No Objection from Federal Reserve to Company's Capital Plan
Fifth Third Bancorp (NASDAQ: FITB) announced today that the Board of
Governors of the Federal Reserve System (“the Federal Reserve”) did not
object to the proposed potential capital actions from April 1, 2013
through March 31, 2014 (the “CCAR period”) included in Fifth Third’s
capital plan submitted in January under the Comprehensive Capital
Analysis and Review (“CCAR”) process. Fifth Third also announced that
its company-run internal stress test results under the Dodd-Frank Act
stress testing rules are being disclosed on a Form 8-K published
contemporaneously with this release.
In comments related to Fifth Third’s announcement regarding its 2013
capital plan under CCAR, Kevin Kabat, CEO of Fifth Third Bancorp, said,
“Our capital plan reflects our strong capital base, profitability and
earnings generation, which enable us to return excess capital generation
to shareholders while retaining more than sufficient capital to support
ongoing business opportunities and balance sheet growth. The plan
included a number of potential actions which were designed and intended
to maintain a strong capital position, while moving our capital
structure further toward new Basel III standards and reducing our
overall cost of capital and common shares outstanding. We believe our
plan for capital management and retention is balanced and prudent given
our expectations, our capital position under current and proposed
regulatory capital rules, and the current economic outlook.”
2013 CCAR Capital Plan
Fifth Third included in its capital plan the following potential capital
actions for the period beginning April 1, 2013 and ending March 31,
2014, subject to Board approval and other factors including regulatory
developments and market conditions.
-
The potential increase in the quarterly common stock dividend, which
will be considered by the Board at its scheduled quarterly meeting in
June
-
The potential repurchase of up to $750 million in trust preferred
securities (TruPS), subject to the determination of a regulatory
capital event, and replacement with the issuance of a similar amount
of Tier 2-qualifying subordinated debt
-
The potential conversion of the $398 million in outstanding Series G
8.5 percent convertible preferred stock into approximately 35.5
million common shares issued to the holders.1 (Note that
these securities are currently accounted for under the “if-converted”
method for inclusion in common shares for earnings per share reporting
purposes.)
-
If this conversion were to occur, we would intend to repurchase
the common shares issued in the conversion up to $550 million in
market value2, and issue $550 million in preferred
stock.
-
The net effect of the potential Series G transactions described
above is to produce a Tier 1 capital neutral outcome (Tier 1
common equity would be modestly reduced by $152 million). It would
be approximately neutral to common shares outstanding, but would
reduce diluted common shares for earnings per share reporting
purposes by approximately 33.6 million shares.3
-
The potential repurchase of common shares in an amount up to $984
million, including any shares issued in a Series G preferred stock
conversion (up to $550 million in value).4
-
In addition, we would currently intend to make incremental
repurchases of common shares in the amount of any after-tax gains
from the sale of Vantiv, Inc. (“Vantiv”) stock.
-
These common share repurchase plans were intended to limit the
further accumulation of excess common equity capital during the
CCAR period.
-
The potential issuance of an additional $500 million in preferred
stock to increase the non-common portion of Tier 1 capital as defined
under Basel III proposed rules
The Federal Reserve’s non-objection applies only to those actions
proposed in Fifth Third’s CCAR submission to be taken from April 1, 2013
through March 31, 2014. Any actions that Fifth Third assumed as part of
this CCAR submission that it may potentially take subsequent to March
31, 2014 would be subject to a subsequent CCAR plan submission and
non-objection for that subsequent period. Any capital distributions,
including those contemplated in the above announced actions, are subject
to evaluation and approval by the Board of Directors at any given time,
Fifth Third’s performance, the state of the economic environment, market
conditions, regulatory factors, and other risks and uncertainties. Fifth
Third has no current information and makes no representations as to
whether, when or in what amounts there may be a) future gains from the
sale of Vantiv stock; b) the potential for a mandatory conversion of
Series G shares and issuance of replacement preferred stock; c) a
regulatory capital event with respect to TruPS securities and issuance
of replacement subordinated debt; d) other capital actions or
distributions requiring future Board approval, future regulatory
developments, or future requisite market conditions.
Disclosure of Company-Run Dodd-Frank Act Stress Test (DFAST)
Additionally, Fifth Third is disclosing the results of its company-run
stress test as required by the Dodd-Frank Act stress testing rules (12
CFR Part 252), or “DFAST.” These rules require that covered companies
disclose certain results from its stress test including: a description
of the types of risk included in the stress test, a general description
of methodologies used in the stress test, estimates of certain financial
results and pro forma capital ratios, and an explanation of the most
significant causes of the changes in regulatory capital ratios. Fifth
Third is making these disclosures on a Form 8-K being furnished
contemporaneously with this release.
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. The Company has $122 billion in
assets and operates 18 affiliates with 1,321 full-service Banking
Centers, including 104 Bank Mart® locations open seven days a week
inside select grocery stores and 2,413 ATMs in Ohio, Kentucky, Indiana,
Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania,
Missouri, Georgia and North Carolina. Fifth Third operates four main
businesses: Commercial Banking, Branch Banking, Consumer Lending, and
Investment Advisors. Fifth Third also has a 33% interest in Vantiv
Holding, LLC. Fifth Third is among the largest money managers in the
Midwest and, as of December 31, 2012, had $308 billion in assets under
care, of which it managed $27 billion for individuals, corporations and
not-for-profit organizations. Investor
information and press
releases can be viewed at www.53.com.
Fifth Third's common stock is traded on the NASDAQ® National Global
Select Market under the symbol "FITB."
Forward-Looking Statements
This report contains statements that we believe are “forward-looking
statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Rule 175 promulgated thereunder, and Section 21E
of the Securities Exchange Act of 1934, as amended, and Rule 3b-6
promulgated thereunder. These statements relate to our financial
condition, results of operations, plans, objectives, future performance
or business. They usually can be identified by the use of
forward-looking language such as “will likely result,” “may,” “are
expected to,” “is anticipated,” “estimate,” “forecast,” “projected,”
“intends to,” or may include other similar words or phrases such as
“believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or
similar expressions, or future or conditional verbs such as “will,”
“would,” “should,” “could,” “might,” “can,” or similar verbs. You should
not place undue reliance on these statements, as they are subject to
risks and uncertainties, including but not limited to the risk factors
set forth in our most recent Annual Report on Form 10-K. When
considering these forward-looking statements, you should keep in mind
these risks and uncertainties, as well as any cautionary statements we
may make. Moreover, you should treat these statements as speaking only
as of the date they are made and based only on information then actually
known to us.
There are a number of important factors that could cause future
results to differ materially from historical performance and these
forward-looking statements. Factors that might cause such a difference
include, but are not limited to: (1) general economic conditions and
weakening in the economy, specifically the real estate market, either
nationally or in the states in which Fifth Third, one or more acquired
entities and/or the combined company do business, are less favorable
than expected; (2) deteriorating credit quality; (3) political
developments, wars or other hostilities may disrupt or increase
volatility in securities markets or other economic conditions;
(4) changes in the interest rate environment reduce interest margins;
(5) prepayment speeds, loan origination and sale volumes, charge-offs
and loan loss provisions; (6) Fifth Third’s ability to maintain required
capital levels and adequate sources of funding and liquidity;
(7) maintaining capital requirements may limit Fifth Third’s operations
and potential growth; (8) changes and trends in capital markets;
(9) problems encountered by larger or similar financial institutions may
adversely affect the banking industry and/or Fifth Third;
(10) competitive pressures among depository institutions increase
significantly; (11) effects of critical accounting policies and
judgments; (12) changes in accounting policies or procedures as may be
required by the Financial Accounting Standards Board (FASB) or other
regulatory agencies; (13) legislative or regulatory changes or actions,
or significant litigation, adversely affect Fifth Third, one or more
acquired entities and/or the combined company or the businesses in which
Fifth Third, one or more acquired entities and/or the combined company
are engaged, including the Dodd-Frank Wall Street Reform and Consumer
Protection Act; (14) ability to maintain favorable ratings from rating
agencies; (15) fluctuation of Fifth Third’s stock price; (16) ability to
attract and retain key personnel; (17) ability to receive dividends from
its subsidiaries; (18) potentially dilutive effect of future
acquisitions on current shareholders’ ownership of Fifth Third;
(19) effects of accounting or financial results of one or more acquired
entities; (20) difficulties from the separation of or the results of
operations of Vantiv, LLC from Fifth Third; (21) loss of income from any
sale or potential sale of businesses that could have an adverse effect
on Fifth Third’s earnings and future growth; (22) ability to secure
confidential information and deliver products and services through the
use of computer systems and telecommunications networks; and (23) the
impact of reputational risk created by these developments on such
matters as business generation and retention, funding and liquidity.
You should refer to our periodic and current reports filed with the
Securities and Exchange Commission, or “SEC,” for further information on
other factors, which could cause actual results to be significantly
different from those expressed or implied by these forward-looking
statements.
1 Any such conversion would be subject to Fifth Third’s
common stock price maintaining a level at or above the mandatory
conversion price of $15.05 per share for 20 of 30 consecutive days, as
of or after June 30, 2012.
2 Any such repurchases would be conducted under Board
authorization and may be executed through open market purchases or one
or more private negotiated transactions, including Rule 10b5-1 programs.
3 Using Fifth Third’s closing stock price on March 13, 2013
of $16.39 per share.
4 Our plans also included the assumption that we would issue
approximately 3.5 million shares in restricted stock under employee
compensation plans in 2013.
Fifth Third Bancorp
Investors
Jim Eglseder, 513-534-8424
or
Laura Wehby, 513-534-7407
or
Media
Debra DeCourcy, APR, 513-534-4153