Exhibit 99.1
| News Release | ||||
| CONTACTS: | Jim Eglseder (Investors) (513) 534-8424 Rich Rosen (Investors) (513) 534-3307 Debra DeCourcy, APR (Media) (513) 534-6957 | FOR IMMEDIATE RELEASE July 23, 2009 | ||
FIFTH THIRD BANCORP REPORTS SECOND QUARTER EARNINGS
Net Income of $882 million, Exceeds Tier 1 Common Commitment by 60%
| • | Generated over $1.4 billion in tangible common equity through the combination of an “at the market” common equity offering and exchange of cash and common stock for convertible preferred stock |
| • | Subsequent to the close of the second quarter, Fifth Third sold its Visa, Inc. class B common stock for an after-tax benefit of approximately $206 million |
| • | These actions result in Tier 1 common equity credit under the SCAP assessment of $1.75 billion, exceeding Fifth Third’s $1.1 billion SCAP commitment by 60% |
| • | Completed sale of an approximate 51% interest in Fifth Third’s processing business, resulting in a gain of $1.8 billion pre-tax, or $1.1 billion after-tax |
| • | Tier 1 common ratio of 7.0%, Tier 1 ratio of 12.9% as of June 30, 2009 |
| • | Visa transaction improves pro forma capital ratios by approximately 19 bps; pro forma Tier 1 common equity ratio of 7.2% |
| • | Average core deposits increased 9% from the previous year; wholesale funding reduced by nearly $7 billion reflecting strong liquidity position |
| • | Net interest margin of 3.26%, up 20 bps sequentially |
| • | Noninterest income increased 11% on strong mortgage banking and payments processing revenue, excluding gain from processing joint venture and investment securities gains/losses |
| • | Allowance to loan ratio increased to 4.28%, allowance to nonperforming loans ratio of 135%, allowance to annualized net charge-off ratio of 1.4 times |
| • | Extended over $21 billion of new and renewed credit in the second quarter |
Earnings Highlights
| For the Three Months Ended | % Change | |||||||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | ||||||||||||||||||||
Earnings ($ in millions) | ||||||||||||||||||||||||||
Net income (loss) | $ | 882 | $ | 50 | ($ | 2,142 | ) | ($ | 56 | ) | ($ | 202 | ) | 1666 | % | NM | ||||||||||
Net income (loss) available to common shareholders | $ | 856 | ($ | 26 | ) | ($ | 2,184 | ) | ($ | 81 | ) | ($ | 202 | ) | NM | NM | ||||||||||
Common Share Data | ||||||||||||||||||||||||||
Earnings per share, basic | 1.35 | (0.04 | ) | (3.78 | ) | (0.14 | ) | (0.37 | ) | NM | NM | |||||||||||||||
Earnings per share, diluted | 1.15 | (0.04 | ) | (3.78 | ) | (0.14 | ) | (0.37 | ) | NM | NM | |||||||||||||||
Cash dividends per common share | 0.01 | 0.01 | 0.01 | 0.15 | 0.15 | — | (93 | %) | ||||||||||||||||||
Financial Ratios | ||||||||||||||||||||||||||
Return on average assets | 3.05 | % | 0.17 | % | (7.16 | %) | (.19 | %) | (.72 | %) | 1694 | % | NM | |||||||||||||
Return on average common equity | 41.2 | (1.4 | ) | (94.6 | ) | (3.3 | ) | (8.5 | ) | NM | NM | |||||||||||||||
Tier I capital | 12.90 | 10.93 | 10.59 | 8.57 | 8.51 | 18 | % | 52 | % | |||||||||||||||||
Tier I common equity | 7.00 | 4.50 | 4.37 | 5.18 | 5.18 | 12 | % | 40 | % | |||||||||||||||||
Net interest margin (a) | 3.26 | 3.06 | 3.46 | 4.24 | 3.04 | 7 | % | 7 | % | |||||||||||||||||
Efficiency (a) | 29.9 | 65.1 | 131.3 | 54.2 | 58.6 | (54 | %) | (49 | %) | |||||||||||||||||
Common shares outstanding (in thousands) | 795,313 | 576,936 | 577,387 | 577,487 | 577,530 | 38 | % | 38 | % | |||||||||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||||||||
Basic | 629,789 | 571,810 | 571,809 | 571,705 | 540,030 | 10 | % | 17 | % | |||||||||||||||||
Diluted | 718,245 | 571,810 | 571,809 | 571,705 | 540,030 | 26 | % | 33 | % | |||||||||||||||||
| (a) | Presented on a fully taxable equivalent basis |
NM: not meaningful
Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2009 net income of $882 million, compared with net income of $50 million in the first quarter of 2009 and a net loss of $202 million in the second quarter of 2008. After preferred dividends, second quarter 2009 net income available to common shareholders was $856 million, compared with a net loss of $26 million in the first quarter of 2009 and a net loss of $202 million in the second quarter of 2008. In the quarter, we reported EPS of $1.15 per diluted share, compared with a net loss of $0.04 per diluted share in the first quarter and a net loss of $0.37 per diluted share in the same quarter of 2008.
Second quarter of 2009 net income included a gain of $1,764 million pre-tax, or $1,055 million after-tax, from the completion of the previously announced processing business transaction with Advent International. Results also included a special FDIC deposit insurance fund assessment, which decreased net income by $55 million pre-tax, or $36 million after-tax. Net income available to common shareholders also included a $35 million benefit, recorded as a reduction to preferred dividend expense, reflecting the excess of the carrying value of preferred shares over the fair value of the common shares and cash exchanged through our tender offer for Series G preferred stock. The benefit of this reduction in preferred dividend expense is not included in earnings per diluted share under the “if converted” method (discussed further below) utilized for determining diluted earnings per share in the second quarter.
First quarter 2009 net income benefited by $101 million after-tax, or $0.18 per share, due to the net impact of several significant items. These items included a tax benefit related to the decision to surrender of one of our bank-owned life insurance (BOLI) policies, charges related to this BOLI policy, a reduction in income tax expense and a related charge due to our agreement with the IRS to settle all of Fifth Third’s disputed leveraged leases for all open years, securities losses, and severance expense. Second quarter 2008 results included net charges of approximately $233 million after-tax, or $0.44 per share, related to significant items. These included $130 million pre-tax charge to reflect a projected change in the timing of tax benefits pursuant to FSP FAS 13-2, an increase to tax expense of approximately $140 million required for interest related to previous tax years pursuant to FIN 48, and $13 million pre-tax in acquisition-related expenses.
During the second quarter of 2009, the reported common shares outstanding increased reflecting the effect of shares issued during the quarter through our “at-the-market” common share offering as well as the common shares issued in connection with the exchange of a portion of our Series G preferred stock. Average diluted common shares of 718 million increased 146 million shares from the first quarter of 2009. The increase reflected an average impact of 47 million shares from the issuance of 158 million shares in our common share offering, and 9 million common shares from the exchange. The increase also reflected the inclusion of the 96 million shares underlying our Series G preferred stock, due to the utilization of the “if-converted” method. Period-end common shares of 795 million increased 218 million shares from the first quarter of 2009 due to the issuance of 158 million in the common share offering and 60 million converted through the preferred stock exchange. We would expect our average basic and diluted shares going forward to approximate the period end share count of 795 million, with the remaining 36 million common shares underlying unexchanged Series
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G preferred shares being included in periods when the impact of their inclusion is dilutive to the diluted EPS calculation. The impact of second quarter activities on reported share counts is more fully discussed later in this release.
During the quarter, we completed the sale of a 51 percent interest in our processing business through a joint venture with Advent International. This transaction produced an after-tax gain of $1.1 billion and enhanced our tangible common equity ratios by approximately 100 basis points. Additionally, we successfully issued $1.0 billion of common stock and exchanged 63 percent of our convertible preferred shares into common stock through a cash and stock tender. These two common stock transactions resulted in a further increase in tangible common equity ratio of approximately 130 basis points. Finally, subsequent to the end of the second quarter, we sold our Visa, Inc. class B common shares for an after-tax benefit of approximately $206 million. The combined effect of these transactions has enhanced our tangible common equity by $2.7 billion, or approximately 240 bps, while at the same time increasing tangible book value per share by approximately $1.00 per share to $9.75 on a pro forma basis.
Also during the quarter, the 19 largest U.S. banks completed the results of the Supervisory Capital Assessment Program (SCAP) “stress test.” The purpose of this stress test was to evaluate results, loan losses, and capital levels under a “more adverse scenario” that was viewed as a possible although unlikely development. Under this assessment, Fifth Third committed to increase its Tier 1 common equity by $1.1 billion, a commitment, which has been exceeded by approximately $650 million through the common stock transactions, and Visa sale outlined above. The SCAP required participating banks to take actions to ensure that their Tier 1 common equity ratio would exceed 4 percent of risk-weighted assets under the more adverse scenario. Including the effect of the Visa transaction, our pro forma Tier 1 common equity ratio as of the second quarter of 2009 was 7.2 percent.
“This was an eventful quarter for Fifth Third and for the industry,” said Kevin T. Kabat, Chairman, CEO and President of Fifth Third Bancorp. “We completed our processing joint venture transaction at a gain of $1.1 billion, raised $1.0 billion in new common equity, and brought about the early conversion of 63 percent of our existing convertible preferred stock, further increasing common equity by $441 million. We exceeded the SCAP Tier 1 common equity commitment by 60 percent. Our operating results and credit loss experience through the second quarter have been superior to the results submitted under the SCAP more adverse scenario, and we expect that to remain the case in coming quarters.
Results for the second quarter were in line with our expectations and continue to reflect strong core results coupled with high credit costs. As expected, we saw significant improvement in the net interest margin, up 20 basis points from the prior quarter, driven by improved liability pricing and wider loan spreads, which drove a 7 percent sequential increase in net interest income. We expect expansion in the net interest margin to continue in the second half of the year. Fee growth remained strong, up 11 percent on a core basis from the
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first quarter of 2009. Expense management remains a key focus, and core expenses were relatively flat from the first quarter despite the strong revenue performance.
Credit trends remain difficult and signals regarding future trends are somewhat mixed at this point. We continue to work aggressively to manage the risk in our loan portfolio. As expected, net charge-offs increased from the first quarter to $626 million. We expect loan losses to increase moderately in the third quarter, with higher commercial real estate charge-offs partially offset by lower consumer charge-offs. Second quarter nonperforming asset growth of 7 percent represented deceleration from prior quarters, and significantly lower levels of inflows. We currently expect higher NPA growth in the third quarter although below the levels of growth experienced in prior quarters.
The provision for loan losses exceeded net charge-offs by $415 million, increasing the reserve to loan ratio to 4.28 percent. Our reserve position relative to loans, nonperforming loans, and levels of charge-offs are very strong and we currently do not expect significant additional growth in loan loss reserves to be necessary, absent further deterioration in credit conditions. The level of our reserves coupled with our strong levels of underlying earnings and capital place us in a very strong position to deal with the expected challenges in the remainder of this credit cycle.”
Income Statement Highlights
| For the Three Months Ended | % Change | ||||||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | |||||||||||||||||||
Condensed Statements of Income ($ in millions) |
| ||||||||||||||||||||||||
Net interest income (taxable equivalent) | $ | 836 | $ | 781 | $ | 897 | $ | 1,068 | $ | 744 | 7 | % | 12 | % | |||||||||||
Provision for loan and lease losses | 1,041 | 773 | 2,356 | 941 | 719 | 35 | % | 45 | % | ||||||||||||||||
Total noninterest income | 2,583 | 697 | 642 | 717 | 722 | 271 | % | 258 | % | ||||||||||||||||
Total noninterest expense | 1,021 | 962 | 2,022 | 967 | 858 | 6 | % | 19 | % | ||||||||||||||||
Income (loss) before income taxes (taxable equivalent) | 1,357 | (257 | ) | (2,839 | ) | (123 | ) | (111 | ) | NM | NM | ||||||||||||||
Taxable equivalent adjustment | 5 | 5 | 5 | 5 | 6 | — | (17 | %) | |||||||||||||||||
Applicable income taxes | 470 | (312 | ) | (702 | ) | (72 | ) | 85 | NM | 453 | % | ||||||||||||||
Net income (loss) | 882 | 50 | (2,142 | ) | (56 | ) | (202 | ) | 1666 | % | NM | ||||||||||||||
Dividends on preferred stock | 26 | 76 | 42 | 25 | — | (66 | %) | NM | |||||||||||||||||
Net income (loss) available to common shareholders | 856 | (26 | ) | (2,184 | ) | (81 | ) | (202 | ) | NM | NM | ||||||||||||||
Earnings per share, diluted | $ | 1.15 | ($ | 0.04 | ) | ($ | 3.78 | ) | ($ | 0.14 | ) | ($ | 0.37 | ) | NM | NM | |||||||||
NM: not meaningful
Net Interest Income
| For the Three Months Ended | % Change | |||||||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | ||||||||||||||||||||
Interest Income ($ in millions) | ||||||||||||||||||||||||||
Total interest income (taxable equivalent) | $ | 1,184 | $ | 1,183 | $ | 1,411 | $ | 1,553 | $ | 1,213 | — | (2 | %) | |||||||||||||
Total interest expense | 348 | 402 | 514 | 485 | 469 | (13 | %) | (26 | %) | |||||||||||||||||
Net interest income (taxable equivalent) | $ | 836 | $ | 781 | $ | 897 | $ | 1,068 | $ | 744 | 7 | % | 12 | % | ||||||||||||
Average Yield | ||||||||||||||||||||||||||
Yield on interest-earning assets | 4.62 | % | 4.63 | % | 5.44 | % | 6.16 | % | 4.95 | % | — | (7 | %) | |||||||||||||
Yield on interest-bearing liabilities | 1.67 | % | 1.89 | % | 2.28 | % | 2.25 | % | 2.23 | % | (12 | %) | (25 | %) | ||||||||||||
Net interest rate spread (taxable equivalent) | 2.95 | % | 2.74 | % | 3.16 | % | 3.91 | % | 2.72 | % | 8 | % | 8 | % | ||||||||||||
Net interest margin (taxable equivalent) | 3.26 | % | 3.06 | % | 3.46 | % | 4.24 | % | 3.04 | % | 7 | % | 7 | % | ||||||||||||
Average Balances ($ in millions) | ||||||||||||||||||||||||||
Loans and leases, including held for sale | $ | 84,996 | $ | 85,829 | $ | 87,426 | $ | 85,772 | $ | 85,212 | (1 | %) | — | |||||||||||||
Total securities and other short-term investments | 17,762 | 17,835 | 15,683 | 14,515 | 13,363 | — | 33 | % | ||||||||||||||||||
Total interest-bearing liabilities | 83,407 | 86,218 | 89,440 | 85,990 | 84,417 | (3 | %) | (1 | %) | |||||||||||||||||
Shareholders' equity | 12,490 | 12,084 | 10,291 | 10,843 | 9,629 | 3 | % | 30 | % | |||||||||||||||||
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Net interest income of $836 million on a taxable equivalent basis increased $55 million, or 7 percent, from the first quarter of 2009. The sequential increase was driven by improved spreads on loan originations, and a deposit mix shift to lower cost core deposits as higher priced term deposits issued in the third and fourth quarters of 2008 matured, partially offset by higher non-accrual loan balances.
The reported net interest margin was 3.26 percent, up 20 bps from 3.06 percent in the first quarter of 2009. The sequential increase in net interest margin was largely driven by the factors outlined above.
Compared with the second quarter of 2008, net interest income increased $92 million and the net interest margin increased 22 bps from 3.04 percent. Second quarter 2008 results included the effect of the changes in estimated cash flows on certain leveraged lease transactions that reduced net interest income by approximately $130 million. Excluding the leveraged lease litigation charge recorded in the second quarter of 2008, net interest income declined by $38 million from the same period in 2008 and the net interest margin declined 30 bps. The declines in net interest income and net interest margin were largely driven by shift in deposit mix toward higher priced certificates of deposit (CDs) in the latter part of 2008 and higher interest reversals, partially offset by improved pricing spreads on loan originations.
Average Loans
| For the Three Months Ended | % Change | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | |||||||||||||||
Average Portfolio Loans and Leases ($ in millions) | |||||||||||||||||||||
Commercial: | |||||||||||||||||||||
Commercial loans | $ | 28,027 | $ | 28,949 | $ | 30,227 | $ | 28,284 | $ | 28,299 | (3 | %) | (1 | %) | |||||||
Commercial mortgage | 12,463 | 12,508 | 13,189 | 13,257 | 12,590 | — | (1 | %) | |||||||||||||
Commercial construction | 4,672 | 4,987 | 5,990 | 6,110 | 5,700 | (6 | %) | (18 | %) | ||||||||||||
Commercial leases | 3,512 | 3,564 | 3,610 | 3,641 | 3,747 | (1 | %) | (6 | %) | ||||||||||||
Subtotal - commercial loans and leases | 48,674 | 50,008 | 53,016 | 51,292 | 50,336 | (3 | %) | (3 | %) | ||||||||||||
Consumer: | |||||||||||||||||||||
Residential mortgage loans | 8,713 | 9,195 | 9,335 | 9,681 | 9,922 | (5 | %) | (12 | %) | ||||||||||||
Home equity | 12,636 | 12,763 | 12,677 | 12,534 | 12,012 | (1 | %) | 5 | % | ||||||||||||
Automobile loans | 8,692 | 8,687 | 8,428 | 8,303 | 8,439 | — | 3 | % | |||||||||||||
Credit card | 1,863 | 1,825 | 1,748 | 1,720 | 1,703 | 2 | % | 9 | % | ||||||||||||
Other consumer loans and leases | 995 | 1,083 | 1,165 | 1,165 | 1,125 | (8 | %) | (12 | %) | ||||||||||||
Subtotal - consumer loans and leases | 32,899 | 33,553 | 33,353 | 33,403 | 33,201 | (2 | %) | (1 | %) | ||||||||||||
Total average loans and leases (excluding held for sale) | $ | 81,573 | $ | 83,561 | $ | 86,369 | $ | 84,695 | $ | 83,537 | (2 | %) | (2 | %) | |||||||
Average loans held for sale | 3,422 | 2,268 | 1,057 | 1,077 | 1,676 | 51 | % | 104 | % | ||||||||||||
Average portfolio loan and lease balances decreased 2 percent both sequentially and compared with the second quarter of 2008. The decline was due to lower customer demand for loans as both consumer and commercial customers are using credit more cautiously. Excluding the impact of $1.3 billion in commercial loans sold or transferred to held-for-sale during the fourth quarter of 2008 and the impact of loans charged-off, period-end portfolio loan and lease balances were flat versus the previous year.
Average commercial loan and lease balances decreased 3 percent both sequentially and compared with the second quarter of the previous year. During the second quarter of 2009, commercial and industrial (C&I)
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average loans decreased by 3 percent, primarily due to lower customer line usage, which accounted for about $700 million of the $900 million decline. Excluding commercial loans charged-off and the impact of loans that were either sold or transferred to held-for-sale in the fourth quarter of 2008, period-end commercial loan and lease balances declined by 1 percent sequentially and from the previous year. Average commercial mortgage and commercial construction loan balances declined by a combined 2 percent sequentially.
Average consumer loan and lease balances decreased 2 percent sequentially and declined 1 percent from the second quarter of 2008. Sequentially, modest credit card loan growth was more than offset by a decline in home equity and residential mortgage loan balances. On a year-over-year basis, growth in home equity, auto, and credit card loans was more than offset by a reduction in residential mortgages. Excluding loans charged-off, period-end consumer loans were flat relative to the previous year.
High mortgage origination volumes during the second quarter of 2009 drove a $1.2 billion increase in the warehouse of residential mortgages held-for-sale on an average basis. The majority of Fifth Third’s mortgages are originated to be sold to agencies, and are not reflected in portfolio loans or portfolio loan growth.
Average Deposits
| For the Three Months Ended | % Change | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | |||||||||||||||
Average Deposits ($ in millions) | |||||||||||||||||||||
Demand deposits | $ | 16,689 | $ | 15,532 | $ | 14,602 | $ | 14,225 | $ | 14,023 | 7 | % | 19 | % | |||||||
Interest checking | 14,837 | 14,229 | 13,698 | 13,843 | 14,396 | 4 | % | 3 | % | ||||||||||||
Savings | 16,705 | 16,272 | 15,960 | 16,154 | 16,583 | 3 | % | 1 | % | ||||||||||||
Money market | 4,167 | 4,559 | 4,983 | 6,051 | 6,592 | (9 | %) | (37 | %) | ||||||||||||
Foreign office (a) | 1,717 | 1,755 | 1,876 | 2,126 | 2,169 | (2 | %) | (21 | %) | ||||||||||||
Subtotal - Transaction deposits | 54,115 | 52,347 | 51,119 | 52,399 | 53,763 | 3 | % | 1 | % | ||||||||||||
Other time | 14,612 | 14,501 | 13,337 | 10,780 | 9,517 | 1 | % | 54 | % | ||||||||||||
Subtotal - Core deposits | 68,727 | 66,848 | 64,456 | 63,179 | 63,280 | 3 | % | 9 | % | ||||||||||||
Certificates - $100,000 and over | 11,455 | 11,802 | 12,468 | 11,623 | 8,143 | (3 | %) | 41 | % | ||||||||||||
Other | 240 | 247 | 1,090 | 395 | 2,948 | (3 | %) | (92 | %) | ||||||||||||
Total deposits | $ | 80,422 | $ | 78,897 | $ | 78,014 | $ | 75,197 | $ | 74,371 | 2 | % | 8 | % | |||||||
| (a) | Includes commercial customer Eurodollar sweep balances for which the Bancorp pays rates comparable to other commercial deposit accounts. |
Average core deposits increased 3 percent sequentially and 9 percent from the second quarter of 2008. Acquisitions had a 3 percent beneficial effect on the year-over-year comparison. On both a sequential and year-over-year basis, growth in average demand deposit (DDA) - up 19 percent year-over-year and up 7 percent sequentially - interest checking, savings, and consumer CD balances were partially offset by lower money market and foreign office commercial sweep deposits. Average transaction deposits (excluding consumer time deposits) were up 3 percent from first quarter 2009 and increased 1 percent from a year ago. Sequential and year-over-year growth was driven by strong checking account balance growth partially offset by migration of money market balances to CDs that offered higher rates.
Retail average core deposits increased 3 percent sequentially and increased 11 percent from the second quarter of 2008. Sequential growth in DDA, interest checking, savings, and consumer CD balances was
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partially offset by lower money market balances, a result of migration into higher-rate consumer CDs. Higher average account balances drove DDA growth, and strong account production drove the increase in savings account balances. Commercial core deposits increased 2 percent sequentially and 3 percent from the previous year. Sequential growth in DDA and interest checking account balances, driven by higher average account balances, more than offset lower savings and money market account balances.
Noninterest Income
| For the Three Months Ended | % Change | ||||||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | |||||||||||||||||||
Noninterest Income ($ in millions) | |||||||||||||||||||||||||
Electronic payment processing revenue | $ | 243 | $ | 223 | $ | 230 | $ | 235 | $ | 235 | 9 | % | 4 | % | |||||||||||
Service charges on deposits | 162 | 146 | 162 | 172 | 159 | 11 | % | 2 | % | ||||||||||||||||
Investment advisory revenue | 73 | 76 | 78 | 90 | 92 | (4 | %) | (21 | %) | ||||||||||||||||
Corporate banking revenue | 99 | 116 | 121 | 104 | 111 | (15 | %) | (11 | %) | ||||||||||||||||
Mortgage banking net revenue | 147 | 134 | (29 | ) | 45 | 86 | 10 | % | 72 | % | |||||||||||||||
Gain on sale of FTPS joint venture | 1,764 | — | — | — | — | NM | NM | ||||||||||||||||||
Other noninterest income | 49 | 10 | 24 | 112 | 49 | 380 | % | (1 | %) | ||||||||||||||||
Securities gains (losses), net | 5 | (24 | ) | (40 | ) | (63 | ) | (10 | ) | NM | NM | ||||||||||||||
Securities gains, net - non-qualifying hedges on mortgage servicing rights | 41 | 16 | 96 | 22 | — | 157 | % | NM | |||||||||||||||||
Total noninterest income | $ | 2,583 | $ | 697 | $ | 642 | $ | 717 | $ | 722 | 271 | % | 258 | % | |||||||||||
Noninterest income of $2.6 billion increased $1.9 billion both sequentially and from a year ago. Second quarter 2009 results included a $1.8 billion gain from the completion of the processing business joint venture, while first quarter 2009 results included $54 million in charges related to one of our BOLI policies. Excluding these items and investment securities gains/losses in each period, noninterest income of $814 million increased by $39 million or 5 percent from the previous quarter and increased by $82 million or 11 percent from the same period the previous year. Both sequential and year-over-year growth was driven by stronger mortgage banking revenue, payment processing revenue, and deposit service charges.
Electronic payment processing revenue of $243 million increased 9 percent sequentially and increased 4 percent from a year ago. Merchant processing revenue increased 20 percent sequentially and increased 10 percent compared with the previous year. The sequential and year-over-year increases were driven by strong debit card processing revenue, offset by decreased average ticket size on both credit and debit transaction. Card issuer interchange revenue increased 10 percent sequentially and increased 3 percent from the previous year, driven by an increase in credit card transactions tempered by a decline in the average dollar amount per transaction. Financial institutions revenue decreased 2 percent compared with the previous quarter and decreased 3 percent from the second quarter of 2008 on declines in contract cancellation fees partially offset by strong transaction volumes.
Service charges on deposits of $162 million increased 11 percent sequentially and 2 percent compared with the same quarter last year. Retail service charges increased 20 percent from the previous quarter and were flat compared with the second quarter of 2008. The sequential increase was driven by strong growth in net new accounts and transaction activity. Commercial service charges increased 2 percent sequentially and increased 3 percent compared with last year. Year-over-year growth primarily reflected an increase in
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customer accounts and lower market interest rates, as reduced earnings credit rates paid on customer balances have resulted in higher realized net service fees to pay for treasury management services.
Corporate banking revenue of $99 million decreased by $17 million or 15 percent from strong first quarter results, largely due to an $11 million decline in lease termination fees and the effects of stabilization in the macroeconomic environment on customer derivatives activity. Sequential results were driven by lower volume of interest rate derivative sales revenue, foreign exchange revenue and business lending fees, partially offset by growth in institutional sales. On a year-over-year basis, corporate banking revenue decreased by $12 million, or 11 percent, driven by lower volume of interest rate derivative sales revenue and foreign exchange revenue partially offset by growth in institutional sales and business lending fees.
Investment advisory revenue of $73 million was down 4 percent sequentially and 21 percent from the second quarter of 2008. Institutional trust revenue was flat from the previous quarter and down 20 percent from the previous year. The year-over-year decline was largely driven by lower overall market value declines. Mutual fund fees were up 6 percent from the previous quarter, reflecting higher asset valuations due to the better performance of equity markets in the second quarter. Brokerage fees were down 5 percent from the first quarter of 2009, reflecting a decline in transaction-based revenues.
Mortgage banking net revenue was $147 million in the second quarter of 2009, an increase of $13 million from strong first quarter 2009 results and $61 million from the second quarter of 2008. Second quarter of 2009 originations were a record $6.9 billion, up from $4.9 billion the previous quarter, and resulted in gains on mortgages sold of $161 million compared with gains of $131 million during the previous quarter and $79 million during the same period in 2008. Revenue for the second quarter included $1 million of gains on the sale of portfolio loans compared with $3 million in the previous quarter and $9 million in the second quarter of 2008. Net servicing revenue, before mortgage servicing rights (MSR) valuation adjustments, totaled $2 million in the second quarter, compared with $2 million last quarter and $11 million a year ago. MSR valuation adjustments, including mark-to-market related adjustments on free-standing derivatives used to economically hedge the MSR portfolio, represented a net loss of $16 million in the second quarter of 2009, compared with a net gain of $1 million last quarter and a net loss of $4 million a year ago. The mortgage-servicing asset, net of the valuation reserve, was $594 million at quarter end on a servicing portfolio of $43.5 billion.
Net securities gains on non-qualifying hedges on MSRs were $41 million in the second quarter of 2009 compared with net gains of $16 million in the previous quarter and no gain in the second quarter of 2008.
Net gains on investment securities were $5 million in the second quarter of 2009, compared with securities losses of $24 million in the previous quarter and losses of $10 million in the same period the previous year.
Other noninterest income totaled $49 million in the second quarter of 2009 compared with $10 million the previous quarter and $49 million in the second quarter of 2008. Second quarter 2009 results included a $15
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million write-down on an facility we intend to vacate, while first quarter 2009 results included $54 million in charges associated with a certain BOLI policy. Excluding these items, other noninterest income was flat compared with the previous quarter and increased by $15 million from the same period the previous year. Year-over-year growth was otherwise driven by gains on non-performing assets that were sold, settled, or transferred to OREO, which were $11 million in the second quarter of 2009 and $13 million in the first quarter of 2009.
The results of our joint processing transaction are discussed more fully elsewhere in this release.
Noninterest Expense
| For the Three Months Ended | % Change | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | Seq | Yr/Yr | |||||||||||||||
Noninterest Expense ($ in millions) | |||||||||||||||||||||
Salaries, wages and incentives | $ | 346 | $ | 327 | $ | 337 | $ | 321 | $ | 331 | 6 | % | 4 | % | |||||||
Employee benefits | $ | 75 | $ | 83 | $ | 61 | $ | 72 | $ | 60 | (10 | %) | 24 | % | |||||||
Payment processing expense | $ | 75 | $ | 67 | $ | 70 | $ | 70 | $ | 67 | 12 | % | 11 | % | |||||||
Net occupancy expense | $ | 79 | $ | 79 | $ | 77 | $ | 77 | $ | 73 | 1 | % | 8 | % | |||||||
Technology and communications | $ | 45 | $ | 45 | $ | 48 | $ | 47 | $ | 49 | 1 | % | (7 | %) | |||||||
Equipment expense | $ | 31 | $ | 31 | $ | 35 | $ | 34 | $ | 31 | (2 | %) | 1 | % | |||||||
Other noninterest expense | $ | 370 | $ | 330 | $ | 1,394 | $ | 346 | $ | 247 | 12 | % | 50 | % | |||||||
Total noninterest expense | $ | 1,021 | $ | 962 | $ | 2,022 | $ | 967 | $ | 858 | 6 | % | 19 | % | |||||||
Noninterest expense of $1.0 billion increased $59 million sequentially and increased $163 million from a year ago. Second quarter of 2009 results included a $55 million FDIC special assessment charge, while first quarter 2009 results included $8 million in severance expense. Excluding these items, expenses increased by $12 million, or 1 percent, driven by higher expenses related to loan collection activities, partially offset by broad-based expense control. Second quarter 2008 results included $13 million in acquisition-related expenses. Excluding the items noted above for the second quarter in 2009 and 2008, expenses increased by $121 million, or 14 percent from the same quarter the previous year, driven by higher credit-related costs as well as the effect of the June 2008 acquisition of First Charter.
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Credit Quality
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Total net losses charged off ($ in millions) | ||||||||||||||||||||
Commercial loans | ($ | 177 | ) | ($ | 103 | ) | ($ | 422 | ) | ($ | 85 | ) | ($ | 107 | ) | |||||
Commercial mortgage loans | (85 | ) | (77 | ) | (465 | ) | (94 | ) | (21 | ) | ||||||||||
Commercial construction loans | (79 | ) | (76 | ) | (539 | ) | (88 | ) | (49 | ) | ||||||||||
Commercial leases | (1 | ) | — | — | — | — | ||||||||||||||
Residential mortgage loans | (112 | ) | (75 | ) | (68 | ) | (77 | ) | (63 | ) | ||||||||||
Home equity | (88 | ) | (72 | ) | (54 | ) | (55 | ) | (54 | ) | ||||||||||
Automobile loans | (36 | ) | (46 | ) | (43 | ) | (32 | ) | (26 | ) | ||||||||||
Credit card | (45 | ) | (36 | ) | (30 | ) | (24 | ) | (21 | ) | ||||||||||
Other consumer loans and leases | (3 | ) | (5 | ) | (6 | ) | (8 | ) | (3 | ) | ||||||||||
Total net losses charged off | (626 | ) | (490 | ) | (1,627 | ) | (463 | ) | (344 | ) | ||||||||||
Total losses | (658 | ) | (521 | ) | (1,652 | ) | (481 | ) | (365 | ) | ||||||||||
Total recoveries | 32 | 31 | 25 | 18 | 21 | |||||||||||||||
Total net losses charged off | ($ | 626 | ) | ($ | 490 | ) | ($ | 1,627 | ) | ($ | 463 | ) | ($ | 344 | ) | |||||
Ratios (annualized) | ||||||||||||||||||||
Net losses charged off as a percent of average loans and leases (excluding held for sale) | 3.08 | % | 2.38 | % | 7.50 | % | 2.17 | % | 1.66 | % | ||||||||||
Commercial | 2.81 | % | 2.08 | % | 10.70 | % | 2.07 | % | 1.41 | % | ||||||||||
Consumer | 3.48 | % | 2.82 | % | 2.40 | % | 2.33 | % | 2.04 | % | ||||||||||
Net charge-offs were $626 million in the second quarter of 2009, or 308 bps of average loans on an annualized basis. First quarter net losses were $490 million, or 238 bps of average loans on an annualized basis. Loss experience overall continues to be driven by commercial and residential real estate loans in Michigan and Florida. In aggregate, Florida and Michigan represented approximately 45 percent of total losses during the quarter and 28 percent of total loans and leases.
Commercial net charge-offs were $342 million, or 281 bps, in the second quarter of 2009, an increase of $86 million from the first quarter of 2009. Within the commercial portfolio, C&I losses were $177 million and increased $74 million from the previous quarter. C&I losses included losses on loans to auto dealers of $28 million and losses on loans to companies in real estate-related industries of $38 million. Commercial mortgage net losses totaled $85 million, an increase of $8 million from the previous quarter. Michigan and Florida accounted for 45 percent of commercial mortgage losses. Commercial construction net losses were $79 million, compared with $76 million in the first quarter, with Michigan and Florida accounting for 54 percent of commercial construction losses. Across all commercial portfolios, net losses on residential builder and developer portfolio loans totaled $76 million, compared with $64 million in first quarter. These homebuilder losses included $45 million on commercial construction loans, $25 million on commercial mortgage loans, and $6 million on C&I loans. Originations of homebuilder/developer loans were suspended in 2007 and remaining portfolio balance totals $2.1 billion. Commercial net charge-offs excluding losses in the homebuilder/developer portfolio were $266 million, or 228 bps in the second quarter.
Consumer net charge-offs of $284 million, or 348 bps, were up $50 million from the first quarter of 2009. Michigan and Florida represented 45 percent of second quarter home equity losses and 29 percent of total home equity loans. Net charge-offs within the residential mortgage portfolio were $112 million, an increase of $37 million from the previous quarter, with losses in Michigan and Florida representing 75 percent of losses in
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the second quarter and approximately 44 percent of total residential mortgage loans. Home equity net charge-offs of $88 million increased $16 million sequentially and growth continued to be driven by losses on brokered home equity loans. Net losses on brokered home equity loans were $39 million, up $9 million sequentially, and represented 44 percent of second quarter home equity losses. Brokered home equity loans represented $2.1 billion, or 17 percent, of the total home equity portfolio with originations being discontinued in 2007. Net charge-offs in the auto portfolio decreased by $10 million from the first quarter of 2009 to $36 million reflecting improved values on used cars sold at auction. Net losses on consumer credit card loans were $45 million, up $9 million from the last quarter, as higher unemployment and weakening economic conditions continue to impact the credit card portfolio.
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Allowance for Credit Losses ($ in millions) | ||||||||||||||||||||
Allowance for loan and lease losses, beginning | $ | 3,070 | $ | 2,787 | $ | 2,058 | $ | 1,580 | $ | 1,205 | ||||||||||
Total net losses charged off | (626 | ) | (490 | ) | (1,627 | ) | (463 | ) | (344 | ) | ||||||||||
Provision for loan and lease losses | 1,041 | 773 | 2,356 | 941 | 719 | |||||||||||||||
Allowance for loan and lease losses, ending | 3,485 | 3,070 | 2,787 | 2,058 | 1,580 | |||||||||||||||
Reserve for unfunded commitments, beginning | 231 | 195 | 132 | 115 | 103 | |||||||||||||||
Provision for unfunded commitments | 8 | 36 | 63 | 17 | 10 | |||||||||||||||
Acquisitions | — | — | — | — | 2 | |||||||||||||||
Reserve for unfunded commitments, ending | 239 | 231 | 195 | 132 | 115 | |||||||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan and lease losses | 3,485 | 3,070 | 2,787 | 2,058 | 1,580 | |||||||||||||||
Reserve for unfunded commitments | 239 | 231 | 195 | 132 | 115 | |||||||||||||||
Total allowance for credit losses | $ | 3,724 | $ | 3,301 | $ | 2,982 | $ | 2,190 | $ | 1,695 | ||||||||||
Allowance for loan and lease losses ratio | ||||||||||||||||||||
As a percent of loans and leases | 4.28 | % | 3.72 | % | 3.31 | % | 2.41 | % | 1.85 | % | ||||||||||
As a percent of nonperforming loans and leases (a) (b) | 135 | % | 128 | % | 157 | % | 92 | % | 92 | % | ||||||||||
As a percent of nonperforming assets (a) (b) | 123 | % | 116 | % | 139 | % | 84 | % | 81 | % | ||||||||||
| (a) | Excludes non accrual loans and leases in loans held for sale |
| (b) | During 1Q09 the Bancorp modified its nonaccrual policy to exclude TDR loans less than 90 days past due because they were performing in accordance with restructured terms. For comparability purposes, prior periods were adjusted to reflect this reclassification. |
Provision for loan and lease losses totaled $1.0 billion in the second quarter of 2009, exceeding net charge-offs by $415 million. The allowance for loan and lease losses represented 4.28 percent of total loans and leases outstanding as of quarter end, compared with 3.72 percent last quarter, and represented 135 percent of nonperforming loans and leases and 139 percent of annualized second quarter net charge-offs.
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| As of | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Nonperforming Assets and Delinquency ($ in millions) | ||||||||||||||||||||
Nonaccrual loans and leases: | ||||||||||||||||||||
Commercial loans | $ | 603 | $ | 667 | $ | 541 | $ | 550 | $ | 407 | ||||||||||
Commercial mortgage | 760 | 692 | 482 | 724 | 524 | |||||||||||||||
Commercial construction | 684 | 551 | 362 | 636 | 537 | |||||||||||||||
Commercial leases | 51 | 27 | 21 | 23 | 18 | |||||||||||||||
Residential mortgage | 262 | 265 | 259 | 216 | 142 | |||||||||||||||
Home equity | 26 | 25 | 26 | 27 | 35 | |||||||||||||||
Automobile | 1 | 2 | 5 | 3 | 7 | |||||||||||||||
Other consumer loans and leases | — | — | — | — | — | |||||||||||||||
Total nonaccrual loans and leases | $ | 2,387 | $ | 2,229 | $ | 1,696 | $ | 2,179 | $ | 1,670 | ||||||||||
Restructured loans and leases - commercial (non accrual) (a) | 12 | — | — | — | — | |||||||||||||||
Restructured loans and leases - consumer (non accrual) (a) | 188 | 167 | 80 | 50 | 56 | |||||||||||||||
Total nonperforming loans and leases | $ | 2,587 | $ | 2,396 | $ | 1,776 | $ | 2,229 | $ | 1,726 | ||||||||||
Repossessed personal property | 21 | 25 | 24 | 24 | 22 | |||||||||||||||
Other real estate owned (b) | 232 | 227 | 206 | 198 | 190 | |||||||||||||||
Total nonperforming assets (c) | $ | 2,840 | $ | 2,648 | $ | 2,006 | $ | 2,451 | $ | 1,938 | ||||||||||
Nonaccrual loans held for sale | 352 | 403 | 473 | — | — | |||||||||||||||
Total nonperforming assets including loans held for sale | $ | 3,192 | $ | 3,051 | $ | 2,479 | $ | 2,451 | $ | 1,938 | ||||||||||
Restructured loans and leases (accrual) (a) | $ | 1,074 | $ | 615 | 494 | 377 | 262 | |||||||||||||
Total loans and leases 90 days past due | $ | 762 | $ | 733 | $ | 662 | $ | 671 | $ | 608 | ||||||||||
Nonperforming loans and leases as a percent of portfolio loans, leases and other assets, including other real estate owned (c) | 3.17 | % | 2.89 | % | 2.11 | % | 2.60 | % | 2.01 | % | ||||||||||
Nonperforming assets as a percent of portfolio loans, leases and other assets, including other real estate owned (c) | 3.48 | % | 3.20 | % | 2.38 | % | 2.86 | % | 2.26 | % | ||||||||||
| (a) | During 1Q09 the Bancorp modified its nonaccrual policy to exclude TDR loans less than 90 days past due because they were performing in accordance with restructured terms. For comparability purposes, prior periods were adjusted to reflect this reclassification. |
| (b) | Excludes government insured advances. |
| (c) | Does not include non accrual loans held-for-sale. |
Nonperforming assets (NPAs) at quarter end were $2.8 billion or 3.48 percent of total loans and leases and other real estate owned (OREO), up $192 million from $2.6 billion, or 3.20 percent, last quarter. Including $352 million of nonaccrual loans classified as held-for-sale, total nonperforming assets were $3.2 billion compared with $3.1 billion in the first quarter. Growth in NPAs continues to be largely associated with commercial and residential real estate loans in Michigan and Florida. In aggregate, Florida and Michigan represented approximately 42 percent of NPAs in the loan portfolio.
Commercial NPAs at quarter-end were $2.2 billion, or 4.52 percent, and increased $193 million, or 10 percent, from the first quarter of 2009. C&I portfolio NPAs of $633 million decreased $42 million from the previous quarter. Commercial construction portfolio NPAs were $735 million, an increase of $138 million from the first quarter of 2009. Commercial mortgage NPAs were $791 million, a sequential increase of $72 million. Commercial real estate loans in Michigan and Florida represented 38 percent of our total commercial real estate portfolio in the second quarter 2009 and 43 percent of commercial real estate NPAs. Across the entire commercial loan portfolio, residential real estate builder and developer portfolio NPAs were $613 million in the second quarter, up $59 million from the previous quarter. Of the residential real estate builder and developer portfolio NPAs, $333 million were commercial construction NPAs, $246 million were commercial mortgage NPAs and $34 million were C&I NPAs.
At quarter-end, $352 million of commercial nonaccrual loans were held-for-sale, compared with $403 million at the end of the first quarter, and in the second quarter recorded a net gain of $11 million on $40 million of
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loans that were sold, settled, or transferred to OREO. These loans continue to be carried at the lower of cost or market, currently 26 cents of the original balance.
Consumer NPAs of $628 million, or 1.92 percent, decreased $2 million from the first quarter of 2009. Of consumer NPAs, $548 million were in residential real estate portfolios. Residential mortgage NPAs were $475 million, consistent with the previous quarter, and home equity NPAs decreased $10 million to $73 million. Residential real estate loans in Michigan and Florida represented 62 percent of total residential real estate NPAs and 35 percent of total residential real estate loans. Nonaccrual troubled debt restructurings were $188 million, compared with $167 million last quarter. Excluding TDRs, consumer NPAs declined by $23 million from the previous quarter. Second quarter OREO balances were $232 million compared with OREO balances of $227 million in the first quarter of 2009, and included $115 million in residential mortgage assets, $16 million in home equity assets, and $101 million in commercial real estate assets. Repossessed personal property of $21 million largely consisted of autos.
Loans still accruing over 90 days past due were $762 million, up $29 million from the first quarter of 2009. Commercial 90 days past due balances increased 9 percent from the previous quarter. Consumer 90 days past due balances were unchanged from the previous quarter.
Capital Position
| For the Three Months Ended | |||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | |||||||||||
Capital Position | |||||||||||||||
Average shareholders’ equity to average assets | 10.78 | % | 10.18 | % | 8.65 | % | 9.45 | % | 8.59 | % | |||||
Tangible equity (a) | 9.72 | % | 7.89 | % | 7.86 | % | 6.19 | % | 6.37 | % | |||||
Tangible common equity (excluding unrealized gains/losses) (a) | 6.55 | % | 4.23 | % | 4.23 | % | 5.23 | % | 5.40 | % | |||||
Tangible common equity (including unrealized gains/losses) (a) | 6.67 | % | 4.35 | % | 4.31 | % | 5.19 | % | 5.28 | % | |||||
Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses) (a) (b) | 6.96 | % | 4.51 | % | 4.39 | % | 5.19 | % | 5.21 | % | |||||
Regulatory capital ratios: (c) | |||||||||||||||
Tier I capital | 12.90 | % | 10.93 | % | 10.59 | % | 8.57 | % | 8.51 | % | |||||
Total risk-based capital | 16.96 | % | 15.13 | % | 14.78 | % | 12.30 | % | 12.15 | % | |||||
Tier I leverage | 12.17 | % | 10.29 | % | 10.27 | % | 8.77 | % | 9.08 | % | |||||
Tier I common equity | 7.00 | % | 4.50 | % | 4.37 | % | 5.18 | % | 5.18 | % | |||||
Book value per share | 12.71 | 13.61 | 13.57 | 16.65 | 16.75 | ||||||||||
Tangible book value per share (a) | 9.51 | 8.79 | 8.74 | 10.10 | 10.16 | ||||||||||
| (a) | The tangible equity ratio, tangible common equity ratios and tangible book value per share ratio, while not required by accounting principles generally accepted in the United States of America (GAAP), are considered to be critical metrics with which to analyze banks. The ratios have been included herein to facilitate a greater understanding of the Bancorp’s capital structure and financial condition. See the Regulation G Non-GAAP Reconciliation table for a reconciliation of these ratios to GAAP. |
| (b) | Under the banking agencies risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together resulting in the Bancorp’s total risk weighted assets. |
| (c) | Current period regulatory capital data ratios are estimated. |
The Tier 1 common equity ratio increased 250 bps from the previous quarter to 7.0 percent, and the tangible common equity to risk weighted assets ratio increased 245 bps from the previous quarter to 7.0 percent. The
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Tier 1 capital ratio increased 197 bps to 12.9 percent, and the total capital ratio increased 183 bps to 17.0 percent. The increase in capital ratios was related to the benefit of the closing of the processing business joint venture with Advent International, the $1.0 billion “at the market” common equity offering, and the net effect of the exchange of common shares and cash for outstanding preferred stock. These transactions are described more fully below.
Additionally, as described below, subsequent to the end of the second quarter, Fifth Third sold Visa, Inc. class B common shares in a transaction that resulted in a net benefit of $206 million. On a pro forma basis, this gain is expected to increase our capital ratios by approximately 19 bps.
Book value per share at June 30, 2009 was $12.71 and tangible book value per share was $9.51, compared with March 31, 2009 book value per share of $13.62 and tangible book value per share of $8.79. The Visa transaction would increase both measures by approximately $0.26 on a pro forma basis.
Other Matters
During the second quarter of 2009, Fifth Third completed an “at the market” $1.0 billion common equity offering in which Fifth Third issued 157,995,960 shares at an average price of $6.33 per share.
In a tender offer that expired June 17, 2009, Fifth Third offered to exchange shares of its common stock and cash for any and all of its outstanding Depository Shares each representing a 1/250th interest in a share of 8.50 percent Non-Cumulative Perpetual Convertible Preferred Stock, Series G. A total of 6,962,250 Depository Shares were validly tendered, and overall, $696,225,000 liquidation amount of Fifth Third’s Depository Shares were exchanged, which represented 62.86 percent of the aggregate liquidation amount of its Depository Shares. The transaction resulted in the issuance of approximately 60,121,124 shares of common stock and payment of $229,754,622 in cash, including payment in lieu of fractional shares. Net income available to common shareholders included a $35 million benefit, recorded as a reduction to preferred dividend expense, reflecting the carrying value of preferred shares relative to the fair value of the common shares and cash exchanged through our tender offer for Series G preferred stock. The benefit of this reduction in preferred dividend expense is not included in earnings per diluted share under the “if converted” method (discussed further below) utilized for determining earnings per diluted share in the second quarter.
On June 30, 2009, Fifth Third and Advent International announced the closing of their joint venture transaction for Fifth Third’s processing business. Advent International purchased an approximate 51 percent interest in Fifth Third’s merchant acquiring and financial institutions businesses, most of the assets and operations of which are held by a limited liability company (“the LLC”). The transaction was valued at approximately $2.35 billion before valuation adjustments by either party. Fifth Third retains an approximate 49 percent interest in the LLC, and will also retain its credit card issuing business, which includes retail credit card and commercial multi-card services. Fifth Third recognized a pre-tax gain of approximately $1.8 billion ($1.1 billion after-tax) on the transaction.
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Common shares outstanding increased during the quarter, reflecting the effect of shares issued during the quarter through the “at-the-market” common share offering as well as the common shares issued in the preferred stock exchange. Average basic common shares outstanding of 630 million increased 58 million shares from the first quarter of 2009. This reflected the average effect of the common shares issued – 47 million from the common share issuance and 9 million from the exchange. Period end common shares of 795 million increased 218 million shares – 158 million shares in the common share offering and 60 million shares issued in the preferred stock exchange - from the first quarter of 2009.
Average diluted common shares of 718 million shares increased 146 million shares from the first quarter of 2009. The increase included the 58 million shares reflected in our basic common shares. The reporting of results under the “if converted” method resulted in a further increase in our diluted share count for the quarter of 87 million shares, of which 51 million represented the average effect prior to the exchange of common shares underlying Series G preferred shares that were exchanged. The remaining 8 million shares underlying the Series G Preferred were included in our average basic share count. In the future, these 51 million shares will be reflected in average basic and diluted shares on a full quarter basis. The remaining 36 million common shares included in this quarter’s average diluted share count continue to underlie unexchanged Series G preferred shares. In previous quarters, these shares were excluded from the diluted EPS calculation, as their impact would have been anti-dilutive to EPS.
Subsequent to the end of the second quarter of 2009, Fifth Third sold its Visa, Inc. class B common shares for a pre-tax benefit of $317 million or an after-tax benefit of $206 million, which will be recognized in the third quarter of 2009. These shares were carried on our books at a value of zero. As a result, the transaction will benefit the Tier 1 Common capital ratio on a pro forma basis by approximately 19 basis points.
Conference Call
Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live by Thomson Financial and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Fifth Third” then “Investor Relations”). The webcast also is being distributed over Thomson Financial’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Financial’s individual investor center at www.earnings.com or by visiting any of the investor sites in Thomson Financial’s Individual Investor Network. Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).
Those unable to listen to the live webcast may access a webcast replay or podcast through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available beginning approximately two hours after the conference call until Thursday, August 6th by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode 17561949#).
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Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of June 30, 2009, the Company has $116 billion in assets, operates 16 affiliates with 1,306 full-service Banking Centers, including 99 Bank Mart® locations open seven days a week inside select grocery stores and 2,355 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has a 49% interest in Fifth Third Processing Solutions, LLC. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2009, has $180 billion in assets under care, of which it managed $24 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 on the NASDAQ® National Global Select Market under the symbol “FITB.”
Forward-Looking Statements
This news release contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K and our most recent quarterly report on Form 10-Q. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us.
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) general economic conditions and weakening in the economy, specifically the real estate market, either nationally or in the states in which Fifth Third, one or more acquired entities and/or the combined company do business, are less favorable than expected; (2) deteriorating credit quality; (3) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (4) changes in the interest rate environment reduce interest margins; (5) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (6) Fifth Third’s ability to maintain required capital levels and adequate sources of funding and liquidity; (7) maintaining capital requirements may limit Fifth Third’s operations and potential growth; (8) changes and trends in capital markets; (9) problems encountered by larger or similar financial institutions may adversely affect the banking industry and/or Fifth Third (10) competitive pressures among depository institutions increase significantly; (11) effects of critical accounting policies and judgments; (12) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies; (13) legislative or regulatory changes or actions, or significant litigation, adversely affect Fifth Third, one or more acquired entities and/or the combined company or the businesses in which Fifth Third, one or more acquired entities and/or the combined company are engaged; (14) ability to maintain favorable ratings from rating agencies; (15) fluctuation of Fifth Third’s stock price; (16) ability to attract and retain key personnel; (17) ability to receive dividends from its subsidiaries; (18) potentially dilutive effect of future acquisitions on current shareholders’ ownership of Fifth Third; (19) effects of accounting or financial results of one or more acquired entities; (20) lower than expected gains related to any sale or potential sale of businesses; (21) difficulties in separating Fifth Third Processing Solutions from Fifth Third; (22) loss of income from any sale or potential sale of businesses that could have an adverse effect on Fifth Third’s earnings and future growth;(23) ability to secure confidential information through the use of computer systems and telecommunications networks; and (24) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity.
You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.
# # #
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Quarterly Financial Review for June 30, 2009
Table of Contents
| Financial Highlights | 18-19 | |
| Consolidated Statements of Income | 20 | |
| Consolidated Statements of Income (Taxable Equivalent) | 21 | |
| Consolidated Balance Sheets | 22-23 | |
| Consolidated Statements of Changes in Shareholders’ Equity | 24 | |
| Average Balance Sheet and Yield Analysis | 25-27 | |
| Summary of Loans and Leases | 28 | |
| Regulatory Capital | 29 | |
| Summary of Credit Loss Experience | 30 | |
| Asset Quality | 31 | |
| Regulation G Non-GAAP Reconciliation | 32 | |
| Segment Presentation | 33 |
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Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| For the Three Months Ended | % Change | Year to Date | % Change | ||||||||||||||||||||||||||
| June 2009 | March 2009 | June 2008 | Seq | Yr/Yr | June 2009 | June 2008 | Yr/Yr | ||||||||||||||||||||||
Income Statement Data | |||||||||||||||||||||||||||||
Net interest income (a) | $ | 836 | $ | 781 | $ | 744 | 7 | % | 12 | % | $ | 1,617 | $ | 1,570 | 3 | % | |||||||||||||
Noninterest income | 2,583 | 697 | 722 | 271 | % | 258 | % | 3,280 | 1,587 | 107 | % | ||||||||||||||||||
Total revenue (a) | 3,419 | 1,478 | 1,466 | 131 | % | 133 | % | 4,897 | 3,157 | 55 | % | ||||||||||||||||||
Provision for loan and lease losses | 1,041 | 773 | 719 | 35 | % | 45 | % | 1,814 | 1,263 | 44 | % | ||||||||||||||||||
Noninterest expense | 1,021 | 962 | 858 | 6 | % | 19 | % | 1,984 | 1,576 | 26 | % | ||||||||||||||||||
Net income (loss) | 882 | 50 | (202 | ) | 1,666 | % | NM | 932 | 84 | 1,006 | % | ||||||||||||||||||
Net income (loss) available to common shareholders | 856 | (26 | ) | (202 | ) | NM | NM | 829 | 84 | 888 | % | ||||||||||||||||||
Common Share Data | |||||||||||||||||||||||||||||
Earnings per share, basic | $ | 1.35 | ($ | 0.04 | ) | ($ | 0.37 | ) | NM | NM | $ | 1.37 | $ | 0.16 | 756 | % | |||||||||||||
Earnings per share, diluted | 1.15 | (0.04 | ) | (0.37 | ) | NM | NM | 1.18 | 0.16 | 638 | % | ||||||||||||||||||
Cash dividends per common share | 0.01 | 0.01 | 0.15 | — | (93 | %) | 0.02 | 0.59 | (97 | %) | |||||||||||||||||||
Book value per share | 12.71 | 13.61 | 16.75 | (7 | %) | (24 | %) | 12.71 | 16.75 | (24 | %) | ||||||||||||||||||
Market price per share | 7.10 | 2.92 | 10.18 | 143 | % | (30 | %) | 7.10 | 10.18 | (30 | %) | ||||||||||||||||||
Common shares outstanding (in thousands) | 795,313 | 576,936 | 577,530 | 38 | % | 38 | % | 795,313 | 577,530 | 38 | % | ||||||||||||||||||
Average common shares outstanding (in thousands): | |||||||||||||||||||||||||||||
Basic | 629,789 | 571,810 | 540,030 | 10 | % | 17 | % | 600,960 | 534,264 | 12 | % | ||||||||||||||||||
Diluted | 718,245 | 571,810 | 540,030 | 26 | % | 33 | % | 693,590 | 542,722 | 28 | % | ||||||||||||||||||
Market capitalization | $ | 5,647 | $ | 1,685 | $ | 5,879 | 235 | % | (4 | %) | $ | 5,647 | $ | 5,879 | (4 | %) | |||||||||||||
Financial Ratios | |||||||||||||||||||||||||||||
Return on assets | 3.05 | % | 0.17 | % | (0.72 | %) | 1,694 | % | NM | 1.60 | % | 0.15 | % | 967 | % | ||||||||||||||
Return on average common equity | 41.2 | % | (1.4 | %) | (8.5 | %) | NM | NM | 20.7 | % | 1.8 | % | 1,050 | % | |||||||||||||||
Noninterest income as a percent of total revenue | 76 | % | 47 | % | 49 | % | 62 | % | 55 | % | 67 | % | 50 | % | 34 | % | |||||||||||||
Average equity as a percent of average assets | 10.78 | % | 10.18 | % | 8.59 | % | 6 | % | 25 | % | 10.48 | % | 8.51 | % | 23 | % | |||||||||||||
Tangible equity (b) (d) | 9.72 | % | 7.89 | % | 6.37 | % | 23 | % | 53 | % | 9.72 | % | 6.37 | % | 53 | % | |||||||||||||
Tangible common equity (c) (d) | 6.55 | % | 4.23 | % | 5.40 | % | 55 | % | 21 | % | 6.55 | % | 5.40 | % | 21 | % | |||||||||||||
Net interest margin (a) | 3.26 | % | 3.06 | % | 3.04 | % | 7 | % | 7 | % | 3.16 | % | 3.22 | % | (2 | %) | |||||||||||||
Efficiency (a) | 29.9 | % | 65.1 | % | 58.6 | % | (54 | %) | (49 | %) | 40.5 | % | 49.9 | % | (19 | %) | |||||||||||||
Effective tax rate | 34.7 | % | (119.0 | %) | (72.4 | %) | NM | NM | 14.5 | % | 72.6 | % | (80 | %) | |||||||||||||||
Credit Quality | |||||||||||||||||||||||||||||
Net losses charged off | $ | 626 | $ | 490 | $ | 344 | 28 | % | 82 | % | $ | 1,116 | $ | 620 | 80 | % | |||||||||||||
Net losses charged off as a percent of average loans and leases | 3.08 | % | 2.38 | % | 1.66 | % | 29 | % | 86 | % | 2.73 | % | 1.52 | % | 80 | % | |||||||||||||
Allowance for loan and lease losses as a percent of loans and leases | 4.28 | % | 3.72 | % | 1.85 | % | 15 | % | 131 | % | 4.28 | % | 1.85 | % | 131 | % | |||||||||||||
Allowance for credit losses as a percent of loans and leases | 4.57 | % | 4.00 | % | 1.98 | % | 14 | % | 131 | % | 4.57 | % | 1.98 | % | 131 | % | |||||||||||||
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned (e) | 3.48 | % | 3.20 | % | 2.26 | % | 9 | % | 54 | % | 3.48 | % | 2.26 | % | 54 | % | |||||||||||||
Average Balances | |||||||||||||||||||||||||||||
Loans and leases, including held for sale | $ | 84,996 | $ | 85,829 | $ | 85,212 | (1 | %) | — | $ | 85,410 | $ | 85,062 | — | |||||||||||||||
Total securities and other short-term investments | 17,762 | 17,835 | 13,363 | — | 33 | % | 17,798 | 12,980 | 37 | % | |||||||||||||||||||
Total assets | 115,878 | 118,681 | 112,098 | (2 | %) | 3 | % | 117,272 | 111,694 | 5 | % | ||||||||||||||||||
Transaction deposits (f) | 54,115 | 52,347 | 53,763 | 3 | % | 1 | % | 53,236 | 53,610 | (1 | %) | ||||||||||||||||||
Core deposits (g) | 68,727 | 66,848 | 63,280 | 3 | % | 9 | % | 67,793 | 63,811 | 6 | % | ||||||||||||||||||
Wholesale funding (h) | 31,369 | 34,902 | 35,160 | (10 | %) | (11 | %) | 33,126 | 34,189 | (3 | %) | ||||||||||||||||||
Shareholders’ equity | 12,490 | 12,084 | 9,629 | 3 | % | 30 | % | 12,288 | 9,504 | 29 | % | ||||||||||||||||||
Regulatory Capital Ratios (i) | |||||||||||||||||||||||||||||
Tier I capital | 12.90 | % | 10.93 | % | 8.51 | % | 18 | % | 52 | % | 12.90 | % | 8.51 | % | 52 | % | |||||||||||||
Total risk-based capital | 16.96 | % | 15.13 | % | 12.15 | % | 12 | % | 40 | % | 16.96 | % | 12.15 | % | 40 | % | |||||||||||||
Tier I leverage | 12.17 | % | 10.29 | % | 9.08 | % | 18 | % | 34 | % | 12.17 | % | 9.08 | % | 34 | % | |||||||||||||
Tier I common equity | 7.00 | % | 4.50 | % | 5.18 | % | 56 | % | 35 | % | 7.00 | % | 5.18 | % | 35 | % | |||||||||||||
Operations | |||||||||||||||||||||||||||||
Banking centers | 1,306 | 1,311 | 1,308 | — | — | 1,306 | 1,308 | — | |||||||||||||||||||||
ATMs | 2,355 | 2,354 | 2,329 | — | 1 | % | 2,355 | 2,329 | 1 | % | |||||||||||||||||||
Full-time equivalent employees | 20,702 | 20,618 | 21,617 | — | (4 | %) | 20,702 | 21,617 | (4 | %) | |||||||||||||||||||
| (a) | Presented on a fully taxable equivalent basis |
| (b) | The tangible equity ratio is calculated as tangible equity (shareholders’ equity less goodwill, intangible assets and accumulated other comprehensive income) divided by tangible assets (total assets less goodwill, intangible assets and tax effected accumulated other comprehensive income.) |
| (c) | The tangible common equity ratio is calculated as tangible common equity (shareholders’ equity less preferred stock, goodwill intangible assets and accumulated other comprehensive income) divided by tangible assets (defined above.) |
| (d) | The tangible equity and tangible common equity ratios, while not required by GAAP, are considered to be critical metrics with which to analyze banks. The ratios have been included herein to facilitate a grater understanding of the Bancorp’s capital structure and financial condition. |
| (e) | Excludes nonaccrual loans held for sale |
| (f) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers |
| (g) | Includes transaction deposits plus other time deposits |
| (h) | Includes certificates $100,000 and over, other deposits, federal funds purchased, short-term borrowings and long-term debt |
| (i) | Current period regulatory capital ratios are estimates |
18
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Net interest income (a) | $ | 836 | $ | 781 | $ | 897 | $ | 1,068 | $ | 744 | ||||||||||
Noninterest income | 2,583 | 697 | 642 | 717 | 722 | |||||||||||||||
Total revenue (a) | 3,419 | 1,478 | 1,539 | 1,785 | 1,466 | |||||||||||||||
Provision for loan and lease losses | 1,041 | 773 | 2,356 | 941 | 719 | |||||||||||||||
Noninterest expense | 1,021 | 962 | 2,022 | 967 | 858 | |||||||||||||||
Net income (loss) | 882 | 50 | (2,142 | ) | (56 | ) | (202 | ) | ||||||||||||
Net income (loss) available to common shareholders | 856 | (26 | ) | (2,184 | ) | (81 | ) | (202 | ) | |||||||||||
Common Share Data | ||||||||||||||||||||
Earnings per share, basic | $ | 1.35 | ($ | 0.04 | ) | ($ | 3.78 | ) | ($ | 0.14 | ) | ($ | 0.37 | ) | ||||||
Earnings per share, diluted | 1.15 | (0.04 | ) | (3.78 | ) | (0.14 | ) | (0.37 | ) | |||||||||||
Cash dividends per common share | 0.01 | 0.01 | 0.01 | 0.15 | 0.15 | |||||||||||||||
Book value per share | 12.71 | 13.61 | 13.57 | 16.65 | 16.75 | |||||||||||||||
Market price per share | 7.10 | 2.92 | 8.26 | 11.90 | 10.18 | |||||||||||||||
Common shares outstanding (in thousands) | 795,313 | 576,936 | 577,387 | 577,487 | 577,530 | |||||||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||
Basic | 629,789 | 571,810 | 571,809 | 571,705 | 540,030 | |||||||||||||||
Diluted | 718,245 | 571,810 | 571,809 | 571,705 | 540,030 | |||||||||||||||
Market capitalization | $ | 5,647 | $ | 1,685 | $ | 4,769 | $ | 6,872 | $ | 5,879 | ||||||||||
Financial Ratios | ||||||||||||||||||||
Return on assets | 3.05 | % | 0.17 | % | (7.16 | %) | (0.19 | %) | (0.72 | %) | ||||||||||
Return on average common equity | 41.2 | % | (1.4 | %) | (94.6 | %) | (3.3 | %) | (8.5 | %) | ||||||||||
Noninterest income as a percent of total revenue | 76 | % | 47 | % | 42 | % | 40 | % | 49 | % | ||||||||||
Average equity as a percent of average assets | 10.78 | % | 10.18 | % | 8.65 | % | 9.45 | % | 8.59 | % | ||||||||||
Tangible equity (b) (d) | 9.72 | % | 7.89 | % | 7.86 | % | 6.19 | % | 6.37 | % | ||||||||||
Tangible common equity (c) (d) | 6.55 | % | 4.23 | % | 4.23 | % | 5.23 | % | 5.40 | % | ||||||||||
Net interest margin (a) | 3.26 | % | 3.06 | % | 3.46 | % | 4.24 | % | 3.04 | % | ||||||||||
Efficiency (a) | 29.9 | % | 65.1 | % | 131.3 | % | 54.2 | % | 58.6 | % | ||||||||||
Effective tax rate | 34.7 | % | (119.0 | %) | (24.7 | %) | 56.6 | % | (72.4 | %) | ||||||||||
Credit Quality | ||||||||||||||||||||
Net losses charged off | $ | 626 | $ | 490 | $ | 1,627 | $ | 463 | $ | 344 | ||||||||||
Net losses charged off as a percent of average loans and leases | 3.08 | % | 2.38 | % | 7.50 | % | 2.17 | % | 1.66 | % | ||||||||||
Allowance for loan and lease losses as a percent of loans and leases | 4.28 | % | 3.72 | % | 3.31 | % | 2.41 | % | 1.85 | % | ||||||||||
Allowance for credit losses as a percent of loans and leases | 4.57 | % | 4.00 | % | 3.54 | % | 2.56 | % | 1.98 | % | ||||||||||
Nonperforming assets as a percent of loans, leases and other assets, including other real estate owned (e) | 3.48 | % | 3.20 | % | 2.38 | % | 2.86 | % | 2.26 | % | ||||||||||
Average Balances | ||||||||||||||||||||
Loans and leases, including held for sale | $ | 84,996 | $ | 85,829 | $ | 87,426 | $ | 85,772 | $ | 85,212 | ||||||||||
Total securities and other short-term investments | 17,762 | 17,835 | 15,683 | 14,515 | 13,363 | |||||||||||||||
Total assets | 115,878 | 118,681 | 118,953 | 114,784 | 112,098 | |||||||||||||||
Transaction deposits (f) | 54,115 | 52,347 | 51,119 | 52,399 | 53,763 | |||||||||||||||
Core deposits (g) | 68,727 | 66,848 | 64,456 | 63,179 | 63,280 | |||||||||||||||
Wholesale funding (h) | 31,369 | 34,902 | 39,586 | 37,036 | 35,160 | |||||||||||||||
Shareholders’ equity | 12,490 | 12,084 | 10,291 | 10,843 | 9,629 | |||||||||||||||
Regulatory Capital Ratios (i) | ||||||||||||||||||||
Tier I capital | 12.90 | % | 10.93 | % | 10.59 | % | 8.57 | % | 8.51 | % | ||||||||||
Total risk-based capital | 16.96 | % | 15.13 | % | 14.78 | % | 12.30 | % | 12.15 | % | ||||||||||
Tier I leverage | 12.17 | % | 10.29 | % | 10.27 | % | 8.77 | % | 9.08 | % | ||||||||||
Tier I common equity | 7.00 | % | 4.50 | % | 4.37 | % | 5.18 | % | 5.18 | % | ||||||||||
Operations | ||||||||||||||||||||
Banking centers | 1,306 | 1,311 | 1,307 | 1,298 | 1,308 | |||||||||||||||
ATMs | 2,355 | 2,354 | 2,341 | 2,329 | 2,329 | |||||||||||||||
Full-time equivalent employees | 20,702 | 20,618 | 21,476 | 21,522 | 21,617 | |||||||||||||||
| (a) | Presented on a fully taxable equivalent basis |
| (b) | The tangible equity ratio is calculated as tangible equity (shareholders’ equity less goodwill, intangible assets and accumulated other comprehensive income) divided by tangible assets (total assets less goodwill, intangible assets and tax effected accumulated other comprehensive income.) |
| (c) | The tangible common equity ratio is calculated as tangible common equity (shareholders’ equity less preferred stock, goodwill intangible assets and accumulated other comprehensive income) divided by tangible assets (defined above.) |
| (d) | The tangible equity and tangible common equity ratios, while not required by GAAP, are considered to be critical metrics with which to analyze banks. The ratios have been included herein to facilitate a grater understanding of the Bancorp’s capital structure and financial condition. |
| (e) | Excludes nonaccrual loans held for sale |
| (f) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers |
| (g) | Includes transaction deposits plus other time deposits |
| (h) | Includes certificates $100,000 and over, other deposits, federal funds purchased, short-term borrowings and long-term debt |
| (i) | Current period regulatory capital ratios are estimates |
19
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
| For the Three Months Ended | % Change | Year to Date | % Change | |||||||||||||||||||||||||
| June 2009 | March 2009 | June 2008 | Seq | Yr/Yr | June 2009 | June 2008 | Yr/Yr | |||||||||||||||||||||
Interest Income | ||||||||||||||||||||||||||||
Interest and fees on loans and leases | $ | 995 | $ | 997 | $ | 1,050 | — | (5 | %) | $ | 1,992 | $ | 2,340 | (15 | %) | |||||||||||||
Interest on securities | 184 | 180 | 155 | 3 | % | 19 | % | 364 | 307 | 18 | % | |||||||||||||||||
Interest on other short-term investments | 0 | 1 | 2 | (54 | %) | (88 | %) | 1 | 7 | (88 | %) | |||||||||||||||||
Total interest income | 1,179 | 1,178 | 1,207 | — | (2 | %) | 2,357 | 2,654 | (11 | %) | ||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||||||
Interest on deposits | 258 | 274 | 278 | (6 | %) | (7 | %) | 532 | 677 | (21 | %) | |||||||||||||||||
Interest on short-term borrowings | 12 | 24 | 49 | (49 | %) | (75 | %) | 37 | 129 | (72 | %) | |||||||||||||||||
Interest on long-term debt | 78 | 104 | 142 | (25 | %) | (45 | %) | 181 | 289 | (38 | %) | |||||||||||||||||
Total interest expense | 348 | 402 | 469 | (13 | %) | (26 | %) | 750 | 1,095 | (32 | %) | |||||||||||||||||
Net Interest Income | 831 | 776 | 738 | 7 | % | 13 | % | 1,607 | 1,559 | 3 | % | |||||||||||||||||
Provision for loan and lease losses | 1,041 | 773 | 719 | 35 | % | 45 | % | 1,814 | 1,263 | 44 | % | |||||||||||||||||
Net interest income (loss) after provision for loan and lease losses | (210 | ) | 3 | 19 | NM | NM | (207 | ) | 296 | NM | ||||||||||||||||||
Noninterest Income | ||||||||||||||||||||||||||||
Electronic payment processing revenue | 243 | 223 | 235 | 9 | % | 4 | % | 466 | 447 | 4 | % | |||||||||||||||||
Service charges on deposits | 162 | 146 | 159 | 11 | % | 2 | % | 308 | 307 | — | ||||||||||||||||||
Investment advisory revenue | 73 | 76 | 92 | (4 | %) | (21 | %) | 149 | 185 | (19 | %) | |||||||||||||||||
Corporate banking revenue | 99 | 116 | 111 | (15 | %) | (11 | %) | 215 | 218 | (2 | %) | |||||||||||||||||
Mortgage banking net revenue | 147 | 134 | 86 | 10 | % | 72 | % | 281 | 182 | 54 | % | |||||||||||||||||
Gain on sale of FTPS joint venture | 1,764 | — | — | NM | NM | 1,764 | — | NM | ||||||||||||||||||||
Other noninterest income | 49 | 10 | 49 | 380 | % | (1 | %) | 60 | 228 | (74 | %) | |||||||||||||||||
Securities gains (losses), net | 5 | (24 | ) | (10 | ) | NM | NM | (20 | ) | 17 | NM | |||||||||||||||||
Securities gains, net - non-qualifying hedges on mortgage servicing rights | 41 | 16 | — | 157 | % | NM | 57 | 3 | 2,162 | % | ||||||||||||||||||
Total noninterest income | 2,583 | 697 | 722 | 271 | % | 258 | % | 3,280 | 1,587 | 107 | % | |||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||
Salaries, wages and incentives | 346 | 327 | 331 | 6 | % | 4 | % | 673 | 679 | (1 | %) | |||||||||||||||||
Employee benefits | 75 | 83 | 60 | (10 | %) | 24 | % | 158 | 145 | 9 | % | |||||||||||||||||
Payment processing expense | 75 | 67 | 67 | 12 | % | 11 | % | 141 | 133 | 6 | % | |||||||||||||||||
Net occupancy expense | 79 | 79 | 73 | 1 | % | 8 | % | 158 | 145 | 8 | % | |||||||||||||||||
Technology and communications | 45 | 45 | 49 | 1 | % | (7 | %) | 90 | 96 | (6 | %) | |||||||||||||||||
Equipment expense | 31 | 31 | 31 | (2 | %) | 1 | % | 62 | 61 | 2 | % | |||||||||||||||||
Other noninterest expense | 370 | 330 | 247 | 12 | % | 50 | % | 702 | 317 | 121 | % | |||||||||||||||||
Total noninterest expense | 1,021 | 962 | 858 | 6 | % | 19 | % | 1,984 | 1,576 | 26 | % | |||||||||||||||||
Income (loss) before income taxes | 1,352 | (262 | ) | (117 | ) | NM | NM | 1,089 | 307 | 254 | % | |||||||||||||||||
Applicable income taxes | 470 | (312 | ) | 85 | NM | 453 | % | 157 | 223 | (30 | %) | |||||||||||||||||
Net income (loss) | 882 | 50 | (202 | ) | 1,666 | % | NM | 932 | 84 | 1,006 | % | |||||||||||||||||
Dividends on preferred stock | 26 | 76 | — | (66 | %) | NM | 103 | — | NM | |||||||||||||||||||
Net income (loss) available to common shareholders | $ | 856 | ($ | 26 | ) | ($ | 202 | ) | NM | NM | $ | 829 | $ | 84 | 888 | % | ||||||||||||
20
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income (Taxable Equivalent)
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Interest Income | ||||||||||||||||||||
Interest and fees on loans and leases | $ | 995 | $ | 997 | $ | 1,218 | $ | 1,378 | $ | 1,050 | ||||||||||
Interest on securities | 184 | 180 | 187 | 165 | 155 | |||||||||||||||
Interest on other short-term investments | 0 | 1 | 1 | 5 | 2 | |||||||||||||||
Total interest income | 1,179 | 1,178 | 1,406 | 1,548 | 1,207 | |||||||||||||||
Taxable equivalent adjustment | 5 | 5 | 5 | 5 | 6 | |||||||||||||||
Total interest income (taxable equivalent) | 1,184 | 1,183 | 1,411 | 1,553 | 1,213 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Interest on deposits | 258 | 274 | 322 | 291 | 278 | |||||||||||||||
Interest on short-term borrowings | 12 | 24 | 55 | 64 | 49 | |||||||||||||||
Interest on long-term debt | 78 | 104 | 137 | 130 | 142 | |||||||||||||||
Total interest expense | 348 | 402 | 514 | 485 | 469 | |||||||||||||||
Net interest income (taxable equivalent) | 836 | 781 | 897 | 1,068 | 744 | |||||||||||||||
Provision for loan and lease losses | 1,041 | 773 | 2,356 | 941 | 719 | |||||||||||||||
Net interest income (loss) (taxable equivalent) after provision for loan and lease losses | (205 | ) | 8 | (1,459 | ) | 127 | 25 | |||||||||||||
Noninterest Income | ||||||||||||||||||||
Electronic payment processing revenue | 243 | 223 | 230 | 235 | 235 | |||||||||||||||
Service charges on deposits | 162 | 146 | 162 | 172 | 159 | |||||||||||||||
Investment advisory revenue | 73 | 76 | 78 | 90 | 92 | |||||||||||||||
Corporate banking revenue | 99 | 116 | 121 | 104 | 111 | |||||||||||||||
Mortgage banking net revenue | 147 | 134 | (29 | ) | 45 | 86 | ||||||||||||||
Gain on sale of FTPS joint venture | 1,764 | — | — | — | — | |||||||||||||||
Other noninterest income | 49 | 10 | 24 | 112 | 49 | |||||||||||||||
Securities gains (losses), net | 5 | (24 | ) | (40 | ) | (63 | ) | (10 | ) | |||||||||||
Securities gains, net—non-qualifying hedges on mortgage servicing rights | 41 | 16 | 96 | 22 | — | |||||||||||||||
Total noninterest income | 2,583 | 697 | 642 | 717 | 722 | |||||||||||||||
Noninterest Expense | ||||||||||||||||||||
Salaries, wages and incentives | 346 | 327 | 337 | 321 | 331 | |||||||||||||||
Employee benefits | 75 | 83 | 61 | 72 | 60 | |||||||||||||||
Payment processing expense | 75 | 67 | 70 | 70 | 67 | |||||||||||||||
Net occupancy expense | 79 | 79 | 77 | 77 | 73 | |||||||||||||||
Technology and communications | 45 | 45 | 48 | 47 | 49 | |||||||||||||||
Equipment expense | 31 | 31 | 35 | 34 | 31 | |||||||||||||||
Other noninterest expense | 370 | 330 | 1,394 | 346 | 247 | |||||||||||||||
Total noninterest expense | 1,021 | 962 | 2,022 | 967 | 858 | |||||||||||||||
Income (loss) before income taxes (taxable equivalent) | 1,357 | (257 | ) | (2,839 | ) | (123 | ) | (111 | ) | |||||||||||
Taxable equivalent adjustment | 5 | 5 | 5 | 5 | 6 | |||||||||||||||
Income (loss) before income taxes | 1,352 | (262 | ) | (2,844 | ) | (128 | ) | (117 | ) | |||||||||||
Applicable income taxes | 470 | (312 | ) | (702 | ) | (72 | ) | 85 | ||||||||||||
Net income (loss) | 882 | 50 | (2,142 | ) | (56 | ) | (202 | ) | ||||||||||||
Dividends on preferred stock | 26 | 76 | 42 | 25 | — | |||||||||||||||
Net income (loss) available to common shareholders | $ | 856 | ($ | 26 | ) | ($ | 2,184 | ) | ($ | 81 | ) | ($ | 202 | ) | ||||||
21
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| As of | % Change | |||||||||||||||||
| June 2009 | March 2009 | June 2008 | Seq | Yr/Yr | ||||||||||||||
Assets | ||||||||||||||||||
Cash and due from banks | $ | 2,899 | $ | 2,491 | $ | 2,853 | 16 | % | 2 | % | ||||||||
Available-for-sale and other securities (a) | 16,061 | 16,916 | 12,718 | (5 | %) | 26 | % | |||||||||||
Held-to-maturity securities (b) | 357 | 358 | 361 | — | (1 | %) | ||||||||||||
Trading securities | 1,354 | 1,407 | 241 | (4 | %) | 461 | % | |||||||||||
Other short-term investments | 513 | 1,587 | 286 | (68 | %) | 79 | % | |||||||||||
Loans held for sale | 3,341 | 2,602 | 889 | 28 | % | 276 | % | |||||||||||
Portfolio loans and leases: | ||||||||||||||||||
Commercial loans | 28,409 | 28,617 | 28,958 | (1 | %) | (2 | %) | |||||||||||
Commercial mortgage loans | 12,407 | 12,560 | 13,394 | (1 | %) | (7 | %) | |||||||||||
Commercial construction loans | 4,491 | 4,745 | 6,007 | (5 | %) | (25 | %) | |||||||||||
Commercial leases | 3,532 | 3,521 | 3,647 | — | (3 | %) | ||||||||||||
Residential mortgage loans | 8,489 | 8,875 | 9,866 | (4 | %) | (14 | %) | |||||||||||
Home equity | 12,511 | 12,710 | 12,421 | (2 | %) | 1 | % | |||||||||||
Automobile loans | 8,741 | 8,688 | 8,362 | 1 | % | 5 | % | |||||||||||
Credit card | 1,914 | 1,816 | 1,717 | 5 | % | 12 | % | |||||||||||
Other consumer loans and leases | 935 | 1,037 | 1,152 | (10 | %) | (19 | %) | |||||||||||
Portfolio loans and leases | 81,429 | 82,569 | 85,524 | (1 | %) | (5 | %) | |||||||||||
Allowance for loan and lease losses | (3,485 | ) | (3,070 | ) | (1,580 | ) | 13 | % | 121 | % | ||||||||
Portfolio loans and leases, net | 77,944 | 79,499 | 83,944 | (2 | %) | (7 | %) | |||||||||||
Bank premises and equipment | 2,440 | 2,490 | 2,444 | (2 | %) | — | ||||||||||||
Operating lease equipment | 474 | 470 | 364 | 1 | % | 30 | % | |||||||||||
Goodwill | 2,417 | 2,623 | 3,603 | (8 | %) | (33 | %) | |||||||||||
Intangible assets | 133 | 154 | 203 | (14 | %) | (35 | %) | |||||||||||
Servicing rights | 595 | 481 | 701 | 24 | % | (15 | %) | |||||||||||
Other assets | 7,456 | 8,235 | 6,368 | (9 | %) | 17 | % | |||||||||||
Total assets | $ | 115,984 | $ | 119,313 | $ | 114,975 | (3 | %) | 1 | % | ||||||||
Liabilities | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Demand | $ | 17,202 | $ | 16,370 | $ | 16,259 | 5 | % | 6 | % | ||||||||
Interest checking | 14,630 | 14,510 | 14,002 | 1 | % | 4 | % | |||||||||||
Savings | 16,819 | 16,517 | 16,602 | 2 | % | 1 | % | |||||||||||
Money market | 4,193 | 4,353 | 6,806 | (4 | %) | (38 | %) | |||||||||||
Foreign office | 2,244 | 1,671 | 2,174 | 34 | % | 3 | % | |||||||||||
Other time | 14,540 | 14,571 | 9,839 | — | 48 | % | ||||||||||||
Certificates - $100,000 and over | 10,688 | 11,784 | 10,870 | (9 | %) | (2 | %) | |||||||||||
Other | 504 | 6 | 864 | 8,237 | % | (42 | %) | |||||||||||
Total deposits | 80,820 | 79,782 | 77,416 | 1 | % | 4 | % | |||||||||||
Federal funds purchased | 435 | 363 | 2,447 | 20 | % | (82 | %) | |||||||||||
Other short-term borrowings | 6,802 | 11,076 | 5,628 | (39 | %) | 21 | % | |||||||||||
Accrued taxes, interest and expenses | 959 | 904 | 1,864 | 6 | % | (49 | %) | |||||||||||
Other liabilities | 3,166 | 2,908 | 1,820 | 9 | % | 74 | % | |||||||||||
Long-term debt | 10,102 | 12,178 | 15,046 | (17 | %) | (33 | %) | |||||||||||
Total liabilities | 102,284 | 107,211 | 104,221 | (5 | %) | (2 | %) | |||||||||||
Shareholders’ equity | ||||||||||||||||||
Common stock | 1,779 | 1,295 | 1,295 | 37 | % | 37 | % | |||||||||||
Preferred stock | 3,588 | 4,252 | 1,082 | (16 | %) | 232 | % | |||||||||||
Capital surplus | 1,722 | 841 | 582 | 105 | % | 196 | % | |||||||||||
Retained earnings | 6,663 | 5,792 | 8,179 | 15 | % | (19 | %) | |||||||||||
Accumulated other comprehensive income (loss) | 152 | 151 | (152 | ) | 1 | % | NM | |||||||||||
Treasury stock | (204 | ) | (229 | ) | (232 | ) | (11 | %) | (12 | %) | ||||||||
Total shareholders’ equity (c) | 13,700 | 12,102 | 10,754 | 13 | % | 27 | % | |||||||||||
Total liabilities and shareholders’ equity | $ | 115,984 | $ | 119,313 | $ | 114,975 | (3 | %) | 1 | % | ||||||||
(a) Amortized cost | $ | 15,820 | $ | 16,642 | $ | 12,935 | (5 | %) | 22 | % | ||||||||
(b) Market values | 357 | 358 | 361 | — | (1 | %) | ||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | ||||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | — | — | |||||||||||||
Outstanding, excluding treasury | 795,313 | 576,936 | 577,530 | 38 | % | 38 | % | |||||||||||
Treasury | 6,191 | 6,491 | 5,897 | (5 | %) | 5 | % | |||||||||||
22
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| As of | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 2,899 | $ | 2,491 | $ | 2,739 | $ | 2,774 | $ | 2,853 | ||||||||||
Available-for-sale and other securities (a) | 16,061 | 16,916 | 12,728 | 13,177 | 12,718 | |||||||||||||||
Held-to-maturity securities (b) | 357 | 358 | 360 | 360 | 361 | |||||||||||||||
Trading securities | 1,354 | 1,407 | 1,191 | 915 | 241 | |||||||||||||||
Other short-term investments | 513 | 1,587 | 3,578 | 229 | 286 | |||||||||||||||
Loans held for sale | 3,341 | 2,602 | 1,452 | 1,000 | 889 | |||||||||||||||
Portfolio loans and leases: | ||||||||||||||||||||
Commercial loans | 28,409 | 28,617 | 29,197 | 29,424 | 28,958 | |||||||||||||||
Commercial mortgage loans | 12,407 | 12,560 | 12,502 | 13,355 | 13,394 | |||||||||||||||
Commercial construction loans | 4,491 | 4,745 | 5,114 | 6,002 | 6,007 | |||||||||||||||
Commercial leases | 3,532 | 3,521 | 3,666 | 3,642 | 3,647 | |||||||||||||||
Residential mortgage loans | 8,489 | 8,875 | 9,385 | 9,351 | 9,866 | |||||||||||||||
Home equity | 12,511 | 12,710 | 12,752 | 12,599 | 12,421 | |||||||||||||||
Automobile loans | 8,741 | 8,688 | 8,594 | 8,306 | 8,362 | |||||||||||||||
Credit card | 1,914 | 1,816 | 1,811 | 1,688 | 1,717 | |||||||||||||||
Other consumer loans and leases | 935 | 1,037 | 1,122 | 1,131 | 1,152 | |||||||||||||||
Portfolio loans and leases | 81,429 | 82,569 | 84,143 | 85,498 | 85,524 | |||||||||||||||
Allowance for loan and lease losses | (3,485 | ) | (3,070 | ) | (2,787 | ) | (2,058 | ) | (1,580 | ) | ||||||||||
Portfolio loans and leases, net | 77,944 | 79,499 | 81,356 | 83,440 | 83,944 | |||||||||||||||
Bank premises and equipment | 2,440 | 2,490 | 2,494 | 2,470 | 2,444 | |||||||||||||||
Operating lease equipment | 474 | 470 | 463 | 369 | 364 | |||||||||||||||
Goodwill | 2,417 | 2,623 | 2,624 | 3,592 | 3,603 | |||||||||||||||
Intangible assets | 133 | 154 | 168 | 188 | 203 | |||||||||||||||
Servicing rights | 595 | 481 | 499 | 687 | 701 | |||||||||||||||
Other assets | 7,456 | 8,235 | 10,112 | 7,093 | 6,368 | |||||||||||||||
Total assets | $ | 115,984 | $ | 119,313 | $ | 119,764 | $ | 116,294 | $ | 114,975 | ||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand | $ | 17,202 | $ | 16,370 | $ | 15,287 | $ | 14,241 | $ | 16,259 | ||||||||||
Interest checking | 14,630 | 14,510 | 14,222 | 13,251 | 14,002 | |||||||||||||||
Savings | 16,819 | 16,517 | 16,063 | 15,955 | 16,602 | |||||||||||||||
Money market | 4,193 | 4,353 | 4,689 | 5,352 | 6,806 | |||||||||||||||
Foreign office | 2,244 | 1,671 | 2,144 | 1,999 | 2,174 | |||||||||||||||
Other time | 14,540 | 14,571 | 14,350 | 11,778 | 9,839 | |||||||||||||||
Certificates - $100,000 and over | 10,688 | 11,784 | 11,851 | 13,173 | 10,870 | |||||||||||||||
Other | 504 | 6 | 7 | 1,711 | 864 | |||||||||||||||
Total deposits | 80,820 | 79,782 | 78,613 | 77,460 | 77,416 | |||||||||||||||
Federal funds purchased | 435 | 363 | 287 | 2,521 | 2,447 | |||||||||||||||
Other short-term borrowings | 6,802 | 11,076 | 9,959 | 8,791 | 5,628 | |||||||||||||||
Accrued taxes, interest and expenses | 959 | 904 | 2,029 | 1,757 | 1,864 | |||||||||||||||
Other liabilities | 3,166 | 2,908 | 3,214 | 2,122 | 1,820 | |||||||||||||||
Long-term debt | 10,102 | 12,178 | 13,585 | 12,947 | 15,046 | |||||||||||||||
Total liabilities | 102,284 | 107,211 | 107,687 | 105,598 | 104,221 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 1,779 | 1,295 | 1,295 | 1,295 | 1,295 | |||||||||||||||
Preferred stock | 3,588 | 4,252 | 4,241 | 1,082 | 1,082 | |||||||||||||||
Capital surplus | 1,722 | 841 | 848 | 597 | 582 | |||||||||||||||
Retained earnings | 6,663 | 5,792 | 5,824 | 8,013 | 8,179 | |||||||||||||||
Accumulated other comprehensive income (loss) | 152 | 151 | 98 | (60 | ) | (152 | ) | |||||||||||||
Treasury stock | (204 | ) | (229 | ) | (229 | ) | (231 | ) | (232 | ) | ||||||||||
Total shareholders’ equity (c) | 13,700 | 12,102 | 12,077 | 10,696 | 10,754 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 115,984 | $ | 119,313 | $ | 119,764 | $ | 116,294 | $ | 114,975 | ||||||||||
(a) Amortized cost | $ | 15,820 | $ | 16,642 | $ | 12,550 | $ | 13,249 | $ | 12,935 | ||||||||||
(b) Market values | 357 | 358 | 360 | 360 | 361 | |||||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | ||||||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||||
Outstanding, excluding treasury | 795,313 | 576,936 | 577,387 | 577,487 | 577,530 | |||||||||||||||
Treasury | 6,191 | 6,491 | 6,040 | 5,941 | 5,897 | |||||||||||||||
23
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
$ in millions
(unaudited)
| For the Three Months Ended | Year to Date | |||||||||||||||
| June 2009 | June 2008 | June 2009 | June 2008 | |||||||||||||
Total shareholders’ equity, beginning | $ | 12,102 | $ | 9,352 | $ | 12,077 | $ | 9,161 | ||||||||
Net income (loss) | 882 | (202 | ) | 932 | 84 | |||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Change in unrealized gains and (losses): | ||||||||||||||||
Available-for-sale securities | (21 | ) | (134 | ) | 42 | (38 | ) | |||||||||
Qualifying cash flow hedges | 19 | (30 | ) | 7 | 9 | |||||||||||
Change in accumulated other comprehensive income related to employee benefit plans | 3 | 1 | 5 | 3 | ||||||||||||
Comprehensive income | 883 | (365 | ) | 986 | 58 | |||||||||||
Cash dividends declared: | ||||||||||||||||
Common stock | (8 | ) | (87 | ) | (13 | ) | (321 | ) | ||||||||
Preferred stock | (16 | ) | — | (82 | ) | — | ||||||||||
Issuance of common stock | 986 | — | 986 | — | ||||||||||||
Issuance of preferred stock, Series G | — | 1,072 | — | 1,072 | ||||||||||||
Redemption of preferred stock, Series G | (269 | ) | — | (269 | ) | — | ||||||||||
Stock-based awards exercised, including treasury shares issued | 1 | (2 | ) | 1 | — | |||||||||||
Stock-based compensation expense | 12 | 15 | 23 | 28 | ||||||||||||
Loans repaid (issued) related to exercise of stock-based awards, net | — | 4 | — | 2 | ||||||||||||
Change in corporate tax benefit related to stock-based compensation | (12 | ) | (5 | ) | (30 | ) | (15 | ) | ||||||||
Shares issued in an acquisition | — | 770 | — | 770 | ||||||||||||
Shares issued from treasury | — | — | — | — | ||||||||||||
OTTI reclassification | 24 | — | 24 | — | ||||||||||||
Other | (3 | ) | — | (3 | ) | (1 | ) | |||||||||
Total shareholders’ equity, ending | $ | 13,700 | $ | 10,754 | $ | 13,700 | $ | 10,754 | ||||||||
24
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| For the Three Months Ended | % Change | |||||||||||||||||
| June 2009 | March 2009 | June 2008 | Seq | Yr/Yr | ||||||||||||||
Assets | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Commercial loans | $ | 28,038 | $ | 28,968 | $ | 28,557 | (3 | %) | (2 | %) | ||||||||
Commercial mortgage loans | 12,668 | 12,809 | 12,590 | (1 | %) | 1 | % | |||||||||||
Commercial construction loans | 4,842 | 5,115 | 5,700 | (5 | %) | (15 | %) | |||||||||||
Commercial leases | 3,512 | 3,564 | 3,747 | (1 | %) | (6 | %) | |||||||||||
Residential mortgage loans | 11,669 | 10,921 | 11,244 | 7 | % | 4 | % | |||||||||||
Home equity | 12,636 | 12,763 | 12,012 | (1 | %) | 5 | % | |||||||||||
Automobile loans | 8,692 | 8,687 | 8,439 | — | 3 | % | ||||||||||||
Credit card | 1,863 | 1,825 | 1,703 | 2 | % | 9 | % | |||||||||||
Other consumer loans and leases | 1,076 | 1,177 | 1,220 | (9 | %) | (12 | %) | |||||||||||
Taxable securities | 16,778 | 16,283 | 12,554 | 3 | % | 34 | % | |||||||||||
Tax exempt securities | 242 | 262 | 364 | (7 | %) | (33 | %) | |||||||||||
Other short-term investments | 742 | 1,290 | 445 | (42 | %) | 67 | % | |||||||||||
Total interest-earning assets | 102,758 | 103,664 | 98,575 | (1 | %) | 4 | % | |||||||||||
Cash and due from banks | 2,350 | 2,438 | 2,357 | (4 | %) | — | ||||||||||||
Other assets | 13,907 | 15,363 | 12,370 | (9 | %) | 12 | % | |||||||||||
Allowance for loan and lease losses | (3,137 | ) | (2,784 | ) | (1,204 | ) | 13 | % | 161 | % | ||||||||
Total assets | $ | 115,878 | $ | 118,681 | $ | 112,098 | (2 | %) | 3 | % | ||||||||
Liabilities | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Interest checking | $ | 14,837 | $ | 14,229 | $ | 14,396 | 4 | % | 3 | % | ||||||||
Savings | 16,705 | 16,272 | 16,583 | 3 | % | 1 | % | |||||||||||
Money market | 4,167 | 4,559 | 6,592 | (9 | %) | (37 | %) | |||||||||||
Foreign office | 1,717 | 1,755 | 2,169 | (2 | %) | (21 | %) | |||||||||||
Other time | 14,612 | 14,501 | 9,517 | 1 | % | 54 | % | |||||||||||
Certificates - $100,000 and over | 11,455 | 11,802 | 8,143 | (3 | %) | 41 | % | |||||||||||
Other | 240 | 247 | 2,948 | (3 | %) | (92 | %) | |||||||||||
Federal funds purchased | 542 | 701 | 3,643 | (23 | %) | (85 | %) | |||||||||||
Other short-term borrowings | 8,002 | 9,621 | 5,623 | (17 | %) | 42 | % | |||||||||||
Long-term debt | 11,130 | 12,531 | 14,803 | (11 | %) | (25 | %) | |||||||||||
Total interest-bearing liabilities | 83,407 | 86,218 | 84,417 | (3 | %) | (1 | %) | |||||||||||
Demand deposits | 16,689 | 15,532 | 14,023 | 7 | % | 19 | % | |||||||||||
Other liabilities | 3,292 | 4,847 | 4,029 | (32 | %) | (18 | %) | |||||||||||
Total liabilities | 103,388 | 106,597 | 102,469 | (3 | %) | 1 | % | |||||||||||
Shareholders’ equity | 12,490 | 12,084 | 9,629 | 3 | % | 30 | % | |||||||||||
Total liabilities and shareholders’ equity | $ | 115,878 | $ | 118,681 | $ | 112,098 | (2 | %) | 3 | % | ||||||||
Yield Analysis | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Commercial loans | 4.06 | % | 4.00 | % | 5.04 | % | ||||||||||||
Commercial mortgage loans | 4.44 | % | 4.56 | % | 5.93 | % | ||||||||||||
Commercial construction loans | 2.80 | % | 3.35 | % | 5.44 | % | ||||||||||||
Commercial leases | 4.66 | % | 3.12 | % | -9.77 | % | ||||||||||||
Residential mortgage loans | 5.65 | % | 6.04 | % | 6.10 | % | ||||||||||||
Home equity | 4.14 | % | 4.28 | % | 5.61 | % | ||||||||||||
Automobile loans | 6.36 | % | 6.40 | % | 6.23 | % | ||||||||||||
Credit card | 10.06 | % | 10.89 | % | 9.28 | % | ||||||||||||
Other consumer loans and leases | 7.52 | % | 6.18 | % | 4.97 | % | ||||||||||||
Total loans and leases | 4.71 | % | 4.73 | % | 4.97 | % | ||||||||||||
Taxable securities | 4.33 | % | 4.39 | % | 4.83 | % | ||||||||||||
Tax exempt securities | 8.04 | % | 7.44 | % | 7.32 | % | ||||||||||||
Other short-term investments | 0.15 | % | 0.19 | % | 2.12 | % | ||||||||||||
Total interest-earning assets | 4.62 | % | 4.63 | % | 4.95 | % | ||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Interest checking | 0.27 | % | 0.27 | % | 0.78 | % | ||||||||||||
Savings | 0.77 | % | 0.89 | % | 1.16 | % | ||||||||||||
Money market | 0.63 | % | 0.72 | % | 1.76 | % | ||||||||||||
Foreign office | 0.54 | % | 0.54 | % | 1.42 | % | ||||||||||||
Other time | 3.48 | % | 3.62 | % | 3.52 | % | ||||||||||||
Certificates - $100,000 and over | 2.80 | % | 3.04 | % | 3.29 | % | ||||||||||||
Other | 0.19 | % | 0.23 | % | 2.10 | % | ||||||||||||
Federal funds purchased | 0.18 | % | 0.30 | % | 2.08 | % | ||||||||||||
Other short-term borrowings | 0.61 | % | 1.00 | % | 2.15 | % | ||||||||||||
Long-term debt | 2.79 | % | 3.36 | % | 3.85 | % | ||||||||||||
Total interest-bearing liabilities | 1.67 | % | 1.89 | % | 2.23 | % | ||||||||||||
Ratios: | ||||||||||||||||||
Net interest margin (taxable equivalent) | 3.26 | % | 3.06 | % | 3.04 | % | ||||||||||||
Net interest rate spread (taxable equivalent) | 2.95 | % | 2.74 | % | 2.72 | % | ||||||||||||
Interest-bearing liabilities to interest-earning assets | 81.17 | % | 83.17 | % | 85.64 | % | ||||||||||||
25
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| Year to Date | % Change | ||||||||||
| June 2009 | June 2008 | Yr/Yr | |||||||||
Assets | |||||||||||
Interest-earning assets: | |||||||||||
Commercial loans | $ | 28,500 | $ | 27,587 | 3 | % | |||||
Commercial mortgage loans | 12,738 | 12,321 | 3 | % | |||||||
Commercial construction loans | 4,978 | 5,639 | (12 | %) | |||||||
Commercial leases | 3,538 | 3,735 | (5 | %) | |||||||
Residential mortgage loans | 11,297 | 11,472 | (2 | %) | |||||||
Home equity | 12,699 | 11,929 | 6 | % | |||||||
Automobile loans | 8,690 | 9,491 | (8 | %) | |||||||
Credit card | 1,844 | 1,681 | 10 | % | |||||||
Other consumer loans and leases | 1,126 | 1,207 | (7 | %) | |||||||
Taxable securities | 16,532 | 12,057 | 37 | % | |||||||
Tax exempt securities | 252 | 383 | (34 | %) | |||||||
Other short-term investments | 1,014 | 540 | 88 | % | |||||||
Total interest-earning assets | 103,208 | 98,042 | 5 | % | |||||||
Cash and due from banks | 2,393 | 2,296 | 4 | % | |||||||
Other assets | 14,633 | 12,424 | 18 | % | |||||||
Allowance for loan and lease losses | (2,962 | ) | (1,068 | ) | 177 | % | |||||
Total assets | $ | 117,272 | $ | 111,694 | 5 | % | |||||
Liabilities | |||||||||||
Interest-bearing liabilities: | |||||||||||
Interest checking | $ | 14,534 | $ | 14,616 | (1 | %) | |||||
Savings | 16,490 | 16,329 | 1 | % | |||||||
Money market | 4,362 | 6,744 | (35 | %) | |||||||
Foreign office | 1,736 | 2,306 | (25 | %) | |||||||
Other time | 14,557 | 10,201 | 43 | % | |||||||
Certificates - $100,000 and over | 11,628 | 6,989 | 66 | % | |||||||
Other | 243 | 3,405 | (93 | %) | |||||||
Federal funds purchased | 621 | 4,451 | (86 | %) | |||||||
Other short-term borrowings | 8,807 | 5,280 | 67 | % | |||||||
Long-term debt | 11,827 | 14,064 | (16 | %) | |||||||
Total interest-bearing liabilities | 84,805 | 84,385 | — | ||||||||
Demand deposits | 16,114 | 13,615 | 18 | % | |||||||
Other liabilities | 4,065 | 4,190 | (3 | %) | |||||||
Total liabilities | 104,984 | 102,190 | 3 | % | |||||||
Shareholders’ equity | 12,288 | 9,504 | 29 | % | |||||||
Total liabilities and shareholders’ equity | $ | 117,272 | $ | 111,694 | 5 | % | |||||
Yield Analysis | |||||||||||
Interest-earning assets: | |||||||||||
Commercial loans | 4.03 | % | 5.50 | % | |||||||
Commercial mortgage loans | 4.50 | % | 6.10 | % | |||||||
Commercial construction loans | 3.08 | % | 5.54 | % | |||||||
Commercial leases | 3.89 | % | -2.76 | % | |||||||
Residential mortgage loans | 5.84 | % | 6.12 | % | |||||||
Home equity | 4.21 | % | 6.03 | % | |||||||
Automobile loans | 6.38 | % | 6.33 | % | |||||||
Credit card | 10.47 | % | 9.22 | % | |||||||
Other consumer loans and leases | 6.83 | % | 5.24 | % | |||||||
Total loans and leases | 4.72 | % | 5.55 | % | |||||||
Taxable securities | 4.36 | % | 4.97 | % | |||||||
Tax exempt securities | 7.73 | % | 7.32 | % | |||||||
Other short-term investments | 0.18 | % | 2.69 | % | |||||||
Total interest-earning assets | 4.62 | % | 5.47 | % | |||||||
Interest-bearing liabilities: | |||||||||||
Interest checking | 0.27 | % | 1.11 | % | |||||||
Savings | 0.83 | % | 1.48 | % | |||||||
Money market | 0.67 | % | 2.26 | % | |||||||
Foreign office | 0.54 | % | 1.98 | % | |||||||
Other time | 3.55 | % | 3.94 | % | |||||||
Certificates - $100,000 and over | 2.92 | % | 3.77 | % | |||||||
Other | 0.21 | % | 2.74 | % | |||||||
Federal funds purchased | 0.25 | % | 2.77 | % | |||||||
Other short-term borrowings | 0.82 | % | 2.56 | % | |||||||
Long-term debt | 3.09 | % | 4.15 | % | |||||||
Total interest-bearing liabilities | 1.78 | % | 2.61 | % | |||||||
Ratios: | |||||||||||
Net interest margin (taxable equivalent) | 3.16 | % | 3.22 | % | |||||||
Net interest rate spread (taxable equivalent) | 2.84 | % | 2.86 | % | |||||||
Interest-bearing liabilities to interest-earning assets | 82.17 | % | 86.07 | % | |||||||
26
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Assets | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Commercial loans | $ | 28,038 | $ | 28,968 | $ | 30,227 | $ | 28,284 | $ | 28,557 | ||||||||||
Commercial mortgage loans | 12,668 | 12,809 | 13,194 | 13,257 | 12,590 | |||||||||||||||
Commercial construction loans | 4,842 | 5,115 | 5,990 | 6,110 | 5,700 | |||||||||||||||
Commercial leases | 3,512 | 3,564 | 3,610 | 3,642 | 3,747 | |||||||||||||||
Residential mortgage loans | 11,669 | 10,921 | 10,327 | 10,711 | 11,244 | |||||||||||||||
Home equity | 12,636 | 12,763 | 12,677 | 12,534 | 12,012 | |||||||||||||||
Automobile loans | 8,692 | 8,687 | 8,428 | 8,303 | 8,439 | |||||||||||||||
Credit card | 1,863 | 1,825 | 1,748 | 1,720 | 1,703 | |||||||||||||||
Other consumer loans and leases | 1,076 | 1,177 | 1,225 | 1,211 | 1,220 | |||||||||||||||
Taxable securities | 16,778 | 16,283 | 14,882 | 13,310 | 12,554 | |||||||||||||||
Tax exempt securities | 242 | 262 | 288 | 315 | 364 | |||||||||||||||
Other short-term investments | 742 | 1,290 | 513 | 890 | 445 | |||||||||||||||
Total interest-earning assets | 102,758 | 103,664 | 103,109 | 100,287 | 98,575 | |||||||||||||||
Cash and due from banks | 2,350 | 2,438 | 2,897 | 2,468 | 2,357 | |||||||||||||||
Other assets | 13,907 | 15,363 | 15,089 | 13,683 | 12,370 | |||||||||||||||
Allowance for loan and lease losses | (3,137 | ) | (2,784 | ) | (2,142 | ) | (1,654 | ) | (1,204 | ) | ||||||||||
Total assets | $ | 115,878 | $ | 118,681 | $ | 118,953 | $ | 114,784 | $ | 112,098 | ||||||||||
Liabilities | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest checking | $ | 14,837 | $ | 14,229 | $ | 13,698 | $ | 13,843 | $ | 14,396 | ||||||||||
Savings | 16,705 | 16,272 | 15,960 | 16,154 | 16,583 | |||||||||||||||
Money market | 4,167 | 4,559 | 4,983 | 6,051 | 6,592 | |||||||||||||||
Foreign office | 1,717 | 1,755 | 1,876 | 2,126 | 2,169 | |||||||||||||||
Other time | 14,612 | 14,501 | 13,337 | 10,780 | 9,517 | |||||||||||||||
Certificates - $100,000 and over | 11,455 | 11,802 | 12,468 | 11,623 | 8,143 | |||||||||||||||
Other | 240 | 247 | 1,090 | 395 | 2,948 | |||||||||||||||
Federal funds purchased | 542 | 701 | 2,016 | 1,013 | 3,643 | |||||||||||||||
Other short-term borrowings | 8,002 | 9,621 | 10,912 | 9,613 | 5,623 | |||||||||||||||
Long-term debt | 11,130 | 12,531 | 13,100 | 14,392 | 14,803 | |||||||||||||||
Total interest-bearing liabilities | 83,407 | 86,218 | 89,440 | 85,990 | 84,417 | |||||||||||||||
Demand deposits | 16,689 | 15,532 | 14,602 | 14,225 | 14,023 | |||||||||||||||
Other liabilities | 3,292 | 4,847 | 4,620 | 3,726 | 4,029 | |||||||||||||||
Total liabilities | 103,388 | 106,597 | 108,662 | 103,941 | 102,469 | |||||||||||||||
Shareholders’ equity | 12,490 | 12,084 | 10,291 | 10,843 | 9,629 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 115,878 | $ | 118,681 | $ | 118,953 | $ | 114,784 | $ | 112,098 | ||||||||||
Yield Analysis | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Commercial loans | 4.06 | % | 4.00 | % | 4.96 | % | 5.46 | % | 5.04 | % | ||||||||||
Commercial mortgage loans | 4.44 | % | 4.56 | % | 6.10 | % | 8.71 | % | 5.93 | % | ||||||||||
Commercial construction loans | 2.80 | % | 3.35 | % | 5.32 | % | 6.97 | % | 5.44 | % | ||||||||||
Commercial leases | 4.66 | % | 3.12 | % | 3.75 | % | 3.85 | % | -9.77 | % | ||||||||||
Residential mortgage loans | 5.65 | % | 6.04 | % | 6.37 | % | 7.05 | % | 6.10 | % | ||||||||||
Home equity | 4.14 | % | 4.28 | % | 5.08 | % | 5.76 | % | 5.61 | % | ||||||||||
Automobile loans | 6.36 | % | 6.40 | % | 6.40 | % | 6.32 | % | 6.23 | % | ||||||||||
Credit card | 10.06 | % | 10.89 | % | 10.68 | % | 9.93 | % | 9.28 | % | ||||||||||
Other consumer loans and leases | 7.52 | % | 6.18 | % | 5.70 | % | 4.93 | % | 4.97 | % | ||||||||||
Total loans and leases | 4.71 | % | 4.73 | % | 5.55 | % | 6.41 | % | 4.97 | % | ||||||||||
Taxable securities | 4.33 | % | 4.39 | % | 4.91 | % | 4.81 | % | 4.83 | % | ||||||||||
Tax exempt securities | 8.04 | % | 7.44 | % | 7.41 | % | 7.38 | % | 7.32 | % | ||||||||||
Other short-term investments | 0.15 | % | 0.19 | % | 0.91 | % | 2.21 | % | 2.12 | % | ||||||||||
Total interest-earning assets | 4.62 | % | 4.63 | % | 5.44 | % | 6.16 | % | 4.95 | % | ||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest checking | 0.27 | % | 0.27 | % | 0.60 | % | 0.78 | % | 0.78 | % | ||||||||||
Savings | 0.77 | % | 0.89 | % | 1.27 | % | 1.29 | % | 1.16 | % | ||||||||||
Money market | 0.63 | % | 0.72 | % | 1.29 | % | 1.67 | % | 1.76 | % | ||||||||||
Foreign office | 0.54 | % | 0.54 | % | 0.95 | % | 1.37 | % | 1.42 | % | ||||||||||
Other time | 3.48 | % | 3.62 | % | 3.62 | % | 3.31 | % | 3.52 | % | ||||||||||
Certificates - $100,000 and over | 2.80 | % | 3.04 | % | 3.39 | % | 2.97 | % | 3.29 | % | ||||||||||
Other | 0.19 | % | 0.23 | % | 0.64 | % | 1.83 | % | 2.10 | % | ||||||||||
Federal funds purchased | 0.18 | % | 0.30 | % | 0.71 | % | 1.78 | % | 2.08 | % | ||||||||||
Other short-term borrowings | 0.61 | % | 1.00 | % | 1.87 | % | 2.46 | % | 2.15 | % | ||||||||||
Long-term debt | 2.79 | % | 3.36 | % | 4.13 | % | 3.63 | % | 3.85 | % | ||||||||||
Total interest-bearing liabilities | 1.67 | % | 1.89 | % | 2.28 | % | 2.25 | % | 2.23 | % | ||||||||||
Ratios: | ||||||||||||||||||||
Net interest margin (taxable equivalent) | 3.26 | % | 3.06 | % | 3.46 | % | 4.24 | % | 3.04 | % | ||||||||||
Net interest rate spread (taxable equivalent) | 2.95 | % | 2.74 | % | 3.16 | % | 3.91 | % | 2.72 | % | ||||||||||
Interest-bearing liabilities to interest-earning assets | 81.17 | % | 83.17 | % | 86.74 | % | 85.74 | % | 85.64 | % | ||||||||||
27
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
| For the Three Months Ended | |||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | |||||||||||
Average Loans and Leases | |||||||||||||||
Commercial: | |||||||||||||||
Commercial loans | $ | 28,027 | $ | 28,949 | $ | 30,227 | $ | 28,284 | $ | 28,299 | |||||
Commercial mortgage loans | 12,463 | 12,508 | 13,189 | 13,257 | 12,590 | ||||||||||
Commercial construction loans | 4,672 | 4,987 | 5,990 | 6,110 | 5,700 | ||||||||||
Commercial leases | 3,512 | 3,564 | 3,610 | 3,641 | 3,747 | ||||||||||
Subtotal - commercial | 48,674 | 50,008 | 53,016 | 51,292 | 50,336 | ||||||||||
Consumer: | |||||||||||||||
Residential mortgage loans | 8,713 | 9,195 | 9,335 | 9,681 | 9,922 | ||||||||||
Home equity | 12,636 | 12,763 | 12,677 | 12,534 | 12,012 | ||||||||||
Automobile loans | 8,692 | 8,687 | 8,428 | 8,303 | 8,439 | ||||||||||
Credit card | 1,863 | 1,825 | 1,748 | 1,720 | 1,703 | ||||||||||
Other consumer loans and leases | 995 | 1,083 | 1,165 | 1,165 | 1,125 | ||||||||||
Subtotal - consumer | 32,899 | 33,553 | 33,353 | 33,403 | 33,201 | ||||||||||
Total average loans and leases (excluding held for sale) | $ | 81,573 | $ | 83,561 | $ | 86,369 | $ | 84,695 | $ | 83,537 | |||||
Average loans held for sale | 3,422 | 2,268 | 1,057 | 1,077 | 1,676 | ||||||||||
End of Period Loans and Leases | |||||||||||||||
Commercial: | |||||||||||||||
Commercial loans | $ | 28,409 | $ | 28,617 | $ | 29,197 | $ | 29,424 | $ | 28,958 | |||||
Commercial mortgage loans | 12,407 | 12,560 | 12,502 | 13,355 | 13,394 | ||||||||||
Commercial construction loans | 4,491 | 4,745 | 5,114 | 6,002 | 6,007 | ||||||||||
Commercial leases | 3,532 | 3,521 | 3,666 | 3,642 | 3,647 | ||||||||||
Subtotal - commercial | 48,839 | 49,443 | 50,479 | 52,423 | 52,006 | ||||||||||
Consumer: | |||||||||||||||
Residential mortgage loans | 8,489 | 8,875 | 9,385 | 9,351 | 9,866 | ||||||||||
Home equity | 12,511 | 12,710 | 12,752 | 12,599 | 12,421 | ||||||||||
Automobile loans | 8,741 | 8,688 | 8,594 | 8,306 | 8,362 | ||||||||||
Credit card | 1,914 | 1,816 | 1,811 | 1,688 | 1,717 | ||||||||||
Other consumer loans and leases | 935 | 1,037 | 1,122 | 1,131 | 1,152 | ||||||||||
Subtotal - consumer | 32,590 | 33,126 | 33,664 | 33,075 | 33,518 | ||||||||||
Total portfolio loans and leases | $ | 81,429 | $ | 82,569 | $ | 84,143 | $ | 85,498 | $ | 85,524 | |||||
Core business activity | 2,989 | 2,199 | 979 | 1,000 | 889 | ||||||||||
Portfolio management activity | 352 | 403 | 473 | — | — | ||||||||||
Total loans held for sale | 3,341 | 2,602 | 1,452 | 1,000 | 889 | ||||||||||
Operating lease equipment | 474 | 470 | 463 | 369 | 364 | ||||||||||
Loans and Leases Serviced for Others (a): | |||||||||||||||
Commercial loans | 1,706 | 2,091 | 2,518 | 3,016 | 3,463 | ||||||||||
Commercial mortgage loans | 264 | 297 | 312 | 290 | 279 | ||||||||||
Commercial construction loans | 216 | 258 | 264 | 271 | 287 | ||||||||||
Commercial leases | 152 | 154 | 170 | 167 | 174 | ||||||||||
Residential mortgage loans | 43,527 | 41,524 | 40,378 | 39,777 | 38,740 | ||||||||||
Home equity | 267 | 272 | 273 | 274 | 275 | ||||||||||
Automobile loans | 1,569 | 1,754 | 1,946 | 2,138 | 2,358 | ||||||||||
Credit card | 15 | 16 | 17 | 18 | 16 | ||||||||||
Other consumer loans and leases | 7 | 7 | 7 | 8 | 5 | ||||||||||
Total loans and leases serviced for others | 47,723 | 46,373 | 45,885 | 45,959 | 45,597 | ||||||||||
Total loans and leases serviced | $ | 132,967 | $ | 132,014 | $ | 131,943 | $ | 132,826 | $ | 132,374 | |||||
| (a) | Fifth Third sells certain loans and leases and obtains servicing responsibilities |
28
Fifth Third Bancorp and Subsidiaries
Regulatory Capital (a)
$ in millions
(unaudited)
| As of | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Tier I capital: | ||||||||||||||||||||
Shareholders’ equity | $ | 13,700 | $ | 12,102 | $ | 12,077 | $ | 10,696 | $ | 10,754 | ||||||||||
Goodwill and certain other intangibles | (2,564 | ) | (2,736 | ) | (2,801 | ) | (3,729 | ) | (3,774 | ) | ||||||||||
Unrealized (gains) losses | (152 | ) | (151 | ) | (109 | ) | 54 | 141 | ||||||||||||
Qualifying trust preferred securities | 2,763 | 2,763 | 2,763 | 2,763 | 2,763 | |||||||||||||||
Other | (5 | ) | (54 | ) | (6 | ) | (50 | ) | (55 | ) | ||||||||||
Total tier I capital | $ | 13,742 | $ | 11,924 | $ | 11,924 | $ | 9,734 | $ | 9,829 | ||||||||||
Total risk-based capital: | ||||||||||||||||||||
Tier I capital | $ | 13,742 | $ | 11,924 | $ | 11,924 | $ | 9,734 | $ | 9,829 | ||||||||||
Qualifying allowance for credit losses | 1,350 | 1,375 | 1,413 | 1,415 | 1,429 | |||||||||||||||
Qualifying subordinated notes | 2,980 | 3,203 | 3,309 | 2,824 | 2,773 | |||||||||||||||
Total risk-based capital | $ | 18,072 | $ | 16,502 | $ | 16,646 | $ | 13,973 | $ | 14,031 | ||||||||||
Risk-weighted assets (b) | $ | 106,540 | $ | 109,087 | $ | 112,622 | $ | 113,601 | $ | 115,481 | ||||||||||
Ratios: | ||||||||||||||||||||
Average shareholders’ equity to average assets | 10.78 | % | 10.18 | % | 8.65 | % | 9.45 | % | 8.59 | % | ||||||||||
Regulatory capital: | ||||||||||||||||||||
Fifth Third Bancorp | ||||||||||||||||||||
Tier I capital | 12.90 | % | 10.93 | % | 10.59 | % | 8.57 | % | 8.51 | % | ||||||||||
Total risk-based capital | 16.96 | % | 15.13 | % | 14.78 | % | 12.30 | % | 12.15 | % | ||||||||||
Tier I leverage | 12.17 | % | 10.29 | % | 10.27 | % | 8.77 | % | 9.08 | % | ||||||||||
Tier I common equity | 7.00 | % | 4.50 | % | 4.37 | % | 5.18 | % | 5.18 | % | ||||||||||
Fifth Third Bank | ||||||||||||||||||||
Tier I capital | 11.53 | % | 8.83 | % | 8.13 | % | 8.63 | % | 8.36 | % | ||||||||||
Total risk-based capital | 14.38 | % | 11.67 | % | 10.92 | % | 11.35 | % | 11.02 | % | ||||||||||
Tier I leverage | 9.89 | % | 7.46 | % | 7.03 | % | 7.64 | % | 7.65 | % | ||||||||||
Tier I common equity | 11.69 | % | 8.83 | % | 7.53 | % | 8.63 | % | 8.36 | % | ||||||||||
Fifth Third Bank (Michigan) | ||||||||||||||||||||
Tier I capital | 10.13 | % | 11.14 | % | 11.06 | % | 9.65 | % | 9.68 | % | ||||||||||
Total risk-based capital | 12.07 | % | 13.05 | % | 12.95 | % | 11.50 | % | 11.51 | % | ||||||||||
Tier I leverage | 9.45 | % | 10.56 | % | 10.45 | % | 10.04 | % | 10.22 | % | ||||||||||
Tier I common equity | 9.18 | % | 10.14 | % | 10.09 | % | 8.73 | % | 8.78 | % | ||||||||||
Fifth Third Bank N.A. | ||||||||||||||||||||
Tier I capital | 12.83 | % | 15.67 | % | 16.33 | % | 14.59 | % | 11.13 | % | ||||||||||
Total risk-based capital | 14.12 | % | 16.94 | % | 17.59 | % | 15.35 | % | 11.65 | % | ||||||||||
Tier I leverage | 10.63 | % | 13.83 | % | 14.11 | % | 14.17 | % | 26.53 | % | ||||||||||
Tier I common equity | 12.83 | % | 15.67 | % | 16.33 | % | 14.59 | % | 11.13 | % | ||||||||||
| (a) | Current period regulatory capital data and ratios are estimated |
| (b) | Under the banking agencies risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied be the associated risk weight of the category. The resulting weighted values are added together resulting in the Bancorp’s total risk weighted assets. |
29
Fifth Third Bancorp and Subsidiaries
Summary of Credit Loss Experience
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Average loans and leases (excluding held for sale): | ||||||||||||||||||||
Commercial loans | $ | 28,027 | $ | 28,949 | $ | 30,227 | $ | 28,284 | $ | 28,299 | ||||||||||
Commercial mortgage loans | 12,463 | 12,508 | 13,189 | 13,257 | 12,590 | |||||||||||||||
Commercial construction loans | 4,672 | 4,987 | 5,990 | 6,110 | 5,700 | |||||||||||||||
Commercial leases | 3,512 | 3,564 | 3,610 | 3,641 | 3,747 | |||||||||||||||
Residential mortgage loans | 8,713 | 9,195 | 9,335 | 9,681 | 9,922 | |||||||||||||||
Home equity | 12,636 | 12,763 | 12,677 | 12,534 | 12,012 | |||||||||||||||
Automobile loans | 8,692 | 8,687 | 8,428 | 8,303 | 8,439 | |||||||||||||||
Credit card | 1,863 | 1,825 | 1,748 | 1,720 | 1,703 | |||||||||||||||
Other consumer loans and leases | 995 | 1,083 | 1,165 | 1,165 | 1,125 | |||||||||||||||
Total average loans and leases (excluding held for sale) | $ | 81,573 | $ | 83,561 | $ | 86,369 | $ | 84,695 | $ | 83,537 | ||||||||||
Losses charged off: | ||||||||||||||||||||
Commercial loans | $ | (185 | ) | $ | (116 | ) | $ | (430 | ) | $ | (89 | ) | $ | (109 | ) | |||||
Commercial mortgage loans | (89 | ) | (79 | ) | (468 | ) | (94 | ) | (22 | ) | ||||||||||
Commercial construction loans | (79 | ) | (78 | ) | (541 | ) | (88 | ) | (49 | ) | ||||||||||
Commercial leases | (1 | ) | — | — | — | — | ||||||||||||||
Residential mortgage loans | (113 | ) | (75 | ) | (68 | ) | (77 | ) | (63 | ) | ||||||||||
Home equity | (90 | ) | (73 | ) | (55 | ) | (58 | ) | (57 | ) | ||||||||||
Automobile loans | (48 | ) | (56 | ) | (50 | ) | (40 | ) | (35 | ) | ||||||||||
Credit card | (47 | ) | (38 | ) | (32 | ) | (25 | ) | (23 | ) | ||||||||||
Other consumer loans and leases | (6 | ) | (6 | ) | (8 | ) | (10 | ) | (7 | ) | ||||||||||
Total losses | (658 | ) | (521 | ) | (1,652 | ) | (481 | ) | (365 | ) | ||||||||||
Recoveries of losses previously charged off: | ||||||||||||||||||||
Commercial loans | 8 | 13 | 8 | 4 | 2 | |||||||||||||||
Commercial mortgage loans | 4 | 2 | 3 | — | 1 | |||||||||||||||
Commercial construction loans | — | 2 | 2 | — | — | |||||||||||||||
Commercial leases | — | — | — | — | — | |||||||||||||||
Residential mortgage loans | 1 | — | — | — | — | |||||||||||||||
Home equity | 2 | 1 | 1 | 3 | 3 | |||||||||||||||
Automobile loans | 12 | 10 | 7 | 8 | 9 | |||||||||||||||
Credit card | 2 | 2 | 2 | 1 | 2 | |||||||||||||||
Other consumer loans and leases | 3 | 1 | 2 | 2 | 4 | |||||||||||||||
Total recoveries | 32 | 31 | 25 | 18 | 21 | |||||||||||||||
Net losses charged off: | ||||||||||||||||||||
Commercial loans | (177 | ) | (103 | ) | (422 | ) | (85 | ) | (107 | ) | ||||||||||
Commercial mortgage loans | (85 | ) | (77 | ) | (465 | ) | (94 | ) | (21 | ) | ||||||||||
Commercial construction loans | (79 | ) | (76 | ) | (539 | ) | (88 | ) | (49 | ) | ||||||||||
Commercial leases | (1 | ) | — | — | — | — | ||||||||||||||
Residential mortgage loans | (112 | ) | (75 | ) | (68 | ) | (77 | ) | (63 | ) | ||||||||||
Home equity | (88 | ) | (72 | ) | (54 | ) | (55 | ) | (54 | ) | ||||||||||
Automobile loans | (36 | ) | (46 | ) | (43 | ) | (32 | ) | (26 | ) | ||||||||||
Credit card | (45 | ) | (36 | ) | (30 | ) | (24 | ) | (21 | ) | ||||||||||
Other consumer loans and leases | (3 | ) | (5 | ) | (6 | ) | (8 | ) | (3 | ) | ||||||||||
Total net losses charged off | $ | (626 | ) | $ | (490 | ) | $ | (1,627 | ) | $ | (463 | ) | $ | (344 | ) | |||||
Net charge-off Ratios: | ||||||||||||||||||||
Commercial loans | 2.53 | % | 1.45 | % | 5.55 | % | 1.19 | % | 1.52 | % | ||||||||||
Commercial mortgage loans | 2.73 | % | 2.50 | % | 14.05 | % | 2.82 | % | 0.66 | % | ||||||||||
Commercial construction loans | 6.76 | % | 6.21 | % | 35.81 | % | 5.71 | % | 3.46 | % | ||||||||||
Commercial leases | 0.02 | % | — | (0.04 | %) | (0.03 | %) | (0.01 | %) | |||||||||||
Residential mortgage loans | 5.17 | % | 3.30 | % | 2.90 | % | 3.16 | % | 2.57 | % | ||||||||||
Home equity | 2.81 | % | 2.28 | % | 1.68 | % | 1.77 | % | 1.83 | % | ||||||||||
Automobile loans | 1.65 | % | 2.17 | % | 2.00 | % | 1.51 | % | 1.21 | % | ||||||||||
Credit card | 9.64 | % | 7.92 | % | 6.82 | % | 5.45 | % | 4.93 | % | ||||||||||
Other consumer loans and leases | 1.95 | % | 1.63 | % | 2.41 | % | 2.84 | % | 1.31 | % | ||||||||||
Total net charge-off ratio | 3.08 | % | 2.38 | % | 7.50 | % | 2.17 | % | 1.66 | % | ||||||||||
30
Fifth Third Bancorp and Subsidiaries
Asset Quality
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | ||||||||||||||||
Allowance for Credit Losses | ||||||||||||||||||||
Allowance for loan and lease losses, beginning | $ | 3,070 | $ | 2,787 | $ | 2,058 | $ | 1,580 | $ | 1,205 | ||||||||||
Total net losses charged off | (626 | ) | (490 | ) | (1,627 | ) | (463 | ) | (344 | ) | ||||||||||
Provision for loan and lease losses | 1,041 | 773 | 2,356 | 941 | 719 | |||||||||||||||
Allowance for loan and lease losses, ending | $ | 3,485 | $ | 3,070 | $ | 2,787 | $ | 2,058 | $ | 1,580 | ||||||||||
Reserve for unfunded commitments, beginning | $ | 231 | $ | 195 | $ | 132 | $ | 115 | $ | 103 | ||||||||||
Provision for unfunded commitments | 8 | 36 | 63 | 17 | 10 | |||||||||||||||
Acquisitions | — | — | — | — | 2 | |||||||||||||||
Reserve for unfunded commitments, ending | $ | 239 | $ | 231 | $ | 195 | $ | 132 | $ | 115 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan and lease losses | $ | 3,485 | $ | 3,070 | $ | 2,787 | $ | 2,058 | $ | 1,580 | ||||||||||
Reserve for unfunded commitments | 239 | 231 | 195 | 132 | 115 | |||||||||||||||
Total allowance for credit losses | $ | 3,724 | $ | 3,301 | $ | 2,982 | $ | 2,190 | $ | 1,695 | ||||||||||
Nonperforming Assets and Delinquent Loans | ||||||||||||||||||||
Nonaccrual loans and leases: | ||||||||||||||||||||
Commercial loans | $ | 603 | $ | 667 | $ | 541 | $ | 550 | $ | 407 | ||||||||||
Commercial mortgage loans | 760 | 692 | 482 | 724 | 524 | |||||||||||||||
Commercial construction loans | 684 | 551 | 362 | 636 | 537 | |||||||||||||||
Commercial leases | 51 | 27 | 21 | 23 | 18 | |||||||||||||||
Residential mortgage loans | 262 | 265 | 259 | 216 | 142 | |||||||||||||||
Home equity | 26 | 25 | 26 | 27 | 35 | |||||||||||||||
Automobile loans | 1 | 2 | 5 | 3 | 7 | |||||||||||||||
Other consumer loans and leases | — | — | — | — | — | |||||||||||||||
Total nonaccrual loans and leases | 2,387 | 2,229 | 1,696 | 2,179 | 1,670 | |||||||||||||||
Restructured loans and leases - commercial (non accrual) | 12 | — | — | — | — | |||||||||||||||
Restructured loans and leases - consumer (non accrual) | 188 | 167 | 80 | 50 | 56 | |||||||||||||||
Total nonperforming loans and leases | 2,587 | 2,396 | 1,776 | 2,229 | 1,726 | |||||||||||||||
Repossessed personal property | 21 | 25 | 24 | 24 | 22 | |||||||||||||||
Other real estate owned | 232 | 227 | 206 | 198 | 190 | |||||||||||||||
Total nonperforming assets (a) | 2,840 | 2,648 | 2,006 | 2,451 | 1,938 | |||||||||||||||
Nonaccrual loans held for sale | 352 | 403 | 473 | — | — | |||||||||||||||
Total nonperforming assets including loans held for sale | $ | 3,192 | $ | 3,051 | $ | 2,479 | $ | 2,451 | $ | 1,938 | ||||||||||
Restructured loans and leases (accrual) | $ | 1,074 | $ | 615 | $ | 494 | $ | 377 | $ | 262 | ||||||||||
Ninety days past due loans and leases: | ||||||||||||||||||||
Commercial loans | $ | 142 | $ | 131 | $ | 76 | $ | 109 | $ | 54 | ||||||||||
Commercial mortgage loans | 131 | 124 | 136 | 157 | 150 | |||||||||||||||
Commercial construction loans | 60 | 49 | 74 | 84 | 53 | |||||||||||||||
Commercial leases | 5 | 6 | 4 | 3 | 1 | |||||||||||||||
Residential mortgage loans | 242 | 231 | 198 | 185 | 228 | |||||||||||||||
Home equity | 99 | 105 | 96 | 72 | 76 | |||||||||||||||
Automobile loans | 18 | 18 | 21 | 16 | 12 | |||||||||||||||
Credit card | 65 | 68 | 56 | 44 | 33 | |||||||||||||||
Other consumer loans and leases | 0 | 1 | 1 | 1 | 1 | |||||||||||||||
Total ninety days past due loans and leases | $ | 762 | $ | 733 | $ | 662 | $ | 671 | $ | 608 | ||||||||||
Ratios | ||||||||||||||||||||
Net losses charged off as a percent of average loans and leases | 3.08 | % | 2.38 | % | 7.50 | % | 2.17 | % | 1.66 | % | ||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||
As a percent of loans and leases | 4.28 | % | 3.72 | % | 3.31 | % | 2.41 | % | 1.85 | % | ||||||||||
As a percent of nonperforming loans and leases (a) | 135 | % | 128 | % | 157 | % | 92 | % | 92 | % | ||||||||||
As a percent of nonperforming assets (a) | 123 | % | 116 | % | 139 | % | 84 | % | 81 | % | ||||||||||
Nonperforming loans and leases as a percent of portfolio loans, leases and other assets, including other real estate owned (a) | 3.17 | % | 2.89 | % | 2.11 | % | 2.60 | % | 2.01 | % | ||||||||||
Nonperforming assets as a percent of portfolio loans, leases and other assets, including other real estate owned (a) | 3.48 | % | 3.20 | % | 2.38 | % | 2.86 | % | 2.26 | % | ||||||||||
Nonperforming assets as a percent of total loans, leases and other assets, including other real estate owned | 3.75 | % | 3.57 | % | 2.89 | % | 2.83 | % | 2.24 | % | ||||||||||
| (a) | Does not include nonaccrual loans held for sale |
31
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconciliation
$ in millions
(unaudited)
| For the Three Months Ended | |||||||||||||||
| June 2009 | March 2009 | December 2008 | September 2008 | June 2008 | |||||||||||
Total shareholders’ equity | 13,700 | 12,102 | 12,077 | 10,696 | 10,754 | ||||||||||
Less: | |||||||||||||||
Preferred stock | (3,588 | ) | (4,252 | ) | (4,241 | ) | (1,082 | ) | (1,082 | ) | |||||
Goodwill | (2,417 | ) | (2,623 | ) | (2,624 | ) | (3,592 | ) | (3,603 | ) | |||||
Intangible assets | (133 | ) | (154 | ) | (168 | ) | (188 | ) | (203 | ) | |||||
Tangible common equity, including unrealized gains / losses (a) | 7,562 | 5,073 | 5,043 | 5,834 | 5,866 | ||||||||||
Less: Accumulated other comprehensive income / loss | (152 | ) | (151 | ) | (98 | ) | 60 | 152 | |||||||
Tangible common equity, excluding unrealized gains / losses (b) | 7,410 | 4,922 | 4,946 | 5,893 | 6,019 | ||||||||||
Add back: Preferred stock | 3,588 | 4,252 | 4,241 | 1,082 | 1,082 | ||||||||||
Tangible equity (c) | 10,998 | 9,174 | 9,187 | 6,975 | 7,100 | ||||||||||
Total assets (d) | 115,984 | 119,313 | 119,764 | 116,294 | 114,975 | ||||||||||
Less: | |||||||||||||||
Goodwill | (2,417 | ) | (2,623 | ) | (2,624 | ) | (3,592 | ) | (3,603 | ) | |||||
Intangible assets | (133 | ) | (154 | ) | (168 | ) | (188 | ) | (203 | ) | |||||
Tangible assets, including unrealized gains / losses (e) | 113,434 | 116,536 | 116,972 | 112,514 | 111,169 | ||||||||||
Less: Accumulated other comprehensive income / loss, before tax | (234 | ) | (233 | ) | (151 | ) | 92 | 235 | |||||||
Tangible assets, excluding unrealized gains / losses (f) | 113,200 | 116,303 | 116,821 | 112,605 | 111,404 | ||||||||||
Common shares outstanding (g) | 795 | 577 | 577 | 577 | 578 | ||||||||||
Risk-weighted assets, determined in accordance with prescribed regulatory requirements (h) | 106,540 | 109,087 | 112,622 | 113,601 | 115,481 | ||||||||||
Ratios | |||||||||||||||
Tangible equity (c) / (f) | 9.72 | % | 7.89 | % | 7.86 | % | 6.19 | % | 6.37 | % | |||||
Tangible common equity (excluding unrealized gains/losses) (b) / (f) | 6.55 | % | 4.23 | % | 4.23 | % | 5.23 | % | 5.40 | % | |||||
Tangible common equity (including unrealized gains/losses) (a) / (e) | 6.67 | % | 4.35 | % | 4.31 | % | 5.19 | % | 5.28 | % | |||||
Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses) (b) / (h) | 6.96 | % | 4.51 | % | 4.39 | % | 5.19 | % | 5.21 | % | |||||
Tangible book value per share (a) / (g) | 9.51 | 8.79 | 8.74 | 10.10 | 10.16 | ||||||||||
32
Fifth Third Bancorp and Subsidiaries
Segment Presentation
$ in millions
(unaudited)
For the three months ended June 30, 2009 | Commercial Banking | Branch Banking | Consumer Lending | Processing Solutions | Investment Advisors | Other/ Eliminations | Total | ||||||||||||||
Net interest income (a) | 339 | 395 | 130 | 4 | 39 | (71 | ) | 836 | |||||||||||||
Provision for loan and lease losses | (289 | ) | (149 | ) | (164 | ) | (5 | ) | (18 | ) | (416 | ) | (1,041 | ) | |||||||
Net interest income after provision for loan and lease losses | 50 | 246 | (34 | ) | (1 | ) | 21 | (487 | ) | (205 | ) | ||||||||||
Total noninterest income | 160 | 206 | 190 | 218 | 82 | 1,727 | 2,583 | ||||||||||||||
Total noninterest expense | (261 | ) | (332 | ) | (151 | ) | (143 | ) | (88 | ) | (46 | ) | (1,021 | ) | |||||||
Net income (loss) before taxes | (51 | ) | 120 | 5 | 74 | 15 | 1,194 | 1,357 | |||||||||||||
Applicable income taxes (a) | 47 | (42 | ) | (2 | ) | (26 | ) | (5 | ) | (447 | ) | (475 | ) | ||||||||
Net income (loss) | (4 | ) | 78 | 3 | 48 | 10 | 747 | 882 | |||||||||||||
Dividends on preferred stock | — | — | — | — | — | 26 | 26 | ||||||||||||||
Net income (loss) available to common shareholders | (4 | ) | 78 | 3 | 48 | 10 | 721 | 856 | |||||||||||||
For the three months ended March 31, 2009 | Commercial Banking | Branch Banking | Consumer Lending | Processing Solutions | Investment Advisors | Other/ Eliminations | Total | ||||||||||||||
Net interest income (a) | 335 | 380 | 132 | 3 | 37 | (106 | ) | 781 | |||||||||||||
Provision for loan and lease losses | (217 | ) | (128 | ) | (133 | ) | (3 | ) | (9 | ) | (283 | ) | (773 | ) | |||||||
Net interest income after provision for loan and lease losses | 118 | 252 | (1 | ) | — | 28 | (389 | ) | 8 | ||||||||||||
Total noninterest income | 179 | 181 | 156 | 205 | 83 | (107 | ) | 697 | |||||||||||||
Total noninterest expense | (237 | ) | (325 | ) | (111 | ) | (135 | ) | (83 | ) | (71 | ) | (962 | ) | |||||||
Net income (loss) before taxes | 60 | 108 | 44 | 70 | 28 | (567 | ) | (257 | ) | ||||||||||||
Applicable income taxes (a) | 7 | (38 | ) | (15 | ) | (24 | ) | (10 | ) | 387 | 307 | ||||||||||
Net income (loss) | 67 | 70 | 29 | 46 | 18 | (180 | ) | 50 | |||||||||||||
Dividends on preferred stock | — | — | — | — | — | 76 | 76 | ||||||||||||||
Net income (loss) available to common shareholders | 67 | 70 | 29 | 46 | 18 | (256 | ) | (26 | ) | ||||||||||||
For the three months ended December 31, 2008 | Commercial Banking | Branch Banking | Consumer Lending | Processing Solutions | Investment Advisors | Other/ Eliminations | Total | ||||||||||||||
Net interest income (a) | 390 | 419 | 122 | 3 | 44 | (80 | ) | 898 | |||||||||||||
Provision for loan and lease losses | (1,347 | ) | (125 | ) | (121 | ) | (5 | ) | (28 | ) | (730 | ) | (2,356 | ) | |||||||
Net interest income after provision for loan and lease losses | (957 | ) | 294 | 1 | (2 | ) | 16 | (810 | ) | (1,458 | ) | ||||||||||
Total noninterest income | 176 | 196 | 76 | 215 | 87 | (108 | ) | 642 | |||||||||||||
Total noninterest expense | (997 | ) | (324 | ) | (326 | ) | (143 | ) | (91 | ) | (141 | ) | (2,022 | ) | |||||||
Net income (loss) before taxes | (1,778 | ) | 166 | (249 | ) | 70 | 12 | (1,059 | ) | (2,838 | ) | ||||||||||
Applicable income taxes (a) | 651 | (58 | ) | 88 | (25 | ) | (4 | ) | 44 | 696 | |||||||||||
Net income (loss) | (1,127 | ) | 108 | (161 | ) | 45 | 8 | (1,015 | ) | (2,142 | ) | ||||||||||
Dividends on preferred stock | — | — | — | — | — | 42 | 42 | ||||||||||||||
Net income (loss) available to common shareholders | (1,127 | ) | 108 | (161 | ) | 45 | 8 | (1,057 | ) | (2,184 | ) | ||||||||||
For the three months ended September 30, 2008 | Commercial Banking | Branch Banking | Consumer Lending | Processing Solutions | Investment Advisors | Other/ Eliminations | Total | ||||||||||||||
Net interest income (a) | 491 | 477 | 132 | — | 50 | (82 | ) | 1,068 | |||||||||||||
Provision for loan and lease losses | (235 | ) | (87 | ) | (124 | ) | (4 | ) | (11 | ) | (480 | ) | (941 | ) | |||||||
Net interest income after provision for loan and lease losses | 256 | 390 | 8 | (4 | ) | 39 | (562 | ) | 127 | ||||||||||||
Total noninterest income | 161 | 212 | 73 | 213 | 96 | (38 | ) | 717 | |||||||||||||
Total noninterest expense | (225 | ) | (312 | ) | (81 | ) | (140 | ) | (91 | ) | (118 | ) | (967 | ) | |||||||
Net income (loss) before taxes | 192 | 290 | — | 69 | 44 | (718 | ) | (123 | ) | ||||||||||||
Applicable income taxes (a) | (42 | ) | (102 | ) | — | (24 | ) | (15 | ) | 250 | 67 | ||||||||||
Net income (loss) | 150 | 188 | — | 45 | 29 | (468 | ) | (56 | ) | ||||||||||||
Dividends on preferred stock | — | — | — | — | — | 25 | 25 | ||||||||||||||
Net income (loss) available to common shareholders | 150 | 188 | — | 45 | 29 | (493 | ) | (81 | ) | ||||||||||||
For the three months ended June 30, 2008 | Commercial Banking | Branch Banking | Consumer Lending | Processing Solutions | Investment Advisors | Other/ Eliminations | Total | ||||||||||||||
Net interest income (a) | 338 | 409 | 96 | (1 | ) | 49 | (147 | ) | 744 | ||||||||||||
Provision for loan and lease losses | (157 | ) | (75 | ) | (103 | ) | (4 | ) | (5 | ) | (375 | ) | (719 | ) | |||||||
Net interest income after provision for loan and lease losses | 181 | 334 | (7 | ) | (5 | ) | 44 | (522 | ) | 25 | |||||||||||
Total noninterest income | 158 | 211 | 86 | 216 | 101 | (50 | ) | 722 | |||||||||||||
Total noninterest expense | (215 | ) | (310 | ) | (88 | ) | (137 | ) | (99 | ) | (9 | ) | (858 | ) | |||||||
Net income (loss) before taxes | 124 | 235 | (9 | ) | 74 | 46 | (581 | ) | (111 | ) | |||||||||||
Applicable income taxes (a) | (18 | ) | (83 | ) | 3 | (26 | ) | (16 | ) | 49 | (91 | ) | |||||||||
Net income (loss) | 106 | 152 | (6 | ) | 48 | 30 | (532 | ) | (202 | ) | |||||||||||
| (a) | Includes taxable equivalent adjustments of $5 million for the three months ended June 30, 2009, March 31, 2009, December 31, 2008 and September 30, 2008 and $6 million for the three months ended June 30, 2008. |
33