- 2Q13 net income available to common shareholders of $594 million, or $0.66 per diluted common share, vs. $413 million or $0.46 per share in 1Q13, up 43%, and $376 million or $0.40 per share in 2Q12, up 65%
- 2Q13 results included a benefit of $242 million pre-tax (~$157 million after-tax, or ~$0.17 per share) on the sale of shares of Vantiv and $76 million pre-tax (~$49 million after-tax, or ~$0.05 per share) on the valuation of the warrant Fifth Third holds in Vantiv
- In 1Q13 and 2Q12, the benefit of the valuation of the warrant Fifth Third holds in Vantiv was $34 million pre-tax (~$22 million after-tax, or ~$0.02 per share) and $56 million pre-tax (~$36 million after-tax, or ~$0.04 per share), respectively
- 2Q13 return on assets (ROA) of 1.98%; return on average common equity of 17.6%; return on average tangible common equity** of 21.6%
- Pre-provision net revenue (PPNR)** of $923 million in 2Q13
- Net interest income (FTE) of $885 million, down 1% sequentially; net interest margin 3.33%; average portfolio loans up 1% sequentially (includes impact from 1Q13 securitization of auto loans); period end loans up 2%
- Noninterest income of $1.1 billion compared with $743 million in prior quarter; increase largely driven by sale of Vantiv shares. Excluding Vantiv, noninterest income of $742 million up 5% from $709 million in 1Q13
- Noninterest expense of $1.0 billion, up 4% from 1Q13; largely driven by increase in litigation reserves
- 2Q13 effective tax rate of 29.8% compared with 30.4% in 1Q13 and 31.8% in 2Q12
- Credit trends remain favorable
- 2Q13 net charge-offs of $112 million (0.51% of loans and leases) vs. 1Q13 NCOs of $133 million (0.63% of loans and leases) and 2Q12 NCOs of $181 million (0.88% of loans and leases)
- 2Q13 provision expense of $64 million vs. provision of $62 million in 1Q13 and $71 million in 2Q12
- Loan loss allowance decreased $48 million sequentially reflecting continued improvement in credit trends; allowance to loan ratio of 1.99%, 151% of nonperforming assets, 191% of nonperforming loans and leases
- Total nonperforming assets (NPAs) of $1.2 billion, including loans held-for-sale (HFS), declined $64 million, or 5%, sequentially; portfolio NPA ratio of 1.32% down 9 bps from 1Q13, NPL ratio of 1.04% down 7 bps from 1Q13
- Strong capital ratios*
- Tier 1 common ratio 9.44%**, down 26 bps sequentially, largely due to repurchases of ~$539 million in common shares announced during the quarter (Basel III pro forma estimate of ~9.10%)
- Tier 1 capital ratio 11.07%, Total capital ratio 14.35%, Leverage ratio 10.41%
- Tangible common equity ratio** of 8.83% excluding unrealized gains/losses; 8.95% including them
- Repurchased ~26 million common shares in 2Q13; average diluted share count reduced by 13 million shares including impact from 1Q13 and 2Q13 share repurchases
- Book value per share of $15.57; tangible book value per share** of $12.71 up 1% from 1Q13 and 7% from 2Q12
* Capital ratios estimated; presented under current U.S. capital regulations. The pro forma Basel III Tier I common equity ratio is management’s estimate based upon its current interpretation of recent prospective regulatory capital requirements approved in July 2013. See “Capital Position” section for more information.
** Non-GAAP measure; see Reg. G reconciliation on page 34 in Exhibit 99.1 of 8-k filing dated 7/18/13.
Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2013
net income of $603 million, compared with net income of $422 million in
the first quarter of 2013 and net income of $385 million in the second
quarter of 2012. After preferred dividends, second quarter 2013 net
income available to common shareholders was $594 million, or $0.66 per
diluted share, compared with first quarter net income to common
shareholders of $413 million, or $0.46 per diluted share, and net income
to common shareholders of $376 million, or $0.40 per diluted share, in
the second quarter of 2012.
Second quarter 2013 noninterest income results included a $242 million
gain on the sale of Vantiv shares; a $76 million positive valuation
adjustment on the Vantiv warrant; a pre-tax benefit of $10 million
resulting from a settlement related to a previously surrendered
bank-owned life insurance (BOLI) policy; and a $5 million charge related
to the valuation of the Visa total return swap. Second quarter
noninterest expense included $33 million in charges to increase
litigation reserves.
First quarter 2013 noninterest income included a $34 million positive
valuation adjustment on the Vantiv warrant; a $7 million gain on the
sale of certain Fifth Third Asset Management (FTAM) advisory contracts;
and a $7 million charge related to the valuation of the Visa total
return swap. Net gains on investment securities were $17 million. First
quarter noninterest expense included $9 million in charges to increase
litigation reserves. First quarter income tax expense was higher by $12
million due to the seasonal expiration of employee stock options.
Second quarter 2012 results included a $56 million positive valuation
adjustment on the Vantiv warrant; a $17 million negative valuation
adjustment associated with bank premises held-for-sale; and an $11
million charge related to the valuation of the Visa total return swap.
Net gains on investment securities were $3 million. Second quarter 2012
noninterest expense included a $9 million reduction to FDIC insurance
expense.
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Earnings ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Bancorp
|
|
|
|
|
$603
|
|
|
|
$422
|
|
|
|
$399
|
|
|
|
$363
|
|
|
|
$385
|
|
|
|
43%
|
|
|
57%
|
|
Net income available to common shareholders
|
|
|
|
|
$594
|
|
|
|
$413
|
|
|
|
$390
|
|
|
|
$354
|
|
|
|
$376
|
|
|
|
44%
|
|
|
58%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
|
|
|
|
0.69
|
|
|
|
0.47
|
|
|
|
0.44
|
|
|
|
0.39
|
|
|
|
0.41
|
|
|
|
47%
|
|
|
68%
|
|
Earnings per share, diluted
|
|
|
|
|
0.66
|
|
|
|
0.46
|
|
|
|
0.43
|
|
|
|
0.38
|
|
|
|
0.40
|
|
|
|
43%
|
|
|
65%
|
|
Cash dividends per common share
|
|
|
|
|
0.12
|
|
|
|
0.11
|
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
0.08
|
|
|
|
9%
|
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
|
|
1.98
|
%
|
|
|
1.41
|
%
|
|
|
1.33
|
%
|
|
|
1.23
|
%
|
|
|
1.32
|
%
|
|
|
40%
|
|
|
50%
|
|
Return on average common equity
|
|
|
|
|
17.6
|
|
|
|
12.5
|
|
|
|
11.5
|
|
|
|
10.4
|
|
|
|
11.4
|
|
|
|
41%
|
|
|
54%
|
|
Return on average tangible common equity
|
|
|
|
|
21.6
|
|
|
|
15.4
|
|
|
|
14.1
|
|
|
|
12.8
|
|
|
|
14.1
|
|
|
|
40%
|
|
|
53%
|
|
Tier I capital
|
|
|
|
|
11.07
|
|
|
|
10.83
|
|
|
|
10.65
|
|
|
|
10.85
|
|
|
|
12.31
|
|
|
|
2%
|
|
|
(10%)
|
|
Tier I common equity
|
|
|
|
|
9.44
|
|
|
|
9.70
|
|
|
|
9.51
|
|
|
|
9.67
|
|
|
|
9.77
|
|
|
|
(3%)
|
|
|
(3%)
|
|
Net interest margin(a)
|
|
|
|
|
3.33
|
|
|
|
3.42
|
|
|
|
3.49
|
|
|
|
3.56
|
|
|
|
3.56
|
|
|
|
(3%)
|
|
|
(6%)
|
|
Efficiency(a)
|
|
|
|
|
52.3
|
|
|
|
59.8
|
|
|
|
65.2
|
|
|
|
63.7
|
|
|
|
59.4
|
|
|
|
(12%)
|
|
|
(12%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ommon shares outstanding (in thousands)
|
|
|
|
|
851,474
|
|
|
|
874,645
|
|
|
|
882,152
|
|
|
|
897,467
|
|
|
|
918,913
|
|
|
|
(3%)
|
|
|
(7%)
|
|
Average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
858,583
|
|
|
|
870,923
|
|
|
|
884,676
|
|
|
|
904,475
|
|
|
|
913,541
|
|
|
|
(1%)
|
|
|
(6%)
|
|
Diluted
|
|
|
|
|
900,625
|
|
|
|
913,163
|
|
|
|
925,585
|
|
|
|
944,821
|
|
|
|
954,622
|
|
|
|
(1%)
|
|
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Presented on a fully taxable equivalent basis
|
|
The percentages in all of the tables in this earning release are
calculated on actual dollar amounts not the rounded dollar amounts.
|
|
|
“Second quarter results were again strong for Fifth Third,” said Kevin
T. Kabat, CEO of Fifth Third Bancorp. “The Company reported $594 million
in net income to common shareholders. Return on assets was 1.98 percent
and return on average tangible common equity* was 21.6 percent for the
quarter including Vantiv-related gains, and were 1.30 percent and 14.1
percent, respectively, excluding them.
“We posted our tenth consecutive quarter of sequential average portfolio
loan growth, driven by C&I loan growth of 3 percent. Nearly all fee
income categories increased quarter-over-quarter, highlighted by
mortgage banking net revenue and corporate banking revenue, which grew 6
and 7 percent, respectively. All major fee categories showed mid-single
digit growth year-over-year.
“Credit trends continued to improve as net charge-offs declined 16
percent to $112 million, or 51 basis points of loans, and we saw
continued, broad based improvement in nearly every key credit metric.
“During the quarter, we entered into an agreement to repurchase $539
million of common shares. We have approximately $600 million of
repurchase capacity remaining under our current CCAR plan extending
through March 31, 2014, excluding any potential gains from Vantiv share
sales in the future. At the beginning of the third quarter, we converted
our Series G preferred stock into common stock, although those shares
were already included in our fully diluted share count. Regulatory
approval of final capital rules for U.S. banks provides welcome clarity
for our management of capital, and our capital position under those
rules would remain strong with an estimated pro forma Tier 1 common
equity ratio* of 9.1 percent under the new final rules compared with 9.4
percent under current rules.”
* Non-GAAP measure; see Reg. G reconciliation on page 34 in Exhibit
99.1 of 8-k filing dated 7/18/13.
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Condensed Statements of Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable equivalent)
|
|
|
|
|
|
$885
|
|
|
|
$893
|
|
|
|
$903
|
|
|
|
$907
|
|
|
|
$899
|
|
|
|
(1
|
%)
|
|
|
(2
|
%)
|
|
Provision for loan and lease losses
|
|
|
|
|
|
64
|
|
|
|
62
|
|
|
|
76
|
|
|
|
65
|
|
|
|
71
|
|
|
|
2
|
%
|
|
|
(11
|
%)
|
|
Total noninterest income
|
|
|
|
|
|
1,060
|
|
|
|
743
|
|
|
|
880
|
|
|
|
671
|
|
|
|
678
|
|
|
|
43
|
%
|
|
|
56
|
%
|
|
Total noninterest expense
|
|
|
|
|
|
1,017
|
|
|
|
978
|
|
|
|
1,163
|
|
|
|
1,006
|
|
|
|
937
|
|
|
|
4
|
%
|
|
|
9
|
%
|
|
Income before income taxes (taxable equivalent)
|
|
|
|
|
|
864
|
|
|
|
596
|
|
|
|
544
|
|
|
|
507
|
|
|
|
569
|
|
|
|
45
|
%
|
|
|
52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment
|
|
|
|
|
|
5
|
|
|
|
5
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
|
|
5
|
%
|
|
|
8
|
%
|
|
Applicable income taxes
|
|
|
|
|
|
256
|
|
|
|
179
|
|
|
|
144
|
|
|
|
139
|
|
|
|
180
|
|
|
|
42
|
%
|
|
|
42
|
%
|
|
Net income
|
|
|
|
|
|
603
|
|
|
|
412
|
|
|
|
396
|
|
|
|
364
|
|
|
|
385
|
|
|
|
46
|
%
|
|
|
56
|
%
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
-
|
|
|
|
(10
|
)
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
-
|
|
|
|
NM
|
|
|
10
|
%
|
|
Net income attributable to Bancorp
|
|
|
|
|
|
603
|
|
|
|
422
|
|
|
|
399
|
|
|
|
363
|
|
|
|
385
|
|
|
|
43
|
%
|
|
|
57
|
%
|
|
Dividends on preferred stock
|
|
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
2
|
%
|
|
|
2
|
%
|
|
Net income available to common shareholders
|
|
|
|
|
|
594
|
|
|
|
413
|
|
|
|
390
|
|
|
|
354
|
|
|
|
376
|
|
|
|
44
|
%
|
|
|
58
|
%
|
|
Earnings per share, diluted
|
|
|
|
|
|
$0.66
|
|
|
|
$0.46
|
|
|
|
$0.43
|
|
|
|
$0.38
|
|
|
|
$0.40
|
|
|
|
43
|
%
|
|
|
65
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Interest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income (taxable equivalent)
|
|
|
|
|
$989
|
|
|
|
$1,000
|
|
|
|
$1,020
|
|
|
|
$1,027
|
|
|
|
$1,031
|
|
|
|
(1
|
%)
|
|
|
(4
|
%)
|
|
Total interest expense
|
|
|
|
|
104
|
|
|
|
107
|
|
|
|
117
|
|
|
|
120
|
|
|
|
132
|
|
|
|
(3
|
%)
|
|
|
(21
|
%)
|
|
Net interest income (taxable equivalent)
|
|
|
|
|
$885
|
|
|
|
$893
|
|
|
|
$903
|
|
|
|
$907
|
|
|
|
$899
|
|
|
|
(1
|
%)
|
|
|
(2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest-earning assets (taxable equivalent)
|
|
|
|
|
3.73
|
%
|
|
|
3.84
|
%
|
|
|
3.94
|
%
|
|
|
4.03
|
%
|
|
|
4.08
|
%
|
|
|
(3
|
%)
|
|
|
(9
|
%)
|
|
Yield on interest-bearing liabilities
|
|
|
|
|
0.57
|
%
|
|
|
0.59
|
%
|
|
|
0.65
|
%
|
|
|
0.67
|
%
|
|
|
0.73
|
%
|
|
|
(3
|
%)
|
|
|
(22
|
%)
|
|
Net interest rate spread (taxable equivalent)
|
|
|
|
|
3.16
|
%
|
|
|
3.25
|
%
|
|
|
3.29
|
%
|
|
|
3.36
|
%
|
|
|
3.35
|
%
|
|
|
(3
|
%)
|
|
|
(6
|
%)
|
|
Net interest margin (taxable equivalent)
|
|
|
|
|
3.33
|
%
|
|
|
3.42
|
%
|
|
|
3.49
|
%
|
|
|
3.56
|
%
|
|
|
3.56
|
%
|
|
|
(3
|
%)
|
|
|
(6
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, including held for sale
|
|
|
|
|
$89,473
|
|
|
|
$88,880
|
|
|
|
$86,180
|
|
|
|
$84,829
|
|
|
|
$84,508
|
|
|
|
1
|
%
|
|
|
6
|
%
|
|
Total securities and other short-term investments
|
|
|
|
|
16,962
|
|
|
|
16,846
|
|
|
|
16,765
|
|
|
|
16,588
|
|
|
|
17,168
|
|
|
|
1
|
%
|
|
|
(1
|
%)
|
|
Total interest-earning assets
|
|
|
|
|
106,435
|
|
|
|
105,726
|
|
|
|
102,945
|
|
|
|
101,417
|
|
|
|
101,676
|
|
|
|
1
|
%
|
|
|
5
|
%
|
|
Total interest-bearing liabilities
|
|
|
|
|
73,363
|
|
|
|
74,038
|
|
|
|
71,420
|
|
|
|
72,026
|
|
|
|
73,162
|
|
|
|
(1
|
%)
|
|
|
-
|
|
|
Bancorp shareholders' equity
|
|
|
|
|
14,221
|
|
|
|
13,779
|
|
|
|
13,855
|
|
|
|
13,887
|
|
|
|
13,628
|
|
|
|
3
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income of $885 million on a fully taxable equivalent basis
decreased $8 million from the first quarter and included a $6 million
increase due to higher day count in the second quarter. Excluding the
impact of day count, the decline in net interest income reflected loan
repricing and maturities of interest rate floors, partially offset by
net loan growth and the benefit of higher yields on investment
securities. Net interest income also benefited from a decline in
interest expense driven by the maturity of $750 million in holding
company debt and related swaps during the quarter, partially offset by
the full quarter impact of the $1.3 billion bank note issuance and
related swaps in the first quarter.
The net interest margin was 3.33 percent, a decrease of 9 bps from 3.42
percent in the previous quarter. The decline in net interest margin was
primarily driven by lower loan yields and the maturity of interest rate
floors, partially offset by higher securities yields and the debt
maturity in the first quarter. The impact of day count reduced the net
interest margin by 1 bp.
Compared with the second quarter of 2012, net interest income decreased
$14 million and the net interest margin decreased 23 bps, driven by
lower asset yields partially offset by higher average loan balances,
lower long-term debt expense, and run-off in higher-priced CDs.
Securities
Average securities and other short-term investments were $17.0 billion
in the second quarter of 2013 compared with $16.8 billion in the
previous quarter and $17.2 billion in the second quarter of 2012. On an
end of period basis, available for sale securities of $16.2 billion
increased $924 million from the prior quarter as a result of the
pre-investment of expected portfolio cash flows. Other short-term
investment end of period balances of $1.1 billion declined $1.2 billion
from unusually high cash balances held at the Federal Reserve at the end
of the first quarter.
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Average Portfolio Loans and Leases ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
|
|
|
$37,630
|
|
|
|
$36,395
|
|
|
|
$34,301
|
|
|
|
$33,111
|
|
|
|
$32,734
|
|
|
|
3
|
%
|
|
|
15
|
%
|
|
Commercial mortgage
|
|
|
|
|
8,618
|
|
|
|
8,965
|
|
|
|
9,193
|
|
|
|
9,567
|
|
|
|
9,810
|
|
|
|
(4
|
%)
|
|
|
(12
|
%)
|
|
Commercial construction
|
|
|
|
|
713
|
|
|
|
695
|
|
|
|
686
|
|
|
|
742
|
|
|
|
873
|
|
|
|
3
|
%
|
|
|
(18
|
%)
|
|
Commercial leases
|
|
|
|
|
3,552
|
|
|
|
3,556
|
|
|
|
3,509
|
|
|
|
3,481
|
|
|
|
3,469
|
|
|
|
-
|
|
|
|
2
|
%
|
|
Subtotal - commercial loans and leases
|
|
|
|
|
50,513
|
|
|
|
49,611
|
|
|
|
47,689
|
|
|
|
46,901
|
|
|
|
46,886
|
|
|
|
2
|
%
|
|
|
8
|
%
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
|
|
|
12,260
|
|
|
|
12,096
|
|
|
|
11,846
|
|
|
|
11,578
|
|
|
|
11,274
|
|
|
|
1
|
%
|
|
|
9
|
%
|
|
Home equity
|
|
|
|
|
9,625
|
|
|
|
9,872
|
|
|
|
10,129
|
|
|
|
10,312
|
|
|
|
10,430
|
|
|
|
(2
|
%)
|
|
|
(8
|
%)
|
|
Automobile loans
|
|
|
|
|
11,887
|
|
|
|
11,961
|
|
|
|
11,944
|
|
|
|
11,812
|
|
|
|
11,755
|
|
|
|
(1
|
%)
|
|
|
1
|
%
|
|
Credit card
|
|
|
|
|
2,071
|
|
|
|
2,069
|
|
|
|
2,029
|
|
|
|
1,971
|
|
|
|
1,915
|
|
|
|
-
|
|
|
|
8
|
%
|
|
Other consumer loans and leases
|
|
|
|
|
351
|
|
|
|
294
|
|
|
|
306
|
|
|
|
314
|
|
|
|
326
|
|
|
|
20
|
%
|
|
|
8
|
%
|
|
Subtotal - consumer loans and leases
|
|
|
|
|
36,194
|
|
|
|
36,292
|
|
|
|
36,254
|
|
|
|
35,987
|
|
|
|
35,700
|
|
|
|
-
|
|
|
|
1
|
%
|
|
Total average loans and leases (excluding held for sale)
|
|
|
|
|
$86,707
|
|
|
|
$85,903
|
|
|
|
$83,943
|
|
|
|
$82,888
|
|
|
|
$82,586
|
|
|
|
1
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans held for sale
|
|
|
|
|
2,766
|
|
|
|
2,977
|
|
|
|
2,237
|
|
|
|
1,941
|
|
|
|
1,922
|
|
|
|
(7
|
%)
|
|
|
44
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loan and lease balances (excluding loans held-for-sale)
increased $804 million, or 1 percent, sequentially and increased $4.1
billion, or 5 percent, from the second quarter of 2012. Period end loan
and lease balances (excluding loans held-for-sale) increased $1.4
billion, or 2 percent sequentially and increased $4.7 billion, or 6
percent, from a year ago. Comparisons reflect the securitization of
approximately $500 million of auto loans in March 2013, as the full
quarter impact of the securitization reduced average portfolio loans by
$338 million compared with the first quarter of 2013.
Average commercial portfolio loan and lease balances were up $902
million, or 2 percent, sequentially and increased $3.6 billion, or 8
percent, from the second quarter of 2012. Average commercial and
industrial (C&I) loans increased 3 percent sequentially and increased 15
percent compared with the second quarter of 2012. Average commercial
mortgage and commercial construction loan balances combined declined 3
percent sequentially and declined 13 percent from the same period in the
previous year. Commercial line usage, on an end of period basis, was 31
percent of committed lines in the second quarter of 2013 compared with
31 percent in the first quarter of 2013 and 32 percent in the second
quarter of 2012.
Average consumer portfolio loan and lease balances were flat
sequentially and increased $494 million, or 1 percent, from the second
quarter of 2012. In the first quarter, approximately $500 million in
auto loans were reclassified to held-for-sale in anticipation of their
securitization and sale, which took place at the end of March. The full
quarter impact of the securitization reduced average portfolio loans by
$338 million compared with the first quarter of 2013. Average
residential mortgage loans increased 1 percent sequentially and
increased 9 percent from a year ago, reflecting the continued retention
of certain shorter term residential mortgage loans. Average auto loans
declined 1 percent sequentially and increased 1 percent from the second
quarter of 2012, and included the effect of the first quarter 2013 auto
securitization. Average home equity loan balances declined 2 percent
sequentially and declined 8 percent year-over-year due to lower demand
and production.
Average loans held-for-sale balances of $2.8 billion decreased $211
million sequentially, primarily reflecting a $135 million decrease in
auto loans that were moved to held-for-sale prior to being securitized
and sold at the end of March. Average loans held-for-sale balances
increased $844 million compared with the second quarter of 2012. Period
end loans held-for-sale of $2.1 billion decreased $543 million from the
previous quarter and increased $285 million from the second quarter of
2012 reflecting fluctuations in residential mortgage held-for-sale
balances.
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Average Deposits ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
|
|
$29,682
|
|
|
|
$28,565
|
|
|
|
$29,223
|
|
|
|
$27,127
|
|
|
|
$26,351
|
|
|
|
4
|
%
|
|
|
13
|
%
|
|
Interest checking
|
|
|
|
|
22,796
|
|
|
|
23,763
|
|
|
|
23,556
|
|
|
|
22,967
|
|
|
|
23,548
|
|
|
|
(4
|
%)
|
|
|
(3
|
%)
|
|
Savings
|
|
|
|
|
18,864
|
|
|
|
19,576
|
|
|
|
20,216
|
|
|
|
21,283
|
|
|
|
22,143
|
|
|
|
(4
|
%)
|
|
|
(15
|
%)
|
|
Money market
|
|
|
|
|
8,918
|
|
|
|
7,932
|
|
|
|
6,026
|
|
|
|
4,776
|
|
|
|
4,258
|
|
|
|
12
|
%
|
|
|
NM
|
|
|
Foreign office(a)
|
|
|
|
|
1,418
|
|
|
|
1,102
|
|
|
|
1,174
|
|
|
|
1,345
|
|
|
|
1,321
|
|
|
|
29
|
%
|
|
|
7
|
%
|
|
Subtotal - Transaction deposits
|
|
|
|
|
81,678
|
|
|
|
80,938
|
|
|
|
80,195
|
|
|
|
77,498
|
|
|
|
77,621
|
|
|
|
1
|
%
|
|
|
5
|
%
|
|
Other time
|
|
|
|
|
3,859
|
|
|
|
3,982
|
|
|
|
4,094
|
|
|
|
4,224
|
|
|
|
4,359
|
|
|
|
(3
|
%)
|
|
|
(11
|
%)
|
|
Subtotal - Core deposits
|
|
|
|
|
85,537
|
|
|
|
84,920
|
|
|
|
84,289
|
|
|
|
81,722
|
|
|
|
81,980
|
|
|
|
1
|
%
|
|
|
4
|
%
|
|
Certificates - $100,000 and over
|
|
|
|
|
6,519
|
|
|
|
4,017
|
|
|
|
3,084
|
|
|
|
3,016
|
|
|
|
3,130
|
|
|
|
62
|
%
|
|
|
NM
|
|
Other
|
|
|
|
|
10
|
|
|
|
40
|
|
|
|
32
|
|
|
|
32
|
|
|
|
23
|
|
|
|
(74
|
%)
|
|
|
(55
|
%)
|
|
Total deposits
|
|
|
|
|
$92,066
|
|
|
|
$88,977
|
|
|
|
$87,405
|
|
|
|
$84,770
|
|
|
|
$85,133
|
|
|
|
3
|
%
|
|
|
8
|
%
|
|
(a) Includes commercial customer Eurodollar sweep balances for
which the Bancorp pays rates comparable to other commercial
deposit accounts.
|
|
|
Average core deposits increased $617 million, or 1 percent, sequentially
and increased $3.6 billion, or 4 percent, from the second quarter of
2012. Average transaction deposits, which are included in core deposits,
increased $740 million, or 1 percent, from the first quarter of 2013
primarily driven by higher demand deposits and money market balances,
partially offset by lower interest checking and savings balances.
Year-over-year transaction deposits increased $4.1 billion, or 5
percent, driven by higher money market and demand deposits, partially
offset by lower savings and interest checking balances. Other time
deposits, primarily CDs, decreased 3 percent sequentially and 11 percent
compared with the second quarter of 2012.
Commercial average transaction deposits increased 1 percent sequentially
and increased 4 percent from the previous year. Sequential performance
reflected higher foreign office, demand deposit, and money market
balances partially offset by lower interest checking balances.
Year-over-year growth was primarily driven by higher inflows to demand
deposit and money market account balances. Average public funds balances
were $5.2 billion compared with $5.5 billion in the first quarter of
2013 and $5.7 billion in the second quarter of 2012.
Consumer average transaction deposits increased 1 percent sequentially
and increased 6 percent from the second quarter of 2012. The sequential
increase reflected higher demand deposit and money market deposits,
which were partially offset by lower savings and interest checking
balances. Year-over-year growth was driven by increased money market and
demand deposit balances partially offset by lower savings and interest
checking balances. Consumer CDs included in core deposits declined 3
percent sequentially, driven by customer reluctance to purchase CDs
given the continued low rate environment, and declined 11 percent
year-over-year driven by maturities of higher-rate CDs.
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Average Wholesale Funding ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates - $100,000 and over
|
|
|
|
|
$6,519
|
|
|
|
$4,017
|
|
|
|
$3,084
|
|
|
|
$3,016
|
|
|
|
$3,130
|
|
|
|
62
|
%
|
|
|
NM
|
|
Other deposits
|
|
|
|
|
10
|
|
|
|
40
|
|
|
|
32
|
|
|
|
32
|
|
|
|
23
|
|
|
|
(74
|
%)
|
|
|
(55
|
%)
|
|
Federal funds purchased
|
|
|
|
|
560
|
|
|
|
691
|
|
|
|
794
|
|
|
|
664
|
|
|
|
408
|
|
|
|
(19
|
%)
|
|
|
37
|
%
|
|
Other short-term borrowings
|
|
|
|
|
2,867
|
|
|
|
5,429
|
|
|
|
4,553
|
|
|
|
4,856
|
|
|
|
4,303
|
|
|
|
(47
|
%)
|
|
|
(33
|
%)
|
|
Long-term debt
|
|
|
|
|
7,552
|
|
|
|
7,506
|
|
|
|
7,891
|
|
|
|
8,863
|
|
|
|
9,669
|
|
|
|
1
|
%
|
|
|
(22
|
%)
|
|
Total wholesale funding
|
|
|
|
|
$17,508
|
|
|
|
$17,683
|
|
|
|
$16,354
|
|
|
|
$17,431
|
|
|
|
$17,533
|
|
|
|
(1
|
%)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average wholesale funding of $17.5 billion decreased $175 million, or 1
percent, sequentially and was flat compared with the second quarter of
2012. The sequential and year-over-year comparisons reflect lower
short-term borrowings, primarily short-term FHLB borrowings, partially
offset by the issuance of certificates $100,000 and over. Average
long-term debt balances reflected the full quarter impact of the $1.3
billion bank note issuance in the first quarter partially offset by the
$750 million and $500 million senior note maturities in the second
quarter of 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Noninterest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
|
|
|
|
$136
|
|
|
|
$131
|
|
|
|
$134
|
|
|
|
$128
|
|
|
|
$130
|
|
|
|
4
|
%
|
|
|
4
|
%
|
|
Corporate banking revenue
|
|
|
|
|
106
|
|
|
|
99
|
|
|
|
114
|
|
|
|
101
|
|
|
|
102
|
|
|
|
7
|
%
|
|
|
4
|
%
|
|
Mortgage banking net revenue
|
|
|
|
|
233
|
|
|
|
220
|
|
|
|
258
|
|
|
|
200
|
|
|
|
183
|
|
|
|
6
|
%
|
|
|
28
|
%
|
|
Investment advisory revenue
|
|
|
|
|
98
|
|
|
|
100
|
|
|
|
93
|
|
|
|
92
|
|
|
|
93
|
|
|
|
(2
|
%)
|
|
|
6
|
%
|
|
Card and processing revenue
|
|
|
|
|
67
|
|
|
|
65
|
|
|
|
66
|
|
|
|
65
|
|
|
|
64
|
|
|
|
4
|
%
|
|
|
6
|
%
|
|
Other noninterest income
|
|
|
|
|
414
|
|
|
|
109
|
|
|
|
215
|
|
|
|
78
|
|
|
|
103
|
|
|
|
NM
|
|
|
NM
|
|
Securities gains, net
|
|
|
|
|
-
|
|
|
|
17
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
(99
|
%)
|
|
|
(96
|
%)
|
|
Securities gains (losses), net - non-qualifying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
hedges on mortgage servicing rights
|
|
|
|
|
6
|
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
5
|
|
|
|
-
|
|
|
|
NM
|
|
|
NM
|
|
Total noninterest income
|
|
|
|
|
$1,060
|
|
|
|
$743
|
|
|
|
$880
|
|
|
|
$671
|
|
|
|
$678
|
|
|
|
43
|
%
|
|
|
56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM: Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income of $1.1 billion increased $317 million sequentially
and increased $382 million compared with prior year results. The
sequential and year-over-year increases were driven by the $242 million
gain on the sale of Vantiv shares and a higher valuation adjustment on
the Vantiv warrant. Vantiv warrant valuation adjustments were a positive
$76 million in the second quarter of 2013 compared with positive $34
million and positive $56 million in the first quarter of 2013 and second
quarter of 2012, respectively. Excluding these Vantiv-related benefits,
noninterest income increased $33 million, or 5 percent, from the first
quarter and $120 million, or 19 percent, from the second quarter of 2012.
Second quarter 2013 results also included a pre-tax benefit of $10
million resulting from a settlement related to a previously surrendered
BOLI policy and a $5 million charge related to the valuation of the
total return swap entered into as part of the 2009 sale of Visa, Inc.
Class B shares. Negative valuation adjustments on this swap were $7
million in the first quarter of 2013 and $11 million in the second
quarter of 2012. First quarter 2013 results also included $7 million in
gains on the sale of certain FTAM advisory contracts. Second quarter
2012 results also included $17 million in lower of cost or market
adjustments associated with bank premises held-for-sale. Excluding these
items, the aforementioned Vantiv-related impacts, and investment
securities gains in all periods, noninterest income of $737 million
increased $45 million, or 7 percent, from the previous quarter and
increased $90 million, or 14 percent, from the second quarter of 2012.
The sequential comparison primarily reflected higher mortgage banking
net revenue, corporate banking revenue, and service charges on deposits.
The year-over-year comparison primarily reflected higher mortgage
banking net revenue and mid-single digit growth in most other fee
categories.
Service charges on deposits of $136 million increased 4 percent from the
first quarter and increased 4 percent compared with the same quarter
last year. Retail service charges increased 10 percent sequentially and
4 percent from the second quarter of 2012 primarily due to the
transition to our new and simplified deposit product offerings.
Commercial service charges increased 1 percent sequentially and
increased 5 percent from a year ago primarily as a result of higher
treasury management fees.
Corporate banking revenue of $106 million increased 7 percent from the
first quarter of 2013 and 4 percent from the same period last year. The
sequential and year-over-year increases were primarily driven by higher
syndication fees, interest rate derivatives, foreign exchange fees, and
business lending fees, partially offset by lower institutional sales
revenue and letter of credit fees.
Mortgage banking net revenue was $233 million in the second quarter of
2013, a 6 percent increase from the first quarter of 2013 and a 28
percent increase from the second quarter of 2012. Second quarter 2013
originations were a record $7.5 billion, compared with $7.4 billion in
the previous quarter and $5.9 billion in the second quarter of 2012.
Second quarter 2013 originations resulted in gains of $150 million on
mortgages sold, compared with gains of $169 million during the previous
quarter and $183 million during the second quarter of 2012. The decline
from the prior quarter and prior year primarily reflected lower gain on
sale margins. Mortgage servicing fees this quarter were $62 million,
compared with $61 million in the previous quarter and $63 million in the
second quarter of 2012. Mortgage banking net revenue is also affected by
net servicing asset value adjustments, which include mortgage servicing
rights (MSR) amortization and MSR valuation adjustments (including
mark-to-market adjustments on free-standing derivatives used to
economically hedge the MSR portfolio). These net servicing asset
valuation adjustments were positive $21 million in the second quarter of
2013 (reflecting MSR amortization of $51 million and MSR valuation
adjustments of positive $72 million); negative $10 million in the first
quarter of 2013 (MSR amortization of $53 million and MSR valuation
adjustments of positive $43 million); and negative $63 million in the
second quarter of 2012 (MSR amortization of $41 million and MSR
valuation adjustments of negative $22 million). The mortgage servicing
asset, net of the valuation reserve, was $894 million at quarter end on
a servicing portfolio of $67 billion.
Net gains on securities held as non-qualifying hedges for the MSR
portfolio were $6 million in the second quarter of 2013, compared with
net gains of $2 million in the first quarter of 2013 and no gains or
losses in the second quarter of 2012.
Investment advisory revenue of $98 million decreased 2 percent from
record first quarter levels and increased 6 percent year-over-year. The
sequential decline reflected lower tax-related private client services
revenue, which is seasonally strong in the first quarter. The
year-over-year increase was due to higher private client services
revenue, brokerage fees, and institutional fees, resulting from
increased production and an improvement in equity and bond market
values. This fee revenue was partially offset by the absence of mutual
fund fees due to the sale of certain Fifth Third funds in the third
quarter of 2012.
Card and processing revenue of $67 million in the second quarter of 2013
increased 4 percent sequentially and increased 6 percent from the second
quarter of 2012. The sequential increase reflected higher transactions
volumes compared with seasonally weaker first quarter volumes. The
year-over-year increase reflected the impact of higher transaction
volumes, higher levels of consumer spending, and the benefit of new
products.
Other noninterest income totaled $414 million in the second quarter of
2013, compared with $109 million in the previous quarter and $103
million in the second quarter of 2012. The second quarter of 2013
included a $242 million gain from the sale of Vantiv shares and a $10
million benefit resulting from a settlement related to a previously
surrendered BOLI policy. Other noninterest income also included effects
of the valuation of the Vantiv warrant and changes in income related to
the valuation of the Visa total return swap. For the quarters ending
June 30, 2013, March 31, 2013, and June 30, 2012, the impact of warrant
valuation adjustments were positive $76 million, positive $34 million,
and positive $56 million, respectively, and changes in income related to
the Visa total return swap were losses of $5 million, $7 million, and
$11 million, respectively. First quarter 2013 results also included $7
million in gains on the sale of certain FTAM advisory contracts. Second
quarter 2012 results also included $17 million in lower of cost or
market adjustments associated with bank premises held-for-sale.
Excluding the items detailed above, other noninterest income of $91
million increased approximately $16 million, or 21 percent, from the
first quarter of 2013 and the second quarter of 2012.
Net credit-related costs recognized in other noninterest income were $6
million in the second quarter of 2013 versus $10 million last quarter
and $17 million in the second quarter of 2012. Second quarter 2013
results included no material gains or losses on sales of commercial
loans held-for-sale and $1 million of fair value charges on commercial
loans held-for-sale, as well as $5 million of losses on other real
estate owned (OREO). First quarter 2013 results included $2 million of
net gains on sales of commercial loans held-for-sale and $1 million of
fair value charges on commercial loans held-for-sale, as well as $10
million of losses on OREO. Second quarter 2012 results included $8
million of net gains on sales of commercial loans held-for-sale, $5
million of fair value charges on commercial loans held-for-sale, and $19
million of losses on OREO.
Net gains on investment securities were immaterial in the second quarter
of 2013, compared with investment securities gains of $17 million in the
previous quarter and $3 million in the second quarter of 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
Seq
|
|
|
Yr/Yr
|
|
Noninterest Expense ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and incentives
|
|
|
|
|
$404
|
|
|
|
$399
|
|
|
|
$416
|
|
|
|
$399
|
|
|
|
$393
|
|
|
|
1
|
%
|
|
|
3
|
%
|
|
Employee benefits
|
|
|
|
|
83
|
|
|
|
114
|
|
|
|
96
|
|
|
|
79
|
|
|
|
84
|
|
|
|
(27
|
%)
|
|
|
(1
|
%)
|
|
Net occupancy expense
|
|
|
|
|
76
|
|
|
|
79
|
|
|
|
76
|
|
|
|
76
|
|
|
|
74
|
|
|
|
(3
|
%)
|
|
|
4
|
%
|
|
Technology and communications
|
|
|
|
|
50
|
|
|
|
49
|
|
|
|
52
|
|
|
|
49
|
|
|
|
48
|
|
|
|
-
|
|
|
|
3
|
%
|
|
Equipment expense
|
|
|
|
|
28
|
|
|
|
28
|
|
|
|
27
|
|
|
|
28
|
|
|
|
27
|
|
|
|
(1
|
%)
|
|
|
1
|
%
|
|
Card and processing expense
|
|
|
|
|
33
|
|
|
|
31
|
|
|
|
31
|
|
|
|
30
|
|
|
|
30
|
|
|
|
6
|
%
|
|
|
10
|
%
|
|
Other noninterest expense
|
|
|
|
|
343
|
|
|
|
278
|
|
|
|
465
|
|
|
|
345
|
|
|
|
281
|
|
|
|
23
|
%
|
|
|
22
|
%
|
|
Total noninterest expense
|
|
|
|
|
$1,017
|
|
|
|
$978
|
|
|
|
$1,163
|
|
|
|
$1,006
|
|
|
|
$937
|
|
|
|
4
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense of $1.0 billion increased 4 percent from the first
quarter of 2013 and increased 9 percent versus the second quarter of
2012. Second quarter 2013 expenses included $33 million in charges to
increase litigation reserves; and a $2 million benefit from the sale of
affordable housing investments. First quarter 2013 expenses included a
$9 million benefit from the sale of affordable housing investments and
$9 million in charges to increase litigation reserves. Second quarter
2012 expenses included a $9 million reduction to FDIC insurance expense
and an $8 million benefit from the sale of affordable housing
investments. Excluding these items, noninterest expense of $986 million
increased $8 million, or 1 percent, compared with the first quarter of
2013 and increased $32 million, or 3 percent, compared with the second
quarter of 2012. Second quarter 2013 also included a net $6 million
increase in the mortgage representation and warranty reserve, driven by
a $9 million increase in the reserve as a result of additional
information obtained from Freddie Mac regarding changes to their
selection criteria for future mortgage repurchases and file requests. As
such, we are able to better estimate the losses that are probable on
loans sold to Freddie Mac with representation and warranty provisions.
(Freddie Mac loans represent approximately 53 percent of the outstanding
balance of sold loans.) The sequential comparison included a decrease in
benefits expense due to seasonally higher FICA and unemployment costs in
the first quarter. Sequential and year-over-year comparisons also
reflected increased compensation-related expenses.
Credit costs related to problem assets recorded as noninterest expense
totaled $35 million in the second quarter of 2013, compared with $24
million in the first quarter of 2013 and $40 million in the second
quarter of 2012. Second quarter credit-related expenses included
provision expense for mortgage repurchases of $20 million, compared with
$20 million in the first quarter and $18 million a year ago. (Realized
mortgage repurchase losses were $14 million in the second quarter of
2013, compared with $20 million last quarter and $16 million in the
second quarter of 2012.) Provision for unfunded commitments was a
benefit of $2 million in the current quarter, compared with a benefit of
$11 million last quarter and a benefit of $1 million a year ago.
Derivative valuation adjustments related to customer credit risk were a
net zero, positive $1 million, and a net zero for this quarter, last
quarter and the year ago quarter, respectively. OREO expense was $3
million this quarter, compared with $4 million last quarter and $5
million a year ago. Other problem asset-related expenses were $14
million in the second quarter, compared with $12 million the previous
quarter and $19 million in the same period last year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
Total net losses charged off ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
|
|
|
($33
|
)
|
|
|
($25
|
)
|
|
|
($36
|
)
|
|
|
($29
|
)
|
|
|
($46
|
)
|
|
Commercial mortgage loans
|
|
|
|
|
(10
|
)
|
|
|
(26
|
)
|
|
|
(17
|
)
|
|
|
(28
|
)
|
|
|
(25
|
)
|
|
Commercial construction loans
|
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
-
|
|
|
Commercial leases
|
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
Residential mortgage loans
|
|
|
|
|
(15
|
)
|
|
|
(20
|
)
|
|
|
(23
|
)
|
|
|
(26
|
)
|
|
|
(36
|
)
|
|
Home equity
|
|
|
|
|
(23
|
)
|
|
|
(30
|
)
|
|
|
(34
|
)
|
|
|
(37
|
)
|
|
|
(39
|
)
|
|
Automobile loans
|
|
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(9
|
)
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
Credit card
|
|
|
|
|
(19
|
)
|
|
|
(20
|
)
|
|
|
(19
|
)
|
|
|
(18
|
)
|
|
|
(18
|
)
|
|
Other consumer loans and leases
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
(3
|
)
|
|
Total net losses charged off
|
|
|
|
|
(112
|
)
|
|
|
(133
|
)
|
|
|
(147
|
)
|
|
|
(156
|
)
|
|
|
(181
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses
|
|
|
|
|
(145
|
)
|
|
|
(168
|
)
|
|
|
(177
|
)
|
|
|
(188
|
)
|
|
|
(219
|
)
|
|
Total recoveries
|
|
|
|
|
33
|
|
|
|
35
|
|
|
|
30
|
|
|
|
32
|
|
|
|
38
|
|
|
Total net losses charged off
|
|
|
|
|
($112
|
)
|
|
|
($133
|
)
|
|
|
($147
|
)
|
|
|
($156
|
)
|
|
|
($181
|
)
|
|
Ratios (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses charged off as a percent of average loans and leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding held for sale)
|
|
|
|
|
0.51
|
%
|
|
|
0.63
|
%
|
|
|
0.70
|
%
|
|
|
0.75
|
%
|
|
|
0.88
|
%
|
|
Commercial
|
|
|
|
|
0.36
|
%
|
|
|
0.44
|
%
|
|
|
0.46
|
%
|
|
|
0.53
|
%
|
|
|
0.67
|
%
|
|
Consumer
|
|
|
|
|
0.73
|
%
|
|
|
0.89
|
%
|
|
|
1.01
|
%
|
|
|
1.04
|
%
|
|
|
1.15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs were $112 million in the second quarter of 2013, or 51
bps of average loans on an annualized basis, the lowest ratio since the
first quarter of 2007. Net charge-offs declined 16 percent compared with
first quarter 2013 net charge-offs of $133 million, and declined 39
percent versus second quarter 2012 net charge-offs of $181 million.
Commercial net charge-offs were $45 million, or 36 bps, the lowest ratio
since the third quarter of 2007. Commercial net charge-offs declined $9
million compared with $54 million, or 44 bps, in the first quarter. C&I
net charge-offs were $33 million, an increase of $8 million from $25
million in the previous quarter. Commercial mortgage net charge-offs
totaled $10 million, down $16 million compared with $26 million in the
prior quarter. Commercial construction net charge-offs were zero in the
second quarter, down $3 million compared with the previous quarter.
Consumer net charge-offs were $67 million, or 73 bps, down $12 million
sequentially to the lowest ratio since the second quarter of 2007. Net
charge-offs on residential mortgage loans in the portfolio were $15
million, down $5 million from the previous quarter. Home equity net
charge-offs were $23 million, down $7 million from the first quarter of
2013. Net charge-offs on brokered home equity loans represented 32
percent of second quarter home equity losses; such loans are 13 percent
of the total home equity portfolio. The home equity portfolio included
$1.2 billion of brokered loans, down from a peak of $2.6 billion in
2007; originations of these loans were discontinued in 2007. Net
charge-offs in the auto portfolio of $5 million increased $1 million
compared with the prior quarter. Net charge-offs on consumer credit card
loans were $19 million, down $1 million from first quarter. Net
charge-offs on other consumer loans were $5 million, or flat compared
with the previous quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
Allowance for Credit Losses ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
|
|
|
|
$1,783
|
|
|
|
$1,854
|
|
|
|
$1,925
|
|
|
|
$2,016
|
|
|
|
$2,126
|
|
|
Total net losses charged off
|
|
|
|
|
(112
|
)
|
|
|
(133
|
)
|
|
|
(147
|
)
|
|
|
(156
|
)
|
|
|
(181
|
)
|
|
Provision for loan and lease losses
|
|
|
|
|
64
|
|
|
|
62
|
|
|
|
76
|
|
|
|
65
|
|
|
|
71
|
|
|
Allowance for loan and lease losses, ending
|
|
|
|
|
1,735
|
|
|
|
1,783
|
|
|
|
1,854
|
|
|
|
1,925
|
|
|
|
2,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
|
|
|
|
168
|
|
|
|
179
|
|
|
|
176
|
|
|
|
178
|
|
|
|
179
|
|
|
Provision for unfunded commitments
|
|
|
|
|
(2
|
)
|
|
|
(11
|
)
|
|
|
3
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
Reserve for unfunded commitments, ending
|
|
|
|
|
166
|
|
|
|
168
|
|
|
|
179
|
|
|
|
176
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses
|
|
|
|
|
1,735
|
|
|
|
1,783
|
|
|
|
1,854
|
|
|
|
1,925
|
|
|
|
2,016
|
|
|
Reserve for unfunded commitments
|
|
|
|
|
166
|
|
|
|
168
|
|
|
|
179
|
|
|
|
176
|
|
|
|
178
|
|
|
Total allowance for credit losses
|
|
|
|
|
$1,901
|
|
|
|
$1,951
|
|
|
|
$2,033
|
|
|
|
$2,101
|
|
|
|
$2,194
|
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of loans and leases
|
|
|
|
|
1.99
|
%
|
|
|
2.08
|
%
|
|
|
2.16
|
%
|
|
|
2.32
|
%
|
|
|
2.45
|
%
|
|
As a percent of nonperforming loans and leases(a)
|
|
|
|
|
191
|
%
|
|
|
187
|
%
|
|
|
180
|
%
|
|
|
167
|
%
|
|
|
150
|
%
|
|
As a percent of nonperforming assets(a)
|
|
|
|
|
151
|
%
|
|
|
147
|
%
|
|
|
144
|
%
|
|
|
133
|
%
|
|
|
125
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes nonaccrual loans and leases in loans held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses totaled $64 million in the second
quarter of 2013, up $2 million from the first quarter of 2013 and down
$7 million from the second quarter of 2012. The allowance for loan and
lease losses declined $48 million sequentially reflecting continued
improvement in credit trends. The allowance represented 1.99 percent of
total loans and leases outstanding as of quarter end, compared with 2.08
percent last quarter, and represented 191 percent of nonperforming loans
and leases, and 151 percent of nonperforming assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
June
|
|
March
|
|
December
|
|
September
|
|
June
|
|
Nonperforming Assets and Delinquent Loans ($ in millions)
|
|
|
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
|
Nonaccrual portfolio loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
|
|
|
$274
|
|
|
$229
|
|
|
$234
|
|
|
$309
|
|
|
$377
|
|
|
Commercial mortgage loans
|
|
|
|
|
169
|
|
|
184
|
|
|
215
|
|
|
263
|
|
|
357
|
|
|
Commercial construction loans
|
|
|
|
|
39
|
|
|
66
|
|
|
70
|
|
|
76
|
|
|
99
|
|
|
Commercial leases
|
|
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
5
|
|
|
3
|
|
|
Residential mortgage loans
|
|
|
|
|
96
|
|
|
110
|
|
|
114
|
|
|
126
|
|
|
135
|
|
|
Home equity
|
|
|
|
|
28
|
|
|
28
|
|
|
30
|
|
|
29
|
|
|
30
|
|
|
Automobile loans
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
Other consumer loans and leases
|
|
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
-
|
|
|
-
|
|
|
Total nonaccrual loans and leases
|
|
|
|
|
$607
|
|
|
$618
|
|
|
$665
|
|
|
$808
|
|
|
$1,002
|
|
|
Restructured loans and leases - commercial (nonaccrual)
|
|
|
|
|
140
|
(c)
|
|
159
|
(c)
|
|
177
|
|
|
153
|
|
|
147
|
|
|
Restructured loans and leases - consumer (nonaccrual)
|
|
|
|
|
162
|
|
|
174
|
|
|
187
|
|
|
192
|
|
|
193
|
|
|
Total nonperforming loans and leases
|
|
|
|
|
$909
|
|
|
$951
|
|
|
$1,029
|
|
|
$1,153
|
|
|
$1,342
|
|
|
Repossessed personal property
|
|
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
10
|
|
|
9
|
|
|
Other real estate owned(a)
|
|
|
|
|
235
|
|
|
252
|
|
|
249
|
|
|
283
|
|
|
268
|
|
|
Total nonperforming assets(b)
|
|
|
|
|
$1,150
|
|
|
$1,210
|
|
|
$1,286
|
|
|
$1,446
|
|
|
$1,619
|
|
|
Nonaccrual loans held for sale
|
|
|
|
|
15
|
|
|
16
|
|
|
25
|
|
|
38
|
|
|
55
|
|
|
Restructured loans - commercial (nonaccrual) held for sale
|
|
|
|
|
-
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
Total nonperforming assets including loans held for sale
|
|
|
|
|
$1,165
|
|
|
$1,229
|
|
|
$1,315
|
|
|
$1,489
|
|
|
$1,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructured Consumer loans and leases (accrual)
|
|
|
|
|
$1,671
|
|
|
$1,683
|
|
|
$1,655
|
|
|
$1,641
|
|
|
$1,634
|
|
|
Restructured Commercial loans and leases (accrual)
|
|
|
|
|
$475
|
(c)
|
|
$441
|
(c)
|
|
$431
|
|
|
$442
|
|
|
$455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 90 days past due
|
|
|
|
|
$152
|
|
|
$164
|
|
|
$195
|
|
|
$201
|
|
|
$203
|
|
|
Nonperforming loans and leases as a percent of portfolio loans,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
leases and other assets, including other real estate owned(b)
|
|
|
|
|
1.04%
|
|
|
1.11%
|
|
|
1.19%
|
|
|
1.38%
|
|
|
1.62%
|
|
|
Nonperforming assets as a percent of portfolio loans, leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other assets, including other real estate owned(b)
|
|
|
|
|
1.32%
|
|
|
1.41%
|
|
|
1.49%
|
|
|
1.73%
|
|
|
1.96%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes government insured advances.
|
|
(b) Does not include nonaccrual loans held for sale.
|
|
(c) Excludes $21.5 million of restructured nonaccrual loans and
$7.6 million of restructured accruing loans associated with a
consolidated variable interest entity in which the Bancorp has no
continuing credit risk.
|
|
|
|
Total nonperforming assets, including loans held-for-sale, were $1.2
billion, a decline of $64 million, or 5 percent, from the previous
quarter. Nonperforming assets held-for-investment (NPAs) were $1.2
billion, or 1.32 percent, of total loans, leases and OREO, and decreased
$60 million, or 5 percent, from the previous quarter. Nonperforming
loans held-for-investment (NPLs) at quarter end were $909 billion or
1.04 percent of total loans, leases and OREO, and decreased $42 million,
or 4 percent, from the previous quarter.
Commercial portfolio NPAs were $794 million, or 1.56 percent of
commercial loans, leases and OREO, and decreased $34 million, or 4
percent, from the first quarter. Commercial portfolio NPLs were $623
million, or 1.23 percent of commercial loans and leases, and decreased
$16 million from last quarter. C&I portfolio NPAs of $361 million
increased $29 million from the prior quarter. Commercial mortgage
portfolio NPAs were $355 million, down $54 million from the previous
quarter. Commercial construction portfolio NPAs were $69 million, a
decrease of $9 million from the previous quarter. Commercial real estate
loans in Michigan and Florida represented 50 percent of commercial real
estate NPAs and 36 percent of our total commercial real estate
portfolio. Within the overall commercial loan portfolio, residential
real estate builder and developer portfolio NPAs of $63 million declined
$16 million from the first quarter, of which $38 million were commercial
mortgage assets, $18 million were commercial construction assets and $7
million were C&I assets. Commercial portfolio NPAs included $140 million
of nonaccrual troubled debt restructurings (TDRs), compared with $159
million last quarter.
Consumer portfolio NPAs of $356 million, or 0.98 percent of consumer
loans, leases and OREO, decreased $26 million from the first quarter.
Consumer portfolio NPLs were $286 million, or 0.79 percent of consumer
loans and leases and decreased $26 million from last quarter. Of
consumer NPAs, $312 million were in residential real estate portfolios.
Residential mortgage NPAs were $254 million, $21 million lower than last
quarter, with Florida representing 44 percent of residential mortgage
NPAs and 13 percent of total residential mortgage loans. Home equity
NPAs of $57 million were down $1 million compared with last quarter.
Credit card NPAs were down $3 million compared to the previous quarter
at $37 million. Consumer nonaccrual TDRs were $162 million in the second
quarter of 2013, compared with $174 million in the first quarter 2013.
Second quarter OREO balances included in portfolio NPA balances
described above were $235 million, down $17 million from the first
quarter, and included $171 million in commercial OREO and $64 million in
consumer OREO. Repossessed personal property of $6 million consisted
largely of autos.
Loans still accruing over 90 days past due were $152 million, down $12
million, or 7 percent, from the first quarter of 2013. Commercial
balances over 90 days past due were immaterial. Consumer balances 90
days past due of $152 million were down $11 million from the previous
quarter. Loans 30-89 days past due of $258 million decreased $48
million, or 16 percent, from the previous quarter. Commercial balances
30-89 days past due of $7 million were down $30 million sequentially and
consumer balances 30-89 days past due of $251 million decreased $18
million from the first quarter, reflecting declines in most categories.
The above delinquencies figures exclude nonaccruals described previously.
Commercial nonaccrual loans held-for-sale were $15 million, compared
with $19 million at the end of the first quarter.
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Capital Position
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For the Three Months Ended
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June
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March
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December
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September
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June
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2013
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2013
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2012
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2012
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2012
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Capital Position
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Average shareholders' equity to average assets
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11.64%
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11.38%
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11.65%
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11.82%
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11.58%
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Tangible equity(a)
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9.65%
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9.36%
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9.17%
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9.45%
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9.50%
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Tangible common equity (excluding unrealized gains/losses)(a)
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8.83%
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9.03%
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8.83%
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9.10%
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9.15%
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Tangible common equity (including unrealized gains/losses)(a)
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8.95%
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9.28%
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9.10%
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9.45%
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9.49%
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Tangible common equity as a percent of risk-weighted assets
(excluding
unrealized gains/losses)(a)(b)
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9.50%
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9.77%
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9.57%
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9.74%
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9.84%
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Regulatory capital ratios:(c)
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Tier I capital
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11.07%
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10.83%
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10.65%
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10.85%
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12.31%
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Total risk-based capital
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14.35%
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14.35%
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14.42%
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14.76%
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16.24%
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Tier I leverage
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10.41%
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10.03%
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10.05%
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10.09%
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11.39%
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Tier I common equity(a)
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9.44%
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9.70%
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9.51%
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9.67%
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9.77%
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Book value per share
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15.57
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15.42
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15.10
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14.84
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14.56
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Tangible book value per share(a)
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12.71
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12.62
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12.33
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12.12
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11.89
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(a) The tangible equity, tangible common equity, tier I common
equity and tangible book value per share ratios, while not
required by accounting principles generally accepted in the United
States of America (U.S. GAAP), are considered to be critical
metrics with which to analyze banks. The ratios have been included
herein to facilitate a greater understanding of the Bancorp's
capital structure and financial condition. See the Regulation G
Non-GAAP Reconciliation table for a reconciliation of these ratios
to U.S. GAAP.
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(b) Under the banking agencies risk-based capital guidelines,
assets and credit equivalent amounts of derivatives and
off-balance sheet exposures are assigned to broad risk categories.
The aggregate dollar amount in each risk category is multiplied by
the associated risk weight of the category. The resulting weighted
values are added together resulting in the Bancorp's total risk
weighted assets.
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(c) Current period regulatory capital data ratios are estimated.
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Capital ratios remained strong, reflecting growth in retained earnings,
the perpetual preferred stock issuance, and the impact of share
repurchase activity during the quarter. Compared with the prior quarter,
the Tier 1 common equity ratio* decreased 26 bps to 9.44 percent, and
included a 48 bps reduction due to repurchases of approximately $539
million in common shares announced during the quarter. The tangible
common equity to tangible assets ratio* was 8.83 percent (excluding
unrealized gains/losses) and 8.95 percent (including unrealized
gains/losses). The Tier 1 capital ratio increased 24 bps to 11.07
percent. The Total capital ratio was flat at 14.35 percent and the
Leverage ratio increased 38 bps to 10.41 percent. The Tier 1 and Total
capital ratios reflected the $593 million issuance of perpetual
preferred stock during the quarter.
Book value per share at June 30, 2013 was $15.57 and tangible book value
per share* was $12.71, compared with March 31, 2013 book value per share
of $15.42 and tangible book value per share of $12.62. Both measures
included the impact of retained earnings and share repurchase activity.
As previously announced, Fifth Third entered into a share repurchase
agreement with a counterparty on January 28, 2013, whereby Fifth Third
would purchase approximately $125 million of its outstanding common
stock. Upon completion of the agreement on April 5, 2013, an additional
849,037 shares were repurchased. This transaction reduced average share
count by approximately 2 million shares in the second quarter.
Additionally, as previously announced, Fifth Third entered into a share
repurchase agreement with a counterparty on May 21, 2013, whereby Fifth
Third would purchase approximately $539 million of its outstanding
common stock. For the quarter, this transaction reduced Fifth Third’s
share count by 25 million shares on the initial transaction date, which
had a 10 million share impact on average share count. Fifth Third
expects the settlement of this forward contract to occur on or before
October 21, 2013.
U.S. banking regulators recently approved final capital rules for U.S.
banks, including changes to the definition of capital components (i.e.
the numerator of capital ratios) and changes to risk-weighting rules for
assets (i.e. the denominator of capital ratios). These final rules
implement portions of rules proposed by international banking regulators
known as Basel III and Basel II. Fifth Third is not a Basel “Advanced
Approaches” institution. Therefore, Fifth Third would be subject to the
general capital rules governing the capital or numerator portion of
these final rules and the “Standardized Approach” for risk-weighting
assets. Additionally, Fifth Third would have a one-time irrevocable
option to neutralize certain accumulated other comprehensive income
(AOCI) components in capital, comparable to treatment under prevailing
capital rules. Fifth Third will also be subject to the Market Risk Rule
for trading assets and liabilities, which has been re-proposed for
alignment with the other final capital rules. We continue to evaluate
the final rule and its impact, which would apply beginning reporting
periods after January 1, 2015.
Our current estimate of the pro-forma fully phased in Tier I common
equity ratio at June 30, 2013 under the final capital rule, assuming the
Company elected to maintain the current treatment of AOCI components in
capital, would be approximately 9.10 percent**. This would compare with
9.44 percent* as calculated under the currently prevailing Basel I
capital framework. The primary drivers of the change from the prevailing
capital framework to the Basel III framework would be an increase in
Tier I common equity of approximately 9 bps, which would be more than
offset by modestly higher risk-weighted assets. (The largest impact to
the numerator is that the new rules would not require the current 10
percent deduction of mortgage servicing rights assets; the largest
changes to the denominator would be the treatment of securitizations and
lending commitments of less than a year.) Fifth Third’s previous
estimates of its pro forma Basel III Tier 1 common equity ratio assumed,
as previously proposed, the inclusion of AOCI components in capital and
the proposed risk-weighting treatment for 1-4 family senior and junior
lien residential mortgages. Those factors would have caused the most
significant pro forma impacts to previously proposed regulatory common
equity ratios. Should Fifth Third make the election to include AOCI
components in capital, the June 30, 2013 pro forma Basel III Tier 1
common ratio would be increased by approximately 13 bps. Fifth Third’s
pro forma Tier 1 common equity ratio exceeds the minimum buffered Tier 1
common equity ratio of 7 percent, comprising a minimum of 4.5 percent
plus a capital conservation buffer of 2.5 percent. The pro forma Tier 1
common equity ratio does not include the effect of any mitigating
actions the Bancorp may undertake to offset any impact of the final
capital rules.
The new regulations approved by U.S. banking regulators also cease Tier
1 capital treatment for outstanding trust preferred securities (“TruPS”)
for banking organizations greater than $15 billion by January 1, 2016.
Fifth Third’s Tier 1 and Total capital levels at June 30, 2013 included
$810 million of TruPS, or 72 bps of risk weighted assets. Based on
regulatory developments, Fifth Third will continue to evaluate the role
of these types of securities in its capital structure. Fifth Third
included the potential redemption of $750 million in TruPS in its 2013
CCAR plan. To the extent these types of securities remain outstanding
during and after the phase-in period, they would continue to be included
in Total capital, as approved in the capital rules described above. We
expect to manage our capital structure over time – including the
components represented by common equity and non-common equity – to adapt
to and reflect the effect of changes in U.S. bank capital regulations,
transition periods for inclusion of capital components in capital,
regulatory expectations, and our goals for capital levels and capital
composition, as appropriate.
Fifth Third is subject to the Federal Reserve’s (FRB) Capital Plans Rule
which was issued November 9, 2012. Under this rule, we are required to
submit our annual capital plan to the Federal Reserve, for its objection
or non-objection. The plan includes those capital actions Fifth Third
intends to pursue or contemplate during the period covered by the FRB’s
response, which is the second quarter of 2013 through the first quarter
of 2014. These actions were more fully described in our March 14, 2013
announcement that the FRB did not object to Fifth Third’s 2013 CCAR
capital plan. Any such actions would be based on environmental and
market conditions, earnings results, our capital position, and other
factors, as well as approval by the Fifth Third Board of Directors, at
the time.
Pursuant to Fifth Third’s 2013 CCAR capital plan, Fifth Third issued
$593 million of 5.10 percent fixed-to-floating non-cumulative perpetual
preferred stock (Series H preferred stock) on May 16, 2013.
Additionally, pursuant to its capital plan, on June 11, 2013, Fifth
Third provided notice that its Board of Directors had authorized the
conversion of all $398 million in outstanding Depositary Shares
representing Series G 8.5 percent convertible preferred stock into
approximately 35.5 million common shares issued to the holders. (Note
that these securities have been accounted for under the “if-converted”
method for inclusion in common shares for diluted earnings per share
reporting purposes.) Effective as of the close of the market on July 1,
2013, after the close of the second quarter of 2013, Fifth Third
converted all remaining outstanding shares of Series G Preferred Stock,
represented by 4,110,500 Depositary Shares, into shares of Fifth Third’s
Common Stock. Each Depositary Share was convertible into 8.6393 shares
of Common Stock, and the aggregate number of shares of Common Stock
issued in this conversion was 35,511,740.
* Non-GAAP measure; see Reg. G reconciliation on page 34 in Exhibit
99.1 of 8-k filing dated 7/18/13.
** Capital ratios
estimated; presented under current U.S. capital regulations. The pro
forma Basel III Tier I common equity ratio is management’s estimate
based upon its current interpretation of recent prospective regulatory
capital requirements approved in July 2013.
Tax Rate
The effective tax rate was 29.8 percent this quarter compared with 30.4
percent in the first quarter. The higher first quarter tax rate included
the seasonal impact of the expiration of employee stock options.
Other
Fifth Third Bank owns 53.8 million units representing a 28 percent
interest in Vantiv Holding, LLC, convertible into shares of Vantiv,
Inc., a publicly traded firm (NYSE: VNTV). Based upon Vantiv’s closing
price of $27.60 on June 28, 2013, our interest in Vantiv was valued at
approximately $1.5 billion. Next month in our 10-Q, we will update our
disclosure of the carrying value of our interest in Vantiv stock, which
was $574 million as of March 31, 2013. The difference between the market
value and the book value of Fifth Third’s interest in Vantiv’s shares is
not recognized in Fifth Third’s equity or capital. Additionally, Fifth
Third has a warrant to purchase additional shares in Vantiv which is
carried as a derivative asset at a fair value of $287 million as of June
30, 2013.
Conference Call
Fifth Third will host a conference call to discuss these financial
results at 9:00 a.m. (Eastern Time) today. This conference call will be
webcast live by Thomson Financial and may be accessed through the Fifth
Third Investor Relations website at www.53.com
(click on “About Fifth Third” then “Investor Relations”). The webcast
also is being distributed over Thomson Financial’s Investor Distribution
Network to both institutional and individual investors. Individual
investors can listen to the call through Thomson Financial’s individual
investor center at www.earnings.com
or by visiting any of the investor sites in Thomson Financial’s
Individual Investor Network. Institutional investors can access the call
via Thomson Financial’s password-protected event management site,
StreetEvents (www.streetevents.com).
Those unable to listen to the live webcast may access a webcast replay
through the Fifth Third Investor Relations website at the same web
address. Additionally, a telephone replay of the conference call will be
available beginning approximately two hours after the conference call
until Thursday, August 1 by dialing 800-585-8367 for domestic access and
404-537-3406 for international access (passcode 88820035#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of June 30, 2013, the Company had
$123 billion in assets and operated 18 affiliates with 1,326
full-service Banking Centers, including 104 Bank Mart® locations open
seven days a week inside select grocery stores and 2,433 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 28%
interest in Vantiv Holding, LLC. Fifth Third is among the largest money
managers in the Midwest and, as of June 30, 2013, had $313 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 news release contains statements that we believe are
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Rule 175 promulgated thereunder,
and Section 21E of the Securities Exchange Act of 1934, as amended, and
Rule 3b-6 promulgated thereunder. These statements relate to our
financial condition, results of operations, plans, objectives, future
performance or business. They usually can be identified by the use of
forward-looking language such as “will likely result,” “may,” “are
expected to,” “is anticipated,” “estimate,” “forecast,” “projected,”
“intends to,” or may include other similar words or phrases such as
“believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or
similar expressions, or future or conditional verbs such as “will,”
“would,” “should,” “could,” “might,” “can,” or similar verbs. You should
not place undue reliance on these statements, as they are subject to
risks and uncertainties, including but not limited to the risk factors
set forth in our most recent Annual Report on Form 10-K. 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; (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.
Fifth Third Bancorp
Investors
Jim Eglseder, 513-534-8424
Laura Wehby, 513-534-7407
or
Media
Larry Magnesen, 513-534-8055