Exhibit 99.1
Key Financial Data
$ millions for all balance sheet and income statement items | ||||||||||||
1Q20 | 4Q19 | 1Q19 | ||||||||||
Income Statement Data | ||||||||||||
Net income available to common shareholders | $ | 29 | $ | 701 | $ | 760 | ||||||
Net interest income (U.S. GAAP) | 1,229 | 1,228 | 1,082 | |||||||||
Net interest income (FTE)(a) | 1,233 | 1,232 | 1,086 | |||||||||
Noninterest income | 671 | 1,035 | 1,101 | |||||||||
Noninterest expense | 1,200 | 1,160 | 1,097 | |||||||||
Per Share Data | ||||||||||||
Earnings per share, basic | $ | 0.04 | $ | 0.97 | $ | 1.14 | ||||||
Earnings per share, diluted | 0.04 | 0.96 | 1.12 | |||||||||
Book value per share | 28.26 | 27.41 | 24.77 | |||||||||
Tangible book value per share(a) | 22.02 | 21.13 | 18.64 | |||||||||
Balance Sheet & Credit Quality | ||||||||||||
Average portfolio loans and leases | $ | 110,779 | $ | 109,787 | $ | 97,773 | ||||||
Average deposits | 126,789 | 126,116 | 109,591 | |||||||||
Netcharge-off ratio(b) | 0.44 | % | 0.41 | % | 0.32 | % | ||||||
Nonperforming asset ratio(c) | 0.60 | 0.62 | 0.45 | |||||||||
Financial Ratios | ||||||||||||
Return on average assets | 0.11 | % | 1.72 | % | 2.11 | % | ||||||
Return on average common equity | 0.6 | 14.2 | 19.6 | |||||||||
Return on average tangible common equity(a) | 1.0 | 18.7 | 23.9 | |||||||||
CET1 capital(d)(e) | 9.36 | 9.75 | 9.60 | |||||||||
Net interest margin(a) | 3.28 | 3.27 | 3.28 | |||||||||
Efficiency(a) | 63.0 | 51.2 | 50.2 | |||||||||
Other than the Quarterly Financial Review tables, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation oftax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis.1Refers to the current expected credit losses (CECL) methodology implemented upon the Bancorp’s adoption ofASU 2016-13. |
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April 21, 2020 |
Income Statement Highlights
($ in millions, except per share data) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Condensed Statements of Income | ||||||||||||||||||||
Net interest income (NII)(a) | $ | 1,233 | $ | 1,232 | $ | 1,086 | — | 14 | % | |||||||||||
Provision for credit losses | 640 | 162 | 90 | 295 | % | 611 | % | |||||||||||||
Noninterest income | 671 | 1,035 | 1,101 | (35 | %) | (39 | %) | |||||||||||||
Noninterest expense | 1,200 | 1,160 | 1,097 | 3 | % | 9 | % | |||||||||||||
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Income before income taxes(a) | $ | 64 | $ | 945 | $ | 1,000 | (93 | %) | (94 | %) | ||||||||||
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Taxable equivalent adjustment | 4 | 4 | 4 | — | — | |||||||||||||||
Applicable income tax expense | 14 | 207 | 221 | (93 | %) | (94 | %) | |||||||||||||
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Net income | $ | 46 | $ | 734 | $ | 775 | (94 | %) | (94 | %) | ||||||||||
Dividends on preferred stock | 17 | 33 | 15 | (48 | %) | 13 | % | |||||||||||||
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Net income available to common shareholders | $ | 29 | $ | 701 | $ | 760 | (96 | %) | (96 | %) | ||||||||||
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Earnings per share, diluted | $ | 0.04 | $ | 0.96 | $ | 1.12 | (96 | %) | (97 | %) | ||||||||||
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Fifth Third Bancorp (Nasdaq: FITB) today reported first quarter 2020 net income of $46 million compared to net income of $775 million in theyear-ago quarter. Net income available to common shareholders was $29 million, or $0.04 per diluted share, compared to $760 million, or $1.12 per diluted share in theyear-ago quarter. Prior quarter net income was $734 million and net income available to common shareholders was $701 million, or $0.96 per diluted share.
Diluted earnings per share impact of certain items - 1Q20 | ||||
(after-tax impacts(f); $ in millions, except per share data) | ||||
Provision in excess of net charge-offs | ($ | 399 | ) | |
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Diluted earnings per share impact from provision in excess of net charge-offs | ($ | 0.55 | ) | |
Unfavorable credit valuation adjustment (CVA) within other noninterest expense | ($ | 28 | ) | |
Valuation of Visa total return swap within other noninterest income | ($ | 17 | ) | |
Net impairment on private equity investments | ($ | 12 | ) | |
Merger-related expenses | ($ | 5 | ) | |
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After-tax impact(f)of other notable items | ($ | 62 | ) | |
Diluted earnings per share impact of other notable items | ($ | 0.09 | ) | |
Diluted earnings per share impact reflect 720.363 million average diluted shares outstanding |
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Net Interest Income
(FTE; $ in millions)(a) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Interest Income | ||||||||||||||||||||
Interest income | $ | 1,529 | $ | 1,563 | $ | 1,437 | (2 | %) | 6 | % | ||||||||||
Interest expense | 296 | 331 | 351 | (11 | %) | (16 | %) | |||||||||||||
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Net interest income (NII) | $ | 1,233 | $ | 1,232 | $ | 1,086 | — | 14 | % | |||||||||||
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Adjusted NII(a) | $ | 1,217 | $ | 1,214 | $ | 1,085 | — | 12 | % | |||||||||||
Average Yield/Rate Analysis | bps Change | |||||||||||||||||||
Yield on interest-earning assets | 4.07 | % | 4.15 | % | 4.33 | % | (8 | ) | (26 | ) | ||||||||||
Rate paid on interest-bearing liabilities | 1.09 | % | 1.22 | % | 1.46 | % | (13 | ) | (37 | ) | ||||||||||
Ratios | ||||||||||||||||||||
Net interest rate spread | 2.98 | % | 2.93 | % | 2.87 | % | 5 | 11 | ||||||||||||
Net interest margin (NIM) | 3.28 | % | 3.27 | % | 3.28 | % | 1 | — | ||||||||||||
Adjusted NIM(a) | 3.24 | % | 3.22 | % | 3.28 | % | 2 | (4 | ) | |||||||||||
Compared to theyear-ago quarter, reported NII increased $147 million, or 14%. Excluding purchase accounting accretion of $16 million in the current quarter and $1 million in theyear-ago quarter, adjusted NII increased $132 million, or 12%, reflecting an increase ininterest-earning assets, including the impact from the MB Financial acquisition, partially offset by the declining-rate environment. Compared to theyear-ago quarter, reported NIM remained flat, and decreased 4 bps excluding purchase accounting accretion.
Compared to the prior quarter, reported NII increased $1 million. Excluding purchase accounting accretion, adjusted NII increased $3 million, reflecting loan growth, the favorable impact of previously executed cash flow hedges, and the benefit of elevated short-term LIBOR rates on loan yields relative to funding costs, partially offset by seasonally strong securities portfolio income in the prior quarter as well as the impact of a lower day count. Compared to the prior quarter, reported NIM increased 1 bp. Excluding purchase accounting accretion, adjusted NIM increased 2 bps, reflecting the favorable impact of previously executed hedges, proactive management of deposit rates, and a lower day count, partially offset by the aforementioned securities portfolio income from the prior quarter and a 3 bps unfavorable impact from elevated cash balances.
3
Noninterest Income
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Noninterest Income | ||||||||||||||||||||
Service charges on deposits | $ | 148 | $ | 149 | $ | 131 | (1 | %) | 13 | % | ||||||||||
Commercial banking revenue | 124 | 127 | 103 | (2 | %) | 20 | % | |||||||||||||
Mortgage banking net revenue | 120 | 73 | 56 | 64 | % | 114 | % | |||||||||||||
Wealth and asset management revenue | 134 | 129 | 112 | 4 | % | 20 | % | |||||||||||||
Card and processing revenue | 86 | 95 | 79 | (9 | %) | 9 | % | |||||||||||||
Leasing business revenue | 73 | 71 | 32 | 3 | % | 128 | % | |||||||||||||
Other noninterest income | 7 | 382 | 569 | (98 | %) | (99 | %) | |||||||||||||
Securities (losses) gains, net | (24 | ) | 10 | 16 | NM | NM | ||||||||||||||
Securities gains (losses), net -non-qualifying hedges on mortgage servicing rights | 3 | (1 | ) | 3 | NM | — | ||||||||||||||
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Total noninterest income | $ | 671 | $ | 1,035 | $ | 1,101 | (35 | %) | (39 | %) | ||||||||||
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(In the first quarter 2020, as a result of updating internal management reporting processes and to provide more detailed information, certain noninterest income disclosures were adjusted. Leasing business revenue is a new line item with revenue previously included in the Corporate banking revenue - with the remaining revenue shown as Commercial banking revenue - and Other noninterest income line items. These adjustments were retrospectively applied to prior periods presented.)
Reported noninterest income decreased $430 million, or 39%, from theyear-ago quarter, and decreased $364 million, or 35%, from the prior quarter. The reported results reflect the impact of certain items in the table below, primarily from Worldpay transactions, in both the prior quarter and theyear-ago quarter.
Noninterest Income excluding certain items
($ in millions) | For the Three Months Ended | |||||||||||
March 2020 | December 2019 | March 2019 | ||||||||||
Noninterest Income excluding certain items | ||||||||||||
Noninterest income (U.S. GAAP) | $ | 671 | $ | 1,035 | $ | 1,101 | ||||||
Valuation of Visa total return swap | 22 | 44 | 31 | |||||||||
Net impairment on private equity investments | 15 | — | — | |||||||||
Merger-related branch network impairment charge | — | — | 13 | |||||||||
Gain on sale of Worldpay shares | — | — | (562 | ) | ||||||||
Gain recognized from Worldpay TRA transaction | — | (345 | ) | — | ||||||||
GreenSky equity securities (gain) | — | — | (9 | ) | ||||||||
Securities (gains) losses, net (excluding GreenSky) | 24 | (10 | ) | (7 | ) | |||||||
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Noninterest income excluding certain items(a) | $ | 732 | $ | 724 | $ | 567 | ||||||
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Compared to theyear-ago quarter, noninterest income excluding the items in the preceding table increased $165 million, or 29%. Compared to the prior quarter, noninterest income excluding the items in the preceding table increased $8 million, or 1%.
Compared to theyear-ago quarter, service charges on deposits increased $17 million, or 13%, driven by higher commercial deposit fees. Commercial banking revenue increased $21 million, or 20%, primarily driven by increases in financial risk management revenue and corporate bond fees, partially offset by a decrease in loan syndications revenue. Mortgage banking net revenue increased $64 million, or 114% primarily driven by an improved gain on sale margin on higher mortgage originations of $4 billion in the current quarter compared to $1.6 billion in theyear-ago quarter. Wealth and asset management revenue increased $22 million, or 20%, primarily driven by higher personal asset management revenue and brokerage fees. Card and processing revenue increased by $7 million, or 9%, reflecting increases in credit and debit transaction volumes, partially offset by higher rewards. Leasing business revenue increased $41 million, or 128%, primarily reflecting the impacts from the MB Financial acquisition.
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Compared to the prior quarter, service charges on deposits decreased $1 million, or 1%, due to lower consumer deposit fees, partially offset by higher commercial deposit fees. Commercial banking revenue decreased $3 million, or 2%, primarily driven by decreases in loan syndications and M&A advisory revenue, partially offset by increases in financial risk management revenue and corporate bond fees. Mortgage banking net revenue increased $47 million, or 64%, primarily driven by an improved gain on sale margin, a 6% increase in origination volumes, and the impact of the MSR valuation, net of hedges. Wealth and asset management revenue increased $5 million, or 4%, primarily driven by higher brokerage fees, partially offset by lower personal asset management revenue. Card processing revenue decreased $9 million, or 9%, reflecting decreases in credit and debit volumes in the final month of the quarter, partially offset by lower rewards. Leasing business revenue increased $2 million, or 3%, primarily driven by an increase in lease syndication fees, partially offset by a decrease in business solutions revenue.
Noninterest Expense
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Noninterest Expense | ||||||||||||||||||||
Compensation and benefits | $ | 647 | $ | 576 | $ | 610 | 12 | % | 6 | % | ||||||||||
Net occupancy expense | 82 | 84 | 75 | (2 | %) | 9 | % | |||||||||||||
Technology and communications | 93 | 103 | 83 | (10 | %) | 12 | % | |||||||||||||
Equipment expense | 32 | 33 | 30 | (3 | %) | 7 | % | |||||||||||||
Card and processing expense | 31 | 33 | 31 | (6 | %) | — | ||||||||||||||
Leasing business expense | 35 | 36 | 19 | (3 | %) | 84 | % | |||||||||||||
Marketing expense | 31 | 44 | 36 | (30 | %) | (14 | %) | |||||||||||||
Intangible amortization expense | 13 | 14 | 3 | (7 | %) | NM | ||||||||||||||
Other noninterest expense | 236 | 237 | 210 | — | 12 | % | ||||||||||||||
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Total noninterest expense | $ | 1,200 | $ | 1,160 | $ | 1,097 | 3 | % | 9 | % | ||||||||||
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(In the first quarter 2020, as a result of updating internal management reporting processes and to provide more detailed information, certain noninterest expense disclosures were adjusted. Leasing business expense and Marketing expense are new line items shown reflecting expenses previously included in the Other noninterest expense line item. These adjustments were retrospectively applied to prior periods presented.)
Impacts of Merger-Related Expenses
($ in millions) | For the Three Months Ended | |||||||||||
March 2020 | December 2019 | March 2019 | ||||||||||
Merger-Related Expenses | ||||||||||||
Compensation and benefits | $ | 2 | $ | 1 | $ | 35 | ||||||
Net occupancy expense | 1 | 3 | — | |||||||||
Technology and communications | 3 | 4 | 11 | |||||||||
Equipment expense | — | — | — | |||||||||
Card and processing expense | — | — | — | |||||||||
Leasing business expense | — | — | — | |||||||||
Marketing expense | — | — | 4 | |||||||||
Intangible amortization expense | — | — | — | |||||||||
Other noninterest expense | 1 | 1 | 26 | |||||||||
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Total merger-related expenses | $ | 7 | $ | 9 | $ | 76 | ||||||
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Noninterest Expense excluding Merger-Related Expenses(a)
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Noninterest Expense excluding Merger-Related Expenses | ||||||||||||||||||||
Compensation and benefits | $ | 645 | $ | 575 | $ | 575 | 12 | % | 12 | % | ||||||||||
Net occupancy expense | 81 | 81 | 75 | — | 8 | % | ||||||||||||||
Technology and communications | 90 | 99 | 72 | (9 | %) | 25 | % | |||||||||||||
Equipment expense | 32 | 33 | 30 | (3 | %) | 7 | % | |||||||||||||
Card and processing expense | 31 | 33 | 31 | (6 | %) | — | ||||||||||||||
Leasing business expense | 35 | 36 | 19 | (3 | %) | 84 | % | |||||||||||||
Marketing expense | 31 | 44 | 32 | (30 | %) | (3 | %) | |||||||||||||
Intangible amortization expense | 13 | 14 | 3 | (7 | %) | NM | ||||||||||||||
Other noninterest expense | 235 | 236 | 184 | — | 28 | % | ||||||||||||||
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Total noninterest expense excluding merger-related expenses | $ | 1,193 | $ | 1,151 | $ | 1,021 | 4 | % | 17 | % | ||||||||||
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Compared to theyear-ago quarter, reported noninterest expense increased $103 million, or 9%. Excluding the merger-related expenses, intangible amortization expense, and an unfavorable CVA within other noninterest expense of $36 million in the current quarter, noninterest expense increased $126 million, or 12%, reflecting the operating expenses resulting from the MB Financial acquisition as well as continued technology investments.
Compared to the prior quarter, reported noninterest expense increased $40 million, or 3%. Excluding the aforementioned merger-related expenses, intangible amortization expense, unfavorable CVA, and a $20 million contribution to the Fifth Third Foundation (included in other noninterest expense) in the prior quarter, noninterest expense increased $27 million, or 2%, as seasonally higher compensation and benefits as well as $3 million in special payments to employees providing essential banking services through theCOVID-19 pandemic were partially offset by lower marketing and technology expenses.
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Average Interest-Earning Assets
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Average Portfolio Loans and Leases | ||||||||||||||||||||
Commercial loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | $ | 51,586 | $ | 50,938 | $ | 46,011 | 1 | % | 12 | % | ||||||||||
Commercial mortgage loans | 11,019 | 10,831 | 7,414 | 2 | % | 49 | % | |||||||||||||
Commercial construction loans | 5,132 | 5,334 | 4,838 | (4 | %) | 6 | % | |||||||||||||
Commercial leases | 3,201 | 3,384 | 3,555 | (5 | %) | (10 | %) | |||||||||||||
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Total commercial loans and leases | $ | 70,938 | $ | 70,487 | $ | 61,818 | 1 | % | 15 | % | ||||||||||
Consumer loans: | ||||||||||||||||||||
Residential mortgage loans | $ | 16,732 | $ | 16,697 | $ | 15,624 | — | 7 | % | |||||||||||
Home equity | 6,006 | 6,147 | 6,355 | (2 | %) | (5 | %) | |||||||||||||
Indirect secured consumer loans | 11,809 | 11,281 | 9,176 | 5 | % | 29 | % | |||||||||||||
Credit card | 2,498 | 2,496 | 2,396 | — | 4 | % | ||||||||||||||
Other consumer loans | 2,796 | 2,679 | 2,404 | 4 | % | 16 | % | |||||||||||||
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Total consumer loans | $ | 39,841 | $ | 39,300 | $ | 35,955 | 1 | % | 11 | % | ||||||||||
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Total average portfolio loans and leases | $ | 110,779 | $ | 109,787 | $ | 97,773 | 1 | % | 13 | % | ||||||||||
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Average Loans and Leases Held for Sale | ||||||||||||||||||||
Commercial loans and leases held for sale | $ | 108 | $ | 43 | $ | 62 | 151 | % | 74 | % | ||||||||||
Consumer loans held for sale | 1,293 | 1,156 | 527 | 12 | % | 145 | % | |||||||||||||
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Total average loans and leases held for sale | $ | 1,401 | $ | 1,199 | $ | 589 | 17 | % | 138 | % | ||||||||||
Securities and other short-term investments | $ | 39,033 | $ | 38,326 | $ | 36,101 | 2 | % | 8 | % | ||||||||||
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Total average interest-earning assets | $ | 151,213 | $ | 149,312 | $ | 134,463 | 1 | % | 12 | % | ||||||||||
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Compared to theyear-ago quarter, total average portfolio loans and leases increased 13%, reflecting the impact of the MB Financial acquisition. Average commercial portfolio loans and leases increased 15%, reflecting the impact of MB Financial as well as higher commercial and industrial (C&I) and commercial mortgage loans, partially offset by a decline in commercial leases. Average consumer portfolio loans increased 11%, reflecting growth in indirect secured consumer loans (predominantly indirect automobile) as well as the impact of MB Financial.
Compared to the prior quarter, total average portfolio loans and leases increased 1%, as higher C&I loans and indirect secured consumer loans were partially offset by lower commercial construction loans and commercial leases. Average commercial portfolio loans and leases increased 1%, reflecting elevated C&I line draws near the end of the quarter and growth in commercial mortgage loans, partially offset by lower commercial construction loans and commercial leases. Average consumer portfolio loans increased 1%, reflecting growth in indirect secured consumer loans (predominantly indirect automobile) and other consumer loans, partially offset by a decline in home equity loans.
Total period end commercial loans and leases of $78 billion increased $6 billion, or 9%, from theyear-ago quarter and increased $8 billion, or 11%, from the prior quarter, primarily due to the aforementioned C&I line draw activity. Period end commercial revolving line utilization was 47%, compared to 38% in theyear-ago quarter and 36% in the prior quarter, reflecting line draw activity at the end of the quarter predominantly from corporate banking clients.
Averageavailable-for-sale debt and other securities of $35.1 billion increased 5% compared to theyear-ago quarter and decreased 1% compared to the prior quarter. Average other short-term investments (which includes interest-bearing cash) of $2.9 billion increased 65% compared to theyear-ago quarter and increased 44% compared to the prior quarter.
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Average Deposits
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Average Deposits | ||||||||||||||||||||
Demand | $ | 35,765 | $ | 35,710 | $ | 30,557 | — | 17 | % | |||||||||||
Interest checking | 40,298 | 38,628 | 33,697 | 4 | % | 20 | % | |||||||||||||
Savings | 14,715 | 14,274 | 13,052 | 3 | % | 13 | % | |||||||||||||
Money market | 27,109 | 27,429 | 23,133 | (1 | %) | 17 | % | |||||||||||||
Foreign office(g) | 209 | 244 | 208 | (14 | %) | — | ||||||||||||||
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Total transaction deposits | $ | 118,096 | $ | 116,285 | $ | 100,647 | 2 | % | 17 | % | ||||||||||
Other time | 5,081 | 5,507 | 4,860 | (8 | %) | 5 | % | |||||||||||||
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Total core deposits | $ | 123,177 | $ | 121,792 | $ | 105,507 | 1 | % | 17 | % | ||||||||||
Certificates - $100,000 and over | 3,355 | 4,072 | 3,358 | (18 | %) | �� | — | |||||||||||||
Other deposits | 257 | 252 | 726 | 2 | % | (65 | %) | |||||||||||||
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Total average deposits | $ | 126,789 | $ | 126,116 | $ | 109,591 | 1 | % | 16 | % | ||||||||||
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Compared to theyear-ago quarter, average core deposits increased 17%, reflecting the impact of the MB Financial acquisition. Average core deposit growth was primarily driven by an increase in interest checking, demand, and money market deposits. Average commercial transaction deposits increased 25% and average consumer transaction deposits increased 11%.
Compared to the prior quarter, average core deposits increased 1%, primarily driven by an increase in interest checking and savings deposits. Average demand deposits represented 29% of total core deposits in both the current and prior quarter. Average commercial transaction deposits increased 1%, and average consumer transaction deposits increased 2%.
Period end total transaction deposits of $128 billion increased $9 billion, or 8%, compared to the prior quarter. Performance was primarily driven by commercial transaction growth of $8 billion, or 14%, partially reflecting deposits from the aforementioned C&I line draw activity near the end of the quarter.
Average Wholesale Funding
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Average Wholesale Funding | ||||||||||||||||||||
Certificates - $100,000 and over | $ | 3,355 | $ | 4,072 | $ | 3,358 | (18 | %) | — | |||||||||||
Other deposits | 257 | 252 | 726 | 2 | % | (65 | %) | |||||||||||||
Federal funds purchased | 654 | 1,174 | 2,019 | (44 | %) | (68 | %) | |||||||||||||
Other short-term borrowings | 1,750 | 1,133 | 646 | 54 | % | 171 | % | |||||||||||||
Long-term debt | 15,816 | 14,860 | 15,438 | 6 | % | 2 | % | |||||||||||||
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Total average wholesale funding | $ | 21,832 | $ | 21,491 | $ | 22,187 | 2 | % | (2 | %) | ||||||||||
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Compared to theyear-ago quarter, average wholesale funding decreased 2% primarily driven by a decrease in federal funds borrowings, partially offset by an increase in other short-term borrowings. Compared to the prior quarter, average wholesale funding increased 2% primarily driven by debt issuances of $1.25 billion during the quarter and an increase in other short-term borrowings, partially offset by decreases in jumbo CD balances and federal funds borrowings.
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Credit Quality Summary
($ in millions) | For the Three Months Ended | |||||||||||||||||||
March 2020 | December 2019 | September 2019 | June 2019 | March 2019 | ||||||||||||||||
Total nonaccrual portfolio loans and leases (NPLs) | $ | 647 | $ | 618 | $ | 482 | $ | 521 | $ | 450 | ||||||||||
Repossessed property | 10 | 10 | 9 | 8 | 11 | |||||||||||||||
OREO | 52 | 52 | 28 | 31 | 37 | |||||||||||||||
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Total nonperforming portfolio loans and leases and OREO (NPAs) | $ | 709 | $ | 680 | $ | 519 | $ | 560 | $ | 498 | ||||||||||
NPL ratio(h) | 0.55 | % | 0.56 | % | 0.44 | % | 0.48 | % | 0.41 | % | ||||||||||
NPA ratio(c) | 0.60 | % | 0.62 | % | 0.47 | % | 0.51 | % | 0.45 | % | ||||||||||
Total loans and leases30-89 days past due (accrual) | 409 | 364 | 402 | 383 | 322 | |||||||||||||||
Total loans and leases 90 days past due (accrual) | 151 | 130 | 132 | 128 | 132 | |||||||||||||||
Allowance for loan and lease losses, beginning | $ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | $ | 1,103 | ||||||||||
Impact of CECL adoption | 643 | — | — | — | — | |||||||||||||||
Total net lossescharged-off | (122 | ) | (113 | ) | (99 | ) | (78 | ) | (77 | ) | ||||||||||
Provision for loan and lease losses | 625 | 172 | 127 | 78 | 89 | |||||||||||||||
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Allowance for loan and lease losses, ending | $ | 2,348 | $ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | ||||||||||
Reserve for unfunded commitments, beginning | $ | 144 | $ | 154 | $ | 147 | $ | 133 | $ | 131 | ||||||||||
Impact of CECL adoption | 10 | — | — | — | — | |||||||||||||||
Reserve for acquired commitments | — | — | — | 7 | 1 | |||||||||||||||
Provision for (benefit from) the reserve for unfunded commitments | 15 | (10 | ) | 7 | 7 | 1 | ||||||||||||||
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Reserve for unfunded commitments, ending | $ | 169 | $ | 144 | $ | 154 | $ | 147 | $ | 133 | ||||||||||
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Total allowance for credit losses | $ | 2,517 | $ | 1,346 | $ | 1,297 | $ | 1,262 | $ | 1,248 | ||||||||||
Allowance for loan and lease losses ratios: | ||||||||||||||||||||
As a percent of portfolio loans and leases | 1.99 | % | 1.10 | % | 1.04 | % | 1.02 | % | 1.02 | % | ||||||||||
As a percent of nonperforming portfolio loans and leases | 363 | % | 194 | % | 237 | % | 214 | % | 248 | % | ||||||||||
As a percent of nonperforming portfolio assets | 331 | % | 177 | % | 221 | % | 199 | % | 224 | % | ||||||||||
Allowance for credit losses as a percent of portfolio loans and leases | 2.13 | % | 1.23 | % | 1.19 | % | 1.15 | % | 1.14 | % | ||||||||||
Total lossescharged-off | $ | (159 | ) | $ | (152 | ) | $ | (130 | ) | $ | (119 | ) | $ | (108 | ) | |||||
Total recoveries of losses previouslycharged-off | 37 | 39 | 31 | 41 | 31 | |||||||||||||||
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Total net lossescharged-off | $ | (122 | ) | $ | (113 | ) | $ | (99 | ) | $ | (78 | ) | $ | (77 | ) | |||||
Netcharge-off ratio (NCO ratio)(b) | 0.44 | % | 0.41 | % | 0.36 | % | 0.29 | % | 0.32 | % | ||||||||||
Commercial NCO ratio | 0.32 | % | 0.20 | % | 0.18 | % | 0.13 | % | 0.11 | % | ||||||||||
Consumer NCO ratio | 0.66 | % | 0.78 | % | 0.68 | % | 0.59 | % | 0.68 | % | ||||||||||
Nonperforming portfolio loans and leases were $647 million in the current quarter, with the resulting NPL ratio of 0.55%. Compared to theyear-ago quarter, NPLs increased $197 million with the NPL ratio increasing 14 bps. Compared to the prior quarter, NPLs increased $29 million with the NPL ratio decreasing 1 bp.
Nonperforming portfolio assets were $709 million in the current quarter, with the resulting NPA ratio of 0.60%. Compared to theyear-ago quarter, NPAs increased $211 million with the NPA ratio increasing 15 bps. Compared to the prior quarter, NPAs increased $29 million with the NPA ratio decreasing 2 bps.
9
The provision for loan and lease losses totaled $625 million in the current quarter. The allowance for loan and lease losses ratio represented 1.99% of total portfolio loans and leases in the current quarter, compared with 1.02% in theyear-ago quarter and 1.10% in the prior quarter. In the current quarter, the allowance for loan and lease losses represented 363% of nonperforming portfolio loans and leases and 331% of nonperforming portfolio assets. The allowance for credit losses ratio represented 2.13% of total portfolio loans and leases in the current quarter, reflecting the impacts of the CECL adoption andCOVID-19.
Net charge-offs were $122 million in the current quarter, with the resulting NCO ratio of 0.44%. Compared to theyear-ago quarter, net charge-offs increased $45 million and the NCO ratio increased 12 bps. Compared to the prior quarter, net charge-offs increased $9 million and the NCO ratio increased 3 bps.
In response to theCOVID-19 pandemic, beginning in March 2020 Fifth Third began providing financial hardship relief in the form of payment deferrals and forbearances to consumer and business customers across a wide array of lending products, as well as the suspension of vehicle repossessions and home foreclosures. The payment deferrals and forbearances are currently expected to cover periods of three to six months. In most cases, these offers are not classified as troubled debt restructurings (TDRs) and do not result in loans being placed on nonaccrual status. However, for the residential mortgage loan portfolio, the forbearance program is expected to result in increases in loans reported as past due.
Capital Position
For the Three Months Ended | ||||||||||||||||||||
March 2020 | December 2019 | September 2019 | June 2019 | March 2019 | ||||||||||||||||
Capital Position | ||||||||||||||||||||
Average total Bancorp shareholders’ equity as a percent of average assets | 12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | 11.43 | % | ||||||||||
Tangible equity(a) | 8.41 | % | 9.52 | % | 9.29 | % | 9.09 | % | 9.03 | % | ||||||||||
Tangible common equity (excluding AOCI)(a) | 7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | 8.21 | % | ||||||||||
Tangible common equity (including AOCI)(a) | 8.65 | % | 9.08 | % | 9.09 | % | 8.91 | % | 8.44 | % | ||||||||||
Regulatory Capital Ratios(e) | ||||||||||||||||||||
CET1 capital(d) | 9.36 | % | 9.75 | % | 9.56 | % | 9.57 | % | 9.60 | % | ||||||||||
Tier I risk-based capital(d) | 10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | 10.67 | % | ||||||||||
Total risk-based capital(d) | 13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | 13.57 | % | ||||||||||
Tier I leverage | 9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % | 10.32 | % |
Capital ratios remained strong during the quarter. The CET1 capital ratio was 9.36%, the tangible common equity to tangible assets ratio was 7.41% excluding AOCI, and 8.65% including AOCI. The Tier I risk-based capital ratio was 10.56%, the Total risk-based capital ratio was 13.59%, and the Tier I leverage ratio was 9.37%.
Fifth Third’s regulatory capital ratio estimates for the first quarter of 2020 reflect the ‘five-year transition’ from the banking agencies’ interim final rule announced on March 27, 2020. This five-year transition election allows banking organizations to defer certain effects of the CECL accounting standard on their regulatory capital. Specifically, this interim final rule allows for 25% of the cumulative increase in allowance since the adoption of CECL and 100% of theday-one impact of CECL adoption to be deferred for atwo-year period. Thistwo-year period will be followed by a three-year transition period tophase-in the impact of the deferred amounts on regulatory capital. As a result of the transition election, the increase in credit reserves negatively impacted the current quarter CET1 capital ratio approximately 18 bps.
10
Tax Rate
The effective tax rate was 22.6% compared with 22.2% in theyear-ago quarter and 22.0% in the prior quarter.
Other
The Bancorp adopted ASU2016-13, Measurement of Credit Losses on Financial Instruments (commonly referred to as Current Expected Credit Losses, or CECL), on January 1, 2020. Upon adoption, the Bancorp recorded an increase to reserves of $653 million. The impact of the cumulative effect of the change was a $472 million decrease to equity.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. As of March 31, 2020, the Company had $185 billion in assets and operates 1,123 full-service Banking Centers, and 2,464 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 53,000fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2020, had $374 billion in assets under care, of which it managed $42 billion for individuals, corporations andnot-for-profit organizations through its Trust and Registered Investment Advisory businesses.Investor information andpress releases can be viewed atwww.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
Earnings Release End Notes
(a) | Non-GAAP measure; see discussion ofnon-GAAP and Reg. G reconciliation beginning on page 19. |
(b) | Net lossescharged-off as a percent of average portfolio loans and leases. |
(c) | Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO. |
(d) | Under the U.S. banking agencies’ Basel III Final Rule, assets and credit equivalent amounts ofoff-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
(e) | Current period regulatory capital ratios are estimated. |
(f) | Assumes a 23% tax rate. |
(g) | Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts. |
(h) | Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO. |
11
FORWARD-LOOKING STATEMENTS
This 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 Rule3b-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,” “potential,” “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 Form10-K as updated by our filings with the U.S. Securities and Exchange Commission (“SEC”). 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. We undertake no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this document.
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) effects of the globalCOVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Third’s capital plan; (21) regulation of Fifth Third’s derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates; (28) changes and trends in capital markets; (29) fluctuation of Fifth Third’s stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (35) risks relating to Fifth Third’s ability to realize the anticipated benefits of the merger with MB Financial, Inc.; (36) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (37) potential dilution from future acquisitions; (38) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (39) results of investments or acquired entities; (40) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (41) inaccuracies or other failures from the use of models; (42) effects of critical accounting policies and judgments or the use of inaccurate estimates; (43) weather-related events, other natural disasters, or health emergencies; and (44) the impact of reputational risk created by these or other 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.
# # #
12
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income(a)
$ in millions
(unaudited)
For the Three Months Ended | % Change | |||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Interest Income | ||||||||||||||||||||
Interest and fees on loans and leases | $ | 1,235 | $ | 1,252 | $ | 1,143 | (1 | %) | 8 | % | ||||||||||
Interest on securities | 283 | 299 | 281 | (5 | %) | 1 | % | |||||||||||||
Interest on other short-term investments | 7 | 8 | 9 | (13 | %) | (22 | %) | |||||||||||||
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Total interest income | 1,525 | 1,559 | 1,433 | (2 | %) | 6 | % | |||||||||||||
Interest Expense | ||||||||||||||||||||
Interest on deposits | 166 | 201 | 205 | (17 | %) | (19 | %) | |||||||||||||
Interest on federal funds purchased | 2 | 5 | 12 | (60 | %) | (83 | %) | |||||||||||||
Interest on other short-term borrowings | 6 | 5 | 6 | 20 | % | — | ||||||||||||||
Interest on long-term debt | 122 | 120 | 128 | 2 | % | (5 | %) | |||||||||||||
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Total interest expense | 296 | 331 | 351 | (11 | %) | (16 | %) | |||||||||||||
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Net Interest Income | 1,229 | 1,228 | 1,082 | — | 14 | % | ||||||||||||||
Provision for credit losses | 640 | 162 | 90 | 295 | % | 611 | % | |||||||||||||
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Net Interest Income After Provision for Credit Losses | 589 | 1,066 | 992 | (45 | %) | (41 | %) | |||||||||||||
Noninterest Income | ||||||||||||||||||||
Service charges on deposits | 148 | 149 | 131 | (1 | %) | 13 | % | |||||||||||||
Commercial banking revenue | 124 | 127 | 103 | (2 | %) | 20 | % | |||||||||||||
Mortgage banking net revenue | 120 | 73 | 56 | 64 | % | 114 | % | |||||||||||||
Wealth and asset management revenue | 134 | 129 | 112 | 4 | % | 20 | % | |||||||||||||
Card and processing revenue | 86 | 95 | 79 | (9 | %) | 9 | % | |||||||||||||
Leasing business revenue | 73 | 71 | 32 | 3 | % | 128 | % | |||||||||||||
Other noninterest income | 7 | 382 | 569 | (98 | %) | (99 | %) | |||||||||||||
Securities (losses) gains, net | (24 | ) | 10 | 16 | NM | NM | ||||||||||||||
Securities gains (losses), net -non-qualifying hedges on mortgage servicing rights | 3 | (1 | ) | 3 | NM | — | ||||||||||||||
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Total noninterest income | 671 | 1,035 | 1,101 | (35 | %) | (39 | %) | |||||||||||||
Noninterest Expense | ||||||||||||||||||||
Compensation and benefits | 647 | 576 | 610 | 12 | % | 6 | % | |||||||||||||
Net occupancy expense | 82 | 84 | 75 | (2 | %) | 9 | % | |||||||||||||
Technology and communications | 93 | 103 | 83 | (10 | %) | 12 | % | |||||||||||||
Equipment expense | 32 | 33 | 30 | (3 | %) | 7 | % | |||||||||||||
Card and processing expense | 31 | 33 | 31 | (6 | %) | — | ||||||||||||||
Leasing business expense | 35 | 36 | 19 | (3 | %) | 84 | % | |||||||||||||
Marketing expense | 31 | 44 | 36 | (30 | %) | (14 | %) | |||||||||||||
Other noninterest expense | 249 | 251 | 213 | (1 | %) | 17 | % | |||||||||||||
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Total noninterest expense | 1,200 | 1,160 | 1,097 | 3 | % | 9 | % | |||||||||||||
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Income Before Income Taxes | 60 | 941 | 996 | (94 | %) | (94 | %) | |||||||||||||
Applicable income tax expense | 14 | 207 | 221 | (93 | %) | (94 | %) | |||||||||||||
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Net Income | 46 | 734 | 775 | (94 | %) | (94 | %) | |||||||||||||
Dividends on preferred stock | 17 | 33 | 15 | (48 | %) | 13 | % | |||||||||||||
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Net Income Available to Common Shareholders | $ | 29 | $ | 701 | $ | 760 | (96 | %) | (96 | %) | ||||||||||
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13
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
March 2020 | December 2019 | September 2019 | June 2019 | March 2019 | ||||||||||||||||
Interest Income | ||||||||||||||||||||
Interest and fees on loans and leases | $ | 1,235 | $ | 1,252 | $ | 1,320 | $ | 1,336 | $ | 1,143 | ||||||||||
Interest on securities | 283 | 299 | 291 | 290 | 281 | |||||||||||||||
Interest on other short-term investments | 7 | 8 | 14 | 10 | 9 | |||||||||||||||
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Total interest income | 1,525 | 1,559 | 1,625 | 1,636 | 1,433 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Interest on deposits | 166 | 201 | 243 | 243 | 205 | |||||||||||||||
Interest on federal funds purchased | 2 | 5 | 4 | 8 | 12 | |||||||||||||||
Interest on other short-term borrowings | 6 | 5 | 8 | 9 | 6 | |||||||||||||||
Interest on long-term debt | 122 | 120 | 128 | 131 | 128 | |||||||||||||||
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Total interest expense | 296 | 331 | 383 | 391 | 351 | |||||||||||||||
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Net Interest Income | 1,229 | 1,228 | 1,242 | 1,245 | 1,082 | |||||||||||||||
Provision for credit losses | 640 | 162 | 134 | 85 | 90 | |||||||||||||||
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Net Interest Income After Provision for Credit Losses | 589 | 1,066 | 1,108 | 1,160 | 992 | |||||||||||||||
Noninterest Income | ||||||||||||||||||||
Service charges on deposits | 148 | 149 | 143 | 143 | 131 | |||||||||||||||
Commercial banking revenue | 124 | 127 | 123 | 107 | 103 | |||||||||||||||
Mortgage banking net revenue | 120 | 73 | 95 | 63 | 56 | |||||||||||||||
Wealth and asset management revenue | 134 | 129 | 124 | 122 | 112 | |||||||||||||||
Card and processing revenue | 86 | 95 | 94 | 92 | 79 | |||||||||||||||
Leasing business revenue | 73 | 71 | 92 | 76 | 32 | |||||||||||||||
Other noninterest income | 7 | 382 | 64 | 47 | 569 | |||||||||||||||
Securities (losses) gains, net | (24 | ) | 10 | 5 | 8 | 16 | ||||||||||||||
Securities gains (losses), net -non-qualifying hedges on mortgage servicing rights | 3 | (1 | ) | — | 2 | 3 | ||||||||||||||
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Total noninterest income | 671 | 1,035 | 740 | 660 | 1,101 | |||||||||||||||
Noninterest Expense | ||||||||||||||||||||
Compensation and benefits | 647 | 576 | 584 | 641 | 610 | |||||||||||||||
Net occupancy expense | 82 | 84 | 84 | 88 | 75 | |||||||||||||||
Technology and communications | 93 | 103 | 100 | 136 | 83 | |||||||||||||||
Equipment expense | 32 | 33 | 33 | 33 | 30 | |||||||||||||||
Card and processing expense | 31 | 33 | 33 | 34 | 31 | |||||||||||||||
Leasing business expense | 35 | 36 | 40 | 38 | 19 | |||||||||||||||
Marketing expense | 31 | 44 | 40 | 41 | 36 | |||||||||||||||
Other noninterest expense | 249 | 251 | 245 | 232 | 213 | |||||||||||||||
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Total noninterest expense | 1,200 | 1,160 | 1,159 | 1,243 | 1,097 | |||||||||||||||
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Income Before Income Taxes | 60 | 941 | 689 | 577 | 996 | |||||||||||||||
Applicable income tax expense | 14 | 207 | 140 | 124 | 221 | |||||||||||||||
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Net Income | 46 | 734 | 549 | 453 | 775 | |||||||||||||||
Dividends on preferred stock | 17 | 33 | 19 | 26 | 15 | |||||||||||||||
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Net Income Available to Common Shareholders | $ | 29 | $ | 701 | $ | 530 | $ | 427 | $ | 760 | ||||||||||
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14
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | % Change | |||||||||||||||||||
March 2020 | December 2019 | March 2019 | Seq | Yr/Yr | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 3,282 | $ | 3,278 | $ | 2,749 | — | 19 | % | |||||||||||
Other short-term investments | 6,319 | 1,950 | 3,556 | 224 | % | 78 | % | |||||||||||||
Available-for-sale debt and other securities(a) | 38,645 | 36,028 | 35,048 | 7 | % | 10 | % | |||||||||||||
Held-to-maturity securities(b) | 17 | 17 | 21 | — | (19 | %) | ||||||||||||||
Trading debt securities | 433 | 297 | 325 | 46 | % | 33 | % | |||||||||||||
Equity securities | 459 | 564 | 426 | (19 | %) | 8 | % | |||||||||||||
Loans and leases held for sale | 1,630 | 1,400 | 692 | 16 | % | 136 | % | |||||||||||||
Portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | 58,250 | 50,542 | 51,862 | 15 | % | 12 | % | |||||||||||||
Commercial mortgage loans | 11,160 | 10,963 | 10,686 | 2 | % | 4 | % | |||||||||||||
Commercial construction loans | 5,462 | 5,090 | 5,231 | 7 | % | 4 | % | |||||||||||||
Commercial leases | 3,123 | 3,363 | 3,909 | (7 | %) | (20 | %) | |||||||||||||
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Total commercial loans and leases | 77,995 | 69,958 | 71,688 | 11 | % | 9 | % | |||||||||||||
Residential mortgage loans | 16,701 | 16,724 | 16,811 | — | (1 | %) | ||||||||||||||
Home equity | 5,963 | 6,083 | 6,435 | (2 | %) | (7 | %) | |||||||||||||
Indirect secured consumer loans | 12,050 | 11,538 | 10,031 | 4 | % | 20 | % | |||||||||||||
Credit card | 2,417 | 2,532 | 2,388 | (5 | %) | 1 | % | |||||||||||||
Other consumer loans | 2,911 | 2,723 | 2,489 | 7 | % | 17 | % | |||||||||||||
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| |||||||||||
Total consumer loans | 40,042 | 39,600 | 38,154 | 1 | % | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases | 118,037 | 109,558 | 109,842 | 8 | % | 7 | % | |||||||||||||
Allowance for loan and lease losses | (2,348 | ) | (1,202 | ) | (1,115 | ) | 95 | % | 111 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases, net | 115,689 | 108,356 | 108,727 | 7 | % | 6 | % | |||||||||||||
Bank premises and equipment | 2,009 | 1,995 | 2,092 | 1 | % | (4 | %) | |||||||||||||
Operating lease equipment | 819 | 848 | 908 | (3 | %) | (10 | %) | |||||||||||||
Goodwill | 4,261 | 4,252 | 4,321 | — | (1 | %) | ||||||||||||||
Intangible assets | 184 | 201 | 218 | (8 | %) | (16 | %) | |||||||||||||
Servicing rights | 685 | 993 | 1,141 | (31 | %) | (40 | %) | |||||||||||||
Other assets | 10,959 | 9,190 | 7,629 | 19 | % | 44 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $ | 185,391 | $ | 169,369 | $ | 167,853 | 9 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand | $ | 39,533 | $ | 35,968 | $ | 35,963 | 10 | % | 10 | % | ||||||||||
Interest checking | 44,520 | 40,409 | 35,746 | 10 | % | 25 | % | |||||||||||||
Savings | 15,557 | 14,248 | 14,451 | 9 | % | 8 | % | |||||||||||||
Money market | 27,775 | 27,277 | 25,942 | 2 | % | 7 | % | |||||||||||||
Foreign office | 177 | 221 | 154 | (20 | %) | 15 | % | |||||||||||||
Other time | 4,683 | 5,237 | 5,539 | (11 | %) | (15 | %) | |||||||||||||
Certificates $100,000 and over | 2,816 | 3,702 | 5,569 | (24 | %) | (49 | %) | |||||||||||||
Other deposits | — | — | 300 | — | (100 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total deposits | 135,061 | 127,062 | 123,664 | 6 | % | 9 | % | |||||||||||||
Federal funds purchased | 1,625 | 260 | 2,630 | 525 | % | (38 | %) | |||||||||||||
Other short-term borrowings | 4,542 | 1,011 | 1,329 | 349 | % | 242 | % | |||||||||||||
Accrued taxes, interest and expenses | 2,432 | 2,441 | 2,242 | — | 8 | % | ||||||||||||||
Other liabilities | 3,576 | 2,422 | 2,661 | 48 | % | 34 | % | |||||||||||||
Long-term debt | 16,282 | 14,970 | 15,483 | 9 | % | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | 163,518 | 148,166 | 148,009 | 10 | % | 10 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity | ||||||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | — | — | |||||||||||||||
Preferred stock | 1,770 | 1,770 | 1,331 | — | 33 | % | ||||||||||||||
Capital surplus | 3,597 | 3,599 | 3,444 | — | 4 | % | ||||||||||||||
Retained earnings | 17,677 | 18,315 | 17,184 | (3 | %) | 3 | % | |||||||||||||
Accumulated other comprehensive income | 2,477 | 1,192 | 409 | 108 | % | 506 | % | |||||||||||||
Treasury stock | (5,699 | ) | (5,724 | ) | (4,772 | ) | — | 19 | % | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Bancorp shareholders’ equity | 21,873 | 21,203 | 19,647 | 3 | % | 11 | % | |||||||||||||
Noncontrolling interests | — | — | 197 | — | (100 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Equity | 21,873 | 21,203 | 19,844 | 3 | % | 10 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities and Equity | $ | 185,391 | $ | 169,369 | $ | 167,853 | 9 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Amortized cost | $ | 36,428 | $ | 34,966 | $ | 34,784 | 4 | % | 5 | % | ||||||||||
(b) Market values | 17 | 17 | 21 | — | (19 | %) | ||||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | ||||||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | — | — | |||||||||||||||
Outstanding, excluding treasury | 711,306 | 708,916 | 739,406 | — | (4 | %) | ||||||||||||||
Treasury | 212,586 | 214,977 | 184,486 | (1 | %) | 15 | % |
15
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | ||||||||||||||||||||
March 2020 | December 2019 | September 2019 | June 2019 | March 2019 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 3,282 | $ | 3,278 | $ | 3,261 | $ | 2,764 | $ | 2,749 | ||||||||||
Other short-term investments | 6,319 | 1,950 | 3,235 | 3,357 | 3,556 | |||||||||||||||
Available-for-sale debt and other securities(a) | 38,645 | 36,028 | 37,178 | 35,753 | 35,048 | |||||||||||||||
Held-to-maturity securities(b) | 17 | 17 | 18 | 21 | 21 | |||||||||||||||
Trading debt securities | 433 | 297 | 297 | 322 | 325 | |||||||||||||||
Equity securities | 459 | 564 | 459 | 485 | 426 | |||||||||||||||
Loans and leases held for sale | 1,630 | 1,400 | 1,223 | 1,205 | 692 | |||||||||||||||
Portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | 58,250 | 50,542 | 50,768 | 51,104 | 51,862 | |||||||||||||||
Commercial mortgage loans | 11,160 | 10,963 | 10,822 | 10,717 | 10,686 | |||||||||||||||
Commercial construction loans | 5,462 | 5,090 | 5,281 | 5,264 | 5,231 | |||||||||||||||
Commercial leases | 3,123 | 3,363 | 3,495 | 3,677 | 3,909 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial loans and leases | 77,995 | 69,958 | 70,366 | 70,762 | 71,688 | |||||||||||||||
Residential mortgage loans | 16,701 | 16,724 | 16,675 | 16,777 | 16,811 | |||||||||||||||
Home equity | 5,963 | 6,083 | 6,218 | 6,325 | 6,435 | |||||||||||||||
Indirect secured consumer loans | 12,050 | 11,538 | 11,026 | 10,403 | 10,031 | |||||||||||||||
Credit card | 2,417 | 2,532 | 2,467 | 2,436 | 2,388 | |||||||||||||||
Other consumer loans | 2,911 | 2,723 | 2,657 | 2,580 | 2,489 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total consumer loans | 40,042 | 39,600 | 39,043 | 38,521 | 38,154 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases | 118,037 | 109,558 | 109,409 | 109,283 | 109,842 | |||||||||||||||
Allowance for loan and lease losses | (2,348 | ) | (1,202 | ) | (1,143 | ) | (1,115 | ) | (1,115 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Portfolio loans and leases, net | 115,689 | 108,356 | 108,266 | 108,168 | 108,727 | |||||||||||||||
Bank premises and equipment | 2,009 | 1,995 | 2,053 | 2,074 | 2,092 | |||||||||||||||
Operating lease equipment | 819 | 848 | 869 | 894 | 908 | |||||||||||||||
Goodwill | 4,261 | 4,252 | 4,290 | 4,284 | 4,321 | |||||||||||||||
Intangible assets | 184 | 201 | 201 | 215 | 218 | |||||||||||||||
Servicing rights | 685 | 993 | 910 | 1,039 | 1,141 | |||||||||||||||
Other assets | 10,959 | 9,190 | 8,819 | 8,221 | 7,629 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $ | 185,391 | $ | 169,369 | $ | 171,079 | $ | 168,802 | $ | 167,853 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand | $ | 39,533 | $ | 35,968 | $ | 35,893 | $ | 35,589 | $ | 35,963 | ||||||||||
Interest checking | 44,520 | 40,409 | 36,965 | 37,491 | 35,746 | |||||||||||||||
Savings | 15,557 | 14,248 | 14,354 | 14,484 | 14,451 | |||||||||||||||
Money market | 27,775 | 27,277 | 27,370 | 26,465 | 25,942 | |||||||||||||||
Foreign office | 177 | 221 | 226 | 175 | 154 | |||||||||||||||
Other time | 4,683 | 5,237 | 5,662 | 5,759 | 5,539 | |||||||||||||||
Certificates $100,000 and over | 2,816 | 3,702 | 4,377 | 5,429 | 5,569 | |||||||||||||||
Other deposits | — | — | 500 | — | 300 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total deposits | 135,061 | 127,062 | 125,347 | 125,392 | 123,664 | |||||||||||||||
Federal funds purchased | 1,625 | 260 | 876 | 179 | 2,630 | |||||||||||||||
Other short-term borrowings | 4,542 | 1,011 | 4,046 | 957 | 1,329 | |||||||||||||||
Accrued taxes, interest and expenses | 2,432 | 2,441 | 2,507 | 2,397 | 2,242 | |||||||||||||||
Other liabilities | 3,576 | 2,422 | 2,425 | 3,422 | 2,661 | |||||||||||||||
Long-term debt | 16,282 | 14,970 | 14,474 | 15,784 | 15,483 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | 163,518 | 148,166 | 149,675 | 148,131 | 148,009 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity | ||||||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | 2,051 | 2,051 | |||||||||||||||
Preferred stock | 1,770 | 1,770 | 1,770 | 1,331 | 1,331 | |||||||||||||||
Capital surplus | 3,597 | 3,599 | 3,589 | 3,572 | 3,444 | |||||||||||||||
Retained earnings | 17,677 | 18,315 | 17,786 | 17,431 | 17,184 | |||||||||||||||
Accumulated other comprehensive income | 2,477 | 1,192 | 1,635 | 1,178 | 409 | |||||||||||||||
Treasury stock | (5,699 | ) | (5,724 | ) | (5,427 | ) | (5,089 | ) | (4,772 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Bancorp shareholders’ equity | 21,873 | 21,203 | 21,404 | 20,474 | 19,647 | |||||||||||||||
Noncontrolling interests | — | — | — | 197 | 197 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Equity | 21,873 | 21,203 | 21,404 | 20,671 | 19,844 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities and Equity | $ | 185,391 | $ | 169,369 | $ | 171,079 | $ | 168,802 | $ | 167,853 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Amortized cost | $ | 36,428 | $ | 34,966 | $ | 35,662 | $ | 34,731 | $ | 34,784 | ||||||||||
(b) Market values | 17 | 17 | 18 | 21 | 21 | |||||||||||||||
(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 | 711,306 | 708,916 | 718,583 | 731,474 | 739,406 | |||||||||||||||
Treasury | 212,586 | 214,977 | 205,309 | 192,419 | 184,486 |
16
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Equity
$ in millions
(unaudited)
For the Three Months Ended | ||||||||
March | March | |||||||
2020 | 2019 | |||||||
Total Equity, Beginning | $ | 21,203 | $ | 16,250 | ||||
Net income | 46 | 775 | ||||||
Other comprehensive income, net of tax: | ||||||||
Change in unrealized gains: | ||||||||
Available-for-sale debt securities | 882 | 431 | ||||||
Qualifying cash flow hedges | 402 | 89 | ||||||
Change in accumulated other comprehensive income related to employee benefit plans | 1 | 1 | ||||||
|
|
|
| |||||
Comprehensive income | $ | 1,331 | $ | 1,296 | ||||
Cash dividends declared: | ||||||||
Common stock | (195 | ) | (165 | ) | ||||
Preferred stock | (17 | ) | (15 | ) | ||||
Impact of stock transactions under stock compensation plans, net | 23 | 25 | ||||||
Shares acquired for treasury | — | (913 | ) | |||||
Impact of acquisition | — | 3,159 | ||||||
Noncontrolling interest | — | 197 | ||||||
Impact of cumulative effect of change in accounting principles | (472 | ) | 10 | |||||
|
|
|
| |||||
Total Equity, Ending | $ | 21,873 | $ | 19,844 | ||||
|
|
|
|
17
Fifth Third Bancorp and Subsidiaries
Regulatory Capital
$ in millions
(unaudited)
As of | ||||||||||||||||||||
March 2020(a) | December 2019 | September 2019 | June 2019 | March 2019 | ||||||||||||||||
Regulatory Capital | ||||||||||||||||||||
CET1 capital | $ | 13,840 | $ | 13,847 | $ | 13,568 | $ | 13,532 | $ | 13,430 | ||||||||||
Additional tier I capital | 1,769 | 1,769 | 1,769 | 1,493 | 1,493 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tier I capital | 15,609 | 15,616 | 15,337 | 15,025 | 14,923 | |||||||||||||||
Tier II capital | 4,472 | 4,045 | 4,076 | 4,112 | 4,048 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total regulatory capital | $ | 20,081 | 19,661 | $ | 19,413 | $ | 19,137 | $ | 18,971 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Risk-weighted assets(b) | $ | 147,795 | $ | 142,065 | $ | 141,880 | $ | 141,421 | $ | 139,844 | ||||||||||
Ratios | ||||||||||||||||||||
Average total Bancorp shareholders’ equity as a percent of average assets | 12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | 11.43 | % | ||||||||||
Regulatory Capital Ratios | ||||||||||||||||||||
Fifth Third Bancorp | ||||||||||||||||||||
CET1 capital(b) | 9.36 | % | 9.75 | % | 9.56 | % | 9.57 | % | 9.60 | % | ||||||||||
Tier I risk-based capital(b) | 10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | 10.67 | % | ||||||||||
Total risk-based capital(b) | 13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | 13.57 | % | ||||||||||
Tier I leverage | 9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % | 10.32 | % | ||||||||||
Fifth Third Bank | ||||||||||||||||||||
Tier I risk-based capital(b) | 11.36 | % | 11.86 | % | 11.79 | % | 11.67 | % | 12.22 | % | ||||||||||
Total risk-based capital(b) | 13.17 | % | 13.46 | % | 13.37 | % | 13.23 | % | 13.86 | % | ||||||||||
Tier I leverage | 10.16 | % | 10.36 | % | 10.26 | % | 10.59 | % | 10.49 | % | ||||||||||
(a) | Current period regulatory capital data and ratios are estimated. |
(b) | Under the U.S. banking agencies’ Basel III Final Rule, assets and credit equivalent amounts ofoff-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
18
Use ofNon-GAAP Financial Measures
In addition to GAAP measures, management considers variousNon-GAAP measures when evaluating the performance of the business, including: “net interest income (FTE),” “interest income (FTE),” “net interest margin (FTE),” “net interest rate spread (FTE),” “income before income taxes (FTE),” “tangible net income available to common shareholders,” “average tangible common equity,” “return on average tangible common equity,” “tangible common equity (excluding AOCI),” “tangible common equity (including AOCI),” “tangible equity,” “tangible book value per share,” “adjusted noninterest income,” “adjusted noninterest expense,”“pre-provision net revenue,” “adjusted efficiency ratio,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” “adjusted return on average tangible common equity, excluding accumulated other comprehensive income,” “adjusted net interest margin,” “adjustedpre-provision net revenue,” “adjusted return on average assets,” “efficiency ratio (FTE),” “total revenue (FTE),” and certain ratios derived from these measures. The Bancorp believes thesenon-GAAP measures provide useful information to investors because these are among the measures used by the Fifth Third management team to evaluate operating performance and makeday-to-day operating decisions.
The FTE basis adjusts for thetax-favored status of income from certain loans and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income and net interest margin as they provide a relevant comparison between taxable andnon-taxable amounts.
The Bancorp believes tangible net income available to common shareholders, average tangible common equity, tangible common equity (excluding AOCI), tangible common equity (including AOCI), tangible equity, tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of the business without the impacts of intangible items, whether acquired or created internally, compared to other companies in the industry who present similar measures.
The Bancorp believes noninterest income, noninterest expense, net interest income, net interest margin,pre-provision net revenue, efficiency ratio, return on average common equity, return on average tangible common equity, and return on average assets are important measures that adjust for significant, unusual, or large transactions that may occur in a reporting period which management does not consider indicative ofon-going financial performance and enhances comparability of results with prior periods.
Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding AOCI), in addition to capital ratios defined by the U.S. banking agencies. These calculations are intended to complement the capital ratios defined by the U.S. banking agencies for both absolute and comparative purposes. These ratios are not formally defined by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to beNon-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding AOCI on certain assets and liabilities enables investors and others to assess the Bancorp’s use of equity without the effects of changes in AOCI some of which are uncertain and providing the tangible common equity ratio including AOCI enables investors and others to assess the Bancorp’s use of equity if components of AOCI, such as unrealized gains or losses, were to be monetized.
Please note that althoughNon-GAAP financial measures provide useful insight, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures.
Please see Reg. G reconciliations of all historicalNon-GAAP measures used in this release to the most directly comparable GAAP measures, beginning on the following page.
19
Fifth Third Bancorp and Subsidiaries
Regulation GNon-GAAP Reconciliation
$ and shares in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
March | December | September | June | March | ||||||||||||||||
2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
Net interest income | $ | 1,229 | $ | 1,228 | $ | 1,242 | $ | 1,245 | $ | 1,082 | ||||||||||
Add: Taxable equivalent adjustment | 4 | 4 | 4 | 5 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest income (FTE) (a) | 1,233 | 1,232 | 1,246 | 1,250 | 1,086 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest income (annualized) (b) | 4,943 | 4,872 | 4,928 | 4,994 | 4,388 | |||||||||||||||
Net interest income (FTE) (annualized) (c) | 4,959 | 4,888 | 4,943 | 5,014 | 4,404 | |||||||||||||||
Net interest income (FTE) | 1,233 | 1,232 | 1,246 | 1,250 | 1,086 | |||||||||||||||
Less: Net interest income impact from purchase accounting accretion | 16 | 18 | 28 | 18 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Adjusted net interest income (FTE) (d) | 1,217 | 1,214 | 1,218 | 1,232 | 1,085 | |||||||||||||||
Adjusted net interest income (FTE) (annualized) (e) | 4,895 | 4,816 | 4,832 | 4,942 | 4,400 | |||||||||||||||
Interest income | 1,525 | 1,559 | 1,625 | 1,636 | 1,433 | |||||||||||||||
Add: Taxable equivalent adjustment | 4 | 4 | 4 | 5 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest income (FTE) | 1,529 | 1,563 | 1,629 | 1,641 | 1,437 | |||||||||||||||
Interest income (FTE) (annualized) (f) | 6,150 | 6,201 | 6,463 | 6,582 | 5,828 | |||||||||||||||
Interest expense (annualized) (g) | 1,191 | 1,313 | 1,520 | 1,568 | 1,424 | |||||||||||||||
Average interest-earning assets (h) | 151,213 | 149,312 | 148,854 | 148,790 | 134,463 | |||||||||||||||
Average interest-bearing liabilities (i) | 109,244 | 107,573 | 107,633 | 106,340 | 97,137 | |||||||||||||||
Net interest margin (b) / (h) | 3.27 | % | 3.26 | % | 3.31 | % | 3.36 | % | 3.26 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest margin (FTE) (c) / (h) | 3.28 | % | 3.27 | % | 3.32 | % | 3.37 | % | 3.28 | % | ||||||||||
Adjusted net interest margin (e) / (h) | 3.24 | % | 3.22 | % | 3.25 | % | 3.32 | % | 3.28 | % | ||||||||||
Net interest rate spread (FTE) (f) / (h) - (g) / (i) | 2.98 | % | 2.93 | % | 2.93 | % | 2.95 | % | 2.87 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income before income taxes | $ | 60 | $ | 941 | $ | 689 | $ | 577 | $ | 996 | ||||||||||
Add: Taxable equivalent adjustment | 4 | 4 | 4 | 5 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income before income taxes (FTE) | $ | 64 | $ | 945 | $ | 693 | $ | 582 | $ | 1,000 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income available to common shareholders | $ | 29 | $ | 701 | $ | 530 | $ | 427 | $ | 760 | ||||||||||
Add: Intangible amortization, net of tax | 10 | 11 | 11 | 11 | 2 | |||||||||||||||
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Tangible net income available to common shareholders (j) | 39 | 712 | 541 | 438 | 762 | |||||||||||||||
Tangible net income available to common shareholders (annualized) (k) | 157 | 2,825 | 2,146 | 1,757 | 3,090 | |||||||||||||||
Average Bancorp shareholders’ equity | 21,713 | 21,304 | 21,087 | 20,135 | 17,025 | |||||||||||||||
Less: Average preferred stock | (1,770 | ) | (1,770 | ) | (1,445 | ) | (1,331 | ) | (1,331 | ) | ||||||||||
Average goodwill | (4,251 | ) | (4,260 | ) | (4,286 | ) | (4,301 | ) | (2,682 | ) | ||||||||||
Average intangible assets | (193 | ) | (194 | ) | (208 | ) | (215 | ) | (58 | ) | ||||||||||
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Average tangible common equity, including accumulated other comprehensive income (“AOCI”) (l) | 15,499 | 15,080 | 15,148 | 14,288 | 12,954 | |||||||||||||||
Less: Average AOCI | (1,825 | ) | (1,416 | ) | (1,444 | ) | (619 | ) | — | |||||||||||
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Average tangible common equity, excluding AOCI (m) | 13,674 | 13,664 | 13,704 | 13,669 | 12,954 | |||||||||||||||
Total Bancorp shareholders’ equity | 21,873 | 21,203 | 21,404 | 20,474 | 19,647 | |||||||||||||||
Less: Preferred stock | (1,770 | ) | (1,770 | ) | (1,770 | ) | (1,331 | ) | (1,331 | ) | ||||||||||
Goodwill | (4,261 | ) | (4,252 | ) | (4,290 | ) | (4,284 | ) | (4,321 | ) | ||||||||||
Intangible assets | (184 | ) | (201 | ) | (201 | ) | (215 | ) | (218 | ) | ||||||||||
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Tangible common equity, including AOCI (n) | 15,658 | 14,980 | 15,143 | 14,644 | 13,777 | |||||||||||||||
Less: AOCI | (2,477 | ) | (1,192 | ) | (1,635 | ) | (1,178 | ) | (409 | ) | ||||||||||
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Tangible common equity, excluding AOCI (o) | 13,181 | 13,788 | 13,508 | 13,466 | 13,368 | |||||||||||||||
Add: Preferred stock | 1,770 | 1,770 | 1,770 | 1,331 | 1,331 | |||||||||||||||
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Tangible equity (p) | 14,951 | 15,558 | 15,278 | 14,797 | 14,699 | |||||||||||||||
Total assets | 185,391 | 169,369 | 171,079 | 168,802 | 167,853 | |||||||||||||||
Less: Goodwill | (4,261 | ) | (4,252 | ) | (4,290 | ) | (4,284 | ) | (4,321 | ) | ||||||||||
Intangible assets | (184 | ) | (201 | ) | (201 | ) | (215 | ) | (218 | ) | ||||||||||
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Tangible assets, including AOCI (q) | 180,946 | 164,916 | 166,588 | 164,303 | 163,314 | |||||||||||||||
Less: AOCI, before tax | (3,135 | ) | (1,509 | ) | (2,070 | ) | (1,491 | ) | (518 | ) | ||||||||||
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Tangible assets, excluding AOCI (r) | $ | 177,811 | $ | 163,407 | $ | 164,518 | $ | 162,812 | $ | 162,796 | ||||||||||
Common shares outstanding (s) | 711 | 709 | 719 | 731 | 739 | |||||||||||||||
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Tangible equity (p) / (r) | 8.41 | % | 9.52 | % | 9.29 | % | 9.09 | % | 9.03 | % | ||||||||||
Tangible common equity (excluding AOCI) (o) / (r) | 7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | 8.21 | % | ||||||||||
Tangible common equity (including AOCI) (n) / (q) | 8.65 | % | 9.08 | % | 9.09 | % | 8.91 | % | 8.44 | % | ||||||||||
Tangible book value per share (n) / (s) | $ | 22.02 | $ | 21.13 | $ | 21.06 | $ | 20.03 | $ | 18.64 | ||||||||||
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20
Fifth Third Bancorp and Subsidiaries
Regulation GNon-GAAP Reconciliation
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||
March | December | March | ||||||||||
2020 | 2019 | 2019 | ||||||||||
Net income (t) | $ | 46 | $ | 734 | $ | 775 | ||||||
Net income (annualized) (u) | 185 | 2,912 | 3,143 | |||||||||
Adjustments(pre-tax items) | ||||||||||||
Provision in excess of credit losses | 518 | — | — | |||||||||
Unfavorable credit valuation adjustment (CVA) | 36 | — | — | |||||||||
Valuation of Visa total return swap | 22 | 44 | 31 | |||||||||
Net impairment of private equity investments | 15 | — | — | |||||||||
Merger-related expense | 7 | 9 | 76 | |||||||||
Fifth Third Foundation contribution | — | 20 | — | |||||||||
Provision impact from conversion to a national charter | — | 9 | — | |||||||||
Gain recognized from Worldpay TRA transaction | — | (345 | ) | — | ||||||||
Merger-related branch network impairment charge | — | — | 13 | |||||||||
GreenSky securities losses (gains) | — | — | (9 | ) | ||||||||
Gain on sale of Worldpay Shares | — | — | (562 | ) | ||||||||
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Adjustments,after-tax (v)(a) | 461 | (202 | ) | (341 | ) | |||||||
Adjustments (tax related items) | ||||||||||||
Acquisition impact on state deferred taxes | — | — | 9 | |||||||||
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Adjustments, tax related (w) | — | — | 9 | |||||||||
Noninterest income (x) | 671 | 1,035 | 1,101 | |||||||||
Valuation of Visa total return swap | 22 | 44 | 31 | |||||||||
Net impairment of private equity investments | 15 | — | — | |||||||||
Gain recognized from Worldpay TRA transaction | — | (345 | ) | — | ||||||||
Merger-related branch network impairment charge | — | — | 13 | |||||||||
GreenSky securities losses (gains) | — | — | (9 | ) | ||||||||
Gain on sale of Worldpay Shares | — | — | (562 | ) | ||||||||
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Adjusted noninterest income (y) | 708 | 734 | 574 | |||||||||
Noninterest expense (z) | 1,200 | 1,160 | 1,097 | |||||||||
Merger-related expense | (7 | ) | (9 | ) | (76 | ) | ||||||
Unfavorable credit valuation adjustment (CVA) | (36 | ) | — | — | ||||||||
Fifth Third Foundation contribution | — | (20 | ) | — | ||||||||
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Adjusted noninterest expense (aa) | 1,157 | 1,131 | 1,021 | |||||||||
Intangible amortization expense | 13 | 14 | 3 | |||||||||
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Adjusted noninterest expense excluding intangible amortization expense (ab) | 1,144 | 1,117 | 1,018 | |||||||||
Adjusted net income (t) + (v) + (w) | 507 | 532 | 443 | |||||||||
Adjusted net income (annualized) (ac) | 2,039 | 2,111 | 1,797 | |||||||||
Adjusted tangible net income available to common shareholders (j) + (v) + (w) | 500 | 510 | 430 | |||||||||
Adjusted tangible net income available to common shareholders (annualized) (ad) | 2,011 | 2,023 | 1,744 | |||||||||
Average assets (ae) | $ | 171,871 | $ | 169,327 | $ | 148,968 | ||||||
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Return on average tangible common equity (k) / (l) | 1.0 | % | 18.7 | % | 23.9 | % | ||||||
Adjusted return on average tangible common equity, including AOCI (ad) / (l) | 13.0 | % | 13.4 | % | 13.5 | % | ||||||
Adjusted return on average tangible common equity, excluding AOCI (ad) / (m) | 14.7 | % | 14.8 | % | 13.5 | % | ||||||
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Return on average assets (u) / (ae) | 0.11 | % | 1.72 | % | 2.11 | % | ||||||
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Adjusted return on average assets (ac) / (ae) | 1.19 | % | 1.25 | % | 1.21 | % | ||||||
Efficiency ratio (z) / [(a) + (x)] | 63.0 | % | 51.2 | % | 50.2 | % | ||||||
Adjusted efficiency ratio (ab) / [(d) + (y)] | 59.4 | % | 57.3 | % | 61.4 | % | ||||||
Total revenue (FTE) (a) + (x) | $ | 1,904 | $ | 2,267 | $ | 2,187 | ||||||
Pre-provision net revenue (PPNR) (a) + (x) - (z) | $ | 704 | $ | 1,107 | $ | 1,090 | ||||||
Adjustedpre-provision net revenue (PPNR) (d) + (y) - (ab) | $ | 781 | $ | 831 | $ | 641 | ||||||
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(a) | Assumes a 23% tax rate, except for merger-related expenses impacted by certainnon-deductible items. |
21