-tax losses were $454 million consisting of $398 million in losses on the sale of securities; $17 million in losses on derivatives related to the securities sold, recorded as other noninterest income; and $39 million in charges related to the termination of financing agreements, recorded in other noninterest expense. The reduction in reported earnings for the year resulted in the lowering of year-to-date tax provision, which produced a negative effective tax rate for the quarter.
The taxable securities portfolio at year-end 2006 was characterized by the following statistics: $11.3 billion; weighted average yield of 4.80%; weighted average life of 4.3 years; duration of 3.4 years. Net unrealized losses for the available-for-sale securities portfolio were $183 million.
In December 2006, we issued $500 million of ten-year fixed-rate subordinated debt and $250 million ten-year floating rate subordinated debt. The fixed rate issue was priced to yield 5.50% and subsequently swapped to floating. The floating rate issue was priced at three month Libor plus 42 bps. This issue contributed approximately 73 bps to our year-end total capital ratio.
We adopted SFAS No. 158 in the fourth quarter of 2006. This new accounting standard required companies to report the funding status of its defined benefit plan as an asset or liability and recognize unamortized gains and losses as a component of equity. The adoption of this statement decreased Fifth Third’s shareholder’s equity by approximately $60 million, reducing the tangible equity ratio by approximately 6 bps.
Average loan and lease balances grew two percent sequentially and seven percent over fourth quarter last year. Commercial loans and leases grew two percent sequentially and eight percent compared with the year ago quarter and consumer loans and leases grew two percent sequentially and five percent compared with the year ago quarter. Excluding anticipated run-off in the consumer lease portfolio totaling $540 million, consumer loans and leases grew seven percent versus last year.
Average core deposits increased one percent sequentially on growth in demand deposits, money market and savings deposits as well as retail CDs. Compared with the fourth quarter last year, average core deposits rose three percent on growth in savings, retail CDs and money market accounts.
During the quarter, we repurchased 2.0 million shares at a total cost of $81 million. Our current remaining share repurchase authorization is 15.8 million shares.
2
Net Interest Income
Net interest income of $744 million on a taxable equivalent basis increased three percent from last quarter. The increase was primarily driven by the sale of available-for-sale securities and repayment of wholesale borrowings, a position that was being carried at a negative spread. Solid trends in loan growth and yields and greater stability in deposit pricing costs also contributed to the growth. The net interest margin increased 17 bps, reflecting the improvement in net interest income coupled with the reduction in earning assets resulting from the sale of securities. The margin result exceeded our original expectations due to better execution on the sales of securities, stronger than expected core deposit growth in the fourth quarter and improved loan yields. Competition for deposits stabilized in some of our markets and the mix shift within our core deposit products slowed relative to prior periods, although balance rollovers within term deposit categories caused some upward pressure on product line composite rates paid.
Net interest income increased one percent compared with the fourth quarter 2005, reflecting a two percent decline in earning assets and a five bps improvement of the net interest margin.
Noninterest Income
Noninterest income of $219 million was $443 million lower than the third quarter of 2006 and $417 million lower than a year ago. Fourth quarter net securities losses and losses on related derivatives of $411 million drove the comparisons. Otherwise, strong performance in electronic payment processing was mitigated by a drop in deposit service charges, lower mortgage banking revenue and lower other noninterest income.
Electronic payment processing (EPP) revenue of $232 million increased six percent sequentially largely reflecting strong growth in the merchant business, solid growth in card revenue, and seasonal increases in the level of retail sales activity. EPP revenue increased 14 percent over the same quarter last year on double-digit growth in merchant processing and card interchange, though growth was mitigated by the effects of slower consumer spending over the course of 2006. We remain confident in the growth outlook for our processing business, as national merchant contract additions announced throughout 2006 continue to be realized and as transaction volumes increase with the continued shift by consumers toward electronic forms of payment.
Deposit service revenue of $122 million declined nine percent compared with last quarter and eight percent versus the same quarter last year. Retail deposit revenue dropped by 13 percent sequentially, reflecting significantly lower consumer NSF fees, while commercial deposit revenue decreased by three percent on growth in compensating balances which increased our payments of earnings credits to customers. Retail deposit service revenue is expected to rebound in the first quarter, although this effect will be mitigated by normal first quarter seasonality.
Investment advisory revenue of $90 million increased two percent versus third quarter, largely the result of growth in our private client group and mutual fund fees. Compared with the same quarter last year, revenue increased four percent. Year-over-year results were driven by strong growth in the private client group and moderate growth in the retail securities and institutional businesses, partially offset by lower mutual fund fees reflecting the ongoing effect of open architecture on proprietary fund sales.
3
Corporate banking revenue of $82 million increased four percent sequentially, primarily related to higher foreign exchange revenue and lease syndication fees. Results decreased 11 percent from the fourth quarter of 2005. Year-over-year comparisons reflect unusually strong fourth quarter 2005 lease syndication fees, as well as lower letter of credit and customer interest rate derivative income.
Mortgage banking net revenue totaled $30 million, compared with $36 million last quarter and $42 million in the prior year quarter. Fourth quarter origination fees and gains on loan sales were $23 million, compared with $21 million in the third quarter and $33 million in fourth quarter 2005. Net servicing revenue totaled $7 million in the fourth quarter, compared with $15 million last quarter and $9 million in fourth quarter 2005. The decline in net servicing revenue related to MSR valuation was partially offset by $3 million in gains on non-qualifying MSR hedges described below. Fourth quarter 2006 net servicing revenue included $31 million in gross servicing fees offset by $19 million in amortization and $5 million in net MSR valuation adjustment. Mortgage originations of $2.3 billion were consistent with $2.3 billion in third quarter 2006 and $2.5 billion in fourth quarter 2005. The mortgage servicing asset, net of the valuation reserve, was $519 million at quarter end on a servicing portfolio of $28.7 billion.
Other noninterest income totaled $58 million in the fourth quarter, compared with $87 million last quarter and $77 million in the same quarter last year. Fourth quarter results included a loss of $17 million on derivatives related to securities sold as part of our fourth quarter balance sheet actions. Sequential comparisons also reflect $11 million in gains related to the third quarter sales of three Indiana branches and a small out-of-footprint credit card portfolio.
Net securities losses totaled $395 million in the fourth quarter. We had $398 million of losses related to our fourth quarter balance sheet actions and $3 million of gains on non-qualifying hedges on mortgage servicing rights. Net securities gains were $19 million last quarter and $1 million in the same quarter last year.
Noninterest Expense
Total noninterest expense of $798 million increased four percent from third quarter 2006 levels and by five percent over the same quarter last year. Comparisons were affected by a $39 million charge in the fourth quarter associated with the termination of financing agreements as part of our balance sheet actions as well as an $11 million charge for the early retirement of debt in the third quarter. Sequential comparisons also reflect $8 million of pension settlement expenses incurred in the third quarter. Fourth quarter 2005 expenses included approximately $9 million in fraud-related expenses and approximately $10 million in tax-related expense.
Excluding the above-mentioned items, noninterest expense increased one percent sequentially, driven by higher processing volume-related expenses, and increased two percent versus last year. The annual increase reflected higher personnel expense and de novo-related occupancy expense.
Credit Quality
Net charge-offs as a percentage of average loans and leases were 52 bps in the fourth quarter, compared with 43 bps last quarter and 67 bps in the fourth quarter of 2005. Net charge-offs were $97 million in the fourth quarter, compared with
4
$79 million last quarter and $117 million in the same quarter last year. The commercial and consumer net charge-off ratios were 42 bps and 64 bps, respectively. Gross charge-offs were 63 bps of loans and leases. Fourth quarter 2006 charge-offs included $9 million related to two large commercial credits, which drove the $11 million increase in commercial charge-offs. Higher indirect consumer losses were responsible for the $7 million increase in consumer charge-offs. Fourth quarter 2005 charge-offs included approximately $27 million in losses related to commercial airline bankruptcies and higher consumer loan and lease losses related to consumer bankruptcy filings in anticipation of federal bankruptcy reform legislation.
Provision for loan and lease losses totaled $107 million in the fourth quarter compared with $87 million last quarter and $134 million in the same quarter last year.
Nonperforming assets (NPAs) at quarter end were $455 million, or 61 bps of total loans and leases and other real estate owned, up from 56 bps last quarter and 52 bps in the fourth quarter a year ago. The sequential increase of $44 million was balanced between consumer and commercial NPAs. Consumer NPA growth was evenly split between indirect consumer and mortgage loans. The increase in commercial NPAs largely occurred in the real estate and construction portfolios. There were no significant geographic concentrations, but NPA growth was highest in eastern Michigan and northeastern Ohio due to the location of the largest NPAs inflows. About half of the commercial NPA increase was experienced in the small business and business banking portfolio. The allowance for loan and lease losses represented 1.04 percent of total loans and leases outstanding as of quarter end, consistent with 1.04 percent last quarter and 1.06 percent in the same quarter last year.
Outlook
The following outlook represents currently expected full year growth rates compared with full year 2006 results. Our outlook is based on current expectations as of the date of this release for results within our businesses; prevailing views related to economic growth, inflation, unemployment and other economic factors; and market forward interest rate expectations. These expectations are inherently subject to risks and uncertainties. There are a number of factors that could cause results to differ materially from historical performance and these expectations. We undertake no obligation to update these expectations after the date of this release. Please refer to the cautionary statement at the end of this release for more information.
| | |
Category | | Growth, percentage, or bps range |
Net interest income | | High single digits |
| |
Net interest margin | | 3.35-3.45% |
| |
Noninterest income* | | High single digits |
| |
Noninterest expense** | | Mid single digits |
| |
Loans | | High single digits |
| |
Core deposits | | Mid single digits |
| |
Net charge-offs | | Low-mid 50 bps range |
| |
Effective tax rate [non-tax equivalent] | | 29-30% |
| |
Tangible equity/tangible asset ratio | | 2007 target >7% |
| * | comparison with the prior year excludes $415 million of losses recorded in noninterest income related to fourth quarter 2006 balance sheet actions |
5
| ** | comparison with the prior year excludes $50 million of charges: $11 million in third quarter 2006 related to the early retirement of debt, and $39 million in fourth quarter 2006 related to termination of financing agreements |
Conference Call
Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. Investors, analysts and other interested parties may dial into the conference call at 877-309-0967 for domestic access and 706-679-3977 for international access (password: Fifth Third). A replay of the conference call will be available for approximately seven days by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode: 4115845#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $100.7 billion in assets, operates 19 affiliates with 1,150 full-service Banking Centers, including 111 Bank Mart® locations open seven days a week inside select grocery stores and 2,096 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 December 31, 2006, has $220 billion in assets under care, of which it managed $34 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 may reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions are inherently uncertain; (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; (9) our ability to maintain favorable ratings from rating agencies; and (10) 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.
# # #
6
FIFTH THIRD BANCORP AND SUBSIDIARIES
Quarterly Financial Review for December 31, 2006
Table of Contents
| | |
Financial Highlights | | 8-9 |
Consolidated Statements of Income | | 10 |
Consolidated Statements of Income (Taxable Equivalent) | | 11 |
Consolidated Balance Sheets | | 12-13 |
Consolidated Statements of Changes in Shareholders’ Equity | | 14 |
Average Balance Sheet and Yield Analysis | | 15-17 |
Summary of Loans and Leases | | 18 |
Regulatory Capital | | 19 |
Asset Quality | | 20 |
7
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | % Change | | | Year to Date | | | % Change Yr/Yr | |
| | | December
2006 | | | September
2006 | | | December
2005 | | | Yr/Yr | | | Seq | | | December
2006 | | | December
2005 | | |
Income Statement Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income (a) | | $ | 744 | | | $ | 719 | | | $ | 735 | | | 1 | % | | 3 | % | | $ | 2,899 | | | $ | 2,996 | | | (3 | )% |
Noninterest income | | | 219 | | | | 662 | | | | 636 | | | (66 | )% | | (67 | )% | | | 2,153 | | | | 2,500 | | | (14 | )% |
Total revenue (a) | | | 963 | | | | 1,381 | | | | 1,371 | | | (30 | )% | | (30 | )% | | | 5,052 | | | | 5,496 | | | (8 | )% |
Provision for loan and lease losses | | | 107 | | | | 87 | | | | 134 | | | (20 | )% | | 23 | % | | | 343 | | | | 330 | | | 4 | % |
Noninterest expense | | | 798 | | | | 767 | | | | 763 | | | 5 | % | | 4 | % | | | 3,057 | | | | 2,927 | | | 4 | % |
Net income | | | 66 | | | | 377 | | | | 332 | | | (80 | )% | | (83 | )% | | | 1,188 | | | | 1,549 | | | (23 | )% |
| | | | | | | | |
Common Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per share, basic | | $ | 0.12 | | | $ | 0.68 | | | $ | 0.60 | | | (80 | )% | | (82 | )% | | $ | 2.14 | | | $ | 2.79 | | | (23 | )% |
Earnings per share, diluted | | | 0.12 | | | | 0.68 | | | | 0.60 | | | (80 | )% | | (82 | )% | | | 2.13 | | | | 2.77 | | | (23 | )% |
Cash dividends per common share | | | 0.40 | | | | 0.40 | | | | 0.38 | | | 5 | % | | — | | | | 1.59 | | | | 1.46 | | | 9 | % |
Book value per share | | | 18.02 | | | | 17.96 | | | | 17.00 | | | 6 | % | | — | | | | 18.02 | | | | 17.00 | | | 6 | % |
Dividend payout ratio | | | 333.3 | % | | | 58.8 | % | | | 63.3 | % | | 427 | % | | 467 | % | | | 74.6 | % | | | 52.7 | % | | 42 | % |
Market price per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
High | | $ | 41.57 | | | $ | 40.18 | | | $ | 42.50 | | | (2 | )% | | 3 | % | | $ | 41.57 | | | $ | 48.12 | | | (14 | )% |
Low | | | 37.75 | | | | 35.95 | | | | 35.04 | | | 8 | % | | 5 | % | | | 35.86 | | | | 35.04 | | | 2 | % |
End of period | | | 40.93 | | | | 38.08 | | | | 37.72 | | | 9 | % | | 7 | % | | | 40.93 | | | | 37.72 | | | 9 | % |
Common shares outstanding (in thousands) | | | 556,253 | | | | 558,066 | | | | 555,623 | | | — | | | — | | | | 556,253 | | | | 555,623 | | | — | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 554,978 | | | | 555,565 | | | | 553,591 | | | — | | | — | | | | 554,983 | | | | 554,411 | | | — | |
Diluted | | | 557,654 | | | | 557,949 | | | | 556,322 | | | — | | | — | | | | 557,494 | | | | 558,443 | | | — | |
Market capitalization | | $ | 22,767 | | | $ | 21,251 | | | $ | 20,958 | | | 9 | % | | 7 | % | | $ | 22,767 | | | $ | 20,958 | | | 9 | % |
Price/earnings ratio (b) | | | 19.13 | | | | 14.53 | | | | 13.57 | | | 41 | % | | 32 | % | | | 19.13 | | | | 13.57 | | | 41 | % |
| | | | | | | | |
Financial Ratios | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Return on average assets | | | 0.25 | % | | | 1.41 | % | | | 1.27 | % | | (80 | )% | | (82 | )% | | | 1.13 | % | | | 1.50 | % | | (25 | )% |
Return on average equity | | | 2.6 | % | | | 15.1 | % | | | 13.9 | % | | (81 | )% | | (83 | )% | | | 12.1 | % | | | 16.6 | % | | (27 | )% |
Noninterest income as a percent of total revenue | | | 23 | % | | | 48 | % | | | 46 | % | | (50 | )% | | (52 | )% | | | 43 | % | | | 45 | % | | (4 | )% |
Average equity as a percent of average assets | | | 9.70 | % | | | 9.33 | % | | | 9.12 | % | | 6 | % | | 4 | % | | | 9.32 | % | | | 9.06 | % | | 3 | % |
Tangible equity | | | 7.79 | % | | | 7.40 | % | | | 6.87 | % | | 13 | % | | 5 | % | | | 7.79 | % | | | 6.87 | % | | 13 | % |
Net interest margin (a) | | | 3.16 | % | | | 2.99 | % | | | 3.11 | % | | 2 | % | | 6 | % | | | 3.06 | % | | | 3.23 | % | | (5 | )% |
Efficiency (a) | | | 82.9 | % | | | 55.5 | % | | | 55.6 | % | | 49 | % | | 49 | % | | | 60.5 | % | | | 53.2 | % | | 14 | % |
Effective tax rate | | | (27.0 | )% | | | 27.6 | % | | | 28.9 | % | | NM | | | NM | | | | 27.1 | % | | | 29.9 | % | | (9 | )% |
| | | | | | | | |
Credit Quality | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net losses charged off | | $ | 97 | | | $ | 79 | | | $ | 117 | | | (17 | )% | | 23 | % | | $ | 316 | | | $ | 299 | | | 6 | % |
Net losses charged off as a percent of average loans and leases | | | 0.52 | % | | | 0.43 | % | | | 0.67 | % | | (22 | )% | | 21 | % | | | 0.44 | % | | | 0.45 | % | | (2 | )% |
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 | | | 0.61 | % | | | 0.56 | % | | | 0.52 | % | | 17 | % | | 9 | % | | | 0.61 | % | | | 0.52 | % | | 17 | % |
| | | | | | | | |
Average Balances | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans and leases, including held for sale | | $ | 75,262 | | | $ | 73,938 | | | $ | 70,489 | | | 7 | % | | 2 | % | | $ | 73,493 | | | $ | 67,737 | | | 8 | % |
Total securities and other short-term investments | | | 18,262 | | | | 21,582 | | | | 23,274 | | | (22 | )% | | (15 | )% | | | 21,288 | | | | 24,999 | | | (15 | )% |
Total assets | | | 104,602 | | | | 105,868 | | | | 103,988 | | | 1 | % | | (1 | )% | | | 105,238 | | | | 102,876 | | | 2 | % |
Transaction deposits | | | 49,010 | | | | 48,543 | | | | 48,937 | | | — | | | 1 | % | | | 48,946 | | | | 47,929 | | | 2 | % |
Core deposits | | | 60,001 | | | | 59,337 | | | | 58,080 | | | 3 | % | | 1 | % | | | 59,446 | | | | 56,420 | | | 5 | % |
Wholesale funding | | | 30,650 | | | | 33,040 | | | | 33,192 | | | (8 | )% | | (7 | )% | | | 32,423 | | | | 33,863 | | | (4 | )% |
Shareholders’ equity | | | 10,150 | | | | 9,878 | | | | 9,480 | | | 7 | % | | 3 | % | | | 9,811 | | | | 9,317 | | | 5 | % |
| | | | | | | | |
Regulatory Capital Ratios (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | | 8.36 | % | | | 8.64 | % | | | 8.35 | % | | — | | | (3 | )% | | | 8.36 | % | | | 8.35 | % | | — | |
Total risk-based capital | | | 11.04 | % | | | 10.61 | % | | | 10.42 | % | | 6 | % | | 4 | % | | | 11.04 | % | | | 10.42 | % | | 6 | % |
Tier I leverage | | | 8.44 | % | | | 8.52 | % | | | 8.08 | % | | 4 | % | | (1 | )% | | | 8.44 | % | | | 8.08 | % | | 4 | % |
| | | | | | | | |
Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Banking centers | | | 1,150 | | | | 1,145 | | | | 1,119 | | | 3 | % | | — | | | | 1,150 | | | | 1,119 | | | 3 | % |
ATMs | | | 2,096 | | | | 2,114 | | | | 2,024 | | | 4 | % | | (1 | )% | | | 2,096 | | | | 2,024 | | | 4 | % |
Full-time equivalent employees | | | 21,362 | | | | 21,301 | | | | 21,681 | | | (1 | )% | | — | | | | 21,362 | | | | 21,681 | | | (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 |
8
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | December
2006 | | | September
2006 | | | June 2006 | | | March
2006 | | | December
2005 | |
Income Statement Data | | | | | | | | | | | | | | | | | | | | |
Net interest income (a) | | $ | 744 | | | $ | 719 | | | $ | 716 | | | $ | 718 | | | $ | 735 | |
Noninterest income | | | 219 | | | | 662 | | | | 655 | | | | 617 | | | | 636 | |
Total revenue (a) | | | 963 | | | | 1,381 | | | | 1,371 | | | | 1,335 | | | | 1,371 | |
Provision for loan and lease losses | | | 107 | | | | 87 | | | | 71 | | | | 78 | | | | 134 | |
Noninterest expense | | | 798 | | | | 767 | | | | 759 | | | | 731 | | | | 763 | |
Net income | | | 66 | | | | 377 | | | | 382 | | | | 363 | | | | 332 | |
| | | | | |
Common Share Data | | | | | | | | | | | | | | | | | | | | |
Earnings per share, basic | | $ | 0.12 | | | $ | 0.68 | | | $ | 0.69 | | | $ | 0.66 | | | $ | 0.60 | |
Earnings per share, diluted | | | 0.12 | | | | 0.68 | | | | 0.69 | | | | 0.65 | | | | 0.60 | |
Cash dividends per common share | | | 0.40 | | | | 0.40 | | | | 0.40 | | | | 0.38 | | | | 0.38 | |
Book value per share | | | 18.02 | | | | 17.96 | | | | 17.13 | | | | 17.01 | | | | 17.00 | |
Dividend payout ratio | | | 333.3 | % | | | 58.8 | % | | | 58.0 | % | | | 58.5 | % | | | 63.3 | % |
Market price per share: | | | | | | | | | | | | | | | | | | | | |
High | | $ | 41.57 | | | $ | 40.18 | | | $ | 41.02 | | | $ | 41.43 | | | $ | 42.50 | |
Low | | | 37.75 | | | | 35.95 | | | | 35.86 | | | | 36.30 | | | | 35.04 | |
End of period | | | 40.93 | | | | 38.08 | | | | 36.95 | | | | 39.36 | | | | 37.72 | |
Common shares outstanding (in thousands) | | | 556,253 | | | | 558,066 | | | | 557,894 | | | | 556,501 | | | | 555,623 | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | | | | | | |
Basic | | | 554,978 | | | | 555,565 | | | | 554,978 | | | | 554,398 | | | | 553,591 | |
Diluted | | | 557,654 | | | | 557,949 | | | | 557,489 | | | | 556,869 | | | | 556,322 | |
Market capitalization | | $ | 22,767 | | | $ | 21,251 | | | $ | 20,614 | | | $ | 21,904 | | | $ | 20,958 | |
Price/earnings ratio (b) | | | 19.13 | | | | 14.53 | | | | 13.94 | | | | 14.52 | | | | 13.57 | |
| | | | | |
Financial Ratios | | | | | | | | | | | | | | | | | | | | |
Return on average assets | | | 0.25 | % | | | 1.41 | % | | | 1.45 | % | | | 1.41 | % | | | 1.27 | % |
Return on average equity | | | 2.6 | % | | | 15.1 | % | | | 16.0 | % | | | 15.3 | % | | | 13.9 | % |
Noninterest income as a percent of total revenue | | | 23 | % | | | 48 | % | | | 48 | % | | | 46 | % | | | 46 | % |
Average equity as a percent of average assets | | | 9.70 | % | | | 9.33 | % | | | 9.09 | % | | | 9.17 | % | | | 9.12 | % |
Tangible equity | | | 7.79 | % | | | 7.40 | % | | | 6.92 | % | | | 6.90 | % | | | 6.87 | % |
Net interest margin (a) | | | 3.16 | % | | | 2.99 | % | | | 3.01 | % | | | 3.08 | % | | | 3.11 | % |
Efficiency (a) | | | 82.9 | % | | | 55.5 | % | | | 55.3 | % | | | 54.7 | % | | | 55.6 | % |
Effective tax rate | | | (27.0 | )% | | | 27.6 | % | | | 28.5 | % | | | 30.7 | % | | | 28.9 | % |
| | | | | |
Credit Quality | | | | | | | | | | | | | | | | | | | | |
Net losses charged off | | $ | 97 | | | $ | 79 | | | $ | 67 | | | $ | 73 | | | $ | 117 | |
Net losses charged off as a percent of average loans and leases | | | 0.52 | % | | | 0.43 | % | | | 0.37 | % | | | 0.42 | % | | | 0.67 | % |
Allowance for loan and lease losses as a percent of loans and leases | | | 1.04 | % | | | 1.04 | % | | | 1.04 | % | | | 1.05 | % | | | 1.06 | % |
Allowance for credit losses as a percent of loans and leases | | | 1.14 | % | | | 1.14 | % | | | 1.14 | % | | | 1.14 | % | | | 1.16 | % |
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | | | 0.61 | % | | | 0.56 | % | | | 0.49 | % | | | 0.51 | % | | | 0.52 | % |
| | | | | |
Average Balances | | | | | | | | | | | | | | | | | | | | |
Loans and leases, including held for sale | | $ | 75,262 | | | $ | 73,938 | | | $ | 73,093 | | | $ | 71,634 | | | $ | 70,489 | |
Total securities and other short-term investments | | | 18,262 | | | | 21,582 | | | | 22,439 | | | | 22,917 | | | | 23,274 | |
Total assets | | | 104,602 | | | | 105,868 | | | | 105,741 | | | | 104,736 | | | | 103,988 | |
Transaction deposits | | | 49,010 | | | | 48,543 | | | | 49,282 | | | | 48,951 | | | | 48,937 | |
Core deposits | | | 60,001 | | | | 59,337 | | | | 59,731 | | | | 58,700 | | | | 58,080 | |
Wholesale funding | | | 30,650 | | | | 33,040 | | | | 32,903 | | | | 33,123 | | | | 33,192 | |
Shareholders’ equity | | | 10,150 | | | | 9,878 | | | | 9,607 | | | | 9,601 | | | | 9,480 | |
| | | | | |
Regulatory Capital Ratios (c) | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | | 8.36 | % | | | 8.64 | % | | | 8.56 | % | | | 8.56 | % | | | 8.35 | % |
Total risk-based capital | | | 11.04 | % | | | 10.61 | % | | | 10.50 | % | | | 10.56 | % | | | 10.42 | % |
Tier I leverage | | | 8.44 | % | | | 8.52 | % | | | 8.38 | % | | | 8.24 | % | | | 8.08 | % |
| | | | | |
Operations | | | | | | | | | | | | | | | | | | | | |
Banking centers | | | 1,150 | | | | 1,145 | | | | 1,138 | | | | 1,132 | | | | 1,119 | |
ATMs | | | 2,096 | | | | 2,114 | | | | 2,034 | | | | 2,025 | | | | 2,024 | |
Full-time equivalent employees | | | 21,362 | | | | 21,301 | | | | 21,230 | | | | 21,497 | | | | 21,681 | |
| (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 |
9
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | % Change | | | Year to Date | | % Change Yr/Yr | |
| | | December
2006 | | | September
2006 | | December
2005 | | Yr/Yr | | | Seq | | | December
2006 | | | December
2005 | |
Interest Income | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest and fees on loans and leases | | $ | 1,332 | | | $ | 1,294 | | $ | 1,098 | | 21 | % | | 3 | % | | $ | 5,000 | | | $ | 3,918 | | 28 | % |
Interest on securities: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 192 | | | | 231 | | | 243 | | (21 | )% | | (17 | )% | | | 904 | | | | 1,032 | | (12 | )% |
Exempt from income taxes | | | 7 | | | | 7 | | | 9 | | (20 | )% | | (3 | )% | | | 30 | | | | 39 | | (24 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest on securities | | | 199 | | | | 238 | | | 252 | | (21 | )% | | (16 | )% | | | 934 | | | | 1,071 | | (13 | )% |
Interest on other short-term investments | | | 14 | | | | 2 | | | 2 | | 538 | % | | 519 | % | | | 21 | | | | 6 | | 275 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest income | | | 1,545 | | | | 1,534 | | | 1,352 | | 14 | % | | 1 | % | | | 5,955 | | | | 4,995 | | 19 | % |
| | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest checking | | | 96 | | | | 102 | | | 94 | | 1 | % | | (6 | )% | | | 398 | | | | 314 | | 27 | % |
Savings | | | 105 | | | | 95 | | | 67 | | 56 | % | | 10 | % | | | 363 | | | | 176 | | 106 | % |
Money market | | | 73 | | | | 69 | | | 50 | | 46 | % | | 6 | % | | | 261 | | | | 140 | | 86 | % |
Other time | | | 122 | | | | 116 | | | 81 | | 51 | % | | 4 | % | | | 433 | | | | 263 | | 65 | % |
Certificates - $100,000 and over | | | 88 | | | | 81 | | | 40 | | 118 | % | | 8 | % | | | 278 | | | | 129 | | 116 | % |
Foreign office | | | 34 | | | | 47 | | | 37 | | (7 | )% | | (27 | )% | | | 177 | | | | 126 | | 40 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest on deposits | | | 518 | | | | 510 | | | 369 | | 41 | % | | 2 | % | | | 1,910 | | | | 1,148 | | 66 | % |
Interest on federal funds purchased | | | 48 | | | | 61 | | | 49 | | — | | | (21 | )% | | | 208 | | | | 138 | | 51 | % |
Interest on short-term bank notes | | | — | | | | — | | | — | | NM | | | NM | | | | — | | | | 6 | | (100 | )% |
Interest on other short-term borrowings | | | 52 | | | | 45 | | | 36 | | 43 | % | | 15 | % | | | 194 | | | | 138 | | 40 | % |
Interest on long-term debt | | | 189 | | | | 205 | | | 170 | | 11 | % | | (8 | )% | | | 770 | | | | 600 | | 28 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest expense | | | 807 | | | | 821 | | | 624 | | 29 | % | | (2 | )% | | | 3,082 | | | | 2,030 | | 52 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Net Interest Income | | | 738 | | | | 713 | | | 728 | | 1 | % | | 4 | % | | | 2,873 | | | | 2,965 | | (3 | )% |
| | | | | | | | |
Provision for loan and lease losses | | | 107 | | | | 87 | | | 134 | | (20 | )% | | 23 | % | | | 343 | | | | 330 | | 4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income after provision for loan and lease losses | | | 631 | | | | 626 | | | 594 | | 6 | % | | 1 | % | | | 2,530 | | | | 2,635 | | (4 | )% |
| | | | | | | | |
Noninterest Income | | | | | | | | | | | | | | | | | | | | | | | | | | |
Electronic payment processing revenue | | | 232 | | | | 218 | | | 204 | | 14 | % | | 6 | % | | | 857 | | | | 748 | | 15 | % |
Service charges on deposits | | | 122 | | | | 134 | | | 133 | | (8 | )% | | (9 | )% | | | 517 | | | | 522 | | (1 | )% |
Mortgage banking net revenue | | | 30 | | | | 36 | | | 42 | | (28 | )% | | (17 | )% | | | 155 | | | | 174 | | (11 | )% |
Investment advisory revenue | | | 90 | | | | 89 | | | 87 | | 4 | % | | 2 | % | | | 367 | | | | 358 | | 2 | % |
Corporate banking revenue | | | 82 | | | | 79 | | | 92 | | (11 | )% | | 4 | % | | | 318 | | | | 299 | | 7 | % |
Other noninterest income | | | 58 | | | | 87 | | | 77 | | (24 | )% | | (33 | )% | | | 300 | | | | 360 | | (17 | )% |
Securities gains (losses), net | | | (398 | ) | | | 19 | | | 1 | | NM | | | NM | | | | (364 | ) | | | 39 | | NM | |
Securities gains, net - non-qualifying hedges on mortgage servicing rights | | | 3 | | | | — | | | — | | NM | | | NM | | | | 3 | | | | — | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total noninterest income | | | 219 | | | | 662 | | | 636 | | (66 | )% | | (67 | )% | | | 2,153 | | | | 2,500 | | (14 | )% |
| | | | | | | | |
Noninterest Expense | | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries, wages and incentives | | | 300 | | | | 288 | | | 287 | | 4 | % | | 4 | % | | | 1,174 | | | | 1,133 | | 4 | % |
Employee benefits | | | 61 | | | | 74 | | | 65 | | (5 | )% | | (17 | )% | | | 292 | | | | 283 | | 3 | % |
Equipment expense | | | 32 | | | | 34 | | | 29 | | 13 | % | | (5 | )% | | | 122 | | | | 105 | | 17 | % |
Net occupancy expense | | | 65 | | | | 63 | | | 59 | | 10 | % | | 3 | % | | | 245 | | | | 221 | | 11 | % |
Other noninterest expense | | | 340 | | | | 308 | | | 323 | | 5 | % | | 10 | % | | | 1,223 | | | | 1,185 | | 3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total noninterest expense | | | 798 | | | | 767 | | | 763 | | 5 | % | | 4 | % | | | 3,056 | | | | 2,927 | | 4 | % |
Income before income taxes and cumulative effect | | | 52 | | | | 521 | | | 467 | | (89 | )% | | (90 | )% | | | 1,627 | | | | 2,208 | | (26 | )% |
Applicable income taxes | | | (14 | ) | | | 144 | | | 135 | | NM | | | NM | | | | 443 | | | | 659 | | (33 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before cumulative effect | | | 66 | | | | 377 | | | 332 | | (80 | )% | | (82 | )% | | | 1,184 | | | | 1,549 | | (24 | )% |
Cumulative effect of change in accounting principle, net of tax (b) | | | — | | | | — | | | — | | NM | | | NM | | | | 4 | | | | — | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 66 | | | $ | 377 | | $ | 332 | | (80 | )% | | (83 | )% | | $ | 1,188 | | | $ | 1,549 | | (23 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common shareholders (a) | | $ | 66 | | | $ | 377 | | $ | 332 | | (80 | )% | | (83 | )% | | $ | 1,188 | | | $ | 1,548 | | (23 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (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 Statements of Income (Taxable Equivalent)
$ in millions
(unaudited)
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended |
| | | December
2006 | | | September
2006 | | June
2006 | | March
2006 | | December
2005 |
Interest Income | | | | | | | | | | | | | | | | |
Interest and fees on loans and leases | | $ | 1,332 | | | $ | 1,294 | | $ | 1,227 | | $ | 1,146 | | $ | 1,098 |
Interest on securities: | | | | | | | | | | | | | | | | |
Taxable | | | 192 | | | | 231 | | | 239 | | | 242 | | | 243 |
Exempt from income taxes | | | 7 | | | | 7 | | | 8 | | | 8 | | | 9 |
| | | | | | | | | | | | | | | | |
Total interest on securities | | | 199 | | | | 238 | | | 247 | | | 250 | | | 252 |
Interest on other short-term investments | | | 14 | | | | 2 | | | 3 | | | 2 | | | 2 |
| | | | | | | | | | | | | | | | |
Total interest income | | | 1,545 | | | | 1,534 | | | 1,477 | | | 1,398 | | | 1,352 |
Taxable equivalent adjustment | | | 6 | | | | 6 | | | 6 | | | 7 | | | 7 |
| | | | | | | | | | | | | | | | |
Total interest income (taxable equivalent) | | | 1,551 | | | | 1,540 | | | 1,483 | | | 1,405 | | | 1,359 |
| | | | | |
Interest Expense | | | | | | | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | | | | | | | |
Interest checking | | | 96 | | | | 102 | | | 102 | | | 99 | | | 94 |
Savings | | | 105 | | | | 95 | | | 87 | | | 76 | | | 67 |
Money market | | | 73 | | | | 69 | | | 64 | | | 55 | | | 50 |
Other time | | | 122 | | | | 116 | | | 105 | | | 89 | | | 81 |
Certificates - $100,000 and over | | | 88 | | | | 81 | | | 61 | | | 48 | | | 40 |
Foreign office | | | 34 | | | | 47 | | | 52 | | | 44 | | | 37 |
| | | | | | | | | | | | | | | | |
Total interest on deposits | | | 518 | | | | 510 | | | 471 | | | 411 | | | 369 |
Interest on federal funds purchased | | | 48 | | | | 61 | | | 48 | | | 51 | | | 49 |
Interest on short-term bank notes | | | — | | | | — | | | — | | | — | | | — |
Interest on other short-term borrowings | | | 52 | | | | 45 | | | 52 | | | 44 | | | 36 |
Interest on long-term debt | | | 189 | | | | 205 | | | 196 | | | 181 | | | 170 |
| | | | | | | | | | | | | | | | |
Total interest expense | | | 807 | | | | 821 | | | 767 | | | 687 | | | 624 |
| | | | | | | | | | | | | | | | |
| | | | | |
Net interest income (taxable equivalent) | | | 744 | | | | 719 | | | 716 | | | 718 | | | 735 |
| | | | | |
Provision for loan and lease losses | | | 107 | | | | 87 | | | 71 | | | 78 | | | 134 |
| | | | | | | | | | | | | | | | |
Net interest income (taxable equivalent) after provision for loan and lease losses | | | 637 | | | | 632 | | | 645 | | | 640 | | | 601 |
| | | | | |
Noninterest Income | | | | | | | | | | | | | | | | |
Electronic payment processing revenue | | | 232 | | | | 218 | | | 211 | | | 196 | | | 204 |
Service charges on deposits | | | 122 | | | | 134 | | | 135 | | | 126 | | | 133 |
Mortgage banking net revenue | | | 30 | | | | 36 | | | 41 | | | 47 | | | 42 |
Investment advisory revenue | | | 90 | | | | 89 | | | 96 | | | 91 | | | 87 |
Corporate banking revenue | | | 82 | | | | 79 | | | 82 | | | 76 | | | 92 |
Other noninterest income | | | 58 | | | | 87 | | | 76 | | | 80 | | | 77 |
Securities gains (losses), net | | | (398 | ) | | | 19 | | | 14 | | | 1 | | | 1 |
Securities gains, net - non-qualifying hedges on mortgage servicing rights | | | 3 | | | | — | | | — | | | — | | | — |
| | | | | | | | | | | | | | | | |
Total noninterest income | | | 219 | | | | 662 | | | 655 | | | 617 | | | 636 |
| | | | | |
Noninterest Expense | | | | | | | | | | | | | | | | |
Salaries, wages and incentives | | | 300 | | | | 288 | | | 303 | | | 284 | | | 287 |
Employee benefits | | | 61 | | | | 74 | | | 69 | | | 87 | | | 65 |
Equipment expense | | | 32 | | | | 34 | | | 29 | | | 27 | | | 29 |
Net occupancy expense | | | 65 | | | | 63 | | | 59 | | | 58 | �� | | 59 |
Other noninterest expense | | | 340 | | | | 308 | | | 299 | | | 275 | | | 323 |
| | | | | | | | | | | | | | | | |
Total noninterest expense | | | 798 | | | | 767 | | | 759 | | | 731 | | | 763 |
| | | | | | | | | | | | | | | | |
Income before income taxes and cumulative effect (taxable equivalent) | | | 58 | | | | 527 | | | 541 | | | 526 | | | 474 |
Taxable equivalent adjustment | | | 6 | | | | 6 | | | 6 | | | 7 | | | 7 |
| | | | | | | | | | | | | | | | |
Income before income taxes and cumulative effect | | | 52 | | | | 521 | | | 535 | | | 519 | | | 467 |
Applicable income taxes | | | (14 | ) | | | 144 | | | 153 | | | 160 | | | 135 |
| | | | | | | | | | | | | | | | |
Income before cumulative effect | | | 66 | | | | 377 | | | 382 | | | 359 | | | 332 |
Cumulative effect of change in accounting principle, net of tax (b) | | | — | | | | — | | | — | | | 4 | | | — |
| | | | | | | | | | | | | | | | |
Net income | | $ | 66 | | | $ | 377 | | $ | 382 | | $ | 363 | | $ | 332 |
| | | | | | | | | | | | | | | | |
Net income available to common shareholders (a) | | $ | 66 | | | $ | 377 | | $ | 382 | | $ | 363 | | $ | 332 |
| | | | | | | | | | | | | | | | |
| (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 |
11
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | | | | |
| | | As of | | | % Change | |
| | | December
2006 | | | September
2006 | | | December
2005 | | | Yr/Yr | | | Seq | |
Assets | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 2,737 | | | $ | 2,399 | | | $ | 3,078 | | | (11 | )% | | 14 | % |
Available-for-sale and other securities (a) | | | 11,053 | | | | 19,514 | | | | 21,924 | | | (50 | )% | | (43 | )% |
Held-to-maturity securities (b) | | | 356 | | | | 359 | | | | 389 | | | (8 | )% | | (1 | )% |
Trading securities | | | 187 | | | | 164 | | | | 117 | | | 59 | % | | 14 | % |
Other short-term investments | | | 809 | | | | 125 | | | | 158 | | | 411 | % | | 547 | % |
Loans held for sale | | | 1,150 | | | | 872 | | | | 1,304 | | | (12 | )% | | 32 | % |
Portfolio loans and leases: | | | | | | | | | | | | | | | | | | |
Commercial loans | | | 20,725 | | | | 21,150 | | | | 19,174 | | | 8 | % | | (2 | )% |
Construction loans | | | 6,847 | | | | 6,597 | | | | 7,037 | | | (3 | )% | | 4 | % |
Commercial mortgage loans | | | 10,405 | | | | 9,879 | | | | 9,188 | | | 13 | % | | 5 | % |
Commercial lease financing | | | 4,984 | | | | 4,895 | | | | 4,852 | | | 3 | % | | 2 | % |
Residential mortgage loans | | | 8,151 | | | | 8,093 | | | | 7,152 | | | 14 | % | | 1 | % |
Consumer loans | | | 23,311 | | | | 22,834 | | | | 22,084 | | | 6 | % | | 2 | % |
Consumer lease financing | | | 1,176 | | | | 1,287 | | | | 1,751 | | | (33 | )% | | (9 | )% |
Unearned income | | | (1,246 | ) | | | (1,255 | ) | | | (1,313 | ) | | (5 | )% | | (1 | )% |
| | | | | | | | | | | | | | | | | | |
Portfolio loans and leases | | | 74,353 | | | | 73,480 | | | | 69,925 | | | 6 | % | | 1 | % |
Allowance for loan and lease losses | | | (771 | ) | | | (761 | ) | | | (744 | ) | | 4 | % | | 1 | % |
| | | | | | | | | | | | | | | | | | |
Portfolio loans and leases, net | | | 73,582 | | | | 72,719 | | | | 69,181 | | | 6 | % | | 1 | % |
Bank premises and equipment | | | 1,940 | | | | 1,902 | | | | 1,726 | | | 12 | % | | 2 | % |
Operating lease equipment | | | 202 | | | | 142 | | | | 143 | | | 41 | % | | 42 | % |
Goodwill | | | 2,193 | | | | 2,193 | | | | 2,169 | | | 1 | % | | — | |
Intangible assets | | | 166 | | | | 175 | | | | 208 | | | (20 | )% | | (5 | )% |
Servicing rights | | | 524 | | | | 504 | | | | 441 | | | 19 | % | | 4 | % |
Other assets | | | 5,770 | | | | 4,760 | | | | 4,387 | | | 32 | % | | 21 | % |
| | | | | | | | | | | | | | | | | | |
Total assets | | $ | 100,669 | | | $ | 105,828 | | | $ | 105,225 | | | (4 | )% | | (5 | )% |
| | | | | | | | | | | | | | | | | | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | |
Demand | | $ | 14,331 | | | $ | 13,883 | | | $ | 14,609 | | | (2 | )% | | 3 | % |
Interest checking | | | 15,993 | | | | 15,855 | | | | 18,282 | | | (13 | )% | | 1 | % |
Savings | | | 13,181 | | | | 12,392 | | | | 11,276 | | | 17 | % | | 6 | % |
Money market | | | 6,584 | | | | 6,462 | | | | 6,129 | | | 7 | % | | 2 | % |
Other time | | | 10,987 | | | | 10,818 | | | | 9,313 | | | 18 | % | | 2 | % |
Certificates - $100,000 and over | | | 6,628 | | | | 6,871 | | | | 4,343 | | | 53 | % | | (4 | )% |
Foreign office | | | 1,676 | | | | 2,362 | | | | 3,482 | | | (52 | )% | | (29 | )% |
| | | | | | | | | | | | | | | | | | |
Total deposits | | | 69,380 | | | | 68,643 | | | | 67,434 | | | 3 | % | | 1 | % |
Federal funds purchased | | | 1,421 | | | | 5,434 | | | | 5,323 | | | (73 | )% | | (74 | )% |
Short-term bank notes | | | — | | | | — | | | | — | | | NM | | | NM | |
Other short-term borrowings | | | 2,796 | | | | 3,833 | | | | 4,246 | | | (34 | )% | | (27 | )% |
Accrued taxes, interest and expenses | | | 2,283 | | | | 2,156 | | | | 2,142 | | | 7 | % | | 6 | % |
Other liabilities | | | 2,209 | | | | 1,570 | | | | 1,407 | | | 57 | % | | 41 | % |
Long-term debt | | | 12,558 | | | | 14,170 | | | | 15,227 | | | (18 | )% | | (11 | )% |
| | | | | | | | | | | | | | | | | | |
Total liabilities | | | 90,647 | | | | 95,806 | | | | 95,779 | | | (5 | )% | | (5 | )% |
Total shareholders’ equity (c) | | | 10,022 | | | | 10,022 | | | | 9,446 | | | 6 | % | | — | |
| | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 100,669 | | | $ | 105,828 | | | $ | 105,225 | | | (4 | )% | | (5 | )% |
| | | | | | | | | | | | | | | | | | |
(a) Amortized cost | | $ | 11,236 | | | $ | 20,103 | | | $ | 22,533 | | | (50 | )% | | (44 | )% |
(b) Market values | | | 356 | | | | 359 | | | | 389 | | | (8 | )% | | (1 | )% |
(c) Common shares, stated value $2.22 per share (in thousands): | | | | | | | | | | | | | | | | | | |
Authorized | | | 1,300,000 | | | | 1,300,000 | | | | 1,300,000 | | | — | | | — | |
Outstanding, excluding treasury | | | 556,253 | | | | 558,066 | | | | 555,623 | | | — | | | — | |
Treasury | | | 27,174 | | | | 25,361 | | | | 27,804 | | | (2 | )% | | 7 | % |
12
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | As of | |
| | | December
2006 | | | September
2006 | | | June 2006 | | | March 2006 | | | December
2005 | |
Assets | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 2,737 | | | $ | 2,399 | | | $ | 2,670 | | | $ | 2,494 | | | $ | 3,078 | |
Available-for-sale and other securities (a) | | | 11,053 | | | | 19,514 | | | | 20,345 | | | | 21,276 | | | | 21,924 | |
Held-to-maturity securities (b) | | | 356 | | | | 359 | | | | 358 | | | | 365 | | | | 389 | |
Trading securities | | | 187 | | | | 164 | | | | 173 | | | | 156 | | | | 117 | |
Other short-term investments | | | 809 | | | | 125 | | | | 207 | | | | 159 | | | | 158 | |
Loans held for sale | | | 1,150 | | | | 872 | | | | 931 | | | | 744 | | | | 1,304 | |
Portfolio loans and leases: | | | | | | | | | | | | | | | | | | | | |
Commercial loans | | | 20,725 | | | | 21,150 | | | | 20,618 | | | | 19,878 | | | | 19,174 | |
Construction loans | | | 6,847 | | | | 6,597 | | | | 6,698 | | | | 6,600 | | | | 7,037 | |
Commercial mortgage loans | | | 10,405 | | | | 9,879 | | | | 9,792 | | | | 9,861 | | | | 9,188 | |
Commercial lease financing | | | 4,984 | | | | 4,895 | | | | 4,899 | | | | 4,911 | | | | 4,852 | |
Residential mortgage loans | | | 8,151 | | | | 8,093 | | | | 7,875 | | | | 7,708 | | | | 7,152 | |
Consumer loans | | | 23,311 | | | | 22,834 | | | | 22,556 | | | | 22,210 | | | | 22,084 | |
Consumer lease financing | | | 1,176 | | | | 1,287 | | | | 1,420 | | | | 1,577 | | | | 1,751 | |
Unearned income | | | (1,246 | ) | | | (1,255 | ) | | | (1,281 | ) | | | (1,323 | ) | | | (1,313 | ) |
| | | | | | | | | | | | | | | | | | | | |
Portfolio loans and leases | | | 74,353 | | | | 73,480 | | | | 72,577 | | | | 71,422 | | | | 69,925 | |
Allowance for loan and lease losses | | | (771 | ) | | | (761 | ) | | | (753 | ) | | | (749 | ) | | | (744 | ) |
| | | | | | | | | | | | | | | | | | | | |
Portfolio loans and leases, net | | | 73,582 | | | | 72,719 | | | | 71,824 | | | | 70,673 | | | | 69,181 | |
Bank premises and equipment | | | 1,940 | | | | 1,902 | | | | 1,853 | | | | 1,798 | | | | 1,726 | |
Operating lease equipment | | | 202 | | | | 142 | | | | 150 | | | | 137 | | | | 143 | |
Goodwill | | | 2,193 | | | | 2,193 | | | | 2,194 | | | | 2,194 | | | | 2,169 | |
Intangible assets | | | 166 | | | | 175 | | | | 185 | | | | 189 | | | | 208 | |
Servicing rights | | | 524 | | | | 504 | | | | 489 | | | | 468 | | | | 441 | |
Other assets | | | 5,770 | | | | 4,760 | | | | 4,732 | | | | 4,391 | | | | 4,387 | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 100,669 | | | $ | 105,828 | | | $ | 106,111 | | | $ | 105,044 | | | $ | 105,225 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | |
Demand | | $ | 14,331 | | | $ | 13,883 | | | $ | 14,078 | | | $ | 14,134 | | | $ | 14,609 | |
Interest checking | | | 15,993 | | | | 15,855 | | | | 16,788 | | | | 17,511 | | | | 18,282 | |
Savings | | | 13,181 | | | | 12,392 | | | | 12,061 | | | | 11,902 | | | | 11,276 | |
Money market | | | 6,584 | | | | 6,462 | | | | 6,505 | | | | 6,399 | | | | 6,129 | |
Other time | | | 10,987 | | | | 10,818 | | | | 10,627 | | | | 10,105 | | | | 9,313 | |
Certificates - $100,000 and over | | | 6,628 | | | | 6,871 | | | | 5,691 | | | | 5,085 | | | | 4,343 | |
Foreign office | | | 1,676 | | | | 2,362 | | | | 4,773 | | | | 3,874 | | | | 3,482 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | | 69,380 | | | | 68,643 | | | | 70,523 | | | | 69,010 | | | | 67,434 | |
Federal funds purchased | | | 1,421 | | | | 5,434 | | | | 2,493 | | | | 3,715 | | | | 5,323 | |
Short-term bank notes | | | — | | | | — | | | | — | | | | — | | | | — | |
Other short-term borrowings | | | 2,796 | | | | 3,833 | | | | 5,275 | | | | 4,472 | | | | 4,246 | |
Accrued taxes, interest and expenses | | | 2,283 | | | | 2,156 | | | | 1,995 | | | | 2,169 | | | | 2,142 | |
Other liabilities | | | 2,209 | | | | 1,570 | | | | 1,767 | | | | 1,463 | | | | 1,407 | |
Long-term debt | | | 12,558 | | | | 14,170 | | | | 14,502 | | | | 14,746 | | | | 15,227 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 90,647 | | | | 95,806 | | | | 96,555 | | | | 95,575 | | | | 95,779 | |
Total shareholders’ equity (c) | | | 10,022 | | | | 10,022 | | | | 9,556 | | | | 9,469 | | | | 9,446 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 100,669 | | | $ | 105,828 | | | $ | 106,111 | | | $ | 105,044 | | | $ | 105,225 | |
| | | | | | | | | | | | | | | | | | | | |
(a) Amortized cost | | $ | 11,236 | | | $ | 20,103 | | | $ | 21,376 | | | $ | 22,127 | | | $ | 22,533 | |
(b) Market values | | | 356 | | | | 359 | | | | 358 | | | | 365 | | | | 389 | |
(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 | | | 556,253 | | | | 558,066 | | | | 557,894 | | | | 556,501 | | | | 555,623 | |
Treasury | | | 27,174 | | | | 25,361 | | | | 25,533 | | | | 26,926 | | | | 27,804 | |
13
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
$ in millions
(unaudited)
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | Year to Date | |
| | | December
2006 | | | December
2005 | | | December
2006 | | | December
2005 | |
Total shareholders’ equity, beginning | | $ | 10,022 | | | $ | 9,385 | | | $ | 9,446 | | | $ | 8,924 | |
Net income | | | 66 | | | | 332 | | | | 1,188 | | | | 1,549 | |
Other comprehensive income, net of tax: | | | | | | | | | | | | | | | | |
Change in unrealized gains and (losses): | | | | | | | | | | | | | | | | |
Available-for-sale securities | | | 263 | | | | (99 | ) | | | 276 | | | | (323 | ) |
Qualifying cash flow hedges | | | 4 | | | | 4 | | | | 12 | | | | 20 | |
Change in additional pension liability | | | (54 | ) | | | (1 | ) | | | (54 | ) | | | 59 | |
| | | | | | | | | | | | | | | | |
Comprehensive income | | | 279 | | | | 236 | | | | 1,422 | | | | 1,305 | |
Cash dividends declared: | | | | | | | | | | | | | | | | |
Common stock | | | (222 | ) | | | (211 | ) | | | (880 | ) | | | (810 | ) |
Preferred stock (a) | | | — | | | | — | | | | (1 | ) | | | (1 | ) |
Stock-based awards exercised, including treasury shares issued | | | 5 | | | | 30 | | | | 35 | | | | 85 | |
Stock-based compensation expense | | | 16 | | | | 12 | | | | 71 | | | | 65 | |
Loans repaid (issued) related to exercise of stock-based awards, net | | | 1 | | | | 3 | | | | 8 | | | | 11 | |
Change in corporate tax benefit related to stock-based compensation | | | 1 | | | | (9 | ) | | | (1 | ) | | | 6 | |
Shares acquired for treasury | | | (81 | ) | | | (1 | ) | | | (82 | ) | | | (1,649 | ) |
Shares issued in business combination | | | — | | | | — | | | | — | | | | 1,509 | |
Other | | | 1 | | | | 1 | | | | 4 | | | | 1 | |
| | | | | | | | | | | | | | | | |
Total shareholders’ equity, ending | | $ | 10,022 | | | $ | 9,446 | | | $ | 10,022 | | | $ | 9,446 | |
| | | | | | | | | | | | | | | | |
| (a) | Dividends on preferred stock are $.185 million for all quarters presented |
14
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | % Change | |
| | | December
2006 | | | September
2006 | | | December
2005 | | | Yr/Yr | | | Seq | |
Assets | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | |
Loans and leases | | $ | 75,262 | | | $ | 73,938 | | | $ | 70,489 | | | 7 | % | | 2 | % |
Taxable securities | | | 16,685 | | | | 20,836 | | | | 22,376 | | | (25 | )% | | (20 | )% |
Tax exempt securities | | | 568 | | | | 587 | | | | 698 | | | (19 | )% | | (3 | )% |
Other short-term investments | | | 1,009 | | | | 159 | | | | 200 | | | 406 | % | | 533 | % |
| | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 93,524 | | | | 95,520 | | | | 93,763 | | | — | | | (2 | )% |
Cash and due from banks | | | 2,398 | | | | 2,355 | | | | 2,847 | | | (16 | )% | | 2 | % |
Other assets | | | 9,440 | | | | 8,745 | | | | 8,105 | | | 16 | % | | 8 | % |
Allowance for loan and lease losses | | | (760 | ) | | | (752 | ) | | | (727 | ) | | 5 | % | | 1 | % |
| | | | | | | | | | | | | | | | | | |
Total assets | | $ | 104,602 | | | $ | 105,868 | | | $ | 103,988 | | | 1 | % | | (1 | )% |
| | | | | | | | | | | | | | | | | | |
| | | | | |
Liabilities | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Interest checking | | $ | 15,744 | | | $ | 16,251 | | | $ | 17,828 | | | (12 | )% | | (3 | )% |
Savings | | | 12,812 | | | | 12,279 | | | | 11,036 | | | 16 | % | | 4 | % |
Money market | | | 6,572 | | | | 6,371 | | | | 5,974 | | | 10 | % | | 3 | % |
Other time | | | 10,991 | | | | 10,794 | | | | 9,143 | | | 20 | % | | 2 | % |
Certificates - $100,000 and over | | | 6,750 | | | | 6,415 | | | | 4,354 | | | 55 | % | | 5 | % |
Foreign office | | | 2,758 | | | | 3,668 | | | | 3,703 | | | (26 | )% | | (25 | )% |
Federal funds purchased | | | 3,615 | | | | 4,546 | | | | 4,771 | | | (24 | )% | | (20 | )% |
Short-term bank notes | | | — | | | | — | | | | — | | | NM | | | NM | |
Other short-term borrowings | | | 4,468 | | | | 4,056 | | | | 4,408 | | | 1 | % | | 10 | % |
Long-term debt | | | 13,059 | | | | 14,355 | | | | 15,956 | | | (18 | )% | | (9 | )% |
| | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 76,769 | | | | 78,735 | | | | 77,173 | | | (1 | )% | | (2 | )% |
Demand deposits | | | 13,882 | | | | 13,642 | | | | 14,099 | | | (2 | )% | | 2 | % |
Other liabilities | | | 3,801 | | | | 3,613 | | | | 3,236 | | | 17 | % | | 5 | % |
| | | | | | | | | | | | | | | | | | |
Total liabilities | | | 94,452 | | | | 95,990 | | | | 94,508 | | | — | | | (2 | )% |
Shareholders’ equity | | | 10,150 | | | | 9,878 | | | | 9,480 | | | 7 | % | | 3 | % |
| | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 104,602 | | | $ | 105,868 | | | $ | 103,988 | | | 1 | % | | (1 | )% |
| | | | | | | | | | | | | | | | | | |
| | | | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | | | | |
Basic | | | 554,978 | | | | 555,565 | | | | 553,591 | | | — | | | — | |
Diluted | | | 557,654 | | | | 557,949 | | | | 556,322 | | | — | | | — | |
| | | | | | | | | | | | | | | | | | |
Yield Analysis | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | |
Loans and leases | | | 7.03 | % | | | 6.96 | % | | | 6.20 | % | | | | | | |
Taxable securities | | | 4.57 | % | | | 4.39 | % | | | 4.31 | % | | | | | | |
Tax exempt securities | | | 7.30 | % | | | 7.29 | % | | | 7.51 | % | | | | | | |
Other short-term investments | | | 5.56 | % | | | 5.69 | % | | | 4.41 | % | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 6.58 | % | | | 6.40 | % | | | 5.75 | % | | | | | | |
| | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Interest checking | | | 2.41 | % | | | 2.49 | % | | | 2.10 | % | | | | | | |
Savings | | | 3.24 | % | | | 3.08 | % | | | 2.41 | % | | | | | | |
Money market | | | 4.40 | % | | | 4.30 | % | | | 3.32 | % | | | | | | |
Other time | | | 4.46 | % | | | 4.24 | % | | | 3.50 | % | | | | | | |
Certificates - $100,000 and over | | | 5.15 | % | | | 5.03 | % | | | 3.66 | % | | | | | | |
Foreign office | | | 4.91 | % | | | 5.05 | % | | | 3.92 | % | | | | | | |
Federal funds purchased | | | 5.31 | % | | | 5.33 | % | | | 4.04 | % | | | | | | |
Short-term bank notes | | | — | | | | — | | | | — | | | | | | | |
Other short-term borrowings | | | 4.61 | % | | | 4.42 | % | | | 3.27 | % | | | | | | |
Long-term debt | | | 5.70 | % | | | 5.66 | % | | | 4.25 | % | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 4.17 | % | | | 4.14 | % | | | 3.21 | % | | | | | | |
| | | | | |
Ratios: | | | | | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | | 3.16 | % | | | 2.99 | % | | | 3.11 | % | | | | | | |
Net interest rate spread (taxable equivalent) | | | 2.41 | % | | | 2.26 | % | | | 2.54 | % | | | | | | |
Interest-bearing liabilities to interest-earning assets | | | 82.08 | % | | | 82.43 | % | | | 82.31 | % | | | | | | |
15
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | |
| | | Year to Date | | | % Change Yr/Yr | |
| | | December
2006 | | | December
2005 | | |
Assets | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | |
Loans and leases | | $ | 73,493 | | | $ | 67,737 | | | 8 | % |
Taxable securities | | | 20,306 | | | | 24,017 | | | (15 | )% |
Tax exempt securities | | | 604 | | | | 789 | | | (23 | )% |
Other short-term investments | | | 378 | | | | 193 | | | 96 | % |
| | | | | | | | | | | |
Total interest-earning assets | | | 94,781 | | | | 92,736 | | | 2 | % |
Cash and due from banks | | | 2,495 | | | | 2,758 | | | (10 | )% |
Other assets | | | 8,713 | | | | 8,102 | | | 8 | % |
Allowance for loan and lease losses | | | (751 | ) | | | (720 | ) | | 4 | % |
| | | | | | | | | | | |
Total assets | | $ | 105,238 | | | $ | 102,876 | | | 2 | % |
| | | | | | | | | | | |
| | | |
Liabilities | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | |
Interest checking | | $ | 16,650 | | | $ | 18,884 | | | (12 | )% |
Savings | | | 12,189 | | | | 10,007 | | | 22 | % |
Money market | | | 6,366 | | | | 5,170 | | | 23 | % |
Other time | | | 10,500 | | | | 8,491 | | | 24 | % |
Certificates - $100,000 and over | | | 5,795 | | | | 4,001 | | | 45 | % |
Foreign office | | | 3,711 | | | | 3,967 | | | (6 | )% |
Federal funds purchased | | | 4,148 | | | | 4,225 | | | (2 | )% |
Short-term bank notes | | | — | | | | 248 | | | (100 | )% |
Other short-term borrowings | | | 4,522 | | | | 5,038 | | | (10 | )% |
Long-term debt | | | 14,247 | | | | 16,384 | | | (13 | )% |
| | | | | | | | | | | |
Total interest-bearing liabilities | | | 78,128 | | | | 76,415 | | | 2 | % |
Demand deposits | | | 13,741 | | | | 13,868 | | | (1 | )% |
Other liabilities | | | 3,558 | | | | 3,276 | | | 9 | % |
| | | | | | | | | | | |
Total liabilities | | | 95,427 | | | | 93,559 | | | 2 | % |
Shareholders’ equity | | | 9,811 | | | | 9,317 | | | 5 | % |
| | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 105,238 | | | $ | 102,876 | | | 2 | % |
| | | | | | | | | | | |
| | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | |
Basic | | | 554,983 | | | | 554,411 | | | — | |
Diluted | | | 557,494 | | | | 558,443 | | | — | |
| | | | | | | | | | | |
Yield Analysis | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | |
Loans and leases | | | 6.82 | % | | | 5.80 | % | | | |
Taxable securities | | | 4.45 | % | | | 4.30 | % | | | |
Tax exempt securities | | | 7.38 | % | | | 7.39 | % | | | |
Other short-term investments | | | 5.52 | % | | | 2.89 | % | | | |
| | | | | | | | | | | |
Total interest-earning assets | | | 6.31 | % | | | 5.42 | % | | | |
| | | |
Interest-bearing liabilities: | | | | | | | | | | | |
Interest checking | | | 2.39 | % | | | 1.66 | % | | | |
Savings | | | 2.98 | % | | | 1.76 | % | | | |
Money market | | | 4.10 | % | | | 2.71 | % | | | |
Other time | | | 4.12 | % | | | 3.09 | % | | | |
Certificates - $100,000 and over | | | 4.80 | % | | | 3.22 | % | | | |
Foreign office | | | 4.76 | % | | | 3.17 | % | | | |
Federal funds purchased | | | 5.02 | % | | | 3.26 | % | | | |
Short-term bank notes | | | — | | | | 2.60 | % | | | |
Other short-term borrowings | | | 4.28 | % | | | 2.74 | % | | | |
Long-term debt | | | 5.40 | % | | | 3.66 | % | | | |
| | | | | | | | | | | |
Total interest-bearing liabilities | | | 3.94 | % | | | 2.66 | % | | | |
| | | |
Ratios: | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | | 3.06 | % | | | 3.23 | % | | | |
Net interest rate spread (taxable equivalent) | | | 2.37 | % | | | 2.76 | % | | | |
Interest-bearing liabilities to interest-earning assets | | | 82.43 | % | | | 82.40 | % | | | |
16
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | December
2006 | | | September
2006 | | | June 2006 | | | March
2006 | | | December
2005 | |
Assets | | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | |
Loans and leases | | $ | 75,262 | | | $ | 73,938 | | | $ | 73,093 | | | $ | 71,634 | | | $ | 70,489 | |
Taxable securities | | | 16,685 | | | | 20,836 | | | | 21,642 | | | | 22,116 | | | | 22,376 | |
Tax exempt securities | | | 568 | | | | 587 | | | | 616 | | | | 644 | | | | 698 | |
Other short-term investments | | | 1,009 | | | | 159 | | | | 181 | | | | 157 | | | | 200 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 93,524 | | | | 95,520 | | | | 95,532 | | | | 94,551 | | | | 93,763 | |
Cash and due from banks | | | 2,398 | | | | 2,355 | | | | 2,564 | | | | 2,668 | | | | 2,847 | |
Other assets | | | 9,440 | | | | 8,745 | | | | 8,393 | | | | 8,261 | | | | 8,105 | |
Allowance for loan and lease losses | | | (760 | ) | | | (752 | ) | | | (748 | ) | | | (744 | ) | | | (727 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 104,602 | | | $ | 105,868 | | | $ | 105,741 | | | $ | 104,736 | | | $ | 103,988 | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest checking | | $ | 15,744 | | | $ | 16,251 | | | $ | 17,025 | | | $ | 17,603 | | | $ | 17,828 | |
Savings | | | 12,812 | | | | 12,279 | | | | 12,064 | | | | 11,588 | | | | 11,036 | |
Money market | | | 6,572 | | | | 6,371 | | | | 6,429 | | | | 6,086 | | | | 5,974 | |
Other time | | | 10,991 | | | | 10,794 | | | | 10,449 | | | | 9,749 | | | | 9,143 | |
Certificates - $100,000 and over | | | 6,750 | | | | 6,415 | | | | 5,316 | | | | 4,670 | | | | 4,354 | |
Foreign office | | | 2,758 | | | | 3,668 | | | | 4,382 | | | | 4,050 | | | | 3,703 | |
Federal funds purchased | | | 3,615 | | | | 4,546 | | | | 3,886 | | | | 4,553 | | | | 4,771 | |
Short-term bank notes | | | — | | | | — | | | | — | | | | — | | | | — | |
Other short-term borrowings | | | 4,468 | | | | 4,056 | | | | 4,854 | | | | 4,718 | | | | 4,408 | |
Long-term debt | | | 13,059 | | | | 14,355 | | | | 14,465 | | | | 15,132 | | | | 15,956 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 76,769 | | | | 78,735 | | | | 78,870 | | | | 78,149 | | | | 77,173 | |
Demand deposits | | | 13,882 | | | | 13,642 | | | | 13,764 | | | | 13,674 | | | | 14,099 | |
Other liabilities | | | 3,801 | | | | 3,613 | | | | 3,500 | | | | 3,312 | | | | 3,236 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 94,452 | | | | 95,990 | | | | 96,134 | | | | 95,135 | | | | 94,508 | |
Shareholders’ equity | | | 10,150 | | | | 9,878 | | | | 9,607 | | | | 9,601 | | | | 9,480 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 104,602 | | | $ | 105,868 | | | $ | 105,741 | | | $ | 104,736 | | | $ | 103,988 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Average common shares outstanding (in thousands): | | | | | | | | | | | | | | | | | | | | |
Basic | | | 554,978 | | | | 555,565 | | | | 554,978 | | | | 554,398 | | | | 553,591 | |
Diluted | | | 557,654 | | | | 557,949 | | | | 557,489 | | | | 556,869 | | | | 556,322 | |
| | | | | | | | | | | | | | | | | | | | |
Yield Analysis | | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | |
Loans and leases | | | 7.03 | % | | | 6.96 | % | | | 6.75 | % | | | 6.51 | % | | | 6.20 | % |
Taxable securities | | | 4.57 | % | | | 4.39 | % | | | 4.43 | % | | | 4.44 | % | | | 4.31 | % |
Tax exempt securities | | | 7.30 | % | | | 7.29 | % | | | 7.33 | % | | | 7.59 | % | | | 7.51 | % |
Other short-term investments | | | 5.56 | % | | | 5.69 | % | | | 5.60 | % | | | 4.98 | % | | | 4.41 | % |
| | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 6.58 | % | | | 6.40 | % | | | 6.23 | % | | | 6.03 | % | | | 5.75 | % |
| | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest checking | | | 2.41 | % | | | 2.49 | % | | | 2.39 | % | | | 2.28 | % | | | 2.10 | % |
Savings | | | 3.24 | % | | | 3.08 | % | | | 2.90 | % | | | 2.67 | % | | | 2.41 | % |
Money market | | | 4.40 | % | | | 4.30 | % | | | 4.01 | % | | | 3.64 | % | | | 3.32 | % |
Other time | | | 4.46 | % | | | 4.24 | % | | | 4.00 | % | | | 3.74 | % | | | 3.50 | % |
Certificates - $100,000 and over | | | 5.15 | % | | | 5.03 | % | | | 4.64 | % | | | 4.15 | % | | | 3.66 | % |
Foreign office | | | 4.91 | % | | | 5.05 | % | | | 4.77 | % | | | 4.39 | % | | | 3.92 | % |
Federal funds purchased | | | 5.31 | % | | | 5.33 | % | | | 4.97 | % | | | 4.50 | % | | | 4.04 | % |
Short-term bank notes | | | — | | | | — | | | | — | | | | — | | | | — | |
Other short-term borrowings | | | 4.61 | % | | | 4.42 | % | | | 4.31 | % | | | 3.82 | % | | | 3.27 | % |
Long-term debt | | | 5.70 | % | | | 5.66 | % | | | 5.45 | % | | | 4.85 | % | | | 4.25 | % |
| | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 4.17 | % | | | 4.14 | % | | | 3.90 | % | | | 3.57 | % | | | 3.21 | % |
| | | | | |
Ratios: | | | | | | | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent) | | | 3.16 | % | | | 2.99 | % | | | 3.01 | % | | | 3.08 | % | | | 3.11 | % |
Net interest rate spread (taxable equivalent) | | | 2.41 | % | | | 2.26 | % | | | 2.33 | % | | | 2.46 | % | | | 2.54 | % |
Interest-bearing liabilities to interest-earning assets | | | 82.08 | % | | | 82.43 | % | | | 82.56 | % | | | 82.65 | % | | | 82.31 | % |
17
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
| | | | | | | | | | | | | | | |
| | | For the Three Months Ended |
| | | December
2006 | | September
2006 | | June 2006 | | March
2006 | | December
2005 |
Average Loans and Leases (including unearned income) | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | |
Commercial loans | | $ | 21,108 | | $ | 20,769 | | $ | 20,239 | | $ | 19,461 | | $ | 18,909 |
Commercial mortgage | | | 9,929 | | | 9,833 | | | 9,980 | | | 9,441 | | | 9,159 |
Commercial construction | | | 6,099 | | | 5,913 | | | 5,840 | | | 6,211 | | | 6,051 |
Commercial leases | | | 3,762 | | | 3,740 | | | 3,729 | | | 3,686 | | | 3,611 |
| | | | | | | | | | | | | | | |
Subtotal - commercial | | | 40,898 | | | 40,255 | | | 39,788 | | | 38,799 | | | 37,730 |
Consumer: | | | | | | | | | | | | | | | |
Residential mortgage | | | 9,334 | | | 8,967 | | | 8,756 | | | 8,351 | | | 8,444 |
Residential construction | | | 704 | | | 733 | | | 735 | | | 706 | | | 673 |
Credit card | | | 1,035 | | | 979 | | | 897 | | | 855 | | | 825 |
Home equity | | | 12,435 | | | 12,366 | | | 12,193 | | | 12,072 | | | 11,884 |
Other consumer loans | | | 9,714 | | | 9,384 | | | 9,340 | | | 9,311 | | | 9,251 |
Consumer leases | | | 1,142 | | | 1,254 | | | 1,384 | | | 1,540 | | | 1,682 |
| | | | | | | | | | | | | | | |
Subtotal - consumer | | | 34,364 | | | 33,683 | | | 33,305 | | | 32,835 | | | 32,759 |
| | | | | | | | | | | | | | | |
Total average loans and leases | | $ | 75,262 | | $ | 73,938 | | $ | 73,093 | | $ | 71,634 | | $ | 70,489 |
| | | | | | | | | | | | | | | |
| | | | | |
End of Period Loans and Leases Serviced | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | |
Commercial loans | | $ | 20,725 | | $ | 21,150 | | $ | 20,618 | | $ | 19,878 | | $ | 19,174 |
Commercial mortgage | | | 10,405 | | | 9,879 | | | 9,792 | | | 9,861 | | | 9,188 |
Commercial construction | | | 6,168 | | | 5,879 | | | 5,950 | | | 5,883 | | | 6,342 |
Commercial leases | | | 3,841 | | | 3,751 | | | 3,740 | | | 3,726 | | | 3,695 |
| | | | | | | | | | | | | | | |
Subtotal - commercial | | | 41,139 | | | 40,659 | | | 40,100 | | | 39,348 | | | 38,399 |
Consumer: | | | | | | | | | | | | | | | |
Residential mortgage | | | 8,151 | | | 8,093 | | | 7,875 | | | 7,708 | | | 7,152 |
Residential construction | | | 679 | | | 718 | | | 748 | | | 717 | | | 695 |
Credit card | | | 1,110 | | | 986 | | | 945 | | | 851 | | | 866 |
Home equity | | | 12,364 | | | 12,429 | | | 12,277 | | | 12,087 | | | 12,000 |
Other consumer loans | | | 9,837 | | | 9,420 | | | 9,334 | | | 9,272 | | | 9,218 |
Consumer leases | | | 1,073 | | | 1,175 | | | 1,298 | | | 1,439 | | | 1,595 |
| | | | | | | | | | | | | | | |
Subtotal - consumer | | | 33,214 | | | 32,821 | | | 32,477 | | | 32,074 | | | 31,526 |
| | | | | | | | | | | | | | | |
Total portfolio loans and leases | | | 74,353 | | | 73,480 | | | 72,577 | | | 71,422 | | | 69,925 |
| | | | | |
Loans held for sale | | | 1,150 | | | 872 | | | 931 | | | 744 | | | 1,304 |
| | | | | |
Operating lease equipment | | | 202 | | | 142 | | | 150 | | | 137 | | | 143 |
Loans and Leases Serviced for Others: | | | | | | | | | | | | | | | |
Residential mortgage (a) | | | 28,688 | | | 27,823 | | | 27,057 | | | 26,399 | | | 25,669 |
Commercial mortgage (b) | | | 769 | | | 756 | | | 890 | | | 2,183 | | | 2,126 |
Commercial loans (c) | | | 3,390 | | | 3,404 | | | 3,332 | | | 3,182 | | | 2,744 |
Commercial leases (b) | | | 263 | | | 256 | | | 258 | | | 271 | | | 264 |
Consumer loans (d) | | | 520 | | | 596 | | | 677 | | | 774 | | | 871 |
| | | | | | | | | | | | | | | |
Total loans and leases serviced for others | | | 33,630 | | | 32,835 | | | 32,214 | | | 32,809 | | | 31,674 |
| | | | | | | | | | | | | | | |
Total loans and leases serviced | | $ | 109,335 | | $ | 107,329 | | $ | 105,872 | | $ | 105,112 | | $ | 103,046 |
| | | | | | | | | | | | | | | |
| (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 |
18
Fifth Third Bancorp and Subsidiaries
Regulatory Capital (a)
$ in millions
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | As of | |
| | | December
2006 | | | September
2006 | | | June 2006 | | | March
2006 | | | December
2005 | |
Tier I capital: | | | | | | | | | | | | | | | | | | | | |
Shareholders’ equity | | $ | 10,022 | | | $ | 10,022 | | | $ | 9,556 | | | $ | 9,469 | | | $ | 9,446 | |
Goodwill and certain other intangibles | | | (2,339 | ) | | | (2,345 | ) | | | (2,351 | ) | | | (2,357 | ) | | | (2,377 | ) |
Unrealized (gains) losses | | | 176 | | | | 385 | | | | 674 | | | | 561 | | | | 405 | |
Other | | | 763 | | | | 748 | | | | 781 | | | | 761 | | | | 735 | |
| | | | | | | | | | | | | | | | | | | | |
Total tier I capital | | $ | 8,622 | | | $ | 8,810 | | | $ | 8,660 | | | $ | 8,434 | | | $ | 8,209 | |
| | | | | | | | | | | | | | | | | | | | |
Total risk-based capital: | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | $ | 8,622 | | | $ | 8,810 | | | $ | 8,660 | | | $ | 8,434 | | | $ | 8,209 | |
Qualifying allowance for credit losses | | | 867 | | | | 857 | | | | 849 | | | | 840 | | | | 838 | |
Qualifying subordinated notes | | | 1,893 | | | | 1,150 | | | | 1,108 | | | | 1,126 | | | | 1,193 | |
| | | | | | | | | | | | | | | | | | | | |
Total risk-based capital | | $ | 11,382 | | | $ | 10,817 | | | $ | 10,617 | | | $ | 10,400 | | | $ | 10,240 | |
| | | | | | | | | | | | | | | | | | | | |
Risk-weighted assets | | $ | 103,124 | | | $ | 101,940 | | | $ | 101,126 | | | $ | 98,511 | | | $ | 98,293 | |
Ratios: | | | | | | | | | | | | | | | | | | | | |
Average shareholders’ equity to average assets | | | 9.70 | % | | | 9.33 | % | | | 9.09 | % | | | 9.17 | % | | | 9.12 | % |
Regulatory capital: | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | | 8.36 | % | | | 8.64 | % | | | 8.56 | % | | | 8.56 | % | | | 8.35 | % |
Total risk-based capital | | | 11.04 | % | | | 10.61 | % | | | 10.50 | % | | | 10.56 | % | | | 10.42 | % |
Tier I leverage | | | 8.44 | % | | | 8.52 | % | | | 8.38 | % | | | 8.24 | % | | | 8.08 | % |
| (a) | Current period regulatory capital data and ratios are estimated |
19
Fifth Third Bancorp and Subsidiaries
Asset Quality
$ in millions
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | December
2006 | | | September
2006 | | | June
2006 | | | March
2006 | | | December
2005 | |
Summary of Credit Loss Experience | | | | | | | | | | | | | | | | | | | | |
Losses charged off: | | | | | | | | | | | | | | | | | | | | |
Commercial loans | | $ | (37 | ) | | $ | (29 | ) | | $ | (31 | ) | | $ | (35 | ) | | $ | (35 | ) |
Commercial mortgage loans | | | (11 | ) | | | (8 | ) | | | (5 | ) | | | (2 | ) | | | (3 | ) |
Construction loans | | | (4 | ) | | | (1 | ) | | | (3 | ) | | | — | | | | (3 | ) |
Residential mortgage loans | | | (7 | ) | | | (5 | ) | | | (6 | ) | | | (4 | ) | | | (5 | ) |
Consumer loans | | | (55 | ) | | | (50 | ) | | | (46 | ) | | | (50 | ) | | | (58 | ) |
Commercial lease financing | | | (1 | ) | | | — | | | | (2 | ) | | | (1 | ) | | | (28 | ) |
Consumer lease financing | | | (3 | ) | | | (3 | ) | | | (3 | ) | | | (4 | ) | | | (5 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total losses | | | (118 | ) | | | (96 | ) | | | (96 | ) | | | (96 | ) | | | (137 | ) |
| | | | | |
Recoveries of losses previously charged off: | | | | | | | | | | | | | | | | | | | | |
Commercial loans | | | 8 | | | | 4 | | | | 9 | | | | 3 | | | | 10 | |
Commercial mortgage loans | | | — | | | | 1 | | | | 1 | | | | — | | | | 1 | |
Construction loans | | | — | | | | — | | | | — | | | | — | | | | — | |
Residential mortgage loans | | | — | | | | — | | | | — | | | | — | | | | — | |
Consumer loans | | | 11 | | | | 10 | | | | 16 | | | | 15 | | | | 8 | |
Commercial lease financing | | | 1 | | | | 1 | | | | 1 | | | | 2 | | | | — | |
Consumer lease financing | | | 1 | | | | 1 | | | | 2 | | | | 3 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | |
Total recoveries | | | 21 | | | | 17 | | | | 29 | | | | 23 | | | | 20 | |
| | | | | |
Net losses charged off: | | | | | | | | | | | | | | | | | | | | |
Commercial loans | | | (29 | ) | | | (25 | ) | | | (22 | ) | | | (32 | ) | | | (25 | ) |
Commercial mortgage loans | | | (11 | ) | | | (7 | ) | | | (4 | ) | | | (2 | ) | | | (2 | ) |
Construction loans | | | (4 | ) | | | (1 | ) | | | (3 | ) | | | — | | | | (3 | ) |
Residential mortgage loans | | | (7 | ) | | | (5 | ) | | | (6 | ) | | | (4 | ) | | | (5 | ) |
Consumer loans | | | (44 | ) | | | (40 | ) | | | (30 | ) | | | (35 | ) | | | (50 | ) |
Commercial lease financing | | | — | | | | 1 | | | | (1 | ) | | | 1 | | | | (28 | ) |
Consumer lease financing | | | (2 | ) | | | (2 | ) | | | (1 | ) | | | (1 | ) | | | (4 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total net losses charged off | | $ | (97 | ) | | $ | (79 | ) | | $ | (67 | ) | | $ | (73 | ) | | $ | (117 | ) |
| | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses, beginning | | $ | 761 | | | $ | 753 | | | $ | 749 | | | $ | 744 | | | $ | 727 | |
Total net losses charged off | | | (97 | ) | | | (79 | ) | | | (67 | ) | | | (73 | ) | | | (117 | ) |
Provision for loan and lease losses | | | 107 | | | | 87 | | | | 71 | | | | 78 | | | | 134 | |
| | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses, ending | | $ | 771 | | | $ | 761 | | | $ | 753 | | | $ | 749 | | | $ | 744 | |
Reserve for unfunded commitments, beginning | | $ | 76 | | | $ | 74 | | | $ | 69 | | | $ | 70 | | | $ | 69 | |
Provision for unfunded commitments | | | — | | | | 2 | | | | 5 | | | | (1 | ) | | | 1 | |
Acquisitions | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Reserve for unfunded commitments, ending | | $ | 76 | | | $ | 76 | | | $ | 74 | | | $ | 69 | | | $ | 70 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Components of allowance for credit losses: | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | | $ | 771 | | | $ | 761 | | | $ | 753 | | | $ | 749 | | | $ | 744 | |
Reserve for unfunded commitments | | | 76 | | | | 76 | | | | 74 | | | | 69 | | | | 70 | |
| | | | | | | | | | | | | | | | | | | | |
Total allowance for credit losses | | $ | 847 | | | $ | 837 | | | $ | 827 | | | $ | 818 | | | $ | 814 | |
| | | | | | | | | | | | | | | | | | | | |
Nonperforming Assets and Delinquent Loans | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans and leases (a) | | $ | 352 | | | $ | 320 | | | $ | 281 | | | $ | 291 | | | $ | 294 | |
Renegotiated loans and leases | | | — | | | | — | | | | — | | | | — | | | | — | |
Other assets, including other real estate owned | | | 103 | | | | 91 | | | | 77 | | | | 73 | | | | 67 | |
| | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets | | $ | 455 | | | $ | 411 | | | $ | 358 | | | $ | 364 | | | $ | 361 | |
| | | | | | | | | | | | | | | | | | | | |
Ninety days past due loans and leases (a) | | $ | 210 | | | $ | 196 | | | $ | 191 | | | $ | 160 | | | $ | 155 | |
| | | | | | | | | | | | | | | | | | | | |
Ratios | | | | | | | | | | | | | | | | | | | | |
Net losses charged off as a percent of average loans and leases | | | 0.52 | % | | | 0.43 | % | | | 0.37 | % | | | 0.42 | % | | | 0.67 | % |
Allowance for loan and lease losses as a percent of loans and leases | | | 1.04 | % | | | 1.04 | % | | | 1.04 | % | | | 1.05 | % | | | 1.06 | % |
Allowance for credit losses as a percent of loans and leases | | | 1.14 | % | | | 1.14 | % | | | 1.14 | % | | | 1.14 | % | | | 1.16 | % |
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned | | | 0.61 | % | | | 0.56 | % | | | 0.49 | % | | | 0.51 | % | | | 0.52 | % |
| (a) | Nonaccrual includes $33 million and Ninety Days Past Due includes $56 million of residential mortgage loans as of December 31, 2006. |
20
