UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 19, 2018
(Exact Name of Registrant as Specified in Its Charter)
Ohio
(State or other jurisdiction of incorporation)
001-33653 | 31-0854434 | |
(Commission File Number) | (IRS Employer Identification No.) | |
Fifth Third Center 38 Fountain Square Plaza, Cincinnati, Ohio |
45263 | |
(Address of principal executive offices) | (Zip Code) |
(800) 972-3030
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 | Results of Operations and Financial Condition. |
On July 19, 2018, Fifth Third Bancorp issued a press release announcing its earnings release for the second quarter of 2018. A copy of this press release is attached as Exhibit 99.1. This information is furnished under both Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure.
The information in this Form 8-K and Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference.
Item 7.01 | Regulation FD Disclosure. |
On July 19, 2018, Fifth Third Bancorp issued a press release announcing its earnings release for the second quarter of 2018. A copy of this press release is attached as Exhibit 99.1. This information is furnished under both Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure.
For the benefit of its investors, Fifth Third Bancorp is also furnishing information regarding its earnings conference call. A copy of this item is attached as Exhibit 99.2.
The information in this Form 8-K and Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference.
Item 9.01 | Financial Statements and Exhibits. |
Exhibit 99.1 Press release dated July 19, 2018 |
Exhibit 99.2 Second Quarter Earnings Conference Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FIFTH THIRD BANCORP | ||||
(Registrant) | ||||
Date: July 19, 2018 | /s/ TAYFUN TUZUN | |||
Tayfun Tuzun | ||||
Executive Vice President and Chief Financial Officer |
Exhibit 99.1
CONTACTS: | Sameer Gokhale (Investors) | News Release | ||
(513) 534-2219 | ||||
Larry Magnesen (Media) | FOR IMMEDIATE RELEASE | |||
(513) 534-8055 | July 19, 2018 |
FIFTH THIRD ANNOUNCES SECOND QUARTER 2018 NET INCOME TO COMMON SHAREHOLDERS OF
$563 MILLION, OR $0.80 PER DILUTED SHARE
| 2Q18 net income available to common shareholders of $563 million, or $0.80 per diluted common share |
| Results included a net positive $0.17 impact on reported 2Q18 EPS: |
| $205 million pre-tax (~$162 million after-tax)(a) gain related to the sale of Worldpay, Inc. (Worldpay) shares |
| $30 million pre-tax (~$24 million after-tax)(a) charge to other noninterest income related to our branch optimization efforts, including the decision to close 29 branches and sell 21 parcels of land |
| $19 million pre-tax (~$15 million after-tax)(a) in compensation expense primarily related to the previously announced staffing review |
| $11 million pre-tax (~$9 million after-tax)(a) gain related to our ownership stake in GreenSky (including a $16 million pre-tax gain from the IPO recorded in other noninterest income, partially offset by a negative $5 million pre-tax securities mark) |
| $10 million pre-tax (~$8 million after-tax)(a) charge to other noninterest income related to the valuation of the Visa total return swap |
| $10 million pre-tax (~$8 million after-tax)(a) contribution to the Fifth Third Foundation |
| Reported net interest income (NII) of $1.020 billion; taxable equivalent NII of $1.024 billion(b), up 3% from 1Q18 and up 8% from 2Q17 |
| Taxable equivalent net interest margin (NIM) of 3.21%(b), up 3 bps from 1Q18 and up 20 bps from 2Q17 |
| Average portfolio loans and leases of $92.6 billion, flat from 1Q18 and up 1% from 2Q17 |
| Noninterest income of $743 million, compared with $909 million in 1Q18 and $564 million in 2Q17; 2Q18 performance includes the aforementioned gain from the sale of Worldpay shares; 1Q18 results included a $414 million pre-tax Worldpay step-up gain |
| Noninterest expense of $1.037 billion, down 1% from 1Q18 and up 8% from 2Q17; excluding the 2Q18 expenses noted above and an $8 million pre-tax litigation charge in 1Q18, noninterest expense was down 3% from 1Q18 |
| Net charge-offs (NCOs) of $94 million, up $13 million from 1Q18 and up $30 million from 2Q17; NCO ratio of 0.41% compared to 0.36% in 1Q18 and 0.28% in 2Q17; criticized assets as a percentage of commercial loans of 3.87% compared to 4.83% in 1Q18 and 5.50% in 2Q17 |
| Portfolio nonperforming asset (NPA) ratio of 0.52%, down 3 bps from 1Q18 and down 20 bps from 2Q17 |
| 2Q18 provision expense of $33 million compared to $23 million in 1Q18 and $52 million in 2Q17 |
| Common equity Tier 1 (CET1) ratio of 10.91%(c); tangible common equity ratio of 8.98%(b), or 9.33% excluding unrealized gains/losses(b) |
| Book value per share of $21.97, up 1% from 1Q18 and up 8% from 2Q17; tangible book value per share(b) of $18.30 up 1% from 1Q18 and up 7% from 2Q17 |
1
Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2018 net income of $586 million versus net income of $704 million in the first quarter of 2018 and $367 million in the second quarter of 2017. After preferred dividends, net income available to common shareholders was $563 million, or $0.80 per diluted share, in the second quarter of 2018, compared with $689 million, or $0.97 per diluted share, in the first quarter of 2018, and $344 million, or $0.45 per diluted share, in the second quarter of 2017.
Earnings Highlights
For the Three Months Ended | % Change | |||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Income Statement Data ($ in millions) |
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Net income attributable to Bancorp |
$ | 586 | $ | 704 | $ | 509 | $ | 1,014 | $ | 367 | (17%) | 60% | ||||||||||||||||
Net income available to common shareholders |
$ | 563 | $ | 689 | $ | 486 | $ | 999 | $ | 344 | (18%) | 64% | ||||||||||||||||
Earnings Per Share Data |
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Average common shares outstanding (in thousands): |
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Basic |
683,345 | 689,820 | 703,372 | 721,280 | 741,401 | (1%) | (8%) | |||||||||||||||||||||
Diluted |
696,210 | 704,101 | 716,908 | 733,285 | 752,328 | (1%) | (7%) | |||||||||||||||||||||
Earnings per share, basic |
$ | 0.81 | $ | 0.99 | $ | 0.68 | $ | 1.37 | $ | 0.46 | (18%) | 76% | ||||||||||||||||
Earnings per share, diluted |
0.80 | 0.97 | 0.67 | 1.35 | 0.45 | (18%) | 78% | |||||||||||||||||||||
Common Share Data |
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Cash dividends per common share |
$ | 0.18 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.14 | 13% | 29% | ||||||||||||||||
Book value per share |
21.97 | 21.68 | 21.67 | 21.30 | 20.42 | 1% | 8% | |||||||||||||||||||||
Tangible book value per share(b) |
18.30 | 18.05 | 18.10 | 17.86 | 17.11 | 1% | 7% | |||||||||||||||||||||
Common shares outstanding (in thousands) |
678,162 | 684,942 | 693,805 | 705,474 | 738,873 | (1%) | (8%) | |||||||||||||||||||||
Financial Ratios |
bps Change | |||||||||||||||||||||||||||
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Return on average assets |
1.66% | 2.02% | 1.43% | 2.85% | 1.05% | (36) | 61 | |||||||||||||||||||||
Return on average common equity |
15.3 | 18.6 | 12.7 | 25.6 | 9.0 | (330) | 630 | |||||||||||||||||||||
Return on average tangible common equity(b) |
18.4 | 22.4 | 15.2 | 30.4 | 10.7 | (400) | 770 | |||||||||||||||||||||
CET1 capital(c) |
10.91 | 10.82 | 10.61 | 10.59 | 10.63 | 9 | 28 | |||||||||||||||||||||
Tier I risk-based capital(c) |
12.02 | 11.95 | 11.74 | 11.72 | 11.76 | 7 | 26 | |||||||||||||||||||||
Taxable equivalent net interest margin(b) |
3.21 | 3.18 | 3.02 | 3.07 | 3.01 | 3 | 20 | |||||||||||||||||||||
Taxable equivalent efficiency(b) |
58.7 | 54.8 | 69.7 | 38.4 | 63.4 | 390 | (470) |
We had a very productive second quarter and remained focused on achieving our long-term objectives. Our quarterly results were very strong, as evidenced by the continued expansion in our net interest margin, lower operating expenses, record capital markets revenue and another very significant decline in the level of criticized assets. Our commercial middle market loan originations were also very strong and we expect this trend to continue over the remainder of the year, said Greg D. Carmichael, Chairman, President and CEO of Fifth Third Bancorp.
During the quarter, we continued to execute on expense initiatives and also took further actions to optimize our branch network. We are very excited about reallocating our resources to grow branches in high-growth markets which should significantly boost household growth. I am confident that these decisions are in the best long-term interests of our shareholders. We remain focused on achieving our enhanced profitability targets.
2
Also during the second quarter we announced the acquisition of MB Financial, which will create a leading retail and commercial franchise in the attractive Chicago market. We are purchasing a well-respected and successful bank, and combining forces will allow us to build scale in the strategically important Chicago market. Since the announcement in May, we have made significant progress in finalizing the composition of the management team in Chicago. We are very confident that the talent we have in place will help us achieve the financial outcomes that we discussed during the announcement. We are looking forward to completing the merger as soon as possible so that we can begin realizing the substantial cost and revenue synergies we have identified.
Lastly, the recently announced CCAR results provide further proof of our commitment to our shareholders. Over the next four quarters, we expect to return a significant amount of capital through a 33% increase in our quarterly common dividend and a 42% increase in share repurchases compared to last years capital plan. We are also pleased that a resubmission of our capital plan, given the pending acquisition of MB Financial, will not delay our capital distribution plans.
Income Statement Highlights
($ in millions, except per-share data) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Condensed Statements of Income |
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Taxable equivalent net interest income(b) |
$ | 1,024 | $ | 999 | $ | 963 | $ | 977 | $ | 945 | 3% | 8% | ||||||||||||||||
Provision for loan and lease losses |
33 | 23 | 67 | 67 | 52 | 43% | (37%) | |||||||||||||||||||||
Total noninterest income |
743 | 909 | 577 | 1,561 | 564 | (18%) | 32% | |||||||||||||||||||||
Total noninterest expense |
1,037 | 1,046 | 1,073 | 975 | 957 | (1%) | 8% | |||||||||||||||||||||
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Taxable equivalent income before income taxes (b) |
$ | 697 | $ | 839 | $ | 400 | $ | 1,496 | $ | 500 | (17%) | 39% | ||||||||||||||||
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Taxable equivalent adjustment |
4 | 3 | 7 | 7 | 6 | 33% | (33%) | |||||||||||||||||||||
Applicable income tax expense (benefit) |
107 | 132 | (116) | 475 | 127 | (19%) | (16%) | |||||||||||||||||||||
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Net income |
$ | 586 | $ | 704 | $ | 509 | $ | 1,014 | $ | 367 | (17%) | 60% | ||||||||||||||||
Less: Net income attributable to noncontrolling interests |
| | | | | NM | NM | |||||||||||||||||||||
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Net income attributable to Bancorp |
$ | 586 | $ | 704 | $ | 509 | $ | 1,014 | $ | 367 | (17%) | 60% | ||||||||||||||||
Dividends on preferred stock |
23 | 15 | 23 | 15 | 23 | 53% | | |||||||||||||||||||||
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Net income available to common shareholders |
$ | 563 | $ | 689 | $ | 486 | $ | 999 | $ | 344 | (18%) | 64% | ||||||||||||||||
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Earnings per share, diluted |
$ | 0.80 | $ | 0.97 | $ | 0.67 | $ | 1.35 | $ | 0.45 | (18%) | 78% | ||||||||||||||||
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3
Net Interest Income
(Taxable equivalent basis; $ in millions)(b) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Interest Income |
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Total interest income |
$ | 1,273 | $ | 1,209 | $ | 1,151 | $ | 1,159 | $ | 1,112 | 5% | 14% | ||||||||||||||||
Total interest expense |
249 | 210 | 188 | 182 | 167 | 19% | 49% | |||||||||||||||||||||
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Taxable equivalent net interest income (NII) |
$ | 1,024 | $ | 999 | $ | 963 | $ | 977 | $ | 945 | 3% | 8% | ||||||||||||||||
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Average Yield | bps Change | |||||||||||||||||||||||||||
Yield on interest-earning assets |
3.98% | 3.85% | 3.61% | 3.64% | 3.54% | 13 | 44 | |||||||||||||||||||||
Adjusted yield on interest-earning assets |
3.98% | 3.85% | 3.69% | 3.64% | 3.54% | 13 | 44 | |||||||||||||||||||||
Rate paid on interest-bearing liabilities |
1.12% | 0.97% | 0.88% | 0.85% | 0.79% | 15 | 33 | |||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||
Taxable equivalent net interest rate spread |
2.86% | 2.88% | 2.73% | 2.79% | 2.75% | (2) | 11 | |||||||||||||||||||||
Taxable equivalent net interest margin (NIM) |
3.21% | 3.18% | 3.02% | 3.07% | 3.01% | 3 | 20 | |||||||||||||||||||||
Adjusted taxable equivalent NIM |
3.21% | 3.18% | 3.10% | 3.07% | 3.01% | 3 | 20 | |||||||||||||||||||||
Average Balances | % Change | |||||||||||||||||||||||||||
Loans and leases, including held for sale |
$ | 93,232 | $ | 92,869 | $ | 92,865 | $ | 92,617 | $ | 92,653 | | 1% | ||||||||||||||||
Total securities and other short-term investments |
34,935 | 34,677 | 33,756 | 33,826 | 33,481 | 1% | 4% | |||||||||||||||||||||
Total interest-earning assets |
128,167 | 127,546 | 126,621 | 126,443 | 126,134 | | 2% | |||||||||||||||||||||
Total interest-bearing liabilities |
89,222 | 87,607 | 84,820 | 85,328 | 85,320 | 2% | 5% | |||||||||||||||||||||
Bancorp shareholders equity |
16,108 | 16,313 | 16,493 | 16,820 | 16,615 | (1%) | (3%) |
Taxable equivalent NII of $1.024 billion in the second quarter of 2018 increased $25 million, or 3 percent, from the prior quarter. Performance reflected higher short-term market rates, a higher day count and growth in middle market commercial and industrial (C&I) loans. Taxable equivalent NIM of 3.21 percent in the second quarter of 2018 increased 3 bps from the prior quarter, primarily driven by higher short-term market rates, partially offset by a higher day count.
Compared to the second quarter of 2017, taxable equivalent NII increased $79 million, or 8 percent. Performance reflected higher short-term rates and an increase in investment portfolio balances. Taxable equivalent NIM increased 20 bps from the second quarter of 2017, primarily driven by higher short-term market rates.
Securities
Average securities and other short-term investments were $34.9 billion in the second quarter of 2018 compared to $34.7 billion in the previous quarter and $33.5 billion in the second quarter of 2017. Average available-for-sale debt and other securities of $32.6 billion in the second quarter of 2018 were up $395 million, or 1 percent, sequentially and up $1.3 billion, or 4 percent, from the second quarter of 2017.
4
Loans
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Average Portfolio Loans and Leases |
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Commercial loans and leases: |
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Commercial and industrial loans |
$ | 42,292 | $ | 41,782 | $ | 41,438 | $ | 41,302 | $ | 41,601 | 1% | 2% | ||||||||||||||||
Commercial mortgage loans |
6,514 | 6,582 | 6,751 | 6,807 | 6,845 | (1%) | (5%) | |||||||||||||||||||||
Commercial construction loans |
4,743 | 4,671 | 4,660 | 4,533 | 4,306 | 2% | 10% | |||||||||||||||||||||
Commercial leases |
3,847 | 3,960 | 4,016 | 4,072 | 4,036 | (3%) | (5%) | |||||||||||||||||||||
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Total commercial loans and leases |
$ | 57,396 | $ | 56,995 | $ | 56,865 | $ | 56,714 | $ | 56,788 | 1% | 1% | ||||||||||||||||
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Consumer loans: |
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Residential mortgage loans |
$ | 15,581 | $ | 15,575 | $ | 15,590 | $ | 15,523 | $ | 15,417 | | 1% | ||||||||||||||||
Home equity |
6,672 | 6,889 | 7,066 | 7,207 | 7,385 | (3%) | (10%) | |||||||||||||||||||||
Automobile loans |
8,968 | 9,064 | 9,175 | 9,267 | 9,410 | (1%) | (5%) | |||||||||||||||||||||
Credit card |
2,221 | 2,224 | 2,202 | 2,140 | 2,080 | | 7% | |||||||||||||||||||||
Other consumer loans |
1,719 | 1,587 | 1,352 | 1,055 | 892 | 8% | 93% | |||||||||||||||||||||
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Total consumer loans |
$ | 35,161 | $ | 35,339 | $ | 35,385 | $ | 35,192 | $ | 35,184 | (1%) | | ||||||||||||||||
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Total average portfolio loans and leases |
$ | 92,557 | $ | 92,334 | $ | 92,250 | $ | 91,906 | $ | 91,972 | | 1% | ||||||||||||||||
Average loans held for sale |
$ | 675 | $ | 535 | $ | 615 | $ | 711 | $ | 681 | 26% | (1%) |
Average portfolio loan and lease balances were flat sequentially and up 1 percent year-over-year. Sequential performance was primarily driven by increases in C&I and other consumer loans, offset by decreases in home equity loans and commercial leases. Year-over-year performance was primarily driven by increases in other consumer and C&I loans, partially offset by decreases in home equity and automobile loans. Period end portfolio loans and leases of $92.0 billion were flat sequentially and up 1 percent year-over-year.
Average commercial portfolio loan and lease balances were up 1 percent both sequentially and from the second quarter of 2017. Sequential performance was primarily driven by an increase in C&I loans reflecting solid growth in middle market lending, partially offset by a decrease in commercial leases consistent with the planned reduction in indirect non-relationship based lease originations. Within commercial real estate, commercial mortgage balances decreased 1 percent and commercial construction balances were up 2 percent sequentially. Year-over-year overall commercial performance was primarily driven by an increase in C&I and commercial construction loans, partially offset by a decrease in commercial mortgage. Period end commercial line utilization was 35 percent in both the first and second quarter of 2018, compared to 34 percent in the second quarter of 2017.
Average consumer portfolio loan and lease balances were down 1 percent sequentially and were flat year-over-year. Sequential performance was primarily driven by a decline in home equity and automobile loan balances, partially offset by an increase in other consumer loans. Year-over-year performance was primarily driven by an increase in other consumer and residential mortgage loans, offset by lower home equity and automobile loan balances.
5
Deposits
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Average Deposits |
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Demand |
$ | 32,834 | $ | 33,825 | $ | 35,519 | $ | 34,850 | $ | 34,915 | (3%) | (6%) | ||||||||||||||||
Interest checking |
28,715 | 28,403 | 26,992 | 25,765 | 26,014 | 1% | 10% | |||||||||||||||||||||
Savings |
13,618 | 13,546 | 13,593 | 13,889 | 14,238 | 1% | (4%) | |||||||||||||||||||||
Money market |
22,036 | 20,750 | 20,023 | 20,028 | 20,278 | 6% | 9% | |||||||||||||||||||||
Foreign office(d) |
371 | 494 | 323 | 395 | 380 | (25%) | (2%) | |||||||||||||||||||||
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Total transaction deposits |
$ | 97,574 | $ | 97,018 | $ | 96,450 | $ | 94,927 | $ | 95,825 | 1% | 2% | ||||||||||||||||
Other time |
4,018 | 3,856 | 3,792 | 3,722 | 3,745 | 4% | 7% | |||||||||||||||||||||
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Total core deposits |
$ | 101,592 | $ | 100,874 | $ | 100,242 | $ | 98,649 | $ | 99,570 | 1% | 2% | ||||||||||||||||
Certificates - $100,000 and over |
2,155 | 2,284 | 2,429 | 2,625 | 2,623 | (6%) | (18%) | |||||||||||||||||||||
Other |
198 | 379 | 119 | 560 | 264 | (48%) | (25%) | |||||||||||||||||||||
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Total average deposits |
$ | 103,945 | $ | 103,537 | $ | 102,790 | $ | 101,834 | $ | 102,457 | | 1% | ||||||||||||||||
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Average core deposits increased 1 percent sequentially and were up 2 percent year-over-year. Average transaction deposits increased 1 percent sequentially and were up 2 percent compared with the second quarter of 2017. The sequential performance continued to reflect deposit migration from demand deposits to interest-bearing accounts. Sequential and year-over-year growth was primarily driven by increases in consumer money market account balances and commercial interest checking deposits, partially offset by lower commercial demand deposit account balances. Other time deposits increased by 4 percent sequentially and 7 percent year-over-year.
Average total commercial transaction deposits of $42 billion decreased 1 percent sequentially and were flat from the second quarter of 2017. Average total consumer transaction deposits of $55 billion increased 2 percent sequentially and increased 3 percent from the second quarter of 2017.
6
Wholesale Funding
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Average Wholesale Funding |
||||||||||||||||||||||||||||
Certificates - $100,000 and over |
$ | 2,155 | $ | 2,284 | $ | 2,429 | $ | 2,625 | $ | 2,623 | (6%) | (18%) | ||||||||||||||||
Other deposits |
198 | 379 | 119 | 560 | 264 | (48%) | (25%) | |||||||||||||||||||||
Federal funds purchased |
1,080 | 692 | 602 | 675 | 311 | 56% | 247% | |||||||||||||||||||||
Other short-term borrowings |
2,452 | 2,423 | 2,316 | 4,212 | 4,194 | 1% | (42%) | |||||||||||||||||||||
Long-term debt |
14,579 | 14,780 | 14,631 | 13,457 | 13,273 | (1%) | 10% | |||||||||||||||||||||
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Total average wholesale funding |
$ | 20,464 | $ | 20,558 | $ | 20,097 | $ | 21,529 | $ | 20,665 | | (1%) | ||||||||||||||||
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Average wholesale funding of $20.5 billion decreased $94 million sequentially and decreased $201 million, or 1 percent, from the second quarter of 2017. The sequential decrease in average wholesale funding reflected lower long-term debt balances resulting from maturities in the first and second quarter of 2018 exceeding a debt issuance in the second quarter of 2018 as well as lower other deposits and jumbo CD balances, partially offset by an increase in Federal funds borrowings. The year-over-year decrease primarily resulted from the ability to fund interest-earning asset growth with core deposits.
Noninterest Income
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Noninterest Income |
||||||||||||||||||||||||||||
Service charges on deposits |
$ | 137 | $ | 137 | $ | 138 | $ | 138 | $ | 139 | | (1%) | ||||||||||||||||
Corporate banking revenue |
120 | 88 | 77 | 101 | 101 | 36% | 19% | |||||||||||||||||||||
Mortgage banking net revenue |
53 | 56 | 54 | 63 | 55 | (5%) | (4%) | |||||||||||||||||||||
Wealth and asset management revenue |
108 | 113 | 106 | 102 | 103 | (4%) | 5% | |||||||||||||||||||||
Card and processing revenue |
84 | 79 | 80 | 79 | 79 | 6% | 6% | |||||||||||||||||||||
Other noninterest income |
250 | 460 | 123 | 1,076 | 85 | (46%) | 194% | |||||||||||||||||||||
Securities gains (losses), net |
(5) | (11) | 1 | | | 55% | NM | |||||||||||||||||||||
Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights |
(4) | (13) | (2) | 2 | 2 | 69% | NM | |||||||||||||||||||||
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Total noninterest income |
$ | 743 | $ | 909 | $ | 577 | $ | 1,561 | $ | 564 | (18%) | 32% | ||||||||||||||||
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7
Noninterest income of $743 million decreased $166 million sequentially and increased $179 million year-over-year. The sequential and year-over-year comparisons reflect the impact of the following items:
Noninterest Income excluding certain items
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June | March | June | ||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | ||||||||||||||||
Noninterest Income excluding certain items |
||||||||||||||||||||
Noninterest income (U.S. GAAP) |
$ | 743 | $ | 909 | $ | 564 | ||||||||||||||
Worldpay step-up gain |
| (414) | | |||||||||||||||||
Gain on sale of Worldpay shares |
(205) | | | |||||||||||||||||
Gain from GreenSky IPO |
(16) | | | |||||||||||||||||
Branch and land network impairment charge |
30 | 8 | | |||||||||||||||||
Valuation of Visa total return swap |
10 | 39 | 9 | |||||||||||||||||
Securities losses / (gains), net |
5 | 11 | | |||||||||||||||||
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|||||||||||
Noninterest income excluding certain items(b) |
$ | 567 | $ | 553 | $ | 573 | 3% | (1%) | ||||||||||||
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Excluding the items in the table above, noninterest income of $567 million increased $14 million, or 3 percent, from the previous quarter and decreased 1 percent from the second quarter of 2017. The sequential performance was primarily driven by increases in corporate banking revenue and card and processing revenue, partially offset by a decrease in wealth and asset management revenue compared to the seasonally strong performance in the first quarter of 2018.
Corporate banking revenue of $120 million was up 36 percent sequentially and up 19 percent year-over-year. The sequential and year-over-year increase was primarily driven by strong, broad-based capital markets revenue growth, led by corporate bond fees and loan syndication revenue.
Mortgage Banking Net Revenue
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Mortgage Banking Net Revenue |
||||||||||||||||||||||||||||
Origination fees and gains on loan sales |
$ | 28 | $ | 24 | $ | 32 | $ | 40 | $ | 37 | 17% | (24%) | ||||||||||||||||
Net mortgage servicing revenue: |
||||||||||||||||||||||||||||
Gross mortgage servicing fees |
54 | 53 | 54 | 56 | 49 | 2% | 10% | |||||||||||||||||||||
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs |
(29) | (21) | (32) | (33) | (31) | 38% | (6%) | |||||||||||||||||||||
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Net mortgage servicing revenue |
25 | 32 | 22 | 23 | 18 | (22%) | 39% | |||||||||||||||||||||
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Total mortgage banking net revenue |
$ | 53 | $ | 56 | $ | 54 | $ | 63 | $ | 55 | (5%) | (4%) | ||||||||||||||||
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Mortgage banking net revenue was $53 million in the second quarter of 2018, down 5 percent from the first quarter of 2018 and down 4 percent from the second quarter of 2017. The sequential decrease was driven by elevated negative net valuation adjustments, partially offset by higher origination fees and gains on loan sales. The year-over-year decrease was driven by lower origination fees and gains on loan sales, partially offset by higher gross mortgage servicing fees. Originations of $2.1 billion in the current quarter increased 35 percent sequentially and decreased 7 percent from the second quarter of 2017.
8
Wealth and asset management revenue of $108 million decreased 4 percent from the first quarter of 2018 and increased 5 percent from the second quarter of 2017. The sequential decrease was primarily driven by seasonally strong tax-related private client service revenue in the first quarter of 2018 and a decrease in personal asset management revenue. The year-over-year increase was primarily driven by higher personal asset management revenue.
Card and processing revenue of $84 million in the second quarter of 2018 increased 6 percent both sequentially and year-over-year. The sequential increase reflected seasonally higher credit card spend volume and higher debit transaction volume. The year-over-year increase in card and processing revenue was due to higher credit card spend volume and higher debit transaction volume.
Other noninterest income totaled $250 million in the second quarter of 2018, compared with $460 million in the previous quarter, and $85 million in the second quarter of 2017. As disclosed in the table on page 8, the reported results included the impact of Worldpay gains, a gain from the GreenSky IPO, valuation adjustments from the Visa total return swap, and branch impairment charges. For the second quarter of 2018, excluding these items, other noninterest income of $69 million decreased $24 million, or 26 percent, from the first quarter of 2018 and decreased $25 million, or 27 percent, from the second quarter of 2017. The sequential decrease was primarily due to lower private equity investment income. The year-over-year results also reflected a decline in equity method earnings from the ownership interest in Worldpay.
Net losses on investment securities were $5 million in the second quarter of 2018 (primarily due to the ownership stake in GreenSky), compared with net losses of $11 million in the first quarter of 2018 and no net gains/losses in the second quarter of 2017. Net losses on securities held as non-qualifying hedges for the MSR portfolio were $4 million in the second quarter of 2018 and $13 million in the first quarter of 2018.
Noninterest Expense
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Seq | Yr/Yr | ||||||||||||||||||||||
Noninterest Expense |
||||||||||||||||||||||||||||
Salaries, wages and incentives |
$ | 471 | $ | 447 | $ | 418 | $ | 407 | $ | 397 | 5% | 19% | ||||||||||||||||
Employee benefits |
78 | 110 | 82 | 77 | 86 | (29%) | (9%) | |||||||||||||||||||||
Net occupancy expense |
74 | 75 | 74 | 74 | 70 | (1%) | 6% | |||||||||||||||||||||
Technology and communications |
67 | 68 | 68 | 62 | 57 | (1%) | 18% | |||||||||||||||||||||
Equipment expense |
30 | 31 | 29 | 30 | 29 | (3%) | 3% | |||||||||||||||||||||
Card and processing expense |
30 | 29 | 34 | 32 | 33 | 3% | (9%) | |||||||||||||||||||||
Other noninterest expense |
287 | 286 | 368 | 293 | 285 | | 1% | |||||||||||||||||||||
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Total noninterest expense |
$ | 1,037 | $ | 1,046 | $ | 1,073 | $ | 975 | $ | 957 | (1%) | 8% | ||||||||||||||||
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Noninterest expense of $1.037 billion decreased $9 million, or 1 percent, compared with the first quarter of 2018, and increased $80 million, or 8 percent, compared with the second quarter of 2017. Excluding the $19 million compensation expense primarily related to the previously announced staffing review and the $10 million contribution to the Fifth Third Foundation in the second quarter of 2018, as well as an $8 million litigation reserve charge in the first quarter of 2018, noninterest expense of $1.008 billion decreased $30 million, or 3 percent. The sequential decrease primarily reflected seasonally lower compensation-related expenses and ongoing discipline in managing expenses throughout the company. The year-over-year increase was primarily driven by higher base compensation and technology and communications expense.
9
Summary of Credit Loss Experience
($ in millions) | For the Three Months Ended | |||||||||||||||||||
June | March | December | September | June | ||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
Net losses charged-off |
||||||||||||||||||||
Commercial and industrial loans |
($ | 47) | ($ | 28) | ($ | 32) | ($ | 27) | ($ | 18) | ||||||||||
Commercial mortgage loans |
(2) | (1) | 1 | (3) | (5) | |||||||||||||||
Commercial leases |
| | (1) | | (1) | |||||||||||||||
Residential mortgage loans |
(2) | (3) | (1) | 1 | (2) | |||||||||||||||
Home equity |
(2) | (5) | (4) | (3) | (5) | |||||||||||||||
Automobile loans |
(8) | (11) | (10) | (8) | (6) | |||||||||||||||
Credit card |
(26) | (25) | (20) | (20) | (22) | |||||||||||||||
Other consumer loans |
(7) | (8) | (9) | (8) | (5) | |||||||||||||||
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|||||||||||
Total net losses charged-off |
($ | 94) | ($ | 81) | ($ | 76) | ($ | 68) | ($ | 64) | ||||||||||
Total losses charged-off |
($ | 118) | ($ | 103) | ($ | 94) | ($ | 85) | ($ | 95) | ||||||||||
Total recoveries of losses previously charged-off |
24 | 22 | 18 | 17 | 31 | |||||||||||||||
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Total net losses charged-off |
($ | 94) | ($ | 81) | ($ | 76) | ($ | 68) | ($ | 64) | ||||||||||
Ratios (annualized) |
||||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases |
0.41% | 0.36% | 0.33% | 0.29% | 0.28% | |||||||||||||||
Commercial |
0.34% | 0.21% | 0.22% | 0.21% | 0.17% | |||||||||||||||
Consumer |
0.52% | 0.60% | 0.51% | 0.43% | 0.46% |
Net charge-offs were $94 million, or 41 bps of average portfolio loans and leases on an annualized basis, in the second quarter of 2018 compared with net charge-offs of $81 million, or 36 bps, in the first quarter of 2018 and $64 million, or 28 bps, in the second quarter of 2017.
Commercial net charge-offs of $49 million, or 34 bps, increased $20 million sequentially. This primarily reflected a $19 million increase in net charge-offs of C&I loans.
Consumer net charge-offs of $45 million, or 52 bps, decreased $7 million sequentially. This primarily reflected a $3 million decrease in net charge-offs on both home equity and automobile loans.
10
($ in millions) | For the Three Months Ended | |||||||||||||||||||
June | March | December | September | June | ||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
Allowance for Credit Losses |
||||||||||||||||||||
Allowance for loan and lease losses, beginning |
$ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | $ | 1,238 | ||||||||||
Total net losses charged-off |
(94) | (81) | (76) | (68) | (64) | |||||||||||||||
Provision for loan and lease losses |
33 | 23 | 67 | 67 | 52 | |||||||||||||||
Deconsolidation of a variable interest entity (VIE) |
| | | (20) | | |||||||||||||||
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Allowance for loan and lease losses, ending |
$ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
Reserve for unfunded commitments, beginning |
$ | 151 | $ | 161 | $ | 157 | $ | 162 | $ | 159 | ||||||||||
(Benefit from) provision for unfunded commitments |
(20) | (10) | 4 | (5) | 3 | |||||||||||||||
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Reserve for unfunded commitments, ending |
$ | 131 | $ | 151 | $ | 161 | $ | 157 | $ | 162 | ||||||||||
Components of allowance for credit losses: |
||||||||||||||||||||
Allowance for loan and lease losses |
$ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
Reserve for unfunded commitments |
131 | 151 | 161 | 157 | 162 | |||||||||||||||
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Total allowance for credit losses |
$ | 1,208 | $ | 1,289 | $ | 1,357 | $ | 1,362 | $ | 1,388 | ||||||||||
Allowance for loan and lease losses ratio |
||||||||||||||||||||
As a percent of portfolio loans and leases |
1.17% | 1.24% | 1.30% | 1.31% | 1.34% | |||||||||||||||
As a percent of nonperforming portfolio loans and leases(e) |
247% | 252% | 274% | 238% | 200% | |||||||||||||||
As a percent of nonperforming portfolio assets(e) |
224% | 226% | 245% | 217% | 185% |
The provision for loan and lease losses totaled $33 million in the second quarter of 2018, compared to $23 million in the first quarter of 2018 and $52 million in the second quarter of 2017.
As of quarter end, the allowance for loan and lease loss ratio represented 1.17 percent of total portfolio loans and leases outstanding, compared with 1.24 percent last quarter, and represented 247 percent of nonperforming loans and leases, and 224 percent of nonperforming assets. Performance reflected a significant improvement in criticized assets and non-performing loans.
11
($ in millions) | As of | |||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Nonperforming Assets and Delinquent Loans |
||||||||||||||||||||
Nonaccrual portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 99 | $ | 155 | $ | 144 | $ | 144 | $ | 225 | ||||||||||
Commercial mortgage loans |
8 | 9 | 12 | 14 | 15 | |||||||||||||||
Commercial leases |
25 | 4 | | 1 | 1 | |||||||||||||||
Residential mortgage loans |
13 | 16 | 17 | 19 | 19 | |||||||||||||||
Home equity |
54 | 55 | 56 | 56 | 52 | |||||||||||||||
Automobile loans |
3 | | | | | |||||||||||||||
Other consumer loans |
1 | 1 | | | | |||||||||||||||
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|
|
|||||||||||
Total nonaccrual portfolio loans and leases (excludes restructured loans) |
$ | 203 | $ | 240 | $ | 229 | $ | 234 | $ | 312 | ||||||||||
Nonaccrual restructured portfolio commercial loans and leases(f) |
173 | 154 | 150 | 214 | 244 | |||||||||||||||
Nonaccrual restructured portfolio consumer loans and leases |
61 | 58 | 58 | 58 | 58 | |||||||||||||||
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|
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|
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|
|
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|
|||||||||||
Total nonaccrual portfolio loans and leases |
$ | 437 | $ | 452 | $ | 437 | $ | 506 | $ | 614 | ||||||||||
Repossessed property |
7 | 9 | 9 | 10 | 11 | |||||||||||||||
OREO |
36 | 43 | 43 | 39 | 37 | |||||||||||||||
|
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|
|
|||||||||||
Total nonperforming portfolio assets(e) |
$ | 480 | $ | 504 | $ | 489 | $ | 555 | $ | 662 | ||||||||||
Nonaccrual loans held for sale |
5 | 5 | 5 | 18 | 7 | |||||||||||||||
Nonaccrual restructured loans held for sale |
18 | 19 | 1 | 2 | 1 | |||||||||||||||
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|
|||||||||||
Total nonperforming assets |
$ | 503 | $ | 528 | $ | 495 | $ | 575 | $ | 670 | ||||||||||
|
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|
|||||||||||
Restructured portfolio consumer loans and leases (accrual) |
$ | 1,029 | $ | 916 | $ | 927 | $ | 929 | $ | 933 | ||||||||||
Restructured portfolio commercial loans and leases (accrual)(f) |
$ | 111 | $ | 249 | $ | 249 | $ | 232 | $ | 224 | ||||||||||
Total loans and leases 30-89 days past due (accrual) |
$ | 217 | $ | 299 | $ | 280 | $ | 252 | $ | 190 | ||||||||||
Total loans and leases 90 days past due (accrual) |
$ | 89 | $ | 107 | $ | 97 | $ | 77 | $ | 75 | ||||||||||
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(e) |
0.47% | 0.49% | 0.48% | 0.55% | 0.67% | |||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(e) |
0.52% | 0.55% | 0.53% | 0.60% | 0.72% |
Total nonperforming portfolio assets decreased $24 million, or 5 percent, from the previous quarter to $480 million. Portfolio nonperforming loans and leases (NPLs) at quarter end decreased $15 million from the previous quarter to $437 million. NPLs as a percent of total loans, leases and OREO at quarter end decreased 2 bps from the previous quarter to 0.47 percent.
Commercial portfolio NPLs decreased $17 million from last quarter to $305 million, or 0.54 percent of commercial portfolio loans, leases and OREO. Consumer portfolio NPLs increased $2 million from last quarter to $132 million, or 0.37 percent of consumer portfolio loans, leases and OREO.
OREO balances decreased $7 million from the prior quarter to $36 million, and included $14 million in commercial OREO and $22 million in consumer OREO. Repossessed personal property decreased $2 million from the prior quarter to $7 million.
Loans over 90 days past due and still accruing decreased $18 million from the first quarter of 2018 to $89 million. Loans 30-89 days past due of $217 million decreased $82 million from the previous quarter.
12
Capital and Liquidity Position
For the Three Months Ended | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Capital Position |
||||||||||||||||||||
Average total Bancorp shareholders equity as a percent of average assets |
11.38% | 11.52% | 11.69% | 11.93% | 11.84% | |||||||||||||||
Tangible equity(b) |
10.29% | 10.09% | 9.90% | 9.84% | 9.98% | |||||||||||||||
Tangible common equity (excluding unrealized gains/losses)(b) |
9.33% | 9.14% | 8.94% | 8.89% | 9.02% | |||||||||||||||
Tangible common equity (including unrealized gains/losses)(b) |
8.98% | 8.89% | 8.99% | 9.00% | 9.12% | |||||||||||||||
Regulatory Capital and Liquidity Ratios |
||||||||||||||||||||
CET1 capital(c) |
10.91% | 10.82% | 10.61% | 10.59% | 10.63% | |||||||||||||||
Tier I risk-based capital(c) |
12.02% | 11.95% | 11.74% | 11.72% | 11.76% | |||||||||||||||
Total risk-based capital(c) |
15.21% | 15.25% | 15.16% | 15.16% | 15.22% | |||||||||||||||
Tier I leverage |
10.24% | 10.11% | 10.01% | 9.97% | 10.07% | |||||||||||||||
Modified liquidity coverage ratio (LCR) |
116% | 113% | 129% | 124% | 115% |
Capital ratios remained strong and increased during the quarter. The CET1 ratio was 10.91 percent, the tangible common equity to tangible assets ratio(b) was 9.33 percent (excluding unrealized gains/losses), and 8.98 percent (including unrealized gains/losses). The Tier I risk-based capital ratio was 12.02 percent, the Total risk-based capital ratio was 15.21 percent, and the Tier I leverage ratio was 10.24 percent.
On May 25, 2018, Fifth Third initially settled a share repurchase agreement whereby Fifth Third would purchase $235 million of its outstanding stock. The initial settlement reduced second quarter common shares outstanding by 6.4 million shares. On June 15, 2018, Fifth Third settled the forward contract. An additional 1.2 million shares were repurchased in connection with the completion of this agreement.
On June 27, 2018, Fifth Third completed the sale of 5 million shares of Class A common stock of Worldpay, Inc. Fifth Third had previously received these Class A shares in exchange for Class B Units of Vantiv Holding, LLC. Fifth Third recognized a pre-tax gain of approximately $205 million (~ $162 million after tax)(a) related to the sale. The sale added approximately 16 basis points to Fifth Thirds CET1 ratio. As a result of the sale, Fifth Third beneficially owns approximately 3.3% of Worldpays equity through its ownership of approximately 10.3 million Class B Units.
On June 28, 2018, Fifth Third announced that the Board of Governors of the Federal Reserve System did not object to Fifth Thirds 2018 CCAR capital plan for the period beginning July 1, 2018 and ending June 30, 2019. Fifth Thirds capital plan included the following capital actions related to common dividends and share repurchases:
| The increase in the quarterly common stock dividend to $0.22 from $0.18 beginning 4Q 2018 and to $0.24 beginning 2Q 2019, a 33 percent increase over the current dividend rate |
| The repurchase of common shares in an amount up to $1.651 billion, or a 42 percent increase over the 2017 capital plan. Included in these repurchases are: |
| $81 million in repurchases related to share issuances under employee benefit plans |
| $53 million in repurchases related to previously-recognized Worldpay tax receivable agreement (TRA) transaction after-tax gains |
13
| The additional ability to repurchase common shares in the amount of any after-tax capital generated from the sale of Worldpay common stock (including expected share repurchases associated with the recent sale of 5 million shares of Worldpay which generated approximately $162 million in after-tax capital)(a) |
| The additional ability to repurchase common shares in the amount of any after-tax cash income generated from the termination and settlement of gross cash flows from existing TRAs with Worldpay or potential future TRAs that may be generated from additional sales of Worldpay |
Fifth Third intends to execute open market share repurchases associated with up to $500 million of its 2018 CCAR repurchase plan before the beginning of the proxy solicitation in connection with the MB Financial, Inc. shareholder vote on its merger with Fifth Third, and may repurchase additional shares after the vote. The timing and amount of this repurchase activity is subject to market conditions and applicable securities laws.
Tax Rate
The effective tax rate was 15.5 percent in the second quarter of 2018 compared with 15.8 percent in the previous quarter and 25.9 percent in the second quarter of 2017. The tax rate in the second quarter of 2018 was impacted by a $12 million tax benefit primarily associated with the exercise and vesting of employee equity awards.
Other
On May 20, 2018, Fifth Third Bancorp and MB Financial, Inc. signed a definitive agreement under which MB Financial will merge with Fifth Third in a transaction valued at approximately $4.7 billion as of May 18, 2018. The transaction is expected to reduce Fifth Thirds regulatory common CET1 ratio by approximately 45 basis points. The pro forma tangible common equity to tangible assets (TCE) ratio of the combined entity is projected to be 8.2 percent at closing. The transaction is subject to the satisfaction of all customary closing conditions, including regulatory approvals as well as the approval of MB Financial shareholders.
As of June 30, 2018, Fifth Third Bank owned approximately 10.3 million units representing a 3.3 percent interest in Vantiv Holding, LLC, convertible into shares of Worldpay, Inc., a publicly traded firm. Based upon Worldpays closing price of $81.78 on June 30, 2018, our interest in Worldpay was valued at approximately $840 million. The difference between the market value and the book value of Fifth Thirds interest in Worldpays shares is not recognized in Fifth Thirds equity or capital.
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 and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on About Us then Investor Relations).
Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available after the conference call until approximately August 2, 2018 by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 3569128#).
14
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of June 30, 2018, the Company had $141 billion in assets and operates 1,158 full-service Banking Centers, and 2,458 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 54,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of June 30, 2018, Fifth Third also had a 3.3% interest in Vantiv Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2018, had $368 billion in assets under care, of which it managed $37 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. Investor information and press releases can be viewed at www.53.com. Fifth Thirds common stock is traded on the NASDAQ® Global Select Market under the symbol FITB.
Earnings Release End Notes
(a) | Assumes a 21% tax rate. |
(b) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31. |
(c) | Under the banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting weighted values are added together resulting in the total risk-weighted assets. Current period regulatory capital ratios are estimated. |
(d) | Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts. |
(e) | Excludes nonaccrual loans held for sale. |
(f) | As of June 30, 2017 excludes $7 million of restructured accruing loans and $19 million of restructured nonaccrual loans associated with a consolidated VIE in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party. |
15
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Fifth Third Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes the Proxy Statement of MB Financial, Inc. and a Prospectus of Fifth Third Bancorp, as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Fifth Third Bancorp and MB Financial, Inc., may be obtained at the SECs Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Fifth Third Bancorp at ir.53.com or from MB Financial, Inc. by accessing MB Financial, Inc.s website at investor.mbfinancial.com.
Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Fifth Third Investor Relations at Fifth Third Investor Relations, MD 1090QC, 38 Fountain Square Plaza, Cincinnati, OH 45263, by calling (866) 670-0468, or by sending an e-mail to ir@53.com or to MB Financial, Attention: Corporate Secretary, at 6111 North River Road, Rosemont, Illinois 60018, by calling (847) 653-1992 or by sending an e-mail to dkoros@mbfinancial.com.
Fifth Third Bancorp and MB Financial, Inc. and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of MB Financial, Inc. in respect of the transaction described in the Proxy Statement/Prospectus. Information regarding Fifth Third Bancorps directors and executive officers is contained in Fifth Third Bancorps Annual Report on Form 10-K for the year ended December 31, 2017 and its Proxy Statement on Schedule 14A, dated March 6, 2018, which are filed with the SEC. Information regarding MB Financial, Inc.s directors and executive officers is contained in its Proxy Statement on Schedule 14A filed with the SEC on April 3, 2018. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger. Free copies of this document may be obtained as described in the preceding paragraph.
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third Bancorps expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as believe, expect, anticipate, intend, target, estimate, continue, positions, plan, predict, project, forecast, guidance, goal, objective, prospects, possible or potential, by future conditional verbs such as assume, will, would, should, could or may, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections.
In addition to factors previously disclosed in Fifth Third Bancorps and MB Financial, Inc.s reports filed with or furnished to the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval of the merger by MB Financial, Inc.s stockholders on the expected terms and schedule, including the risk that regulatory approvals required for the merger are not obtained or are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating the businesses of MB Financial, Inc. or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of Fifth Third Bancorps products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
# # #
16
Quarterly Financial Review for June 30, 2018
Table of Contents
Financial Highlights |
18-19 | |||
Consolidated Statements of Income |
20 | |||
Consolidated Balance Sheets |
21-22 | |||
Consolidated Statements of Changes in Equity |
23 | |||
Average Balance Sheet and Yield Analysis |
24-26 | |||
Summary of Loans and Leases |
27 | |||
Regulatory Capital |
28 | |||
Summary of Credit Loss Experience |
29 | |||
Asset Quality |
30 | |||
Regulation G Non-GAAP Reconciliation |
31-32 | |||
Segment Presentation |
33 |
17
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
% / bps | % / bps | |||||||||||||||||||||||||||||||
For the Three Months Ended | Change | Year to Date | Change | |||||||||||||||||||||||||||||
June | March | June | June | June | ||||||||||||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | 2018 | 2017 | Yr/Yr | |||||||||||||||||||||||||
Income Statement Data |
||||||||||||||||||||||||||||||||
Taxable equivalent net interest income(c) |
$ | 1,024 | $ | 999 | $ | 945 | 3% | 8% | $ | 2,023 | $ | 1,884 | 7% | |||||||||||||||||||
Noninterest income |
743 | 909 | 564 | (18%) | 32% | 1,652 | 1,087 | 52% | ||||||||||||||||||||||||
Taxable equivalent total revenue |
1,767 | 1,908 | 1,509 | (7%) | 17% | 3,675 | 2,971 | 24% | ||||||||||||||||||||||||
Provision for loan and lease losses |
33 | 23 | 52 | 43% | (37%) | 56 | 126 | (56%) | ||||||||||||||||||||||||
Noninterest expense |
1,037 | 1,046 | 957 | (1%) | 8% | 2,083 | 1,943 | 7% | ||||||||||||||||||||||||
Net income attributable to Bancorp |
586 | 704 | 367 | (17%) | 60% | 1,290 | 672 | 92% | ||||||||||||||||||||||||
Net income available to common shareholders |
563 | 689 | 344 | (18%) | 64% | 1,252 | 634 | 97% | ||||||||||||||||||||||||
Earnings Per Share Data |
||||||||||||||||||||||||||||||||
Net income allocated to common shareholders |
$ | 557 | $ | 681 | $ | 340 | (18%) | 64% | $ | 1,238 | $ | 627 | 97% | |||||||||||||||||||
Average common shares outstanding (in thousands): |
||||||||||||||||||||||||||||||||
Basic |
683,345 | 689,820 | 741,401 | (1%) | (8%) | 686,565 | 744,517 | (8%) | ||||||||||||||||||||||||
Diluted |
696,210 | 704,101 | 752,328 | (1%) | (7%) | 700,134 | 756,545 | (7%) | ||||||||||||||||||||||||
Earnings per share, basic |
$ | 0.81 | $ | 0.99 | $ | 0.46 | (18%) | 76% | $ | 1.80 | $ | 0.84 | 114% | |||||||||||||||||||
Earnings per share, diluted |
0.80 | 0.97 | 0.45 | (18%) | 78% | 1.77 | 0.83 | 113% | ||||||||||||||||||||||||
Common Share Data |
||||||||||||||||||||||||||||||||
Cash dividends per common share |
$ | 0.18 | $ | 0.16 | $ | 0.14 | 13% | 29% | $ | 0.34 | $ | 0.28 | 21% | |||||||||||||||||||
Book value per share |
21.97 | 21.68 | 20.42 | 1% | 8% | 21.97 | 20.42 | 8% | ||||||||||||||||||||||||
Market price per share |
28.70 | 31.75 | 25.96 | (10%) | 11% | 28.70 | 25.96 | 11% | ||||||||||||||||||||||||
Common shares outstanding (in thousands) |
678,162 | 684,942 | 738,873 | (1%) | (8%) | 678,162 | 738,873 | (8%) | ||||||||||||||||||||||||
Market capitalization |
$ | 19,463 | $ | 21,747 | $ | 19,181 | (11%) | 1% | $ | 19,463 | $ | 19,181 | 1% | |||||||||||||||||||
Financial Ratios |
||||||||||||||||||||||||||||||||
Return on average assets |
1.66% | 2.02% | 1.05% | (36) | 61 | 1.84% | 0.97% | 87 | ||||||||||||||||||||||||
Return on average common equity |
15.3% | 18.6% | 9.0% | (330) | 630 | 17.0% | 8.4% | 860 | ||||||||||||||||||||||||
Return on average tangible common equity(a)(c) |
18.4% | 22.4% | 10.7% | (400) | 770 | 20.4% | 10.0% | 1,040 | ||||||||||||||||||||||||
Noninterest income as a percent of total revenue |
42% | 48% | 37% | (600) | 500 | 45% | 37% | 800 | ||||||||||||||||||||||||
Dividend payout ratio |
22.2% | 16.2% | 30.4% | 600 | (820) | 18.9% | 33.3% | (1,440) | ||||||||||||||||||||||||
Average total Bancorp shareholders equity as a percent of average assets |
11.38% | 11.52% | 11.84% | (14) | (46) | 11.45% | 11.78% | (33) | ||||||||||||||||||||||||
Tangible common equity(b)(c) |
9.33% | 9.14% | 9.02% | 19 | 31 | 9.33% | 9.02% | 31 | ||||||||||||||||||||||||
Taxable equivalent net interest margin(c) |
3.21% | 3.18% | 3.01% | 3 | 20 | 3.19% | 3.01% | 18 | ||||||||||||||||||||||||
Taxable equivalent efficiency(c) |
58.7% | 54.8% | 63.4% | 390 | (470) | 56.7% | 65.4% | (870) | ||||||||||||||||||||||||
Effective tax rate |
15.5% | 15.8% | 25.9% | (30) | (1,040) | 15.7% | 24.5% | (880) | ||||||||||||||||||||||||
Credit Quality |
||||||||||||||||||||||||||||||||
Net losses charged-off |
$ | 94 | $ | 81 | $ | 64 | 16% | 47% | $ | 175 | $ | 153 | 14% | |||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases |
0.41% | 0.36% | 0.28% | 5 | 13 | 0.38% | 0.34% | 4 | ||||||||||||||||||||||||
ALLL as a percent of portfolio loans and leases |
1.17% | 1.24% | 1.34% | (7) | (17) | 1.17% | 1.34% | (17) | ||||||||||||||||||||||||
Allowance for credit losses as a percent of portfolio loans and leases(j) |
1.31% | 1.40% | 1.52% | (9) | (21) | 1.31% | 1.52% | (21) | ||||||||||||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(d) |
0.52% | 0.55% | 0.72% | (3) | (20) | 0.52% | 0.72% | (20) | ||||||||||||||||||||||||
Average Balances |
||||||||||||||||||||||||||||||||
Loans and leases, including held for sale |
$ | 93,232 | $ | 92,869 | $ | 92,653 | | 1% | $ | 93,051 | $ | 92,721 | | |||||||||||||||||||
Total securities and other short-term investments |
34,935 | 34,677 | 33,481 | 1% | 4% | 34,806 | 33,329 | 4% | ||||||||||||||||||||||||
Total assets |
141,529 | 141,565 | 140,344 | | 1% | 141,547 | 140,243 | 1% | ||||||||||||||||||||||||
Transaction deposits(e) |
97,574 | 97,018 | 95,825 | 1% | 2% | 97,298 | 96,419 | 1% | ||||||||||||||||||||||||
Core deposits(f) |
101,592 | 100,874 | 99,570 | 1% | 2% | 101,235 | 100,205 | 1% | ||||||||||||||||||||||||
Wholesale funding(g) |
20,464 | 20,558 | 20,665 | | (1%) | 20,511 | 19,900 | 3% | ||||||||||||||||||||||||
Bancorp shareholders equity |
16,108 | 16,313 | 16,615 | (1%) | (3%) | 16,209 | 16,522 | (2%) | ||||||||||||||||||||||||
Regulatory Capital and Liquidity Ratios(h) |
||||||||||||||||||||||||||||||||
CET1 capital(i) |
10.91% | 10.82% | 10.63% | 9 | 28 | 10.91% | 10.63% | 28 | ||||||||||||||||||||||||
Tier I risk-based capital(i) |
12.02% | 11.95% | 11.76% | 7 | 26 | 12.02% | 11.76% | 26 | ||||||||||||||||||||||||
Total risk-based capital(i) |
15.21% | 15.25% | 15.22% | (4) | (1) | 15.21% | 15.22% | (1) | ||||||||||||||||||||||||
Tier I leverage |
10.24% | 10.11% | 10.07% | 13 | 17 | 10.24% | 10.07% | 17 | ||||||||||||||||||||||||
Modified liquidity coverage ratio (LCR) |
116% | 113% | 115% | 3% | 1% | 116% | 115% | 1% | ||||||||||||||||||||||||
Operations |
||||||||||||||||||||||||||||||||
Banking centers |
1,158 | 1,153 | 1,157 | | | 1,158 | 1,157 | | ||||||||||||||||||||||||
ATMs |
2,458 | 2,459 | 2,461 | | | 2,458 | 2,461 | | ||||||||||||||||||||||||
Full-time equivalent employees |
18,163 | 18,344 | 17,744 | (1%) | 2% | 18,163 | 17,744 | 2% |
(a) | The return on average tangible common equity is calculated as tangible net income available to common shareholders (excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets). |
(b) | 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 (total assets less goodwill, intangible assets and AOCI)]. |
(c) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31. |
(d) | Excludes nonaccrual loans held for sale. |
(e) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers. |
(f) | Includes transaction deposits plus other time deposits. |
(g) | Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
(h) | Current period regulatory capital and liquidity ratios are estimates. |
(i) | Under the banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorps total risk-weighted assets. |
(j) | The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
18
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
Income Statement Data |
||||||||||||||||||||
Taxable equivalent net interest income(c) |
$ | 1,024 | $ | 999 | $ | 963 | $ | 977 | $ | 945 | ||||||||||
Noninterest income |
743 | 909 | 577 | 1,561 | 564 | |||||||||||||||
Taxable equivalent total revenue |
1,767 | 1,908 | 1,540 | 2,538 | 1,509 | |||||||||||||||
Provision for loan and lease losses |
33 | 23 | 67 | 67 | 52 | |||||||||||||||
Noninterest expense |
1,037 | 1,046 | 1,073 | 975 | 957 | |||||||||||||||
Net income attributable to Bancorp |
586 | 704 | 509 | 1,014 | 367 | |||||||||||||||
Net income available to common shareholders |
563 | 689 | 486 | 999 | 344 | |||||||||||||||
Earnings Per Share Data |
||||||||||||||||||||
Net income allocated to common shareholders |
$ | 557 | $ | 681 | $ | 482 | $ | 989 | $ | 340 | ||||||||||
Average common shares outstanding (in thousands): |
||||||||||||||||||||
Basic |
683,345 | 689,820 | 703,372 | 721,280 | 741,401 | |||||||||||||||
Diluted |
696,210 | 704,101 | 716,908 | 733,285 | 752,328 | |||||||||||||||
Earnings per share, basic |
$ | 0.81 | $ | 0.99 | $ | 0.68 | $ | 1.37 | 0.46 | |||||||||||
Earnings per share, diluted |
0.80 | 0.97 | 0.67 | 1.35 | 0.45 | |||||||||||||||
Common Share Data |
||||||||||||||||||||
Cash dividends per common share |
$ | 0.18 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.14 | ||||||||||
Book value per share |
21.97 | 21.68 | 21.67 | 21.30 | 20.42 | |||||||||||||||
Market value per share |
28.70 | 31.75 | 30.34 | 27.98 | 25.96 | |||||||||||||||
Common shares outstanding (in thousands) |
678,162 | 684,942 | 693,805 | 705,474 | 738,873 | |||||||||||||||
Market capitalization |
$ | 19,463 | $ | 21,747 | $ | 21,050 | $ | 19,739 | $ | 19,181 | ||||||||||
Financial Ratios |
||||||||||||||||||||
Return on average assets |
1.66% | 2.02% | 1.43% | 2.85% | 1.05% | |||||||||||||||
Return on average common equity |
15.3% | 18.6% | 12.7% | 25.6% | 9.0% | |||||||||||||||
Return on average tangible common equity(a)(c) |
18.4% | 22.4% | 15.2% | 30.4% | 10.7% | |||||||||||||||
Noninterest income as a percent of total revenue |
42% | 48% | 37% | 62% | 37% | |||||||||||||||
Dividend payout ratio |
22.2% | 16.2% | 23.5% | 11.7% | 30.4% | |||||||||||||||
Average total Bancorp shareholders equity as a percent of average assets |
11.38% | 11.52% | 11.69% | 11.93% | 11.84% | |||||||||||||||
Tangible common equity(b)(c) |
9.33% | 9.14% | 8.94% | 8.89% | 9.02% | |||||||||||||||
Taxable equivalent net interest margin(c) |
3.21% | 3.18% | 3.02% | 3.07% | 3.01% | |||||||||||||||
Taxable equivalent efficiency ratio(c) |
58.7% | 54.8% | 69.7% | 38.4% | 63.4% | |||||||||||||||
Effective tax rate |
15.5% | 15.8% | (29.8%) | 31.9% | 25.9% | |||||||||||||||
Credit Quality |
||||||||||||||||||||
Net losses charged-off |
$ | 94 | $ | 81 | $ | 76 | $ | 68 | $ | 64 | ||||||||||
Net losses charged-off as a percent of average portfolio loans and leases |
0.41% | 0.36% | 0.33% | 0.29% | 0.28% | |||||||||||||||
ALLL as a percent of portfolio loans and leases |
1.17% | 1.24% | 1.30% | 1.31% | 1.34% | |||||||||||||||
Allowance for credit losses as a percent of portfolio loans and leases(j) |
1.31% | 1.40% | 1.48% | 1.48% | 1.52% | |||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(d) |
0.52% | 0.55% | 0.53% | 0.60% | 0.72% | |||||||||||||||
Average Balances |
||||||||||||||||||||
Loans and leases, including held for sale |
$ | 93,232 | $ | 92,869 | $ | 92,865 | $ | 92,617 | $ | 92,653 | ||||||||||
Total securities and other short-term investments |
34,935 | 34,677 | 33,756 | 33,826 | 33,481 | |||||||||||||||
Total assets |
141,529 | 141,565 | 141,055 | 140,992 | 140,344 | |||||||||||||||
Transaction deposits(e) |
97,574 | 97,018 | 96,450 | 94,927 | 95,825 | |||||||||||||||
Core deposits(f) |
101,592 | 100,874 | 100,242 | 98,649 | 99,570 | |||||||||||||||
Wholesale funding(g) |
20,464 | 20,558 | 20,097 | 21,529 | 20,665 | |||||||||||||||
Bancorp shareholders equity |
16,108 | 16,313 | 16,493 | 16,820 | 16,615 | |||||||||||||||
Regulatory Capital and Liquidity Ratios(h) |
||||||||||||||||||||
CET1 capital(i) |
10.91% | 10.82% | 10.61% | 10.59% | 10.63% | |||||||||||||||
Tier I risk-based capital(i) |
12.02% | 11.95% | 11.74% | 11.72% | 11.76% | |||||||||||||||
Total risk-based capital(i) |
15.21% | 15.25% | 15.16% | 15.16% | 15.22% | |||||||||||||||
Tier I leverage |
10.24% | 10.11% | 10.01% | 9.97% | 10.07% | |||||||||||||||
Modified liquidity coverage ratio (LCR) |
116% | 113% | 129% | 124% | 115% | |||||||||||||||
Operations |
||||||||||||||||||||
Banking centers |
1,158 | 1,153 | 1,154 | 1,155 | 1,157 | |||||||||||||||
ATMs |
2,458 | 2,459 | 2,469 | 2,465 | 2,461 | |||||||||||||||
Full-time equivalent employees |
18,163 | 18,344 | 18,125 | 17,797 | 17,744 |
(a) | The return on average tangible common equity is calculated as tangible net income available to common shareholders (excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets). |
(b) | 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 (total assets less goodwill, intangible assets and AOCI)]. |
(c) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31. |
(d) | Excludes nonaccrual loans held for sale. |
(e) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers. |
(f) | Includes transaction deposits plus other time deposits. |
(g) | Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
(h) | Current period regulatory capital and liquidity ratios are estimates. |
(i) | Under the banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorps total risk-weighted assets. |
(j) | The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
19
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
For the Three Months Ended | % Change | Year to Date | % Change | |||||||||||||||||||||||||||||
June | March | June | June | June | ||||||||||||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | 2018 | 2017 | Yr/Yr | |||||||||||||||||||||||||
Interest Income |
||||||||||||||||||||||||||||||||
Interest and fees on loans and leases |
$ | 996 | $ | 938 | $ | 858 | 6% | 16% | $ | 1,933 | $ | 1,696 | 14% | |||||||||||||||||||
Interest on securities |
267 | 263 | 245 | 2% | 9% | 530 | 490 | 8% | ||||||||||||||||||||||||
Interest on other short-term investments |
6 | 5 | 3 | 20% | 100% | 11 | 6 | 83% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest income |
1,269 | 1,206 | 1,106 | 5% | 15% | 2,474 | 2,192 | 13% | ||||||||||||||||||||||||
Interest Expense |
||||||||||||||||||||||||||||||||
Interest on deposits |
119 | 95 | 65 | 25% | 83% | 215 | 124 | 73% | ||||||||||||||||||||||||
Interest on federal funds purchased |
5 | 2 | 1 | 150% | 400% | 7 | 2 | 250% | ||||||||||||||||||||||||
Interest on other short-term borrowings |
11 | 8 | 10 | 38% | 10% | 19 | 12 | 58% | ||||||||||||||||||||||||
Interest on long-term debt |
114 | 105 | 91 | 9% | 25% | 217 | 182 | 19% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest expense |
249 | 210 | 167 | 19% | 49% | 458 | 320 | 43% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Interest Income |
1,020 | 996 | 939 | 2% | 9% | 2,016 | 1,872 | 8% | ||||||||||||||||||||||||
Provision for loan and lease losses |
33 | 23 | 52 | 43% | (37%) | 56 | 126 | (56%) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Interest Income After Provision for Loan and Lease Losses |
987 | 973 | 887 | 1% | 11% | 1,960 | 1,746 | 12% | ||||||||||||||||||||||||
Noninterest Income |
||||||||||||||||||||||||||||||||
Service charges on deposits |
137 | 137 | 139 | | (1%) | 275 | 277 | (1%) | ||||||||||||||||||||||||
Corporate banking revenue |
120 | 88 | 101 | 36% | 19% | 208 | 175 | 19% | ||||||||||||||||||||||||
Mortgage banking net revenue |
53 | 56 | 55 | (5%) | (4%) | 109 | 108 | 1% | ||||||||||||||||||||||||
Wealth and asset management revenue |
108 | 113 | 103 | (4%) | 5% | 221 | 211 | 5% | ||||||||||||||||||||||||
Card and processing revenue |
84 | 79 | 79 | 6% | 6% | 163 | 153 | 7% | ||||||||||||||||||||||||
Other noninterest income |
250 | 460 | 85 | (46%) | 194% | 708 | 160 | 343% | ||||||||||||||||||||||||
Securities (losses) gains, net |
(5) | (11) | | 55% | NM | (15) | 1 | NM | ||||||||||||||||||||||||
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights |
(4) | (13) | 2 | 69% | NM | (17) | 2 | NM | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest income |
743 | 909 | 564 | (18%) | 32% | 1,652 | 1,087 | 52% | ||||||||||||||||||||||||
Noninterest Expense |
||||||||||||||||||||||||||||||||
Salaries, wages and incentives |
471 | 447 | 397 | 5% | 19% | 918 | 808 | 14% | ||||||||||||||||||||||||
Employee benefits |
78 | 110 | 86 | (29%) | (9%) | 188 | 196 | (4%) | ||||||||||||||||||||||||
Net occupancy expense |
74 | 75 | 70 | (1%) | 6% | 149 | 148 | 1% | ||||||||||||||||||||||||
Technology and communications |
67 | 68 | 57 | (1%) | 18% | 135 | 116 | 16% | ||||||||||||||||||||||||
Equipment expense |
30 | 31 | 29 | (3%) | 3% | 61 | 57 | 7% | ||||||||||||||||||||||||
Card and processing expense |
30 | 29 | 33 | 3% | (9%) | 60 | 63 | (5%) | ||||||||||||||||||||||||
Other noninterest expense |
287 | 286 | 285 | | 1% | 572 | 555 | 3% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest expense |
1,037 | 1,046 | 957 | (1%) | 8% | 2,083 | 1,943 | 7% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Income Before Income Taxes |
693 | 836 | 494 | (17%) | 40% | 1,529 | 890 | 72% | ||||||||||||||||||||||||
Applicable income tax expense |
107 | 132 | 127 | (19%) | (16%) | 239 | 218 | 10% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Income |
586 | 704 | 367 | (17%) | 60% | 1,290 | 672 | 92% | ||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests |
| | | NM | NM | | | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Income Attributable to Bancorp |
586 | 704 | 367 | (17%) | 60% | 1,290 | 672 | 92% | ||||||||||||||||||||||||
Dividends on preferred stock |
23 | 15 | 23 | 53% | | 38 | 38 | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Income Available to Common Shareholders |
$ | 563 | $ | 689 | $ | 344 | (18%) | 64% | $ | 1,252 | $ | 634 | 97% | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | % Change | |||||||||||||||||||
June 2018 |
March 2018 |
June 2017 |
Seq | Yr/Yr | ||||||||||||||||
Assets |
||||||||||||||||||||
Cash and due from banks |
$ | 2,052 | $ | 2,038 | $ | 2,203 | 1% | (7%) | ||||||||||||
Other short-term investments |
1,636 | 1,747 | 2,163 | (6%) | (24%) | |||||||||||||||
Available-for-sale debt and other securities(a) |
31,961 | 31,819 | 31,733 | | 1% | |||||||||||||||
Held-to-maturity securities(b) |
19 | 23 | 26 | (17%) | (27%) | |||||||||||||||
Trading debt securities |
280 | 571 | 490 | (51%) | (43%) | |||||||||||||||
Equity securities |
475 | 418 | 442 | 14% | 7% | |||||||||||||||
Loans and leases held for sale |
783 | 717 | 766 | 9% | 2% | |||||||||||||||
Portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
41,403 | 41,635 | 40,914 | (1%) | 1% | |||||||||||||||
Commercial mortgage loans |
6,625 | 6,509 | 6,868 | 2% | (4%) | |||||||||||||||
Commercial construction loans |
4,687 | 4,766 | 4,366 | (2%) | 7% | |||||||||||||||
Commercial leases |
3,788 | 3,919 | 4,157 | (3%) | (9%) | |||||||||||||||
Residential mortgage loans |
15,640 | 15,563 | 15,460 | | 1% | |||||||||||||||
Home equity |
6,599 | 6,757 | 7,301 | (2%) | (10%) | |||||||||||||||
Automobile loans |
8,938 | 9,018 | 9,318 | (1%) | (4%) | |||||||||||||||
Credit card |
2,270 | 2,188 | 2,117 | 4% | 7% | |||||||||||||||
Other consumer loans |
1,982 | 1,615 | 945 | 23% | 110% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases |
91,932 | 91,970 | 91,446 | | 1% | |||||||||||||||
Allowance for loan and lease losses |
(1,077) | (1,138) | (1,226) | (5%) | (12%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases, net |
90,855 | 90,832 | 90,220 | | 1% | |||||||||||||||
Bank premises and equipment |
1,915 | 1,966 | 2,041 | (3%) | (6%) | |||||||||||||||
Operating lease equipment |
606 | 625 | 719 | (3%) | (16%) | |||||||||||||||
Goodwill |
2,462 | 2,462 | 2,423 | | 2% | |||||||||||||||
Intangible assets |
30 | 30 | 18 | | 67% | |||||||||||||||
Servicing rights |
959 | 926 | 849 | 4% | 13% | |||||||||||||||
Other assets |
6,662 | 7,326 | 6,974 | (9%) | (4%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 140,695 | $ | 141,500 | $ | 141,067 | (1%) | | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Demand |
$ | 32,680 | $ | 34,066 | $ | 34,965 | (4%) | (7%) | ||||||||||||
Interest checking |
29,452 | 29,627 | 25,436 | (1%) | 16% | |||||||||||||||
Savings |
13,455 | 13,751 | 14,068 | (2%) | (4%) | |||||||||||||||
Money market |
21,593 | 21,540 | 20,191 | | 7% | |||||||||||||||
Foreign office |
336 | 374 | 395 | (10%) | (15%) | |||||||||||||||
Other time |
4,058 | 3,945 | 3,692 | 3% | 10% | |||||||||||||||
Certificates $100,000 and over |
2,557 | 2,042 | 2,633 | 25% | (3%) | |||||||||||||||
Other |
| 116 | 500 | NM | NM | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
104,131 | 105,461 | 101,880 | (1%) | 2% | |||||||||||||||
Federal funds purchased |
597 | 178 | 117 | 235% | 410% | |||||||||||||||
Other short-term borrowings |
1,763 | 1,335 | 5,389 | 32% | (67%) | |||||||||||||||
Accrued taxes, interest and expenses |
1,206 | 1,104 | 1,617 | 9% | (25%) | |||||||||||||||
Other liabilities |
2,425 | 2,418 | 2,162 | | 12% | |||||||||||||||
Long-term debt |
14,321 | 14,800 | 13,456 | (3%) | 6% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
124,443 | 125,296 | 124,621 | (1%) | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity |
||||||||||||||||||||
Common stock(c) |
2,051 | 2,051 | 2,051 | | | |||||||||||||||
Preferred stock |
1,331 | 1,331 | 1,331 | | | |||||||||||||||
Capital surplus |
2,833 | 2,828 | 2,751 | | 3% | |||||||||||||||
Retained earnings |
16,143 | 15,707 | 13,862 | 3% | 16% | |||||||||||||||
Accumulated other comprehensive (loss) income |
(552) | (389) | 163 | (42%) | NM | |||||||||||||||
Treasury stock |
(5,574) | (5,344) | (3,739) | 4% | 49% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Bancorp shareholders equity |
16,232 | 16,184 | 16,419 | | (1%) | |||||||||||||||
Noncontrolling interests |
20 | 20 | 27 | | (26%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Equity |
16,252 | 16,204 | 16,446 | | (1%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Equity |
$ | 140,695 | $ | 141,500 | $ | 141,067 | (1%) | | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(a) Amortized cost |
$ | 32,589 | $ | 32,230 | $ | 31,402 | 1% | 4% | ||||||||||||
(b) Market values |
19 | 23 | 26 | (17%) | (27%) | |||||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): |
||||||||||||||||||||
Authorized |
2,000,000 | 2,000,000 | 2,000,000 | | | |||||||||||||||
Outstanding, excluding treasury |
678,162 | 684,942 | 738,873 | (1%) | (8%) | |||||||||||||||
Treasury |
245,731 | 238,951 | 185,020 | 3% | 33% |
21
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Assets |
||||||||||||||||||||
Cash and due from banks |
$ | 2,052 | $ | 2,038 | $ | 2,514 | $ | 2,205 | $ | 2,203 | ||||||||||
Other short-term investments |
1,636 | 1,747 | 2,753 | 3,298 | 2,163 | |||||||||||||||
Available-for-sale debt and other securities(a) |
31,961 | 31,819 | 31,751 | 31,391 | 31,733 | |||||||||||||||
Held-to-maturity securities(b) |
19 | 23 | 24 | 25 | 26 | |||||||||||||||
Trading debt securities |
280 | 571 | 492 | 511 | 490 | |||||||||||||||
Equity securities |
475 | 418 | 439 | 428 | 442 | |||||||||||||||
Loans and leases held for sale |
783 | 717 | 492 | 711 | 766 | |||||||||||||||
Portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
41,403 | 41,635 | 41,170 | 41,011 | 40,914 | |||||||||||||||
Commercial mortgage loans |
6,625 | 6,509 | 6,604 | 6,863 | 6,868 | |||||||||||||||
Commercial construction loans |
4,687 | 4,766 | 4,553 | 4,652 | 4,366 | |||||||||||||||
Commercial leases |
3,788 | 3,919 | 4,068 | 4,043 | 4,157 | |||||||||||||||
Residential mortgage loans |
15,640 | 15,563 | 15,591 | 15,588 | 15,460 | |||||||||||||||
Home equity |
6,599 | 6,757 | 7,014 | 7,143 | 7,301 | |||||||||||||||
Automobile loans |
8,938 | 9,018 | 9,112 | 9,236 | 9,318 | |||||||||||||||
Credit card |
2,270 | 2,188 | 2,299 | 2,168 | 2,117 | |||||||||||||||
Other consumer loans |
1,982 | 1,615 | 1,559 | 1,179 | 945 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases |
91,932 | 91,970 | 91,970 | 91,883 | 91,446 | |||||||||||||||
Allowance for loan and lease losses |
(1,077) | (1,138) | (1,196) | (1,205) | (1,226) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases, net |
90,855 | 90,832 | 90,774 | 90,678 | 90,220 | |||||||||||||||
Bank premises and equipment |
1,915 | 1,966 | 2,003 | 2,018 | 2,041 | |||||||||||||||
Operating lease equipment |
606 | 625 | 646 | 663 | 719 | |||||||||||||||
Goodwill |
2,462 | 2,462 | 2,445 | 2,423 | 2,423 | |||||||||||||||
Intangible assets |
30 | 30 | 27 | 18 | 18 | |||||||||||||||
Servicing rights |
959 | 926 | 858 | 848 | 849 | |||||||||||||||
Other assets |
6,662 | 7,326 | 6,975 | 7,047 | 6,974 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 140,695 | $ | 141,500 | $ | 142,193 | $ | 142,264 | $ | 141,067 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Demand |
$ | 32,680 | $ | 34,066 | $ | 35,276 | $ | 35,246 | $ | 34,965 | ||||||||||
Interest checking |
29,452 | 29,627 | 27,703 | 26,091 | 25,436 | |||||||||||||||
Savings |
13,455 | 13,751 | 13,425 | 13,693 | 14,068 | |||||||||||||||
Money market |
21,593 | 21,540 | 20,097 | 19,646 | 20,191 | |||||||||||||||
Foreign office |
336 | 374 | 484 | 609 | 395 | |||||||||||||||
Other time |
4,058 | 3,945 | 3,775 | 3,756 | 3,692 | |||||||||||||||
Certificates $100,000 and over |
2,557 | 2,042 | 2,402 | 2,411 | 2,633 | |||||||||||||||
Other |
| 116 | | | 500 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
104,131 | 105,461 | 103,162 | 101,452 | 101,880 | |||||||||||||||
Federal funds purchased |
597 | 178 | 174 | 118 | 117 | |||||||||||||||
Other short-term borrowings |
1,763 | 1,335 | 4,012 | 5,688 | 5,389 | |||||||||||||||
Accrued taxes, interest and expenses |
1,206 | 1,104 | 1,412 | 2,071 | 1,617 | |||||||||||||||
Other liabilities |
2,425 | 2,418 | 2,144 | 2,516 | 2,162 | |||||||||||||||
Long-term debt |
14,321 | 14,800 | 14,904 | 14,039 | 13,456 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
124,443 | 125,296 | 125,808 | 125,884 | 124,621 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity |
||||||||||||||||||||
Common stock(c) |
2,051 | 2,051 | 2,051 | 2,051 | 2,051 | |||||||||||||||
Preferred stock |
1,331 | 1,331 | 1,331 | 1,331 | 1,331 | |||||||||||||||
Capital surplus |
2,833 | 2,828 | 2,790 | 2,682 | 2,751 | |||||||||||||||
Retained earnings |
16,143 | 15,707 | 15,122 | 14,748 | 13,862 | |||||||||||||||
Accumulated other comprehensive (loss) income |
(552) | (389) | 73 | 185 | 163 | |||||||||||||||
Treasury stock |
(5,574) | (5,344) | (5,002) | (4,637) | (3,739) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Bancorp shareholders equity |
16,232 | 16,184 | 16,365 | 16,360 | 16,419 | |||||||||||||||
Noncontrolling interests |
20 | 20 | 20 | 20 | 27 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Equity |
16,252 | 16,204 | 16,385 | 16,380 | 16,446 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Equity |
$ | 140,695 | $ | 141,500 | $ | 142,193 | $ | 142,264 | $ | 141,067 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(a) Amortized cost |
$ | 32,589 | $ | 32,230 | $ | 31,577 | $ | 31,026 | $ | 31,402 | ||||||||||
(b) Market values |
19 | 23 | 24 | 25 | 26 | |||||||||||||||
(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 |
678,162 | 684,942 | 693,805 | 705,474 | 738,873 | |||||||||||||||
Treasury |
245,731 | 238,951 | 230,088 | 218,419 | 185,020 |
22
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Equity
$ in millions
(unaudited)
For the Three Months Ended | Year to Date | |||||||||||||||
June | June | June | June | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Total Equity, Beginning |
$ | 16,204 | $ | 16,457 | $ | 16,385 | $ | 16,232 | ||||||||
Net income attributable to Bancorp |
586 | 367 | 1,290 | 672 | ||||||||||||
Other comprehensive income, net of tax: |
||||||||||||||||
Change in unrealized (losses) gains: |
||||||||||||||||
Available-for-sale securities |
(167) | 93 | (620) | 109 | ||||||||||||
Qualifying cash flow hedges |
3 | 1 | (5) | (7) | ||||||||||||
Change in accumulated other comprehensive income related to employee benefit plans |
1 | 1 | 2 | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income |
423 | 462 | 667 | 776 | ||||||||||||
Cash dividends declared: |
||||||||||||||||
Common stock |
(124) | (104) | (235) | (210) | ||||||||||||
Preferred stock |
(23) | (23) | (38) | (38) | ||||||||||||
Impact of stock transactions under stock compensation plans, net |
7 | (3) | 22 | 29 | ||||||||||||
Shares acquired for treasury |
(235) | (342) | (553) | (342) | ||||||||||||
Other |
| (1) | | (1) | ||||||||||||
Impact of cumulative effect of change in account principles |
| | 4 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Equity, Ending |
$ | 16,252 | $ | 16,446 | $ | 16,252 | $ | 16,446 | ||||||||
|
|
|
|
|
|
|
|
23
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
For the Three Months Ended | % Change | |||||||||||||||||||
June | March | June | ||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | ||||||||||||||||
Assets |
||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 42,327 | $ | 41,799 | $ | 41,656 | 1% | 2% | ||||||||||||
Commercial mortgage loans |
6,521 | 6,588 | 6,861 | (1%) | (5%) | |||||||||||||||
Commercial construction loans |
4,743 | 4,671 | 4,306 | 2% | 10% | |||||||||||||||
Commercial leases |
3,847 | 3,960 | 4,039 | (3%) | (5%) | |||||||||||||||
Residential mortgage loans |
16,213 | 16,086 | 16,024 | 1% | 1% | |||||||||||||||
Home equity |
6,672 | 6,889 | 7,385 | (3%) | (10%) | |||||||||||||||
Automobile loans |
8,968 | 9,064 | 9,410 | (1%) | (5%) | |||||||||||||||
Credit card |
2,221 | 2,224 | 2,080 | | 7% | |||||||||||||||
Other consumer loans |
1,720 | 1,588 | 892 | 8% | 93% | |||||||||||||||
Taxable securities |
33,380 | 33,133 | 32,092 | 1% | 4% | |||||||||||||||
Tax exempt securities |
81 | 73 | 68 | 11% | 19% | |||||||||||||||
Other short-term investments |
1,474 | 1,471 | 1,321 | | 12% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-earning assets |
128,167 | 127,546 | 126,134 | | 2% | |||||||||||||||
Cash and due from banks |
2,179 | 2,175 | 2,175 | | | |||||||||||||||
Other assets |
12,320 | 13,039 | 13,272 | (6%) | (7%) | |||||||||||||||
Allowance for loan and lease losses |
(1,137) | (1,195) | (1,237) | (5%) | (8%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 141,529 | $ | 141,565 | $ | 140,344 | | 1% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||
Interest checking deposits |
$ | 28,715 | $ | 28,403 | $ | 26,014 | 1% | 10% | ||||||||||||
Savings deposits |
13,618 | 13,546 | 14,238 | 1% | (4%) | |||||||||||||||
Money market deposits |
22,036 | 20,750 | 20,278 | 6% | 9% | |||||||||||||||
Foreign office deposits |
371 | 494 | 380 | (25%) | (2%) | |||||||||||||||
Other time deposits |
4,018 | 3,856 | 3,745 | 4% | 7% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing core deposits |
68,758 | 67,049 | 64,655 | 3% | 6% | |||||||||||||||
Certificates $100,000 and over |
2,155 | 2,284 | 2,623 | (6%) | (18%) | |||||||||||||||
Other deposits |
198 | 379 | 264 | (48%) | (25%) | |||||||||||||||
Federal funds purchased |
1,080 | 692 | 311 | 56% | 247% | |||||||||||||||
Other short-term borrowings |
2,452 | 2,423 | 4,194 | 1% | (42%) | |||||||||||||||
Long-term debt |
14,579 | 14,780 | 13,273 | (1%) | 10% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing liabilities |
89,222 | 87,607 | 85,320 | 2% | 5% | |||||||||||||||
Demand deposits |
32,834 | 33,825 | 34,915 | (3%) | (6%) | |||||||||||||||
Other liabilities |
3,345 | 3,800 | 3,467 | (12%) | (4%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
125,401 | 125,232 | 123,702 | | 1% | |||||||||||||||
Total Equity |
16,128 | 16,333 | 16,642 | (1%) | (3%) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Equity |
$ | 141,529 | $ | 141,565 | $ | 140,344 | | 1% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
For the Three Months Ended | bps Change | |||||||||||||||||||
June | March | June | ||||||||||||||||||
2018 | 2018 | 2017 | Seq | Yr/Yr | ||||||||||||||||
Yield Analysis |
||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||
Commercial and industrial loans(a) |
4.26% | 3.96% | 3.60% | 30 | 66 | |||||||||||||||
Commercial mortgage loans(a) |
4.43% | 4.20% | 3.65% | 23 | 78 | |||||||||||||||
Commercial construction loans(a) |
4.94% | 4.59% | 4.01% | 35 | 93 | |||||||||||||||
Commercial leases(a) |
2.82% | 2.78% | 2.73% | 4 | 9 | |||||||||||||||
Residential mortgage loans |
3.56% | 3.60% | 3.54% | (4) | 2 | |||||||||||||||
Home equity |
4.85% | 4.62% | 4.20% | 23 | 65 | |||||||||||||||
Automobile loans |
3.26% | 3.12% | 2.87% | 14 | 39 | |||||||||||||||
Credit card |
11.96% | 12.36% | 10.95% | (40) | 101 | |||||||||||||||
Other consumer loans |
6.75% | 6.58% | 6.63% | 17 | 12 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans and leases |
4.30% | 4.11% | 3.74% | 19 | 56 | |||||||||||||||
Taxable securities |
3.20% | 3.21% | 3.05% | (1) | 15 | |||||||||||||||
Tax exempt securities(a) |
4.03% | 1.40% | 5.10% | 263 | (107) | |||||||||||||||
Other short-term investments |
1.62% | 1.37% | 0.99% | 25 | 63 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-earning assets |
3.98% | 3.85% | 3.54% | 13 | 44 | |||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||
Interest checking deposits |
0.76% | 0.63% | 0.38% | 13 | 38 | |||||||||||||||
Savings deposits |
0.10% | 0.07% | 0.06% | 3 | 4 | |||||||||||||||
Money market deposits |
0.71% | 0.53% | 0.34% | 18 | 37 | |||||||||||||||
Foreign office deposits |
0.45% | 0.13% | 0.18% | 32 | 27 | |||||||||||||||
Other time deposits |
1.34% | 1.25% | 1.23% | 9 | 11 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing core deposits |
0.65% | 0.52% | 0.34% | 13 | 31 | |||||||||||||||
Certificates $100,000 and over |
1.35% | 1.49% | 1.36% | (14) | (1) | |||||||||||||||
Other deposits |
1.80% | 1.44% | 0.98% | 36 | 82 | |||||||||||||||
Federal funds purchased |
1.76% | 1.43% | 0.94% | 33 | 82 | |||||||||||||||
Other short-term borrowings |
1.84% | 1.34% | 0.93% | 50 | 91 | |||||||||||||||
Long-term debt |
3.11% | 2.86% | 2.76% | 25 | 35 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing liabilities |
1.12% | 0.97% | 0.79% | 15 | 33 | |||||||||||||||
Ratios: |
||||||||||||||||||||
Taxable equivalent net interest margin(b) |
3.21% | 3.18% | 3.01% | 3 | 20 | |||||||||||||||
Taxable equivalent net interest rate spread(b) |
2.86% | 2.88% | 2.75% | (2) | 11 | |||||||||||||||
Interest-bearing liabilities to interest-earning assets |
69.61% | 68.69% | 67.64% | 92 | 197 |
(a) | Presented on a fully taxable equivalent basis. |
(b) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31. |
24
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Assets |
||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 42,327 | $ | 41,799 | $ | 41,455 | $ | 41,314 | $ | 41,656 | ||||||||||
Commercial mortgage loans |
6,521 | 6,588 | 6,757 | 6,814 | 6,861 | |||||||||||||||
Commercial construction loans |
4,743 | 4,671 | 4,660 | 4,533 | 4,306 | |||||||||||||||
Commercial leases |
3,847 | 3,960 | 4,018 | 4,079 | 4,039 | |||||||||||||||
Residential mortgage loans |
16,213 | 16,086 | 16,178 | 16,206 | 16,024 | |||||||||||||||
Home equity |
6,672 | 6,889 | 7,066 | 7,207 | 7,385 | |||||||||||||||
Automobile loans |
8,968 | 9,064 | 9,175 | 9,267 | 9,410 | |||||||||||||||
Credit card |
2,221 | 2,224 | 2,202 | 2,140 | 2,080 | |||||||||||||||
Other consumer loans |
1,720 | 1,588 | 1,354 | 1,057 | 892 | |||||||||||||||
Taxable securities |
33,380 | 33,133 | 32,222 | 32,289 | 32,092 | |||||||||||||||
Tax exempt securities |
81 | 73 | 75 | 65 | 68 | |||||||||||||||
Other short-term investments |
1,474 | 1,471 | 1,459 | 1,472 | 1,321 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-earning assets |
128,167 | 127,546 | 126,621 | 126,443 | 126,134 | |||||||||||||||
Cash and due from banks |
2,179 | 2,175 | 2,288 | 2,227 | 2,175 | |||||||||||||||
Other assets |
12,320 | 13,039 | 13,351 | 13,532 | 13,272 | |||||||||||||||
Allowance for loan and lease losses |
(1,137) | (1,195) | (1,205) | (1,210) | (1,237) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 141,529 | $ | 141,565 | $ | 141,055 | $ | 140,992 | $ | 140,344 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||
Interest checking deposits |
$ | 28,715 | $ | 28,403 | $ | 26,992 | $ | 25,765 | $ | 26,014 | ||||||||||
Savings deposits |
13,618 | 13,546 | 13,593 | 13,889 | 14,238 | |||||||||||||||
Money market deposits |
22,036 | 20,750 | 20,023 | 20,028 | 20,278 | |||||||||||||||
Foreign office deposits |
371 | 494 | 323 | 395 | 380 | |||||||||||||||
Other time deposits |
4,018 | 3,856 | 3,792 | 3,722 | 3,745 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing core deposits |
68,758 | 67,049 | 64,723 | 63,799 | 64,655 | |||||||||||||||
Certificates $100,000 and over |
2,155 | 2,284 | 2,429 | 2,625 | 2,623 | |||||||||||||||
Other deposits |
198 | 379 | 119 | 560 | 264 | |||||||||||||||
Federal funds purchased |
1,080 | 692 | 602 | 675 | 311 | |||||||||||||||
Other short-term borrowings |
2,452 | 2,423 | 2,316 | 4,212 | 4,194 | |||||||||||||||
Long-term debt |
14,579 | 14,780 | 14,631 | 13,457 | 13,273 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing liabilities |
89,222 | 87,607 | 84,820 | 85,328 | 85,320 | |||||||||||||||
Demand deposits |
32,834 | 33,825 | 35,519 | 34,850 | 34,915 | |||||||||||||||
Other liabilities |
3,345 | 3,800 | 4,203 | 3,973 | 3,467 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
125,401 | 125,232 | 124,542 | 124,151 | 123,702 | |||||||||||||||
Total Equity |
16,128 | 16,333 | 16,513 | 16,841 | 16,642 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Equity |
$ | 141,529 | $ | 141,565 | $ | 141,055 | $ | 140,992 | $ | 140,344 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Yield Analysis |
||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||
Commercial and industrial loans(a) |
4.26% | 3.96% | 3.75% | 3.75% | 3.60% | |||||||||||||||
Commercial mortgage loans(a) |
4.43% | 4.20% | 3.92% | 3.85% | 3.65% | |||||||||||||||
Commercial construction loans(a) |
4.94% | 4.59% | 4.28% | 4.23% | 4.01% | |||||||||||||||
Commercial leases(a) |
2.82% | 2.78% | 0.06% | 2.70% | 2.73% | |||||||||||||||
Residential mortgage loans |
3.56% | 3.60% | 3.52% | 3.48% | 3.54% | |||||||||||||||
Home equity |
4.85% | 4.62% | 4.38% | 4.39% | 4.20% | |||||||||||||||
Automobile loans |
3.26% | 3.12% | 3.06% | 2.96% | 2.87% | |||||||||||||||
Credit card |
11.96% | 12.36% | 11.83% | 11.63% | 10.95% | |||||||||||||||
Other consumer loans |
6.75% | 6.58% | 6.64% | 6.89% | 6.63% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans and leases |
4.30% | 4.11% | 3.80% | 3.88% | 3.74% | |||||||||||||||
Taxable securities |
3.20% | 3.21% | 3.15% | 3.06% | 3.05% | |||||||||||||||
Tax exempt securities(a) |
4.03% | 1.40% | 5.62% | 5.33% | 5.10% | |||||||||||||||
Other short-term investments |
1.62% | 1.37% | 1.24% | 1.16% | 0.99% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-earning assets |
3.98% | 3.85% | 3.61% | 3.64% | 3.54% | |||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||
Interest checking deposits |
0.76% | 0.63% | 0.51% | 0.44% | 0.38% | |||||||||||||||
Savings deposits |
0.10% | 0.07% | 0.06% | 0.06% | 0.06% | |||||||||||||||
Money market deposits |
0.71% | 0.53% | 0.42% | 0.39% | 0.34% | |||||||||||||||
Foreign office deposits |
0.45% | 0.13% | 0.30% | 0.21% | 0.18% | |||||||||||||||
Other time deposits |
1.34% | 1.25% | 1.23% | 1.23% | 1.23% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing core deposits |
0.65% | 0.52% | 0.43% | 0.39% | 0.34% | |||||||||||||||
Certificates $100,000 and over |
1.35% | 1.49% | 1.45% | 1.38% | 1.36% | |||||||||||||||
Other deposits |
1.80% | 1.44% | 1.17% | 1.16% | 0.98% | |||||||||||||||
Federal funds purchased |
1.76% | 1.43% | 1.21% | 1.16% | 0.94% | |||||||||||||||
Other short-term borrowings |
1.84% | 1.34% | 1.10% | 1.09% | 0.93% | |||||||||||||||
Long-term debt |
3.11% | 2.86% | 2.72% | 2.82% | 2.76% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest-bearing liabilities |
1.12% | 0.97% | 0.88% | 0.85% | 0.79% | |||||||||||||||
Ratios: |
||||||||||||||||||||
Taxable equivalent net interest margin(b) |
3.21% | 3.18% | 3.02% | 3.07% | 3.01% | |||||||||||||||
Taxable equivalent net interest rate spread(b) |
2.86% | 2.88% | 2.73% | 2.79% | 2.75% | |||||||||||||||
Interest-bearing liabilities to interest-earning assets |
69.61% | 68.69% | 66.99% | 67.48% | 67.64% |
(a) | Presented on a fully taxable equivalent basis. |
(b) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31. |
25
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield Analysis
$ in millions, except share data
(unaudited)
Year to Date | % Change | |||||||||||
June | June | |||||||||||
2018 | 2017 | Yr/Yr | ||||||||||
Assets |
||||||||||||
Interest-earning assets: |
||||||||||||
Commercial and industrial loans |
$ | 42,064 | $ | 41,773 | 1% | |||||||
Commercial mortgage loans |
6,555 | 6,903 | (5%) | |||||||||
Commercial construction loans |
4,707 | 4,147 | 14% | |||||||||
Commercial leases |
3,903 | 3,972 | (2%) | |||||||||
Residential mortgage loans |
16,150 | 15,912 | 1% | |||||||||
Home equity |
6,780 | 7,482 | (9%) | |||||||||
Automobile loans |
9,016 | 9,597 | (6%) | |||||||||
Credit card |
2,223 | 2,111 | 5% | |||||||||
Other consumer loans |
1,653 | 824 | 101% | |||||||||
Taxable securities |
33,257 | 31,954 | 4% | |||||||||
Tax exempt securities |
77 | 61 | 26% | |||||||||
Other short-term investments |
1,472 | 1,314 | 12% | |||||||||
|
|
|
|
|
|
|||||||
Total interest-earning assets |
127,857 | 126,050 | 1% | |||||||||
Cash and due from banks |
2,177 | 2,190 | (1%) | |||||||||
Other assets |
12,679 | 13,248 | (4%) | |||||||||
Allowance for loan and lease losses |
(1,166) | (1,245) | (6%) | |||||||||
|
|
|
|
|
|
|||||||
Total Assets |
$ | 141,547 | $ | 140,243 | 1% | |||||||
|
|
|
|
|
|
|||||||
Liabilities |
||||||||||||
Interest-bearing liabilities: |
||||||||||||
Interest checking deposits |
$ | 28,560 | $ | 26,385 | 8% | |||||||
Savings deposits |
13,582 | 14,178 | (4%) | |||||||||
Money market deposits |
21,397 | 20,440 | 5% | |||||||||
Foreign office deposits |
432 | 417 | 4% | |||||||||
Other time deposits |
3,937 | 3,786 | 4% | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing core deposits |
67,908 | 65,206 | 4% | |||||||||
Certificates $100,000 and over |
2,220 | 2,601 | (15%) | |||||||||
Other deposits |
288 | 213 | 35% | |||||||||
Federal funds purchased |
887 | 474 | 87% | |||||||||
Other short-term borrowings |
2,438 | 3,050 | (20%) | |||||||||
Long-term debt |
14,678 | 13,562 | 8% | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing liabilities |
88,419 | 85,106 | 4% | |||||||||
Demand deposits |
33,327 | 34,999 | (5%) | |||||||||
Other liabilities |
3,571 | 3,589 | (1%) | |||||||||
|
|
|
|
|
|
|||||||
Total Liabilities |
125,317 | 123,694 | 1% | |||||||||
Total Equity |
16,230 | 16,549 | (2%) | |||||||||
|
|
|
|
|
|
|||||||
Total Liabilities and Equity |
$ | 141,547 | $ | 140,243 | 1% | |||||||
|
|
|
|
|
|
|||||||
Year to Date | bps Change | |||||||||||
June | June | |||||||||||
2018 | 2017 | Yr/Yr | ||||||||||
Yield Analysis |
||||||||||||
Interest-earning assets: |
||||||||||||
Commercial and industrial loans(a) |
4.11% | 3.53% | 58 | |||||||||
Commercial mortgage loans(a) |
4.32% | 3.60% | 72 | |||||||||
Commercial construction loans(a) |
4.77% | 3.89% | 88 | |||||||||
Commercial leases(a) |
2.80% | 2.71% | 9 | |||||||||
Residential mortgage loans |
3.58% | 3.55% | 3 | |||||||||
Home equity |
4.74% | 4.09% | 65 | |||||||||
Automobile loans |
3.19% | 2.84% | 35 | |||||||||
Credit card |
12.16% | 11.95% | 21 | |||||||||
Other consumer loans |
6.67% | 6.57% | 10 | |||||||||
|
|
|
|
|
|
|||||||
Total loans and leases |
4.21% | 3.72% | 49 | |||||||||
Taxable securities |
3.21% | 3.08% | 13 | |||||||||
Tax exempt securities(a) |
2.79% | 5.41% | (262) | |||||||||
Other short-term investments |
1.50% | 0.86% | 64 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-earning assets |
3.91% | 3.53% | 38 | |||||||||
Interest-bearing liabilities: |
||||||||||||
Interest checking deposits |
0.70% | 0.34% | 36 | |||||||||
Savings deposits |
0.08% | 0.05% | 3 | |||||||||
Money market deposits |
0.62% | 0.33% | 29 | |||||||||
Foreign office deposits |
0.27% | 0.15% | 12 | |||||||||
Other time deposits |
1.30% | 1.23% | 7 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing core deposits |
0.58% | 0.33% | 25 | |||||||||
Certificates $100,000 and over |
1.42% | 1.36% | 6 | |||||||||
Other deposits |
1.57% | 0.85% | 72 | |||||||||
Federal funds purchased |
1.63% | 0.78% | 85 | |||||||||
Other short-term borrowings |
1.60% | 0.81% | 79 | |||||||||
Long-term debt |
2.98% | 2.71% | 27 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing liabilities |
1.05% | 0.76% | 29 |
(a) | Presented on a fully taxable equivalent basis. |
26
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Average Portfolio Loans and Leases |
||||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 42,292 | $ | 41,782 | $ | 41,438 | $ | 41,302 | $ | 41,601 | ||||||||||
Commercial mortgage loans |
6,514 | 6,582 | 6,751 | 6,807 | 6,845 | |||||||||||||||
Commercial construction loans |
4,743 | 4,671 | 4,660 | 4,533 | 4,306 | |||||||||||||||
Commercial leases |
3,847 | 3,960 | 4,016 | 4,072 | 4,036 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans and leases |
57,396 | 56,995 | 56,865 | 56,714 | 56,788 | |||||||||||||||
Consumer loans: |
||||||||||||||||||||
Residential mortgage loans |
15,581 | 15,575 | 15,590 | 15,523 | 15,417 | |||||||||||||||
Home equity |
6,672 | 6,889 | 7,066 | 7,207 | 7,385 | |||||||||||||||
Automobile loans |
8,968 | 9,064 | 9,175 | 9,267 | 9,410 | |||||||||||||||
Credit card |
2,221 | 2,224 | 2,202 | 2,140 | 2,080 | |||||||||||||||
Other consumer loans |
1,719 | 1,587 | 1,352 | 1,055 | 892 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
35,161 | 35,339 | 35,385 | 35,192 | 35,184 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average portfolio loans and leases |
$ | 92,557 | $ | 92,334 | $ | 92,250 | $ | 91,906 | $ | 91,972 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average loans held for sale |
$ | 675 | $ | 535 | $ | 615 | $ | 711 | $ | 681 | ||||||||||
End of Period Portfolio Loans and Leases |
||||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 41,403 | $ | 41,635 | $ | 41,170 | $ | 41,011 | $ | 40,914 | ||||||||||
Commercial mortgage loans |
6,625 | 6,509 | 6,604 | 6,863 | 6,868 | |||||||||||||||
Commercial construction loans |
4,687 | 4,766 | 4,553 | 4,652 | 4,366 | |||||||||||||||
Commercial leases |
3,788 | 3,919 | 4,068 | 4,043 | 4,157 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans and leases |
56,503 | 56,829 | 56,395 | 56,569 | 56,305 | |||||||||||||||
Consumer loans: |
||||||||||||||||||||
Residential mortgage loans |
15,640 | 15,563 | 15,591 | 15,588 | 15,460 | |||||||||||||||
Home equity |
6,599 | 6,757 | 7,014 | 7,143 | 7,301 | |||||||||||||||
Automobile loans |
8,938 | 9,018 | 9,112 | 9,236 | 9,318 | |||||||||||||||
Credit card |
2,270 | 2,188 | 2,299 | 2,168 | 2,117 | |||||||||||||||
Other consumer loans |
1,982 | 1,615 | 1,559 | 1,179 | 945 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
35,429 | 35,141 | 35,575 | 35,314 | 35,141 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total portfolio loans and leases |
$ | 91,932 | $ | 91,970 | $ | 91,970 | $ | 91,883 | $ | 91,446 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans and leases held for sale |
$ | 783 | $ | 717 | $ | 492 | $ | 711 | $ | 766 | ||||||||||
Operating lease equipment |
$ | 606 | $ | 625 | $ | 646 | $ | 663 | $ | 719 | ||||||||||
Loans and leases serviced for others:(a) |
||||||||||||||||||||
Commercial and industrial loans |
$ | 421 | $ | 401 | $ | 415 | $ | 449 | $ | 495 | ||||||||||
Commercial mortgage loans |
263 | 238 | 240 | 228 | 242 | |||||||||||||||
Commercial construction loans |
82 | 87 | 76 | 72 | 62 | |||||||||||||||
Commercial leases |
222 | 243 | 254 | 257 | 261 | |||||||||||||||
Residential mortgage loans |
62,247 | 60,973 | 60,021 | 60,783 | 61,803 | |||||||||||||||
Other consumer loans |
50 | 50 | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans and leases serviced for others |
63,285 | 61,992 | 61,006 | 61,789 | 62,863 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans and leases serviced |
$ | 156,606 | $ | 155,304 | $ | 154,114 | $ | 155,046 | $ | 155,794 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(a) | Fifth Third sells certain loans and leases and obtains servicing responsibilities. |
27
Fifth Third Bancorp and Subsidiaries
Regulatory Capital
$ in millions
(unaudited)
As of | ||||||||||||||||||||
June 2018(a) |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Regulatory capital: |
||||||||||||||||||||
Common stock and related surplus (net of treasury stock) |
($ | 690) | ($ | 465) | ($ | 160) | $ | 96 | $ | 1,063 | ||||||||||
Retained earnings |
16,143 | 15,707 | 15,122 | 14,748 | 13,862 | |||||||||||||||
Common equity tier I capital adjustments and deductions |
(2,467) | (2,470) | (2,445) | (2,401) | (2,403) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
CET1 capital |
12,986 | 12,772 | 12,517 | 12,443 | 12,522 | |||||||||||||||
Additional tier I capital |
1,331 | 1,331 | 1,331 | 1,330 | 1,331 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tier I capital |
14,317 | 14,103 | 13,848 | 13,773 | 13,853 | |||||||||||||||
Tier II capital |
3,799 | 3,896 | 4,039 | 4,043 | 4,074 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total regulatory capital |
$ | 18,116 | $ | 17,999 | $ | 17,887 | $ | 17,816 | $ | 17,927 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Risk-weighted assets(b) |
$ | 119,073 | $ | 118,001 | $ | 117,997 | $ | 117,527 | $ | 117,761 | ||||||||||
Ratios: |
||||||||||||||||||||
Average shareholders equity to average assets |
11.38% | 11.52% | 11.69% | 11.93% | 11.84% | |||||||||||||||
Regulatory Capital Ratios: |
||||||||||||||||||||
Fifth Third Bancorp |
||||||||||||||||||||
CET1 capital(b) |
10.91% | 10.82% | 10.61% | 10.59% | 10.63% | |||||||||||||||
Tier I risk-based capital(b) |
12.02% | 11.95% | 11.74% | 11.72% | 11.76% | |||||||||||||||
Total risk-based capital(b) |
15.21% | 15.25% | 15.16% | 15.16% | 15.22% | |||||||||||||||
Tier I leverage |
10.24% | 10.11% | 10.01% | 9.97% | 10.07% | |||||||||||||||
Fifth Third Bank |
||||||||||||||||||||
Tier I risk-based capital(b) |
12.43% | 12.39% | 12.06% | 12.30% | 12.24% | |||||||||||||||
Total risk-based capital(b) |
14.10% | 14.15% | 13.88% | 14.14% | 14.08% | |||||||||||||||
Tier I leverage |
10.63% | 10.51% | 10.32% | 10.50% | 10.50% |
(a) | Current period regulatory capital data and ratios are estimated. |
(b) | Under the banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting weighted values are added together resulting in the total risk-weighted assets. |
28
Fifth Third Bancorp and Subsidiaries
Summary of Credit Loss Experience
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Average portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 42,292 | $ | 41,782 | $ | 41,438 | $ | 41,302 | $ | 41,601 | ||||||||||
Commercial mortgage loans |
6,514 | 6,582 | 6,751 | 6,807 | 6,845 | |||||||||||||||
Commercial construction loans |
4,743 | 4,671 | 4,660 | 4,533 | 4,306 | |||||||||||||||
Commercial leases |
3,847 | 3,960 | 4,016 | 4,072 | 4,036 | |||||||||||||||
Residential mortgage loans |
15,581 | 15,575 | 15,590 | 15,523 | 15,417 | |||||||||||||||
Home equity |
6,672 | 6,889 | 7,066 | 7,207 | 7,385 | |||||||||||||||
Automobile loans |
8,968 | 9,064 | 9,175 | 9,267 | 9,410 | |||||||||||||||
Credit card |
2,221 | 2,224 | 2,202 | 2,140 | 2,080 | |||||||||||||||
Other consumer loans |
1,719 | 1,587 | 1,352 | 1,055 | 892 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average portfolio loans and leases |
$ | 92,557 | $ | 92,334 | $ | 92,250 | $ | 91,906 | $ | 91,972 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Losses charged-off: |
||||||||||||||||||||
Commercial and industrial loans |
($ | 51) | ($ | 33) | ($ | 34) | ($ | 30) | ($ | 34) | ||||||||||
Commercial mortgage loans |
(3) | (2) | (1) | (3) | (6) | |||||||||||||||
Commercial leases |
| | (1) | | (1) | |||||||||||||||
Residential mortgage loans |
(4) | (4) | (3) | (2) | (4) | |||||||||||||||
Home equity |
(5) | (7) | (8) | (6) | (9) | |||||||||||||||
Automobile loans |
(13) | (17) | (15) | (13) | (12) | |||||||||||||||
Credit card |
(29) | (28) | (23) | (23) | (24) | |||||||||||||||
Other consumer loans |
(13) | (12) | (9) | (8) | (5) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total losses charged-off |
($ | 118) | ($ | 103) | ($ | 94) | ($ | 85) | ($ | 95) | ||||||||||
Recoveries of losses previously charged-off: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 4 | $ | 5 | $ | 2 | $ | 3 | $ | 16 | ||||||||||
Commercial mortgage loans |
1 | 1 | 2 | | 1 | |||||||||||||||
Commercial leases |
| | | | | |||||||||||||||
Residential mortgage loans |
2 | 1 | 2 | 3 | 2 | |||||||||||||||
Home equity |
3 | 2 | 4 | 3 | 4 | |||||||||||||||
Automobile loans |
5 | 6 | 5 | 5 | 6 | |||||||||||||||
Credit card |
3 | 3 | 3 | 3 | 2 | |||||||||||||||
Other consumer loans |
6 | 4 | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recoveries of losses previously charged-off |
$ | 24 | $ | 22 | $ | 18 | $ | 17 | $ | 31 | ||||||||||
Net losses charged-off: |
||||||||||||||||||||
Commercial and industrial loans |
($ | 47) | ($ | 28) | ($ | 32) | ($ | 27) | ($ | 18) | ||||||||||
Commercial mortgage loans |
(2) | (1) | 1 | (3) | (5) | |||||||||||||||
Commercial leases |
| | (1) | | (1) | |||||||||||||||
Residential mortgage loans |
(2) | (3) | (1) | 1 | (2) | |||||||||||||||
Home equity |
(2) | (5) | (4) | (3) | (5) | |||||||||||||||
Automobile loans |
(8) | (11) | (10) | (8) | (6) | |||||||||||||||
Credit card |
(26) | (25) | (20) | (20) | (22) | |||||||||||||||
Other consumer loans |
(7) | (8) | (9) | (8) | (5) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net losses charged-off |
($ | 94) | ($ | 81) | ($ | 76) | ($ | 68) | ($ | 64) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net losses charged-off as a percent of average portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
0.44% | 0.27% | 0.31% | 0.26% | 0.17% | |||||||||||||||
Commercial mortgage loans |
0.11% | 0.06% | (0.09%) | 0.16% | 0.33% | |||||||||||||||
Commercial leases |
0.00% | 0.00% | 0.08% | 0.01% | 0.06% | |||||||||||||||
Residential mortgage loans |
0.05% | 0.06% | 0.03% | (0.02%) | 0.04% | |||||||||||||||
Home equity |
0.12% | 0.26% | 0.25% | 0.18% | 0.27% | |||||||||||||||
Automobile loans |
0.33% | 0.50% | 0.45% | 0.35% | 0.27% | |||||||||||||||
Credit card |
4.73% | 4.65% | 3.74% | 3.75% | 4.22% | |||||||||||||||
Other consumer loans |
1.85% | 2.16% | 2.38% | 2.80% | 2.31% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net losses charged-off as a percent of average portfolio loans and leases |
0.41% | 0.36% | 0.33% | 0.29% | 0.28% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
29
Fifth Third Bancorp and Subsidiaries
Asset Quality
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Allowance for Credit Losses |
||||||||||||||||||||
Allowance for loan and lease losses, beginning |
$ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | $ | 1,238 | ||||||||||
Total net losses charged-off |
(94) | (81) | (76) | (68) | (64) | |||||||||||||||
Provision for loan and lease losses |
33 | 23 | 67 | 67 | 52 | |||||||||||||||
Deconsolidation of a variable interest entity |
| | | (20) | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Allowance for loan and lease losses, ending |
$ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserve for unfunded commitments, beginning |
$ | 151 | $ | 161 | $ | 157 | $ | 162 | $ | 159 | ||||||||||
(Benefit from) provision for unfunded commitments |
(20) | (10) | 4 | (5) | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserve for unfunded commitments, ending |
$ | 131 | $ | 151 | $ | 161 | $ | 157 | $ | 162 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Components of allowance for credit losses: |
||||||||||||||||||||
Allowance for loan and lease losses |
$ | 1,077 | $ | 1,138 | $ | 1,196 | $ | 1,205 | $ | 1,226 | ||||||||||
Reserve for unfunded commitments |
131 | 151 | 161 | 157 | 162 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total allowance for credit losses |
$ | 1,208 | $ | 1,289 | $ | 1,357 | $ | 1,362 | $ | 1,388 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
As of | ||||||||||||||||||||
June 2018 |
March 2018 |
December 2017 |
September 2017 |
June 2017 |
||||||||||||||||
Nonperforming Assets and Delinquent Loans |
||||||||||||||||||||
Nonaccrual portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 99 | $ | 155 | $ | 144 | $ | 144 | $ | 225 | ||||||||||
Commercial mortgage loans |
8 | 9 | 12 | 14 | 15 | |||||||||||||||
Commercial leases |
25 | 4 | | 1 | 1 | |||||||||||||||
Residential mortgage loans |
13 | 16 | 17 | 19 | 19 | |||||||||||||||
Home equity |
54 | 55 | 56 | 56 | 52 | |||||||||||||||
Automobile loans |
3 | | | | | |||||||||||||||
Other consumer loans |
1 | 1 | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonaccrual portfolio loans and leases (excludes restructured loans) |
203 | 240 | 229 | 234 | 312 | |||||||||||||||
Nonaccrual restructured portfolio commercial loans and leases |
173 | 154 | 150 | 214 | 244 | |||||||||||||||
Nonaccrual restructured portfolio consumer loans and leases |
61 | 58 | 58 | 58 | 58 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonaccrual portfolio loans and leases |
437 | 452 | 437 | 506 | 614 | |||||||||||||||
Repossessed property |
7 | 9 | 9 | 10 | 11 | |||||||||||||||
OREO |
36 | 43 | 43 | 39 | 37 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming portfolio assets |
480 | 504 | 489 | 555 | 662 | |||||||||||||||
Nonaccrual loans held for sale |
5 | 5 | 5 | 18 | 7 | |||||||||||||||
Nonaccrual restructured loans held for sale |
18 | 19 | 1 | 2 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming assets |
$ | 503 | $ | 528 | $ | 495 | $ | 575 | $ | 670 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restructured portfolio consumer loans and leases (accrual) |
$ | 1,029 | $ | 916 | $ | 927 | $ | 929 | $ | 933 | ||||||||||
Restructured portfolio commercial loans and leases (accrual) |
$ | 111 | $ | 249 | $ | 249 | $ | 232 | $ | 224 | ||||||||||
Loans 90 days past due (accrual): |
||||||||||||||||||||
Commercial and industrial loans |
$ | 4 | $ | 7 | $ | 3 | $ | 3 | $ | 3 | ||||||||||
Commercial mortgage loans |
| 1 | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans |
4 | 8 | 3 | 3 | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Residential mortgage loans |
44 | 62 | 57 | 43 | 45 | |||||||||||||||
Automobile loans |
10 | 9 | 10 | 10 | 7 | |||||||||||||||
Credit card |
31 | 28 | 27 | 21 | 20 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
85 | 99 | 94 | 74 | 72 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans 90 days past due (accrual)(b) |
$ | 89 | $ | 107 | $ | 97 | $ | 77 | $ | 75 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ratios |
||||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases |
0.41% | 0.36% | 0.33% | 0.29% | 0.28% | |||||||||||||||
Allowance for loan and lease losses: |
||||||||||||||||||||
As a percent of portfolio loans and leases |
1.17% | 1.24% | 1.30% | 1.31% | 1.34% | |||||||||||||||
As a percent of nonperforming portfolio loans and leases(a) |
247% | 252% | 274% | 238% | 200% | |||||||||||||||
As a percent of nonperforming portfolio assets(a) |
224% | 226% | 245% | 217% | 185% | |||||||||||||||
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(a) |
0.47% | 0.49% | 0.48% | 0.55% | 0.67% | |||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(a) |
0.52% | 0.55% | 0.53% | 0.60% | 0.72% | |||||||||||||||
Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property |
0.54% | 0.57% | 0.53% | 0.62% | 0.73% | |||||||||||||||
Allowance for credit losses as a percent of nonperforming assets |
252% | 256% | 278% | 245% | 210% |
(a) | Excludes nonaccrual loans held for sale. |
(b) | Excludes loans held for sale. |
30
Use of Non-GAAP Financial Measures
In addition to GAAP measures, management considers various Non-GAAP measures when evaluating the performance of the business, including: taxable equivalent net interest income, adjusted taxable equivalent net interest income, taxable equivalent net interest margin, adjusted taxable equivalent net interest margin, adjusted yield on interest-earning assets, efficiency ratio, taxable equivalent net interest rate spread, taxable equivalent income before income taxes, noninterest income excluding certain items, tangible net income available to common shareholders, average tangible common equity, tangible common equity ratio, tangible common equity ratio (excluding unrealized gains/ losses) tangible common equity ratio (including unrealized gains/ losses) tangible equity, tangible book value per share, and certain ratios derived from these measures.
The taxable equivalent basis adjusts for the tax-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 as it provides a relevant comparison between taxable and non-taxable amounts.
Noninterest income excluding certain items is provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted noninterest income. Adjusted taxable equivalent net interest income and adjusted taxable equivalent net interest margin are provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted net interest income.
Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding unrealized gains/losses), 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 be Non-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding unrealized gains/losses on certain assets and liabilities enables investors and others to assess the Bancorps use of equity without the effects of gains or losses some of which are uncertain and providing the tangible common equity ratio including unrealized gains/losses enables investors and others to assess the Bancorps use of equity if all unrealized gains or losses were to be monetized.
Management believes tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of a business as it calculates the return available to common shareholders and book value of common stock without the impact of intangible assets and their related amortization. This is useful for evaluating the performance of a business consistently, whether acquired or developed internally, compared to other companies in the industry who present similar measures.
Please note that although Non-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 page 32 for Reg. G reconciliations of all historical Non-GAAP measures used in this release to the most directly comparable GAAP measures.
31
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconciliation
$ and shares in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||||
June | March | December | September | June | ||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||||
Net interest income (U.S. GAAP) |
$ | 1,020 | $ | 996 | $ | 956 | $ | 970 | $ | 939 | ||||||||||||
Add: |
Taxable equivalent adjustment |
4 | 3 | 7 | 7 | 6 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Taxable equivalent net interest income (a) |
1,024 | 999 | 963 | 977 | 945 | |||||||||||||||||
Net interest income (U.S. GAAP) (annualized) (b) |
4,091 | 4,039 | 3,793 | 3,848 | 3,766 | |||||||||||||||||
Taxable equivalent net interest income (annualized) (c) |
4,107 | 4,052 | 3,821 | 3,876 | 3,790 | |||||||||||||||||
Taxable equivalent net interest income |
1,024 | 999 | 963 | 977 | 945 | |||||||||||||||||
Add: |
Leveraged lease remeasurement | | | 27 | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted taxable equivalent net interest income (d) |
1,024 | 999 | 990 | 977 | 945 | |||||||||||||||||
Adjusted taxable equivalent net interest income (annualized) (e) |
4,107 | 4,052 | 3,928 | 3,876 | 3,790 | |||||||||||||||||
Interest income (U.S. GAAP) |
1,269 | 1,206 | 1,144 | 1,152 | 1,106 | |||||||||||||||||
Add: |
Taxable equivalent adjustment |
4 | 3 | 7 | 7 | 6 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Taxable equivalent interest income |
1,273 | 1,209 | 1,151 | 1,159 | 1,112 | |||||||||||||||||
Taxable equivalent interest income (annualized) (f) |
5,106 | 4,903 | 4,566 | 4,598 | 4,460 | |||||||||||||||||
Taxable equivalent interest income |
1,273 | 1,209 | 1,151 | 1,159 | 1,112 | |||||||||||||||||
Add: |
Leveraged lease remeasurement | | | 27 | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted taxable equivalent interest income (g) |
1,273 | 1,209 | 1,178 | 1,159 | 1,112 | |||||||||||||||||
Adjusted taxable equivalent interest income (annualized) (h) |
5,106 | 4,903 | 4,674 | 4,598 | 4,460 | |||||||||||||||||
Interest expense (annualized) (i) |
999 | 852 | 746 | 722 | 670 | |||||||||||||||||
Noninterest income (j) |
743 | 909 | 577 | 1,561 | 564 | |||||||||||||||||
Noninterest expense (k) |
1,037 | 1,046 | 1,073 | 975 | 957 | |||||||||||||||||
Average interest-earning assets (l) |
128,167 | 127,546 | 126,621 | 126,443 | 126,134 | |||||||||||||||||
Average interest-bearing liabilities (m) |
89,222 | 87,607 | 84,820 | 85,328 | 85,320 | |||||||||||||||||
Net interest margin (U.S. GAAP) (b) / (l) |
3.19% | 3.17% | 3.00% | 3.04% | 2.99% | |||||||||||||||||
Taxable equivalent net interest margin (c) / (l) |
3.21% | 3.18% | 3.02% | 3.07% | 3.01% | |||||||||||||||||
Adjusted taxable equivalent net interest margin (e) / (l) |
3.21% | 3.18% | 3.10% | 3.07% | 3.01% | |||||||||||||||||
Adjusted taxable equivalent yield on interest-earnings assets (h) / (l) |
3.98% | 3.85% | 3.69% | 3.64% | 3.54% | |||||||||||||||||
Taxable equivalent efficiency ratio (k) / (a) + (j) |
58.7% | 54.8% | 69.7% | 38.4% | 63.4% | |||||||||||||||||
Taxable equivalent net interest rate spread (f) / (l) - (i) / (m) |
2.86% | 2.88% | 2.73% | 2.79% | 2.75% | |||||||||||||||||
Income before income taxes (U.S. GAAP) |
$ | 693 | $ | 836 | $ | 393 | $ | 1,489 | $ | 494 | ||||||||||||
Add: |
Taxable equivalent adjustment |
4 | 3 | 7 | 7 | 6 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Taxable equivalent income before income taxes |
$ | 697 | $ | 839 | $ | 400 | $ | 1,496 | $ | 500 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income available to common shareholders (U.S. GAAP) |
563 | 689 | 486 | 999 | 344 | |||||||||||||||||
Add: |
Intangible amortization, net of tax |
1 | 1 | | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tangible net income available to common shareholders |
564 | 690 | 486 | 999 | 344 | |||||||||||||||||
Tangible net income available to common shareholders (annualized) (n) |
2,262 | 2,798 | 1,928 | 3,963 | 1,380 | |||||||||||||||||
Average Bancorp shareholders equity (U.S. GAAP) |
16,108 | 16,313 | 16,493 | 16,820 | 16,615 | |||||||||||||||||
Less: |
Average preferred stock |
(1,331) | (1,331) | (1,331) | (1,331) | (1,331) | ||||||||||||||||
Average goodwill |
(2,462) | (2,455) | (2,437) | (2,423) | (2,424) | |||||||||||||||||
Average intangible assets and other servicing rights |
(30) | (27) | (25) | (18) | (18) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Average tangible common equity (o) |
12,285 | 12,500 | 12,700 | 13,048 | 12,842 | |||||||||||||||||
Total Bancorp shareholders equity (U.S. GAAP) |
16,232 | 16,184 | 16,365 | 16,360 | 16,419 | |||||||||||||||||
Less: |
Preferred stock |
(1,331) | (1,331) | (1,331) | (1,331) | (1,331) | ||||||||||||||||
Goodwill |
(2,462) | (2,462) | (2,445) | (2,423) | (2,423) | |||||||||||||||||
Intangible assets and other servicing rights |
(30) | (30) | (27) | (18) | (18) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tangible common equity, including unrealized gains / losses (p) |
12,409 | 12,361 | 12,562 | 12,588 | 12,647 | |||||||||||||||||
Less: |
Accumulated other comprehensive income |
552 | 389 | (73) | (185) | (163) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tangible common equity, excluding unrealized gains / losses (q) |
12,961 | 12,750 | 12,489 | 12,403 | 12,484 | |||||||||||||||||
Add: |
Preferred stock |
1,331 | 1,331 | 1,331 | 1,331 | 1,331 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tangible equity (r) |
14,292 | 14,081 | 13,820 | 13,734 | 13,815 | |||||||||||||||||
Total assets (U.S. GAAP) |
140,695 | 141,500 | 142,193 | 142,264 | 141,067 | |||||||||||||||||
Less: |
Goodwill |
(2,462) | (2,462) | (2,445) | (2,423) | (2,423) | ||||||||||||||||
Intangible assets and other servicing rights |
(30) | (30) | (27) | (18) | (18) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tangible assets, including unrealized gains / losses (s) |
138,203 | 139,008 | 139,721 | 139,823 | 138,626 | |||||||||||||||||
Less: |
Accumulated other comprehensive income / loss, before tax |
699 | 492 | (92) | (285) | (251) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tangible assets, excluding unrealized gains / losses (t) |
$ | 138,902 | $ | 139,500 | $ | 139,629 | $ | 139,538 | $ | 138,375 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common shares outstanding (u) |
678 | 685 | 694 | 705 | 739 | |||||||||||||||||
Ratios: |
||||||||||||||||||||||
Return on average tangible common equity (n) / (o) |
18.4% | 22.4% | 15.2% | 30.4% | 10.7% | |||||||||||||||||
Tangible equity (r) / (t) |
10.29% | 10.09% | 9.90% | 9.84% | 9.98% | |||||||||||||||||
Tangible common equity (excluding unrealized gains/losses) (q) / (t) |
9.33% | 9.14% | 8.94% | 8.89% | 9.02% | |||||||||||||||||
Tangible common equity (including unrealized gains/losses) (p) / (s) |
8.98% | 8.89% | 8.99% | 9.00% | 9.12% | |||||||||||||||||
Tangible book value per share (p) / (u) |
$ | 18.30 | $ | 18.05 | $ | 18.10 | $ | 17.86 | $ | 17.11 |
32
Fifth Third Bancorp and Subsidiaries
Segment Presentation
$ in millions
(unaudited)
For the three months ended June 30, 2018 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
Taxable equivalent net interest income(a) |
$ | 431 | $ | 499 | $ | 59 | $ | 45 | ($ | 10) | $ | 1,024 | ||||||||||||
(Provision for) benefit from loan and lease losses |
10 | (47) | (8) | 11 | 1 | (33) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income after provision for loan and lease losses |
441 | 452 | 51 | 56 | (9) | 991 | ||||||||||||||||||
Total noninterest income |
229 | 167 | 52 | 109 | 186 | 743 | ||||||||||||||||||
Total noninterest expense |
(358) | (432) | (107) | (123) | (17) | (1,037) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income (loss) before income taxes |
312 | 187 | (4) | 42 | 160 | 697 | ||||||||||||||||||
Applicable income tax (expense) benefit(a) |
(23) | (40) | 1 | (9) | (40) | (111) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income (loss) |
289 | 147 | (3) | 33 | 120 | 586 | ||||||||||||||||||
For the three months ended March 31, 2018 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
Taxable equivalent net interest income(a) |
$ | 422 | $ | 466 | $ | 59 | $ | 43 | $ | 9 | $ | 999 | ||||||||||||
(Provision for) benefit from loan and lease losses |
20 | (44) | (12) | (16) | 29 | (23) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income after provision for loan and lease losses |
442 | 422 | 47 | 27 | 38 | 976 | ||||||||||||||||||
Total noninterest income |
219 | 184 | 46 | 116 | 344 | 909 | ||||||||||||||||||
Total noninterest expense |
(384) | (437) | (106) | (131) | 12 | (1,046) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income (loss) before income taxes |
277 | 169 | (13) | 12 | 394 | 839 | ||||||||||||||||||
Applicable income tax (expense) benefit(a) |
(18) | (35) | 3 | (3) | (82) | (135) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income (loss) |
259 | 134 | (10) | 9 | 312 | 704 | ||||||||||||||||||
For the three months ended December 31, 2017(d) |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
Taxable equivalent net interest income(a) |
$ | 397 | $ | 464 | $ | 61 | $ | 40 | $ | 1 | $ | 963 | ||||||||||||
Provision for loan and lease losses |
(13) | (37) | (10) | (4) | (3) | (67) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income after provision for loan and lease losses |
384 | 427 | 51 | 36 | (2) | 896 | ||||||||||||||||||
Total noninterest income |
192 | 194 | 54 | 107 | 30 | 577 | ||||||||||||||||||
Total noninterest expense |
(410) | (432) | (101) | (124) | (6) | (1,073) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income taxes |
166 | 189 | 4 | 19 | 22 | 400 | ||||||||||||||||||
Applicable income tax expense(a) |
(23) | (66) | (2) | (7) | 207 | 109 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income |
143 | 123 | 2 | 12 | 229 | 509 | ||||||||||||||||||
For the three months ended September 30, 2017(d) |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
Taxable equivalent net interest income(a) |
$ | 429 | $ | 453 | $ | 59 | $ | 38 | ($ | 2) | $ | 977 | ||||||||||||
(Provision for) benefit from loan and lease losses |
3 | (35) | (8) | 1 | (28) | (67) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income after provision for loan and lease losses |
432 | 418 | 51 | 39 | (30) | 910 | ||||||||||||||||||
Total noninterest income |
216 | 191 | 68 | 101 | 985 | 1,561 | ||||||||||||||||||
Total noninterest expense |
(341) | (419) | (101) | (111) | (3) | (975) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income taxes |
307 | 190 | 18 | 29 | 952 | 1,496 | ||||||||||||||||||
Applicable income tax expense(a) |
(63) | (66) | (6) | (10) | (337) | (482) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income |
244 | 124 | 12 | 19 | 615 | 1,014 | ||||||||||||||||||
For the three months ended June 30, 2017(d) |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
Taxable equivalent net interest income(a) |
$ | 421 | $ | 437 | $ | 59 | $ | 37 | ($ | 9) | $ | 945 | ||||||||||||
(Provision for) benefit from loan and lease losses |
(22) | (39) | (7) | 1 | 15 | (52) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income after provision for loan and lease losses |
399 | 398 | 52 | 38 | 6 | 893 | ||||||||||||||||||
Total noninterest income |
228 | 189 | 62 | 101 | (16) | 564 | ||||||||||||||||||
Total noninterest expense |
(330) | (416) | (109) | (113) | 11 | (957) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income taxes |
297 | 171 | 5 | 26 | 1 | 500 | ||||||||||||||||||
Applicable income tax benefit (a) |
(60) | (60) | (2) | (9) | (2) | (133) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income |
237 | 111 | 3 | 17 | (1) | 367 |
(a) | Includes taxable equivalent adjustments of $4 million, $3 million, $7 million, $7 million and $6 million for the three months ended June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017, respectively. |
(b) | Branch Banking provides a full range of deposit and loan and lease products to individuals and small businesses through full-service banking centers. |
(c) | Consumer Lending includes the Bancorps residential mortgage, home equity, automobile and other indirect lending activities. |
(d) | Prior period balances have been adjusted to reflect changes in internal expense allocation methodologies. |
33
Fifth Third Bancorp 2Q18 Earnings Presentation July 19, 2018 Refer to earnings release dated July 19, 2018 for further information. Exhibit 99.2
FORWARD-LOOKING STATEMENTS This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third Bancorp’s and MB Financial, Inc.’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections. In addition to factors previously disclosed in Fifth Third Bancorp’s and MB Financial, Inc.’s reports filed with or furnished to the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval of the merger by MB Financial, Inc.’s stockholders on the expected terms and schedule, including the risk that regulatory approvals required for the merger are not obtained or are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating the businesses of MB Financial, Inc. or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of Fifth Third Bancorp’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. In this presentation, we may sometimes use non-GAAP financial information. Please note that although non-GAAP financial measures provide useful insight to analysts, investors and regulators, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures. If applicable, we provide GAAP reconciliations for non-GAAP financial measures in a later slide in this presentation, which is also available in the investor relations section of our website, www.53.com. Management does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of the Bancorp's control or cannot be reasonably predicted. For the same reasons, the Bancorp's management is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. We provide a discussion of non-GAAP measures and reconciliations to the most directly comparable GAAP measures in later slides in this presentation, as well as on pages 31 and 32 of our earnings release. IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed merger, Fifth Third Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes the Proxy Statement of MB Financial, Inc. and a Prospectus of Fifth Third Bancorp, as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Fifth Third Bancorp and MB Financial, Inc., may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Fifth Third Bancorp at ir.53.com or from MB Financial, Inc. by accessing MB Financial, Inc.’s website at investor.mbfinancial.com. Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Fifth Third Investor Relations at Fifth Third Investor Relations, MD 1090QC, 38 Fountain Square Plaza, Cincinnati, OH 45263, by calling (866) 670-0468, or by sending an e-mail to ir@53.com or to MB Financial, Attention: Corporate Secretary, at 6111 North River Road, Rosemont, Illinois 60018, by calling (847) 653-1992 or by sending an e-mail to dkoros@mbfinancial.com. Fifth Third Bancorp and MB Financial, Inc. and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of MB Financial, Inc. in respect of the transaction described in the Proxy Statement/Prospectus. Information regarding Fifth Third Bancorp’s directors and executive officers is contained in Fifth Third Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2017 and its Proxy Statement on Schedule 14A, dated March 6, 2018, which are filed with the SEC. Information regarding MB Financial, Inc.’s directors and executive officers is contained in its Proxy Statement on Schedule 14A filed with the SEC on April 3, 2018. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger. Free copies of this document may be obtained as described in the preceding paragraph.
2Q18 highlights Announced acquisition of Chicago-based MB Financial Developed three year branch optimization plan to re-allocate 100-125 branches to higher growth markets Implemented workforce reduction plan with estimated annualized savings of approximately $80MM NIM1 up 20 bps YoY, and up 3 bps QoQ Net interest income1 up 8% YoY, and up 3% QoQ Adjusted ROA2 of 1.33% up 26 bps YoY; adjusted ROTCE2 of 14.6% up 370 bps YoY Significant improvement in key credit metrics Continued progress toward long-term financial goals Reported 1Fully taxable equivalent; 2For adjusted EPS: see reconciliation on page 4 of this presentation, for other Non-GAAP measures: see reconciliation on pages 25 and 26 of this presentation and use of non-GAAP measures on pages 31 and 32 of the earnings release;3Commercial criticized assets as a percentage of total commercial loans excluding HFS Adjusted2 EPS ROA Efficiency ratio1 ROTCE $0.80 $0.63 1.33% NCO ratio: 0.41% NPA ratio: 0.52% Criticized asset ratio3: 3.87% 14.6% NIM1 3.21% 3.21% 1.66% 18.4% 63.4% 58.7% 60.4% excluding LIH
2Q18 in review Items included in 2Q18 results had a net positive $0.17 EPS impact: $205MM pre-tax (~$162MM after-tax2) gain related to the sale of Worldpay, Inc (“Worldpay”) shares $30MM pre-tax (~$24MM after-tax2) charge related to branch optimization efforts $19MM pre-tax (~$15MM after-tax2) compensation expense primarily related to previously announced staffing review $11MM pre-tax (~$9MM after-tax2) gain related to our ownership stake in GreenSky $10MM pre-tax (~$8MM after-tax2) charge related to the valuation of the Visa total return swap $10MM pre-tax (~$8MM after-tax2) contribution to the Fifth Third Foundation 1Non-GAAP measure: see reconciliation on pages 25 and 26 of this presentation and use of non-GAAP measures on pages 31 and 32 of the earnings release; 2Assumes a 21% tax rate
Balance sheet Securities1 and short-term investments Loan & lease balances Core deposit balances $ billions $ billions $ billions Current Outlook Average securities1 Short-term investments Transaction Other time Loan-to-core deposit ratio Commercial up 1% vs. 1Q18; up 1% YoY Consumer down 1% vs. 1Q18; flat YoY (flat vs 1Q18; up 2% YOY when excluding auto) Average securities up 1% vs. 1Q18; up 4% YoY Opportunistically invested at attractive entry points given market dynamics Transaction deposits up 1% vs. 1Q18; up 2% YoY Consumer up 2% sequentially; Commercial down 1% Average loan-to-core deposit ratio of 91% Avg 1% YoY Avg 4% YoY Avg 2% YoY (end of period, incl. HFS) Commercial loans & leases: 3Q18: up ~3% vs. 2Q18 FY 2018: up ~4% vs. FY 2017 Consumer loans & leases: 3Q18: flat vs. 2Q18 FY 2018: up ~1% vs. FY 2017 (up ~2% excluding Auto) Average portfolio loan & lease balances 1Available-for-sale debt and other securities at amortized cost; previous disclosures included available-for-sale equity securities which are now disclosed separately in the financial results See forward looking statements on page 2
Net interest income1 2Q18 vs. 1Q18 Current outlook 2Q18 vs. 2Q17 NII up $25 million, or 3% NIM up 3 bps NII and NIM performance drivers: Market rates ($16MM, +5 bps) Growth in higher yielding commercial loans ($5MM, +1 bp) Day count ($7MM, -2 bps) Commercial deposit balance shift to interest bearing accounts ($4MM, -1 bp) NII up $79 million, or 8% NIM up 20 bps NII and NIM performance drivers: Higher short-term market rates Increased mix of higher yielding commercial and consumer loans 1Net interest income (NII) and net interest margin (NIM) are on a fully-taxable equivalent basis; non-GAAP measure: see reconciliation on pages 25 and 26 of this presentation and use of non-GAAP measures on pages 31 and 32 of the earnings release See forward-looking statements on page 2 NII and NIM (FTE) $ millions Q3 2018: NII ~$1.040BN NIM flat vs. 2Q18 (including a 2 bps negative impact of day count) FY 2018: NII ~$4.12BN NIM of 3.20 - 3.22% with one more rate hike in September $990
Noninterest income 2Q18 vs. 1Q18 2Q18 vs. 2Q17 Adjusted noninterest income1 up $14 million, or 3% Performance drivers: Corporate banking revenue growth driven by strong, broad-based capital markets revenue growth Highest capital markets revenue in history of Bank Higher card and processing revenue Adjusted noninterest income1 down $6 million, or 1% Performance drivers: Lower Worldpay equity method income Weakness in mortgage banking revenue Partially offset by record corporate banking revenue 1Non-GAAP measure: see reconciliation on pages 25 and 26 of this presentation and use of non-GAAP measures on pages 31 and 32 of the earnings release See forward-looking statements on page 2 Noninterest income $ millions 1 Current outlook Current outlook Q3 2018: ~$600MM, despite continued weakness in mortgage FY 2018: ~$2.35BN adjusted noninterest income1 (which excludes Worldpay gains and other non-core items)
Noninterest expense 2Q18 vs. 1Q18 Current outlook 2Q18 vs. 2Q17 Adjusted noninterest expense1 down 3% Performance drivers: Seasonally lower compensation-related expenses Ongoing discipline in managing expenses throughout the company Adjusted noninterest expense1 up 5% Performance drivers: Higher base compensation, including impact from recent acquisitions Increase in technology and communications expense 1Non-GAAP measure: see reconciliation on pages 25 and 26 of this presentation and use of non-GAAP measures on pages 31 and 32 of the earnings release See forward-looking statements on page 2 Noninterest expense $ millions Q3 2018: Down ~1% from reported 2Q18 FY 2018: $4.0 - 4.1BN adjusted expense1 range 1
Credit quality overview 1Excludes HFS loans; 2Commercial criticized assets as a percentage of total commercial loans excluding HFS See forward-looking statements on page 2 Current Outlook Provision reflective of loan growth 2H18 net charge-offs expected to be below 1H18 Net charge-offs of 0.41%, up 13 bps from 2Q17; up 5 bps from 1Q18 Commercial net charge-offs up 13 bps sequentially Consumer net charge-offs seasonally down 8 bps sequentially NPA ratio of 0.52%, down 20 bps from 2Q17; down 3 bps from 1Q18 Nonperforming assets and nonperforming loans at 11+ year lows Criticized asset ratio down 163 bps from 2Q17; down 96 bps from 1Q18 Criticized asset ratio at the lowest level in ~20 years Nonperforming assets1 Net charge-offs Criticized assets2 $ millions $ millions
Strong capital and liquidity position 1Current period regulatory capital ratio is estimated Common Equity Tier 1 ratio (Basel III)1 Modified LCR CET1 ratio of 10.9%, up 9 bps sequentially and up 28 bps YoY; Worldpay sale increased CET1 by 16 bps Continue to expect migration towards 9.5% CET1 ratio Initiated share repurchase of $235MM or 6.4MM shares; settled forward contract to repurchase additional 1.2MM shares Raised common dividend to $0.18 CCAR 2018 non-objection for 33% increase to quarterly common dividend and 42% increase in share repurchases compared to last years capital plan Ability to repurchase shares using proceeds from recently-executed Worldpay gain ($162MM after-tax)
Thoughtful reduction in Worldpay stake 49% ~$6BN Worldpay TRA revenue forecast1 Vantiv/Worldpay ownership and monetized gains 1Assumes Worldpay has sufficient U.S. taxable income to utilized the TRA-related deductions, and assumes a 21% federal tax rate 2Assumes remaining units are exchanged at $82.06 per unit on 7/2/18. Recognized nearly $6BN in gains since the joint venture and distributed a significant amount of capital to shareholders Generated $205MM pre-tax gain from partial share of Worldpay ownership Currently own ~3.3% of global company TRA revenue generated from sale expected to partially offset noninterest income reduction from sale in 2019 and beyond Current market value of ownership stake of ~$840MM Continue to account for ownership under the equity method of accounting ($ MM pre-tax expected to be recognized in the fourth quarter of each year shown below; the realized cash - and therefore potential share repurchase capacity – would not occur until the following quarter) 608 260 868 Total gross TRA over next 15+ years 2
Current outlook Loans & leases Noninterest expense Effective tax rate Noninterest income NII (FTE)1 NIM (FTE)1 Credit items 1Non-GAAP measure: see forward-looking statements on page 2 of this presentation regarding forward-looking non-GAAP measures and use of non-GAAP measures on pages 31 and 32 of the earnings release. Note: Previous and current outlook excludes potential, but currently unforecasted, items, such as any potential Worldpay gains or losses, future capital actions, or changes in regulatory accounting guidance (end of period, incl. HFS) Q3 2018: ~$1.040BN FY 2018: ~$4.12BN with September 2018 rate hike Q3 2018: flat vs. 2Q18 FY 2018: 3.20 - 3.22% with September 2018 rate hike FY 2018: 16.0 - 16.5%, including the impact from the Worldpay step-up and sale gains Run-rate beyond 2018: 15.5 - 16.0% Provision reflective of loan growth 2H18 net charge-offs expected to be below 1H18 Outlook as of July 19, 2018; please see cautionary statement on page 2 regarding forward-looking statements FY 2018: Commercial up ~4%; Consumer up ~1% (~2% ex. Auto) Q3 2018: down ~1% vs. reported 2Q18 FY 2018: $4.0 - 4.1BN adjusted expense1 range Q3 2018: ~$600MM FY 2018: ~$2.35BN adjusted noninterest income1
ROTCE: 18%+ ROA: 1.55 – 1.65% Efficiency: low 50s NorthStar work to be substantially complete by 4Q18 Wealth & Asset Management Balance Sheet Optimization Household Growth Mortgage Enhanced marketing analytics Virtual advisor Focus Already completed or launched… Personal Lending GreenSky Consumer credit optimization Digital personal lending enhancements LOS upgrade MSR acquisitions Middle Market, Specialty Lending / Industry Verticals Capital Markets Insurance Process redesign (CCEI) Market expansion FIG vertical rollout, Solar center of excellence Financial risk management platform upgrade (Vision 2020) Advisory business expansion (incl. Coker Capital) Epic Insurance/Integrity R.G. McGraw Wholesale Payments Consumer Payments Managed payables platform Fintech partnerships Advanced analytical capabilities Refreshed and more competitive card products OptiFi robo-advisor platform Retirement Corporation of America $5BN in commercial exits that did not fit risk/return profile Reduced auto originations …expected by 4Q18 Environmental services center of excellence Full roll-out of analytical enhancements Credit optimization program Iris relationship manager portal Real-time payments Secured card graduation program Online secured card application (including MB Financial) (excluding LIH expense) FY 2020 targets: n/a - complete n/a - complete n/a - complete n/a - complete n/a - complete n/a - complete See forward-looking statements on page 2
Leveraged geospatial information sciences to evaluate our branch network Planning closures in slower-growth areas and openings in higher-growth markets ~100-125 openings and ~100-125 closings over next 36 months No meaningful expense savings expected from closures; benefits expected to be realized through significant household, deposit, and revenue growth over time Additional initiatives to further improve profitability and achieve long term financial success Branch network optimization Expense management Positioning the company for long-term success well beyond NorthStar horizon Eliminated non-revenue producing roles during the quarter Expect ~$80MM in annualized pre-tax savings to be fully implemented beginning 1Q19 Identified ~$20MM in annualized pre-tax savings as part of ongoing review of vendor spend Continuous improvement program focused on maintaining expense discipline
MB acquisition financial update Excluding revenue synergies, transaction expected to improve: ROA by ~12 bps ROTCE by ~200 bps Efficiency by ~400 bps TBVPS dilution of $1.43 or 7.7% IRR improves 150 – 200 bps with revenue synergies 1.450 FITB shares and $5.54 of cash per MBFI share $49.39 of total consideration per MB Financial share (~90% stock / ~10% cash) Total consideration of ~$4.2BN 8.8x P / 2019E EPS with fully phased-in cost savings, 15.0x P / 2019E EPS excluding cost savings 2.51x P / TBV Continue to expect fully phased-in expense synergies of ~$255MM pre-tax Represents ~30% of 2019 Fifth Third Chicago and MB expenses 50% in year 1; 100% in year 2 No changes to restructuring costs, credit mark, or CDI assumptions 1Market data based on closing price as of July 18, 2018 and fully diluted shares. Note: Financial impacts and earnings estimates are for illustrative purposes only and are based on IBES consensus estimates. No Revenue Synergies With Revenue Synergies Crossover Earnback 6.8 years 5.9 years $60 - 75MM revenue synergies identified (pre-tax, net of expenses) that were not included in deal model Expect benefits to ramp up over 3 year period Business Banking ABL/Specialty/Equipment Finance Middle Market Wealth Management Consumer household growth Substantial cost synergies Consideration & pricing1 Identified revenue synergies Compelling strategic & financial opportunity
Merger integration update Board committee tasked with integration oversight and extensive senior management involved to ensure seamless integration Dedicated functional integration teams Best-of-blend approach with a “better together” mindset Inclusive communication between companies Focused on creating and sustaining long-term client and shareholder value Targeting 1Q19 closing and simultaneous conversion of almost all systems Expectation that core systems will migrate primarily to Fifth Third technology, which reduces complexity of the systems conversion Approach to integration Major accomplishments Town hall meetings with Fifth Third and MB employees on the day of announcement Ongoing customer listening sessions Re-confirmed expense synergies and identified significant revenue synergies Finalized anticipated critical business model and leadership teams Developed integrated plan to enable a 1Q19 closing and seamless conversion Holding Company and bank merger applications submitted to FRB and ODFI (state regulator) Initial S4 filed
Appendix
PPNR and efficiency ratio trends1 1NII and Efficiency ratio are on a fully-taxable equivalent basis; non-GAAP measures: See reconciliation on pages 25 and 26 of this presentation and use of non-GAAP measures on pages 31 and 32 of the earnings release; 2Prior quarters include similar adjustments PPNR reconciliation $ millions PPNR trend $ millions $1,563 Adjusted PPNR up 4% YoY driven by: NII growth primarily from higher short term rates Noninterest income growth driven by record corporate banking revenue Partially offset by increased compensation expense Adjusted PPNR up 13% vs. 1Q18 driven by: Higher NII primarily driven by market rates Corporate banking revenue growth Seasonally lower compensation related expense Efficiency ratio $862 $730
Strong liquidity profile $ millions – excl. Retail Brokered & Institutional CDs Unsecured debt maturities Heavily core funded Holding company: Modified LCR of 116% Holding Company cash as of June 30, 2018: $3.2B Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~24 months (debt maturities, common and preferred dividends, interest, and other expenses) without accessing capital markets, relying on dividends from subsidiaries or any other actions The Holding Company issued $250MM of three-year senior notes in 2Q18 $500MM of Holding Company long-term debt matured in 2Q18 Bank entity: The Bank did not issue any long-term debt in 2Q18 Submitted notice in 2Q18 that $1.25B of senior bank notes will be redeemed in 3Q18 Available and contingent borrowing capacity (2Q18): FHLB ~$9.8B available, ~11.1B total Federal Reserve ~$32.6B 2018 funding plans In 2018, Fifth Third expects to issue sufficient long-term debt to maintain its current ratings under the Moody’s LGF methodology As of 06/30/2018 1$600MM of senior bank notes matured in 1Q18; $500MM of Holding Company debt matured in 2Q18 $3,212
Balance sheet positioning Investment portfolio $13.1B fix | $42.8B float 1,2,3 Commercial loans1,2,3 Consumer loans1 Long-term debt4 $25.9B fix | $10.2B float 1 $9.4B fix | $4.9B float 4 57% allocation to bullet/ locked-out cash flow securities Yield: 3.20% Effective duration of 5.25 Net unrealized pre-tax loss: $628MM 99% AFS 1ML based: 64%6 3ML based: 7%6 Prime based: 4%6 Weighted avg. life: 1.69 years 1ML based: 2%7 12ML based: 2%7 Prime based: 22%7 Weighted avg. life: 3.41 years Auto: 1.46 years Data as of 6/30/18; 1Includes HFS Loans & Leases; 2Fifth Third had $4.15B 1ML receive-fix swaps outstanding against C&I loans, which are being included in fixed; 3Fifth Third has $2B 1ML forward starting received-fix swaps outstanding against C&I loans effective after 6/1/2019, which are excluded from this analysis; 4Fifth Third had $3.21B 3ML receive-fix swaps outstanding against long-term debt, which are being included in floating, long-term debt with swaps outstanding reflected at fair value; 5Effective duration of the taxable available for sale portfolio; 6As a percent of total commercial; 7As a percent of total consumer; 8As a percent of total long-term debt 1ML based: 0%8 3ML based: 30%8 Weighted avg. life: 4.02 years Level 1 100% Fix | 0% Float Level 2A 100% Fix | 0% Float Non-HQLA/ Other 77% Fix | 23% Float C&I 20% Fix | 80% Float Coml. mortgage 23% Fix | 77% Float Coml. lease 100% Fix | 0% Float Resi mtg.& construction 91% Fix | 9% Float Auto 99% Fix | 1% Float Home equity 8% Fix | 92% Float Senior debt 67% Fix | 33% Float Sub debt 74% Fix | 26% Float Auto securiz. proceeds 94% Fix | 6% Float Coml. construction 1% Fix | 99% Float Credit card 28% Fix | 72% Float Other 56% Fix | 44% Float Other 66% Fix | 34% Float Total interest earning assets ~$128B; $70 fix | $58 float
Interest rate risk management Estimated NII sensitivity profile and ALCO policy limits Estimated NII sensitivity with deposit beta changes Estimated NII sensitivity with demand deposit balance changes NII benefits from asset rate reset in rising rate environment: 58% of total loans are floating rate considering impacts of interest rate swaps (77% of total commercial and 28% of total consumer) Investment portfolio effective duration of 5.21 Short-term borrowings represent approximately 12% of total wholesale funding, or 2% of total funding Approximately $10 billion in non-core funding matures beyond one year Interest rate sensitivity tables are based on conservative deposit assumptions: 70% beta on all interest-bearing deposit and sweep balances (~50% betas experience in 2004 – 2006 Fed tightening cycle)2 No modeled re-pricing lag on deposits Modeled non-interest bearing commercial DDA runoff of approximately $1.0 billion (about 4%) for each 100 bps increase in rates over 2 years DDA runoff rolls into an interest-bearing product with a 100% beta 1 Effective duration of the taxable available for sale portfolio; 2Re-pricing percentage or “beta” is the estimated change in yield over 12 months as a result of a shock or ramp 100 bps parallel shift in the yield curve Note: data as of 6/30/18; actual results may vary from these simulated results due to differences between forecasted and actual balance sheet composition, timing, magnitude, and frequency of interest rate changes, as well as other changes in market conditions and management strategies.
Mortgage banking results $ billions Mortgage banking net revenue $ billions Mortgage originations and gain-on-sale margin1 1Gain-on-sale margin represents gains on all loans originated for sale $2.1B in originations, up 35% sequentially and down 7% YoY; 73% purchase volume 2Q18 mortgage banking drivers: Origination fees and gain on sale revenue up $4MM sequentially Gain on sale margin down 23 bps sequentially Additional $4MM securities losses (not included in mortgage banking) Acquired $2BN servicing portfolio ($14BN since 2Q17)
NPL rollforward1 1Loan balances exclude nonaccrual loans HFS Commercial $ millions Consumer $ millions Total NPL $ millions
Credit trends Commercial & industrial $ millions Residential mortgage $ millions Commercial mortgage $ millions Commercial construction $ millions $ millions Home equity $ millions Automobile * Excludes loans HFS
Regulation G non-GAAP reconciliation See pages 31 and 32 of the earnings release for a discussion on the use of non-GAAP financial measures 1Pre-tax items: for 2Q18 and 1Q18 assumes a 21% tax rate, for 4Q17 and prior periods assumes at 35% tax rate HL to check #
Regulation G non-GAAP reconciliation See pages 31 and 32 of the earnings release for a discussion on the use of non-GAAP financial measures HL to check #
*M.MRS/?:EIENI8