- 1Q15 net income available to common shareholders of $367 million, or $0.44 per diluted common share
- Includes a $70 million pre-tax (~$46 million after tax) positive valuation adjustment on the warrant Fifth Third holds in Vantiv, $37 million pre-tax (~$24 million after tax) gain on the sale of held-for-sale residential mortgage loans classified as troubled debt restructurings (TDRs), and a $17 million pre-tax (~$11 million after tax) charge related to the valuation of the Visa total return swap, resulting in a net $0.07 impact on earnings per share
- 1Q15 return on average assets (ROA) of 1.12%; return on average common equity of 10.3%; return on average tangible common equity** of 12.3%
- Pre-provision net revenue (PPNR)** of $584 million in 1Q15
- Net interest income (FTE) of $852 million, down 4 percent sequentially and down 5 percent from 1Q14; net interest margin of 2.86%, down 10 basis points sequentially
- Average portfolio loans of $90.5 billion, down $533 million sequentially due to the transfer of $720 million of residential mortgage TDRs to held-for-sale in 4Q14 (reduced average balances by $694 million); loans up $978 million from 1Q14 driven by increases in C&I loans
- Noninterest income of $660 million compared with $653 million in the prior quarter; impacted by the gain on sale of residential mortgage TDRs in 1Q15 and valuations on the Vantiv warrant in both quarters
- Noninterest expense of $923 million, up 1 percent from prior quarter driven by seasonally higher compensation-related expenses, partially offset by lower credit-related costs
- Credit trends
- Net charge-offs declined 46 percent year-over-year; 1Q15 net charge-offs of $91 million (0.41% of loans and leases) vs. 4Q14 NCOs of $191 million (0.83% of loans and leases) which included $87 million of charge-offs related to the transfer of residential mortgage TDRs to held-for-sale and 1Q14 NCOs of $168 million (0.76% of loans and leases)
- Portfolio NPA ratio of 0.76% down 6 bps from 4Q14, NPL ratio of 0.57% down 7 bps from 4Q14; total nonperforming assets (NPAs) of $693 million, including loans held-for-sale (HFS), declined $90 million sequentially
- 1Q15 provision expense of $69 million; $99 million in 4Q14 (including the $23 million impact related to the transfer of loans held-for-sale) and $69 million in 1Q14
- Strong capital ratios*
- Common equity Tier 1 ratio 9.62%
- Tier 1 risk-based capital ratio 10.74%, Total risk-based capital ratio 14.16%, Leverage ratio 9.61%
- Tangible common equity ratio** of 8.78%; 8.41% excluding securities portfolio unrealized gains/losses
- 9 million reduction in average diluted share count
- Book value per share of $17.85 up 3 percent from 4Q14 and up 10 percent from 1Q14; tangible book value per share** of $14.87
* Capital ratios estimated; presented under current U.S. capital regulations.
** Non-GAAP measure; see Reg. G reconciliation on page 32 in Exhibit 99.1 of 8-k filing dated 4/21/15.
Fifth Third Bancorp (Nasdaq: FITB) today reported first quarter 2015 net
income of $382 million versus net income of $385 million in the fourth
quarter of 2014 and $318 million in the first quarter of 2014. After
preferred dividends, net income available to common shareholders was
$367 million, or $0.44 per diluted share, in the first quarter of 2015,
compared with $362 million, or $0.43 per diluted share, in the fourth
quarter of 2014, and $309 million, or $0.36 per diluted share, in the
first quarter of 2014.
First quarter 2015 included:
Income
-
$70 million positive valuation adjustment on the Vantiv warrant
-
$37 million gain on the sale of residential mortgage loans classified
as troubled debt restructurings
-
($17 million) charge related to the valuation of the Visa total return
swap
Expenses
-
($2 million) in litigation reserve charges
Fourth quarter 2014 included:
Income
-
$56 million positive valuation adjustment on the Vantiv warrant
-
$23 million annual payment received from Vantiv pursuant to tax
receivable agreement
-
($19 million) charge related to the valuation of the Visa total return
swap
Expenses
-
$3 million reversal of litigation reserves
Results also included $23 million of provision expense related to the
transfer of residential mortgage loans classified as troubled debt
restructurings to held-for-sale.
First quarter 2014 included:
Income
-
($36 million) negative valuation adjustment on the Vantiv warrant
-
$1 million benefit related to the valuation of the Visa total return
swap
Expenses
-
($51 million) in litigation reserve charges
|
Earnings Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Earnings ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Bancorp
|
|
$382
|
|
|
|
$385
|
|
|
|
$340
|
|
|
|
$439
|
|
|
|
$318
|
|
|
|
(1%)
|
|
20%
|
|
Net income available to common shareholders
|
|
$367
|
|
|
|
$362
|
|
|
|
$328
|
|
|
|
$416
|
|
|
|
$309
|
|
|
|
1%
|
|
15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
|
0.45
|
|
|
|
0.44
|
|
|
|
0.39
|
|
|
|
0.49
|
|
|
|
0.36
|
|
|
|
2%
|
|
25%
|
|
Earnings per share, diluted
|
|
0.44
|
|
|
|
0.43
|
|
|
|
0.39
|
|
|
|
0.49
|
|
|
|
0.36
|
|
|
|
2%
|
|
22%
|
|
Cash dividends per common share
|
|
0.13
|
|
|
|
0.13
|
|
|
|
0.13
|
|
|
|
0.13
|
|
|
|
0.12
|
|
|
|
-
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
1.12
|
|
%
|
|
1.13
|
|
%
|
|
1.02
|
|
%
|
|
1.34
|
|
%
|
|
1.00
|
|
%
|
|
-
|
|
12%
|
|
Return on average common equity
|
|
10.3
|
|
|
|
10.0
|
|
|
|
9.2
|
|
|
|
11.9
|
|
|
|
9.0
|
|
|
|
2%
|
|
13%
|
|
Return on average tangible common equity(b)
|
|
12.3
|
|
|
|
12.1
|
|
|
|
11.1
|
|
|
|
14.4
|
|
|
|
11.0
|
|
|
|
2%
|
|
12%
|
|
Tier I risk-based capital(c)
|
|
10.74
|
|
|
|
10.83
|
|
|
|
10.83
|
|
|
|
10.80
|
|
|
|
10.45
|
|
|
|
(1%)
|
|
3%
|
|
Common equity Tier I(c)
|
|
9.62
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
N/A
|
|
Tier I common equity(b)
|
|
N/A
|
|
|
|
9.65
|
|
|
|
9.64
|
|
|
|
9.61
|
|
|
|
9.51
|
|
|
|
N/A
|
|
N/A
|
|
Net interest margin(a)
|
|
2.86
|
|
|
|
2.96
|
|
|
|
3.10
|
|
|
|
3.15
|
|
|
|
3.22
|
|
|
|
(3%)
|
|
(11%)
|
|
Efficiency(a)
|
|
61.0
|
|
|
|
59.6
|
|
|
|
62.1
|
|
|
|
58.2
|
|
|
|
64.9
|
|
|
|
2%
|
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (in thousands)
|
|
815,190
|
|
|
|
824,047
|
|
|
|
834,262
|
|
|
|
844,489
|
|
|
|
847,569
|
|
|
|
(1%)
|
|
(4%)
|
|
Average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
810,210
|
|
|
|
819,057
|
|
|
|
829,392
|
|
|
|
838,492
|
|
|
|
845,860
|
|
|
|
(1%)
|
|
(4%)
|
|
Diluted
|
|
818,672
|
|
|
|
827,831
|
|
|
|
838,324
|
|
|
|
848,245
|
|
|
|
857,924
|
|
|
|
(1%)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Presented on a fully taxable equivalent basis.
|
|
(b) These 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.
|
|
(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 values are added together resulting in the
Bancorp's total risk-weighted assets used in the calculation of the
tier I risk-based capital and common equity tier 1 ratios beginning
January 1, 2015. Current period regulatory capital ratios are
estimated.
|
|
The percentages in all of the tables in this earning release are
calculated on actual dollar amounts and not the rounded dollar
amounts.
|
|
NA: Not applicable.
|
|
“Our results this quarter were solid despite the impact of expected
first quarter seasonality and challenging market conditions, and reflect
the strength of our franchise in generating strong shareholder returns
resulting from our strategic decisions to build and invest in our
businesses. We are very focused on growing businesses that will operate
profitably in all environments by deepening our relationships with
customers and managing our risk exposures to achieve optimal returns for
our shareholders. Our quarterly results include the significant value
that we have achieved in our Vantiv investment and the gain on the sale
of our TDR loans, which is another step toward reducing future sources
of potential volatility,” said Kevin Kabat, CEO of Fifth Third Bancorp.
“First quarter net income of $382 million, which reflected record
investment advisory revenue and solid mortgage banking revenue growth,
produced an ROA of 1.12% and ROE of 10.3%. These results included the
impact of the NII decline associated with the changes in our deposit
advance product in the quarter.
“Our loan growth, especially in the C&I category, was weaker at the end
of last year which impacted the starting balances early in the quarter,
but we were encouraged by better activity in February and March. Average
loans increased 2 percent compared with the year ago quarter with
continued strength in C&I lending, which was up 3 percent, and growth in
commercial real estate and bankcard loans of 4 percent each.
“Credit results were very good, resulting in net charge-offs of 41 bps
for the quarter, with commercial loan net charge-offs of 29 bps and
consumer loan net charge-offs of 59 bps. Total delinquencies also
continued to be at very low levels and were highlighted by total
non-performing assets, which were down 11 percent compared with last
quarter.
“Average core deposits were up 2 percent sequentially, with 6 percent
growth in interest checking, and were up 7 percent year over year, with
demand deposit growth of 10 percent.
“During the quarter, we received a non-objection from the Federal
Reserve for our 2015 CCAR plan. That plan demonstrates the strength of
Fifth Third’s current capital levels and our resiliency under stress
conditions. We are pleased to be able to continue the measured return of
capital to shareholders under our 2015 CCAR plan.”
|
Income Statement Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Condensed Statements of Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable equivalent)
|
|
$852
|
|
$888
|
|
$908
|
|
$905
|
|
$898
|
|
(4%)
|
|
(5%)
|
|
Provision for loan and lease losses
|
|
69
|
|
99
|
|
71
|
|
76
|
|
69
|
|
(30%)
|
|
-
|
|
Total noninterest income
|
|
660
|
|
653
|
|
520
|
|
736
|
|
564
|
|
1%
|
|
17%
|
|
Total noninterest expense
|
|
923
|
|
918
|
|
888
|
|
954
|
|
950
|
|
1%
|
|
(3%)
|
|
Income before income taxes (taxable equivalent)
|
|
520
|
|
524
|
|
469
|
|
611
|
|
443
|
|
(1%)
|
|
18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment
|
|
5
|
|
5
|
|
5
|
|
5
|
|
5
|
|
5%
|
|
2%
|
|
Applicable income taxes
|
|
133
|
|
134
|
|
124
|
|
167
|
|
119
|
|
(1%)
|
|
11%
|
|
Net income
|
|
382
|
|
385
|
|
340
|
|
439
|
|
319
|
|
(1%)
|
|
20%
|
|
Less: Net income attributable to noncontrolling interests
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
1
|
|
NM
|
|
(61%)
|
|
Net income attributable to Bancorp
|
|
382
|
|
385
|
|
340
|
|
439
|
|
318
|
|
(1%)
|
|
20%
|
|
Dividends on preferred stock
|
|
15
|
|
23
|
|
12
|
|
23
|
|
9
|
|
(35%)
|
|
60%
|
|
Net income available to common shareholders
|
|
367
|
|
362
|
|
328
|
|
416
|
|
309
|
|
1%
|
|
15%
|
|
Earnings per share, diluted
|
|
$ 0.44
|
|
$ 0.43
|
|
$ 0.39
|
|
$ 0.49
|
|
$ 0.36
|
|
2%
|
|
22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Interest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income (taxable equivalent)
|
|
$975
|
|
|
$1,016
|
|
|
$1,023
|
|
|
$1,013
|
|
|
$998
|
|
|
(4%)
|
|
(2%)
|
|
Total interest expense
|
|
123
|
|
|
128
|
|
|
115
|
|
|
108
|
|
|
100
|
|
|
(4%)
|
|
22%
|
|
Net interest income (taxable equivalent)
|
|
$852
|
|
|
$888
|
|
|
$908
|
|
|
$905
|
|
|
$898
|
|
|
(4%)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest-earning assets (taxable equivalent)
|
|
3.28%
|
|
|
3.38%
|
|
|
3.49%
|
|
|
3.53%
|
|
|
3.58%
|
|
|
(3%)
|
|
(8%)
|
|
Rate paid on interest-bearing liabilities
|
|
0.60%
|
|
|
0.61%
|
|
|
0.56%
|
|
|
0.54%
|
|
|
0.51%
|
|
|
(3%)
|
|
16%
|
|
Net interest rate spread (taxable equivalent)
|
|
2.68%
|
|
|
2.77%
|
|
|
2.93%
|
|
|
2.99%
|
|
|
3.07%
|
|
|
(3%)
|
|
(13%)
|
|
Net interest margin (taxable equivalent)
|
|
2.86%
|
|
|
2.96%
|
|
|
3.10%
|
|
|
3.15%
|
|
|
3.22%
|
|
|
(3%)
|
|
(11%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, including held for sale
|
|
$91,659
|
|
|
$91,581
|
|
|
$91,428
|
|
|
$91,241
|
|
|
$90,238
|
|
|
-
|
|
2%
|
|
Total securities and other short-term investments
|
|
29,038
|
|
|
27,604
|
|
|
24,927
|
|
|
23,940
|
|
|
22,940
|
|
|
5%
|
|
27%
|
|
Total interest-earning assets
|
|
120,697
|
|
|
119,185
|
|
|
116,355
|
|
|
115,181
|
|
|
113,178
|
|
|
1%
|
|
7%
|
|
Total interest-bearing liabilities
|
|
83,339
|
|
|
82,544
|
|
|
81,157
|
|
|
80,770
|
|
|
79,130
|
|
|
1%
|
|
5%
|
|
Bancorp shareholders' equity
|
|
15,820
|
|
|
15,644
|
|
|
15,486
|
|
|
15,157
|
|
|
14,862
|
|
|
1%
|
|
6%
|
Net interest income of $852 million on a fully taxable equivalent basis
decreased $36 million from the fourth quarter, as expected, primarily
driven by a $21 million negative impact of the previously announced
changes to the Bancorp’s deposit advance product that were effective
January 1, 2015. Additionally, net interest income was negatively
impacted by $13 million due to fewer days in the quarter. Otherwise, the
effects of lower deposit costs and increased investment securities
balances generally offset the negative effect of loan repricing during
the quarter.
The net interest margin was 2.86 percent, a decrease of 10 bps from the
previous quarter primarily driven by a 7 basis point impact due to the
changes to the deposit advance product, 3 basis point impact of loan
repricing and 2 basis point impact of higher cash balances as we
continue to experience strong deposit flows. Day count benefitted the
net interest margin by 3 basis points in the quarter.
Compared with the first quarter of 2014, net interest income decreased
$46 million and the net interest margin decreased 36 bps. The decline in
net interest income was driven by the effect of the aforementioned
changes to the deposit advance product as well as continued loan
repricing. Otherwise, the impact of higher investment securities
balances and loan balances generally offset the impact of higher
interest expense resulting from increased long-term debt balances. The
decline in the net interest margin was primarily driven by the impact of
loan repricing.
Securities
Average securities and other short-term investments were $29.0 billion
in the first quarter of 2015 compared with $27.6 billion in the previous
quarter and $22.9 billion in the first quarter of 2014. Average
securities of $23.2 billion increased $733 million from the prior
quarter reflecting purchases of securities. Other short-term investments
average balances of $5.9 billion increased $701 million sequentially. On
an end of period basis, securities balances of $27.0 billion increased
$4.0 billion driven by purchases of securities towards the end of the
quarter and other short-term investments decreased $3.0 billion
reflecting lower cash balances held at the Federal Reserve.
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Average Portfolio Loans and Leases ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$41,426
|
|
|
$41,277
|
|
|
$41,477
|
|
|
$41,374
|
|
|
$40,377
|
|
|
-
|
|
3%
|
|
Commercial mortgage loans
|
|
7,241
|
|
|
7,480
|
|
|
7,633
|
|
|
7,885
|
|
|
7,981
|
|
|
(3%)
|
|
(9%)
|
|
Commercial construction loans
|
|
2,197
|
|
|
1,909
|
|
|
1,563
|
|
|
1,362
|
|
|
1,116
|
|
|
15%
|
|
97%
|
|
Commercial leases
|
|
3,715
|
|
|
3,600
|
|
|
3,571
|
|
|
3,555
|
|
|
3,607
|
|
|
3%
|
|
3%
|
|
Subtotal - commercial loans and leases
|
|
54,579
|
|
|
54,266
|
|
|
54,244
|
|
|
54,176
|
|
|
53,081
|
|
|
1%
|
|
3%
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
12,433
|
|
|
13,046
|
|
|
12,785
|
|
|
12,611
|
|
|
12,659
|
|
|
(5%)
|
|
(2%)
|
|
Home equity
|
|
8,802
|
|
|
8,937
|
|
|
9,009
|
|
|
9,101
|
|
|
9,194
|
|
|
(2%)
|
|
(4%)
|
|
Automobile loans
|
|
11,933
|
|
|
12,073
|
|
|
12,105
|
|
|
12,070
|
|
|
12,023
|
|
|
(1%)
|
|
(1%)
|
|
Credit card
|
|
2,321
|
|
|
2,324
|
|
|
2,295
|
|
|
2,232
|
|
|
2,230
|
|
|
-
|
|
4%
|
|
Other consumer loans and leases
|
|
440
|
|
|
395
|
|
|
361
|
|
|
359
|
|
|
343
|
|
|
11%
|
|
28%
|
|
Subtotal - consumer loans and leases
|
|
35,929
|
|
|
36,775
|
|
|
36,555
|
|
|
36,373
|
|
|
36,449
|
|
|
(2%)
|
|
(1%)
|
|
Total average loans and leases (excluding held for sale)
|
|
$90,508
|
|
|
$91,041
|
|
|
$90,799
|
|
|
$90,549
|
|
|
$89,530
|
|
|
(1%)
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans held for sale
|
|
1,151
|
|
|
540
|
|
|
629
|
|
|
692
|
|
|
708
|
|
|
NM
|
|
63%
|
Average loan and lease balances (excluding loans held-for-sale)
decreased $533 million, or 1 percent, sequentially and increased $978
million, or 1 percent, from the first quarter of 2014. The sequential
decrease in average loans and leases was primarily driven by declines in
residential mortgage due to the transfer of certain residential mortgage
loans classified as troubled debt restructurings to held-for-sale at the
end of the fourth quarter of 2014, which reduced average loans by $694
million. The increase from the prior year was driven by increased
commercial and industrial (C&I) balances. Period end loans and leases
(excluding loans held-for-sale) of $91.2 billion increased $1.2 billion
sequentially, and increased $1.5 billion, or 2 percent, from a year ago
primarily driven by increases in C&I loans.
Average commercial portfolio loan and lease balances increased $313
million, or 1 percent, sequentially and increased $1.5 billion, or 3
percent, from the first quarter of 2014. Average C&I loans increased
$149 million from the prior quarter and increased $1.0 billion from the
first quarter of 2014. Within commercial real estate, average commercial
mortgage balances continued to decline and average commercial
construction balances increased for the ninth consecutive quarter. In
total, average commercial real estate balances increased $49 million
sequentially and $341 million from the prior year. Commercial line
usage, on an end of period basis, was 32 percent of committed lines in
the first quarter of 2015 compared with 32 percent in the fourth quarter
of 2014 and 30 percent in the first quarter of 2014.
Average consumer portfolio loan and lease balances decreased $846
million, or 2 percent, sequentially and decreased $520 million, or 1
percent, year-over-year. Average residential mortgage loans decreased 5
percent sequentially and 2 percent from a year ago driven by loans
transferred to held for sale at the end of the fourth quarter. Average
auto loans declined 1 percent on a sequential and year-over-year basis.
Average home equity loans declined 2 percent sequentially and 4 percent
from the first quarter of 2014. Average credit card loans were flat
sequentially and increased 4 percent from the first quarter of 2014.
Average loans held-for-sale balances of $1.2 billion increased $611
million sequentially primarily due to the transfer of certain
residential mortgage loans classified as troubled debt restructurings to
held-for-sale in the fourth quarter of 2014 and increased $443 million
compared with the first quarter of 2014. Period end loans held-for-sale
of $724 million decreased $537 million from the previous quarter due to
$568 million of residential mortgage loans subsequently sold in the
first quarter and decreased $56 million from the first quarter of 2014.
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Average Deposits ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
$33,760
|
|
|
$33,301
|
|
|
$31,790
|
|
|
$31,275
|
|
|
$30,626
|
|
|
1%
|
|
10%
|
|
Interest checking
|
|
26,885
|
|
|
25,478
|
|
|
24,926
|
|
|
25,222
|
|
|
25,911
|
|
|
6%
|
|
4%
|
|
Savings
|
|
15,174
|
|
|
15,173
|
|
|
15,759
|
|
|
16,509
|
|
|
16,903
|
|
|
-
|
|
(10%)
|
|
Money market
|
|
17,492
|
|
|
17,023
|
|
|
15,222
|
|
|
13,942
|
|
|
12,439
|
|
|
3%
|
|
41%
|
|
Foreign office(a)
|
|
861
|
|
|
1,439
|
|
|
1,663
|
|
|
2,200
|
|
|
2,017
|
|
|
(40%)
|
|
(57%)
|
|
Subtotal - Transaction deposits
|
|
94,172
|
|
|
92,414
|
|
|
89,360
|
|
|
89,148
|
|
|
87,896
|
|
|
2%
|
|
7%
|
|
Other time
|
|
4,022
|
|
|
3,936
|
|
|
3,800
|
|
|
3,693
|
|
|
3,616
|
|
|
2%
|
|
11%
|
|
Subtotal - Core deposits
|
|
98,194
|
|
|
96,350
|
|
|
93,160
|
|
|
92,841
|
|
|
91,512
|
|
|
2%
|
|
7%
|
|
Certificates - $100,000 and over
|
|
2,683
|
|
|
2,998
|
|
|
3,339
|
|
|
3,840
|
|
|
5,576
|
|
|
(11%)
|
|
(52%)
|
|
Total deposits
|
|
$100,877
|
|
|
$99,348
|
|
|
$96,499
|
|
|
$96,681
|
|
|
$97,088
|
|
|
2%
|
|
4%
|
|
(a) Includes commercial customer Eurodollar sweep balances for
which the Bancorp pays rates comparable to other commercial
deposit accounts.
|
Average core deposits increased $1.8 billion sequentially and increased
$6.7 billion, or 7 percent, from the first quarter of 2014. Average
transaction deposits increased $1.8 billion from the fourth quarter of
2014 primarily driven by higher interest checking, money market account,
and demand deposit balances, partially offset by lower foreign office
balances. Year-over-year transaction deposits increased $6.3 billion, or
7 percent, driven by higher money market account, demand deposit, and
interest checking balances, partially offset by lower savings and
foreign office balances. Other time deposits increased 2 percent
sequentially and 11 percent compared with the first quarter of 2014.
Average commercial transaction deposits increased 1 percent sequentially
and 8 percent from the previous year. Sequential performance reflected
higher interest checking balances partially offset by lower foreign
office balances. Year-over-year growth reflected higher demand deposit,
interest checking, and money market account balances as customers are
holding higher balances partially offset by lower foreign office
balances.
Average consumer transaction deposits increased 2 percent sequentially
and increased 6 percent from the first quarter of 2014. The sequential
performance reflected higher money market account, interest checking,
and demand deposit balances partially offset by lower savings balances.
Year-over-year growth was driven by increased money market account and
demand deposit balances partially offset by lower savings and interest
checking balances.
|
Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Average Wholesale Funding ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates - $100,000 and over
|
|
$2,683
|
|
|
$2,998
|
|
|
$3,339
|
|
|
$3,840
|
|
|
$5,576
|
|
|
(11%)
|
|
(52%)
|
|
Federal funds purchased
|
|
172
|
|
|
161
|
|
|
520
|
|
|
606
|
|
|
547
|
|
|
7%
|
|
(69%)
|
|
Other short-term borrowings
|
|
1,602
|
|
|
1,481
|
|
|
1,973
|
|
|
2,234
|
|
|
1,808
|
|
|
8%
|
|
(11%)
|
|
Long-term debt
|
|
14,448
|
|
|
14,855
|
|
|
13,955
|
|
|
12,524
|
|
|
10,313
|
|
|
(3%)
|
|
40%
|
|
Total wholesale funding
|
|
$18,905
|
|
|
$19,495
|
|
|
$19,787
|
|
|
$19,204
|
|
|
$18,244
|
|
|
(3%)
|
|
4%
|
Average wholesale funding of $18.9 billion decreased $590 million, or 3
percent, sequentially and increased $661 million, or 4 percent, compared
with the first quarter of 2014. The sequential decrease was driven by a
decrease in long-term debt due to $500 million of bank-level
subordinated debt that matured during the quarter as well as a decrease
in certificates $100,000 and over, partially offset by an increase in
other short-term borrowings. The year-over-year increase in average
wholesale funding reflected an increase in long-term debt due to
issuances during 2014, partially offset by a decrease in certificates
$100,000 and over, federal funds purchased, and other short-term
borrowings.
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
|
$ 135
|
|
$ 142
|
|
$ 145
|
|
$ 139
|
|
$ 133
|
|
(5%)
|
|
2%
|
|
Corporate banking revenue
|
|
92
|
|
120
|
|
100
|
|
107
|
|
104
|
|
(23%)
|
|
(11%)
|
|
Mortgage banking net revenue
|
|
86
|
|
61
|
|
61
|
|
78
|
|
109
|
|
40%
|
|
(21%)
|
|
Investment advisory revenue
|
|
108
|
|
100
|
|
103
|
|
102
|
|
102
|
|
7%
|
|
6%
|
|
Card and processing revenue
|
|
71
|
|
76
|
|
75
|
|
76
|
|
68
|
|
(6%)
|
|
5%
|
|
Other noninterest income
|
|
164
|
|
150
|
|
33
|
|
226
|
|
41
|
|
9%
|
|
NM
|
|
Securities gains, net
|
|
4
|
|
4
|
|
3
|
|
8
|
|
7
|
|
16%
|
|
(34%)
|
|
Total noninterest income
|
|
$ 660
|
|
$ 653
|
|
$ 520
|
|
$ 736
|
|
$ 564
|
|
1%
|
|
17%
|
Noninterest income of $660 million increased $7 million sequentially and
$96 million compared with prior year results. These comparisons reflect
the impacts described below.
For the quarters ending March 31, 2015, December 31, 2014, and March 31,
2014, the impacts of Vantiv warrant valuation adjustments were a
positive $70 million, positive $56 million, and negative $36 million,
respectively. Quarterly results also included the impact of valuation
adjustments of the Visa total return swap of negative $17 million,
negative $19 million, and positive $1 million in the first quarter of
2015, the fourth quarter of 2014, and the first quarter of 2014,
respectively. First quarter 2015 also included a $37 million gain on the
sale of held-for-sale residential mortgage loans classified as troubled
debt restructurings. Excluding these items and net securities gains in
all periods, noninterest income of $566 million decreased $46 million,
or 8 percent, from the previous quarter and decreased $26 million, or 4
percent, from the first quarter of 2014. The sequential decrease was
primarily due to the $23 million annual payment recognized from Vantiv
pursuant to the tax receivable agreement in the fourth quarter of 2014
and a decrease in corporate banking revenue, partially offset by
increased mortgage banking revenue. The year-over-year decline was
primarily due to lower mortgage banking net revenue and corporate
banking revenue.
Service charges on deposits of $135 million, which were seasonally low
in the first quarter, decreased 5 percent from the fourth quarter and
increased 2 percent compared with the same quarter last year. The
sequential decline was due to a 9 percent decrease in retail service
charges due to lower overdraft occurrences as well as a 2 percent
decrease in commercial service charges.
Corporate banking revenue of $92 million decreased $28 million from the
fourth quarter of 2014 and $12 million from the first quarter of 2013.
The sequential decrease was primarily due to a $21 million decline in
syndication fees as a result of decreased activity in the market in the
current quarter and compared with strong fourth quarter results, as well
as a decline in business lending fees. The year-over-year decrease was
driven by lower syndication fees, institutional sales revenue, and lease
remarketing fees, partially offset by an increase in foreign exchange
fees.
Mortgage banking net revenue was $86 million in the first quarter of
2015, up 40 percent from the fourth quarter of 2014 and down 21 percent
from the first quarter of 2014. First quarter 2015 originations were
$1.8 billion, compared with $1.7 billion in the previous quarter and
$1.7 billion in the first quarter of 2014. First quarter 2015
originations resulted in gains of $44 million on mortgages sold,
compared with gains of $36 million during the previous quarter and $41
million during the first quarter of 2014. The sequential and
year-over-year increases were primarily driven by higher gain on sale
margins due to increased refinance activity during the quarter given the
low rate environment and slightly higher production. Mortgage servicing
fees were $59 million this quarter, $60 million in the fourth quarter of
2014, and $62 million in the first quarter of 2014. Mortgage banking net
revenue is also affected by net servicing asset valuation 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 negative $17
million in the first quarter of 2015 (reflecting MSR amortization of $34
million and MSR valuation adjustments of positive $17 million); negative
$34 million in the fourth quarter of 2014 (MSR amortization of $32
million and MSR valuation adjustments of negative $2 million); and
positive $6 million in the first quarter of 2014 (MSR amortization of
$22 million and MSR valuation adjustments of positive $28 million). The
mortgage servicing asset, net of the valuation reserve, was $788 million
at quarter end on a servicing portfolio of $64 billion.
Investment advisory revenue of $108 million increased 7 percent from the
fourth quarter and increased 6 percent year-over-year. The sequential
increase was attributable to higher tax-related private client services
revenue, which is seasonally stronger in the first quarter, as well as
an increase in securities and brokerage fees due to a continued shift
from transaction-based fees to recurring revenue streams. The
year-over-year increase reflected an increase in personal asset
management fees due to market-related growth and an increase in
securities and brokerage fees.
Card and processing revenue of $71 million in the first quarter of 2015
decreased 6 percent sequentially and increased 5 percent from the first
quarter of 2014. The sequential decrease reflected lower transaction
volumes compared with seasonally strong fourth quarter volumes. The
year-over-year increase reflects an increase in the number of actively
used cards and an increase in customer spend volume.
Other noninterest income totaled $164 million in the first quarter of
2015, compared with $150 million in the previous quarter and $41 million
in the first quarter of 2014. As previously described, the results
included the impact of Vantiv warrant valuation adjustments, the gain on
sale of troubled debt restructurings, and charges related to the
valuation of the Visa total return swap. Excluding these items, other
noninterest income of $74 million decreased approximately $39 million,
or 35 percent, from the fourth quarter of 2014 and decreased
approximately $2 million, or 3 percent, from the first quarter of 2014.
The sequential decrease was primarily due to payments recognized from
Vantiv pursuant to the tax receivable agreement of $23 million in the
fourth quarter of 2014 as well as normal seasonality in Vantiv’s
business as reflected in our equity method of earnings.
Net gains on investment securities were $4 million in the first quarter
of 2015, compared with $4 million in the previous quarter and $7 million
in the first quarter of 2014.
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Expense ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and incentives
|
|
$369
|
|
$366
|
|
$357
|
|
$368
|
|
$359
|
|
1%
|
|
3%
|
|
Employee benefits
|
|
99
|
|
79
|
|
75
|
|
79
|
|
101
|
|
26%
|
|
(3%)
|
|
Net occupancy expense
|
|
79
|
|
77
|
|
78
|
|
79
|
|
80
|
|
2%
|
|
(1%)
|
|
Technology and communications
|
|
55
|
|
54
|
|
53
|
|
52
|
|
53
|
|
2%
|
|
3%
|
|
Equipment expense
|
|
31
|
|
30
|
|
30
|
|
30
|
|
30
|
|
1%
|
|
3%
|
|
Card and processing expense
|
|
36
|
|
36
|
|
37
|
|
37
|
|
31
|
|
(2%)
|
|
14%
|
|
Other noninterest expense
|
|
254
|
|
276
|
|
258
|
|
309
|
|
296
|
|
(7%)
|
|
(13%)
|
|
Total noninterest expense
|
|
$923
|
|
$918
|
|
$888
|
|
$954
|
|
$950
|
|
1%
|
|
(3%)
|
Noninterest expense of $923 million increased 1 percent compared with
the fourth quarter of 2014 and decreased 3 percent compared with the
first quarter of 2014.
First quarter 2015 expenses included $2 million in charges to litigation
reserves, compared with a $3 million reversal of litigation reserves in
the fourth quarter of 2014 and $51 million in charges to litigation
reserves in the first quarter of 2014. Excluding these items,
noninterest expense of $921 million was flat sequentially and increased
$22 million, or 2 percent, year-over-year. The sequential comparison was
affected by a seasonal increase in FICA and unemployment tax expense
recorded in employee benefits, partially offset by lower credit-related
costs and the year-over-year increase reflected higher incentive-based
compensation expense and increased credit-related costs.
Credit costs related to problem assets recorded as noninterest expense
totaled $14 million in the first quarter of 2015, compared with $33
million in the fourth quarter of 2014, and $9 million in the first
quarter of 2014. Credit-related expenses included provision for mortgage
repurchases that was an immaterial amount in the first quarter of 2015
and the fourth quarter of 2014 and $3 million in the first quarter of
2014. (Realized mortgage repurchase losses were $3 million in the first
quarter of 2015, compared with $2 million in the fourth quarter of 2014,
and $10 million in the first quarter of 2014.) Provision for unfunded
commitments was a benefit of $4 million in the current quarter, compared
with an expense of $1 million last quarter and a benefit of $9 million a
year ago. Derivative valuation adjustments related to customer credit
risk were positive $2 million for the current quarter, negative $10
million in the fourth quarter, and positive $2 million for the year ago
quarter. OREO expense was $7 million, compared with $4 million last
quarter and $5 million a year ago. Other problem asset-related expenses
were $13 million in the first quarter, compared with $17 million in the
previous quarter, and $13 million in the same period last year.
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Total net losses charged off ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
($38)
|
|
|
($44)
|
|
|
($50)
|
|
|
($31)
|
|
|
($97)
|
|
|
Commercial mortgage loans
|
|
(1)
|
|
|
(10)
|
|
|
(5)
|
|
|
(9)
|
|
|
(3)
|
|
|
Commercial construction loans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8)
|
|
|
(5)
|
|
|
Commercial leases
|
|
-
|
|
|
(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Residential mortgage loans
|
|
(6)
|
|
|
(94)
|
|
|
(9)
|
|
|
(8)
|
|
|
(15)
|
|
|
Home equity
|
|
(14)
|
|
|
(11)
|
|
|
(14)
|
|
|
(18)
|
|
|
(16)
|
|
|
Automobile loans
|
|
(8)
|
|
|
(7)
|
|
|
(7)
|
|
|
(5)
|
|
|
(8)
|
|
|
Credit card
|
|
(21)
|
|
|
(20)
|
|
|
(23)
|
|
|
(21)
|
|
|
(19)
|
|
|
Other consumer loans and leases
|
|
(3)
|
|
|
(4)
|
|
|
(7)
|
|
|
(1)
|
|
|
(5)
|
|
Total net losses charged off
|
|
(91)
|
|
|
(191)
|
|
|
(115)
|
|
|
(101)
|
|
|
(168)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses
|
|
(115)
|
|
|
(215)
|
|
|
(146)
|
|
|
(127)
|
|
|
(190)
|
|
Total recoveries
|
|
24
|
|
|
24
|
|
|
31
|
|
|
26
|
|
|
22
|
|
Total net losses charged off
|
|
($91)
|
|
|
($191)
|
|
|
($115)
|
|
|
($101)
|
|
|
($168)
|
|
Ratios (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses charged off as a percent of average loans and leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding held for sale)
|
|
0.41%
|
|
|
0.83%
|
|
|
0.50%
|
|
|
0.45%
|
|
|
0.76%
|
|
|
Commercial
|
|
0.29%
|
|
|
0.40%
|
|
|
0.40%
|
|
|
0.35%
|
|
|
0.79%
|
|
|
Consumer
|
|
0.59%
|
|
|
1.47%
|
|
|
0.66%
|
|
|
0.60%
|
|
|
0.72%
|
Net charge-offs were $91 million, or 41 bps of average loans on an
annualized basis, in the first quarter of 2015 compared with net
charge-offs of $191 million, or 83 bps, in the fourth quarter of 2014
and $168 million, or 76 bps, in the first quarter of 2014. For
comparison purposes, the fourth quarter of 2014 net charge-offs included
$87 million (38 bps) related to the transfer of certain residential
mortgage loans classified as troubled debt restructurings to
held-for-sale and the first quarter of 2014 included three large credits
that together resulted in combined charge-offs of $60 million (27 bps).
Commercial net charge-offs were $39 million, or 29 bps, and were down
$16 million sequentially. C&I net charge-offs of $38 million decreased
$6 million from the previous quarter and commercial real estate net
charge-offs decreased $9 million from the previous quarter.
Consumer net charge-offs were $52 million, or 59 bps, down $84 million
sequentially. Excluding consumer net charge-offs of $87 million related
to the transfer of certain residential mortgage loans classified as
troubled debt restructurings to held-for-sale in the fourth quarter of
2014, consumer net charge-offs were up $3 million sequentially. Net
charge-offs on residential mortgage loans in the portfolio were $6
million, down $88 million from the previous quarter primarily reflecting
the impact of the charge-offs in the fourth quarter of 2014 mentioned
above. Home equity net charge-offs were $14 million, up $3 million from
the fourth quarter of 2014, and net charge-offs in the auto portfolio of
$8 million were up $1 million compared with the prior quarter. Net
charge-offs on consumer credit card loans were $21 million, up $1
million from the fourth quarter. Net charge-offs on other consumer loans
were $3 million, down $1 million compared with the previous quarter.
|
|
|
For the Three Months Ended
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Allowance for Credit Losses ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
|
$1,322
|
|
|
$1,414
|
|
|
$1,458
|
|
|
$1,483
|
|
|
$1,582
|
|
Total net losses charged off
|
|
(91)
|
|
|
(191)
|
|
|
(115)
|
|
|
(101)
|
|
|
(168)
|
|
Provision for loan and lease losses
|
|
69
|
|
|
99
|
|
|
71
|
|
|
76
|
|
|
69
|
|
Allowance for loan and lease losses, ending
|
|
1,300
|
|
|
1,322
|
|
|
1,414
|
|
|
1,458
|
|
|
1,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
|
135
|
|
|
134
|
|
|
142
|
|
|
153
|
|
|
162
|
|
Provision (benefit) for unfunded commitments
|
|
(4)
|
|
|
1
|
|
|
(8)
|
|
|
(11)
|
|
|
(9)
|
|
Charge-offs
|
|
(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Reserve for unfunded commitments, ending
|
|
130
|
|
|
135
|
|
|
134
|
|
|
142
|
|
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses
|
|
1,300
|
|
|
1,322
|
|
|
1,414
|
|
|
1,458
|
|
|
1,483
|
|
Reserve for unfunded commitments
|
|
130
|
|
|
135
|
|
|
134
|
|
|
142
|
|
|
153
|
|
Total allowance for credit losses
|
|
$1,430
|
|
|
$1,457
|
|
|
$1,548
|
|
|
$1,600
|
|
|
$1,636
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of loans and leases
|
|
1.42%
|
|
|
1.47%
|
|
|
1.56%
|
|
|
1.61%
|
|
|
1.65%
|
|
As a percent of nonperforming loans and leases(a)
|
|
247%
|
|
|
228%
|
|
|
228%
|
|
|
228%
|
|
|
202%
|
|
As a percent of nonperforming assets(a)
|
|
188%
|
|
|
178%
|
|
|
178%
|
|
|
175%
|
|
|
157%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes nonaccrual loans and leases in loans held for sale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses totaled $69 million in the first
quarter of 2015 and decreased $30 million from the fourth quarter of
2014 and was flat from the first quarter of 2014. The decrease from the
prior quarter was driven by the $23 million impact in the fourth quarter
of 2014 related to the transfer of certain residential mortgage loans
classified as troubled debt restructurings to held-for-sale. The
allowance for loan and lease losses declined $22 million sequentially
reflecting the portfolio’s overall risk profile and charges to the
allowance. The allowance represented 1.42 percent of total loans and
leases outstanding as of quarter end, compared with 1.47 percent last
quarter, and represented 247 percent of nonperforming loans and leases,
and 188 percent of nonperforming assets.
|
|
|
|
|
As of
|
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
Nonperforming Assets and Delinquent Loans ($ in millions)
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
Nonaccrual portfolio loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$61
|
|
$86
|
|
$102
|
|
$103
|
|
$153
|
|
|
Commercial mortgage loans
|
|
57
|
|
64
|
|
77
|
|
86
|
|
96
|
|
|
Commercial construction loans
|
|
-
|
|
-
|
|
2
|
|
3
|
|
3
|
|
|
Commercial leases
|
|
2
|
|
3
|
|
3
|
|
2
|
|
3
|
|
|
Residential mortgage loans
|
|
40
|
|
44
|
|
52
|
|
56
|
|
68
|
|
|
Home equity
|
|
71
|
|
72
|
|
69
|
|
73
|
|
75
|
|
|
Automobile loans
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Other consumer loans and leases
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
Total nonaccrual loans and leases (excludes restructured loans)
|
|
$231
|
|
$269
|
|
$305
|
|
$323
|
|
$398
|
|
|
Restructured loans - commercial (nonaccrual)(c)
|
|
205
|
|
214
|
|
201
|
|
202
|
|
209
|
|
|
Restructured loans - consumer (nonaccrual)
|
|
90
|
|
96
|
|
114
|
|
115
|
|
126
|
|
|
|
Total nonaccrual portfolio loans and leases
|
|
$526
|
|
$579
|
|
$620
|
|
$640
|
|
$733
|
|
Repossessed personal property
|
|
20
|
|
18
|
|
19
|
|
18
|
|
6
|
|
Other real estate owned(a)
|
|
145
|
|
147
|
|
157
|
|
174
|
|
207
|
|
|
|
Total nonperforming assets(b)
|
|
$691
|
|
$744
|
|
$796
|
|
$832
|
|
$946
|
|
Nonaccrual loans held for sale
|
|
2
|
|
24
|
|
4
|
|
5
|
|
3
|
|
Restructured loans - (nonaccrual) held for sale
|
|
-
|
|
15
|
|
3
|
|
-
|
|
-
|
|
Total nonperforming assets including loans held for sale
|
|
$693
|
|
$783
|
|
$803
|
|
$837
|
|
$949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructured Consumer loans and leases (accrual)
|
|
$943
|
|
$905
|
|
$1,610
|
|
$1,623
|
|
$1,682
|
|
Restructured Commercial loans and leases (accrual)(c)
|
|
$774
|
|
$844
|
|
$885
|
|
$914
|
|
$847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 90 days past due
|
|
$78
|
|
$87
|
|
$87
|
|
$94
|
|
$94
|
|
Nonperforming loans and leases as a percent of portfolio loans,
|
|
|
|
|
|
|
|
|
|
|
|
|
leases and other assets, including other real estate owned(b)
|
|
0.57%
|
|
0.64%
|
|
0.68%
|
|
0.70%
|
|
0.82%
|
|
Nonperforming assets as a percent of portfolio loans, leases
|
|
|
|
|
|
|
|
|
|
|
|
|
and other assets, including other real estate owned(b)
|
|
0.76%
|
|
0.82%
|
|
0.88%
|
|
0.92%
|
|
1.05%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes government insured advances.
|
|
(b) Does not include nonaccrual loans held for sale.
|
|
(c) Excludes $21 million of restructured nonaccrual loans and $7
million of restructured accruing loans as of March 31, 2015,
December 31, 2014, September 30, 2014, June 30, 2014, and March 31,
2014.
|
|
|
Total nonperforming assets, including loans held-for-sale, were $693
million, a decline of $90 million, or 11 percent, from the previous
quarter. Nonperforming loans (NPLs) at quarter-end were $526 million or
0.57 percent of total loans, leases and OREO, and decreased $53 million,
or 9 percent, from the previous quarter.
Commercial NPAs were $421 million, or 0.76 percent of commercial loans,
leases and OREO, and decreased $40 million, or 9 percent, from the
fourth quarter. Commercial NPLs were $325 million, or 0.59 percent of
commercial loans and leases, and decreased $42 million from last
quarter. C&I NPAs of $216 million decreased $30 million from the prior
quarter. Commercial mortgage NPAs were $186 million, down $9 million
from the previous quarter. Commercial construction NPAs were $16
million, flat from the previous quarter. Commercial lease NPAs were $3
million, down $1 million from the previous quarter. Commercial NPAs
included $205 million of nonaccrual troubled debt restructurings (TDRs),
compared with $214 million last quarter.
Consumer NPAs of $270 million, or 0.75 percent of consumer loans, leases
and OREO, decreased $13 million from the fourth quarter. Consumer NPLs
were $201 million, or 0.56 percent of consumer loans and leases and
decreased $11 million from last quarter. Residential mortgage NPAs were
$113 million, $13 million lower than last quarter. Home equity NPAs of
$111 million increased $3 million sequentially and credit card NPAs of
$38 million were down $3 million compared with the previous quarter.
Consumer nonaccrual TDRs were $90 million in the first quarter of 2015,
compared with $96 million in the fourth quarter of 2014.
First quarter OREO balances included in NPA balances were $145 million,
down $2 million from the fourth quarter, and included $81 million in
commercial OREO and $64 million in consumer OREO. Repossessed personal
property of $20 million increased $2 million from the prior quarter.
Loans over 90 days past due and still accruing were $78 million, down $9
million from the fourth quarter of 2014. Commercial balances over 90
days past due were $3 million compared with less than $1 million in the
prior quarter, and consumer balances 90 days past due of $75 million
were down $12 million from the previous quarter. Loans 30-89 days past
due of $203 million were down $47 million from the previous quarter.
Commercial balances 30-89 days past due of $25 million were up $9
million sequentially and consumer balances 30-89 days past due of $178
million decreased $56 million from the fourth quarter. The above
delinquencies figures exclude nonaccruals described previously.
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Capital Position
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For the Three Months Ended
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March
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December
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September
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June
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March
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2015
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2014
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2014
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2014
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2014
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Capital Position
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Average shareholders' equity to average assets
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11.49%
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11.54%
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11.71%
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11.57%
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11.53%
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Tangible equity(a)
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9.38%
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9.41%
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9.65%
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9.77%
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9.61%
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Tangible common equity (excluding unrealized gains/losses)(a)
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8.41%
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8.43%
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8.64%
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8.74%
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8.79%
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Tangible common equity (including unrealized gains/losses)(a)
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8.78%
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8.71%
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8.84%
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9.00%
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8.93%
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Tangible common equity as a percent of risk-weighted assets
(excluding unrealized gains/losses)
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9.59%(b)
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9.70%(d)
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9.70%(d)
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9.67%(d)
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9.57%(d)
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Regulatory capital ratios:
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Basel III
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Transitional(c)
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Basel I(d)
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Common equity Tier I
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9.62%(b)
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N/A
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N/A
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N/A
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N/A
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Tier I risk-based capital
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10.74%(b)
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10.83%
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10.83%
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10.80%
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10.45%
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Total risk-based capital
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14.16%(b)
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14.33%
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14.34%
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14.30%
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14.02%
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Tier I leverage
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9.61%
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9.66%
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9.82%
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9.86%
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9.71%
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Tier I common equity
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N/A
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9.65%(a)
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9.64%(a)
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9.61%(a)
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9.51%(a)
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Book value per share
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17.85
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17.35
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16.87
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16.74
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16.27
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Tangible book value per share(a)
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14.87
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14.40
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13.95
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13.86
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13.40
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(a)
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These 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)
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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
Bancorp's total risk-weighted assets.
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(c)
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Current period regulatory capital ratios are estimated.
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(d)
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These capital ratios were calculated under the Supervisory
Agencies general risk-based capital rules (Basel I) which was in
effect prior to January 1, 2015.
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Capital ratios remained strong during the quarter, reflecting growth in
retained earnings, the payment of preferred dividends, and share
repurchase activity. The common equity Tier 1 ratio was 9.62 percent,
the tangible common equity to tangible assets ratio* was 8.41 percent
(excluding unrealized gains/losses), and 8.78 percent (including
unrealized gains/losses). The Tier 1 risk-based capital ratio was 10.74
percent, the total risk-based capital ratio was 14.16 percent, and the
Leverage ratio was 9.61 percent.
The Basel III Final Rule was effective for the Fifth Third on January 1,
2015, subject to phase-in periods for certain of its components and
other provisions. Transition provisions apply to the minimum regulatory
capital ratios; regulatory capital adjustments and deductions; and
non-qualifying capital instruments. Transition provisions for the
regulatory capital adjustments and deductions will change the amount
deducted from capital each calendar year until the transition period
ends. As of March 31, 2015, Fifth Third’s regulatory capital adjustments
and deductions were primarily impacted by the transition provision
related to the deduction of intangible assets other than goodwill and
mortgage servicing assets. Also, Fifth Third will make a one-time
permanent election to not include AOCI in common equity Tier 1 capital
in the March 31, 2015 regulatory filings.
Book value per share at March 31, 2015 was $17.85 and tangible book
value per share* was $14.87, compared with the December 31, 2014 book
value per share of $17.35 and tangible book value per share of $14.40.
As previously announced, Fifth Third entered into a share repurchase
agreement with a counterparty on January 22, 2015, whereby Fifth Third
would purchase approximately $180 million of its outstanding common
stock. This transaction reduced Fifth Third’s first quarter share count
by 8.54 million shares on January 27, 2015. Settlement of the forward
contract related to this agreement is expected to occur on or before
April 23, 2015. In addition, the settlement of the forward contract
related to the October 20, 2014 $180 million share repurchase agreement
occurred on January 5, 2015. An additional 0.79 million shares were
repurchased upon completion of the agreement. In total, the incremental
impact to the average diluted share count in the first quarter of 2015
was approximately 8.97 million shares due to share repurchase
transactions in the first quarter of 2015 and the fourth quarter of 2014.
On March 11, 2015, Fifth Third announced that the FRB did not object to
Fifth Third’s 2015 CCAR capital plan, which included the potential
increase in the quarterly common stock dividend to $0.14 per share in
2016 and the potential repurchase of common shares during the CCAR
period in an amount up to $765 million. In addition, the capital plan
incorporated Fifth Third’s potential repurchases of common shares in the
amount of any after-tax gains from the sale of Vantiv, Inc. (“Vantiv”)
stock. These capital plans were intended to maintain common equity
capital levels in the current range during the CCAR period. 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.
* Non-GAAP measure; see Reg. G reconciliation on page 32 in Exhibit
99.1 of 8-k filing dated 4/21/15.
Tax Rate
The effective tax rate was 25.9 percent this quarter compared with 25.9
percent in the fourth quarter of 2014 and 27.3 percent in the first
quarter of 2014.
Other
Fifth Third Bank owns 43 million units representing a 22.8 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 $37.70 on March 31, 2015, our interest in Vantiv was valued at
approximately $1.6 billion. Next month in our 10-Q, we will update our
disclosure of the carrying value of our interest in Vantiv stock, which
was $394 million as of December 31, 2014. 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 $485
million as of March 31, 2015.
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”). 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 Tuesday, May 5, 2015 by dialing 800-585-8367 for domestic access
or 404-537-3406 for international access (passcode 9854806#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of March 31, 2015, the Company had
$140 billion in assets and operated 15 affiliates with 1,303
full-service Banking Centers, including 101 Bank Mart® locations, most
open seven days a week, inside select grocery stores and 2,637 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 22.8%
interest in Vantiv Holding, LLC. Fifth Third is among the largest money
managers in the Midwest and, as of March 31, 2015, 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® 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 and adequate sources of funding and
liquidity 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 Fifth Third’s investment in, relationship with, and nature of the
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
Jim Eglseder (Investors), 513-534-8424
Laura Wehby (Investors), 513-534-7407
Larry Magnesen (Media), 513-534-8055