2014 Earnings Per Diluted Share of $1.66
- 4Q14 net income available to common shareholders of $362 million, or $0.43 per diluted common share
- Includes a $56 million pre-tax (~$37 million after-tax, or $0.04 per share) positive valuation adjustment on the warrant Fifth Third holds in Vantiv, $23 million pre-tax (~$15 million after-tax, or $0.02 per share) of provision expense related to the transfer of residential mortgage loans classified as troubled debt restructurings to held-for-sale, and a $19 million pre-tax (~$13 million after-tax, or $0.02 per share) charge related to the valuation of Visa total return swap
- 4Q14 return on average assets (ROA) of 1.13%; return on average common equity of 10.0%; return on average tangible common equity** of 12.1%
- Pre-provision net revenue (PPNR)** of $618 million in 4Q14
- Net interest income (FTE) of $888 million, down 2% sequentially and down 2% from 4Q13; net interest margin of 2.96%, down 14 basis points sequentially
- Average portfolio loans of $91.0 billion, up $242 million sequentially and $3.1 billion from 4Q13
- Noninterest income of $653 million compared with $520 million in the prior quarter; impacted by valuations on the Vantiv warrant and the valuation of the Visa total return swap during both quarters and the annual payment received from Vantiv pursuant to the tax receivable agreement in the fourth quarter
- Noninterest expense of $918 million compared with $888 million in the prior quarter primarily driven by higher compensation-related expenses and credit-related costs
- Credit trends
- 4Q14 net charge-offs of $191 million (0.83% of loans and leases) included $87 million of charge-offs related to the transfer of residential mortgage loans classified as troubled debt restructurings to held-for-sale; 3Q14 NCOs of $115 million (0.50% of loans and leases) and 4Q13 NCOs of $148 million (0.67% of loans and leases)
- 4Q14 provision expense of $99 million included $23 million impact related to the aforementioned transfer of loans to held-for-sale; $71 million in 3Q14 and $53 million in 4Q13
- Allowance for loan and lease losses decreased $92 million sequentially ($64 million reduction related to aforementioned transfer of loans to held-for-sale); allowance to loan ratio of 1.47%
- Total nonperforming assets (NPAs) of $783 million, including loans held-for-sale (HFS), declined $20 million sequentially; portfolio NPA ratio of 0.82% down 6 bps from 3Q14, NPL ratio of 0.64% down 4 bps from 3Q14; 2 bps improvement due to aforementioned transfer of loans to held-for-sale
- Strong capital ratios*
- Tier 1 common ratio** 9.65%, vs. 9.64% in 3Q14 (Basel III pro forma estimate of ~9.4%)
- Tier 1 risk-based capital ratio 10.83%, Total risk-based capital ratio 14.33%, Leverage ratio 9.66%
- Tangible common equity ratio** of 8.71%; 8.43% excluding securities portfolio unrealized gains/losses
- Book value per share of $17.35; tangible book value per share** of $14.40; up 3% from 3Q14 and up 11% from 4Q13
- Repurchased 10 million common shares in 4Q14; incremental impact from 3Q14 and 4Q14 transactions reduced average diluted share count by 11 million in 4Q14
* 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 the Basel III Final Rule approved in July 2013. See “Capital Position” section for more information.
** Non-GAAP measure; see Reg. G reconciliation on page 33 in Exhibit 99.1 of 8-k filing dated 1/21/15.
Fifth Third Bancorp (Nasdaq: FITB) today reported full year 2014 net
income of $1.5 billion, down 19 percent from net income of $1.8 billion
in 2013. After preferred dividends, 2014 net income available to common
shareholders was $1.4 billion, or $1.66 per diluted share, down 21
percent compared with 2013 net income available to common shareholders
of $1.8 billion, or $2.02 per diluted share.
Fourth quarter 2014 net income was $385 million, an increase of 13
percent from net income of $340 million in the third quarter of 2014 and
a decrease of 4 percent from net income of $402 million in the fourth
quarter of 2013. After preferred dividends, net income available to
common shareholders was $362 million, or $0.43 per diluted share, in the
fourth quarter 2014, compared with $328 million, or $0.39 per diluted
share, in the third quarter 2014, and $383 million, or $0.43 per diluted
share, in the fourth quarter of 2013.
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 total return swap
entered into as part of the 2009 sale of Visa, Inc. Class B shares
Expenses
-
($6 million) in severance expense
-
$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. Additionally, results included an
immaterial amount in mortgage repurchase provision.
Third quarter 2014 included:
Income
-
($53 million) negative valuation adjustment on the Vantiv warrant
-
($3 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
Expenses
-
($4 million) in litigation reserve charges
-
($2 million) in severance expense
Results also included the impact of $3 million in mortgage repurchase
provision.
Fourth quarter 2013 included:
Income
-
$91 million positive valuation adjustment on the Vantiv warrant
-
($18 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
-
$9 million annual payment received from Vantiv pursuant to tax
receivable agreement
Expenses
-
($69 million) in net charges to increase litigation reserves
-
($8 million) of debt extinguishment costs associated with the
redemption of Fifth Third Capital Trust IV trust preferred securities
(TruPS)
-
($8 million) contribution to Fifth Third Foundation
-
($8 million) in severance expense
Results also included a benefit to the mortgage repurchase provision of
$28 million primarily related to Fifth Third’s settlement with Freddie
Mac and corresponding expectations for future repurchase requests and
file claims.
|
|
|
Earnings Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Earnings ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Bancorp
|
$385
|
|
|
$340
|
|
|
$439
|
|
|
$318
|
|
|
$402
|
|
|
13%
|
|
(4%)
|
|
Net income available to common shareholders
|
$362
|
|
|
$328
|
|
|
$416
|
|
|
$309
|
|
|
$383
|
|
|
10%
|
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
0.44
|
|
|
0.39
|
|
|
0.49
|
|
|
0.36
|
|
|
0.44
|
|
|
13%
|
|
-
|
|
Earnings per share, diluted
|
0.43
|
|
|
0.39
|
|
|
0.49
|
|
|
0.36
|
|
|
0.43
|
|
|
10%
|
|
-
|
|
Cash dividends per common share
|
0.13
|
|
|
0.13
|
|
|
0.13
|
|
|
0.12
|
|
|
0.12
|
|
|
-
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
1.13
|
%
|
|
1.02
|
%
|
|
1.34
|
%
|
|
1.00
|
%
|
|
1.24
|
%
|
|
10%
|
|
(10%)
|
|
Return on average common equity
|
10.0
|
|
|
9.2
|
|
|
11.9
|
|
|
9.0
|
|
|
10.8
|
|
|
9%
|
|
(7%)
|
|
Return on average tangible common equity(b)
|
12.1
|
|
|
11.1
|
|
|
14.4
|
|
|
11.0
|
|
|
13.1
|
|
|
9%
|
|
(8%)
|
|
Tier I risk-based capital
|
10.83
|
|
|
10.83
|
|
|
10.80
|
|
|
10.45
|
|
|
10.43
|
|
|
-
|
|
4%
|
|
Tier I common equity(b)
|
9.65
|
|
|
9.64
|
|
|
9.61
|
|
|
9.51
|
|
|
9.45
|
|
|
-
|
|
2%
|
|
Net interest margin(a)
|
2.96
|
|
|
3.10
|
|
|
3.15
|
|
|
3.22
|
|
|
3.21
|
|
|
(5%)
|
|
(8%)
|
|
Efficiency(a)
|
59.6
|
|
|
62.1
|
|
|
58.2
|
|
|
64.9
|
|
|
61.5
|
|
|
(4%)
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (in thousands)
|
824,047
|
|
|
834,262
|
|
|
844,489
|
|
|
847,569
|
|
|
855,306
|
|
|
(1%)
|
|
(4%)
|
|
Average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
819,057
|
|
|
829,392
|
|
|
838,492
|
|
|
845,860
|
|
|
868,077
|
|
|
(1%)
|
|
(6%)
|
|
Diluted
|
827,831
|
|
|
838,324
|
|
|
848,245
|
|
|
857,924
|
|
|
877,511
|
|
|
(1%)
|
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Presented on a fully taxable equivalent basis.
|
|
(b) The tangible common equity and tier 1 common equity 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.
|
|
The percentages in all of the tables in this earning release are
calculated on actual dollar amounts and not the rounded dollar
amounts.
|
|
NM: Not meaningful.
|
|
|
|
“Fifth Third reported full year net income available to common
shareholders of $1.4 billion and earnings per diluted share were $1.66.
Full year 2014 earnings included solid performance across our business
lines highlighted by growth in corporate banking, payments processing,
and investment advisory revenue,” said Kevin T. Kabat, Vice Chairman and
CEO of Fifth Third Bancorp. “Highlights for the year also included 7
percent growth in demand deposits and well-controlled expenses that were
down 6 percent. Return on average assets was 1.1 percent and return on
average tangible common equity* was 12.2 percent.
“Fourth quarter earnings of $385 million rounded out a solid year in a
very tough operating environment. Average total deposits were up 3
percent sequentially, highlighted by 5 percent average demand deposit
growth. Fee income comparisons were led by corporate banking which
increased 20 percent sequentially, led by strong results in capital
markets fees to close out the year. We continue to make what we believe
to be long-term value enhancing decisions when we deploy our
shareholders’ equity and maintain our focus on earnings growth as we
anticipate a healthier economy in 2015.
“Full year net charge-offs were impacted by our decision to move $720
million of residential mortgage TDRs to held-for-sale, as we look to
take advantage of market conditions to reduce our TDR portfolio. This
decision increased our charge-offs by $87 million. The intended
transaction is in line with our previous statements about our view of
the current pricing for risk assets and is another indication of our
strong focus to reduce the volatility of our future earnings. Otherwise
in credit, nonperforming assets were down 24 percent from last year and
remain at very low levels. Our credit metrics are moving in the right
direction and provide further support to our positive credit outlook.
“We continued to prudently and actively manage our capital position,
reducing our share count by another 4 percent in 2014. Fifth Third
performed very well in 2014, and we made a number of decisions
throughout the year to reduce risk and volatility of earnings, and we
feel the Company is well positioned as we enter 2015.”
* Non-GAAP measure; see Reg. G reconciliation on page 33 in Exhibit
99.1 of 8-k filing dated 1/21/15.
|
|
|
Income Statement Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Condensed Statements of Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable equivalent)
|
$888
|
|
$908
|
|
$905
|
|
$898
|
|
$905
|
|
(2
|
%)
|
|
(2
|
%)
|
|
Provision for loan and lease losses
|
99
|
|
71
|
|
76
|
|
69
|
|
53
|
|
40
|
%
|
|
87
|
%
|
|
Total noninterest income
|
653
|
|
520
|
|
736
|
|
564
|
|
703
|
|
26
|
%
|
|
(7
|
%)
|
|
Total noninterest expense
|
918
|
|
888
|
|
954
|
|
950
|
|
989
|
|
3
|
%
|
|
(7
|
%)
|
|
Income before income taxes (taxable equivalent)
|
524
|
|
469
|
|
611
|
|
443
|
|
566
|
|
12
|
%
|
|
(8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment
|
5
|
|
5
|
|
5
|
|
5
|
|
5
|
|
(4
|
%)
|
|
(1
|
%)
|
|
Applicable income taxes
|
134
|
|
124
|
|
167
|
|
119
|
|
159
|
|
8
|
%
|
|
(16
|
%)
|
|
Net income
|
385
|
|
340
|
|
439
|
|
319
|
|
402
|
|
13
|
%
|
|
(4
|
%)
|
|
Less: Net income attributable to noncontrolling interests
|
-
|
|
-
|
|
|
-
|
|
1
|
|
-
|
|
(70
|
%)
|
|
NM
|
|
|
Net income attributable to Bancorp
|
385
|
|
340
|
|
439
|
|
318
|
|
402
|
|
13
|
%
|
|
(4
|
%)
|
|
Dividends on preferred stock
|
23
|
|
12
|
|
23
|
|
9
|
|
19
|
|
87
|
%
|
|
19
|
%
|
|
Net income available to common shareholders
|
362
|
|
328
|
|
416
|
|
309
|
|
383
|
|
10
|
%
|
|
(6
|
%)
|
|
Earnings per share, diluted
|
$ 0.43
|
|
$ 0.39
|
|
$ 0.49
|
|
$ 0.36
|
|
$ 0.43
|
|
10
|
%
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Interest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income (taxable equivalent)
|
$1,016
|
|
|
|
$1,023
|
|
|
|
$1,013
|
|
|
|
$998
|
|
|
|
$1,007
|
|
|
|
(1
|
%)
|
|
1
|
%
|
|
Total interest expense
|
128
|
|
|
|
115
|
|
|
|
108
|
|
|
|
100
|
|
|
|
102
|
|
|
|
11
|
%
|
|
25
|
%
|
|
Net interest income (taxable equivalent)
|
$888
|
|
|
|
$908
|
|
|
|
$905
|
|
|
|
$898
|
|
|
|
$905
|
|
|
|
(2
|
%)
|
|
(2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest-earning assets (taxable equivalent)
|
3.38
|
%
|
|
|
3.49
|
%
|
|
|
3.53
|
%
|
|
|
3.58
|
%
|
|
|
3.57
|
%
|
|
|
(3
|
%)
|
|
(5
|
%)
|
|
Rate paid on interest-bearing liabilities
|
0.61
|
%
|
|
|
0.56
|
%
|
|
|
0.54
|
%
|
|
|
0.51
|
%
|
|
|
0.52
|
%
|
|
|
9
|
%
|
|
17
|
%
|
|
Net interest rate spread (taxable equivalent)
|
2.77
|
%
|
|
|
2.93
|
%
|
|
|
2.99
|
%
|
|
|
3.07
|
%
|
|
|
3.05
|
%
|
|
|
(5
|
%)
|
|
(9
|
%)
|
|
Net interest margin (taxable equivalent)
|
2.96
|
%
|
|
|
3.10
|
%
|
|
|
3.15
|
%
|
|
|
3.22
|
%
|
|
|
3.21
|
%
|
|
|
(5
|
%)
|
|
(8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, including held for sale
|
$91,581
|
|
|
|
$91,428
|
|
|
|
$91,241
|
|
|
|
$90,238
|
|
|
|
$88,865
|
|
|
|
-
|
|
|
3
|
%
|
|
Total securities and other short-term investments
|
27,604
|
|
|
|
24,927
|
|
|
|
23,940
|
|
|
|
22,940
|
|
|
|
23,043
|
|
|
|
11
|
%
|
|
20
|
%
|
|
Total interest-earning assets
|
119,185
|
|
|
|
116,355
|
|
|
|
115,181
|
|
|
|
113,178
|
|
|
|
111,908
|
|
|
|
2
|
%
|
|
7
|
%
|
|
Total interest-bearing liabilities
|
82,544
|
|
|
|
81,157
|
|
|
|
80,770
|
|
|
|
79,130
|
|
|
|
77,573
|
|
|
|
2
|
%
|
|
6
|
%
|
|
Bancorp shareholders' equity
|
15,644
|
|
|
|
15,486
|
|
|
|
15,157
|
|
|
|
14,862
|
|
|
|
14,757
|
|
|
|
1
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income of $888 million on a fully taxable equivalent basis
decreased $20 million from the third quarter primarily driven by the
effects of loan repricing and higher interest expense associated with
the debt issuance in the third quarter of 2014 and partially offset by
the benefit of loan growth. Additionally, net interest income was
negatively impacted by lower average investment securities balances and
higher deposit costs in the quarter.
The net interest margin was 2.96 percent, a decrease of 14 bps from the
previous quarter primarily resulting from elevated cash balances due to
growth in funding balances. Additionally, the net interest margin was
negatively impacted by debt issuances and loan repricing during the
quarter.
Compared with the fourth quarter of 2013, net interest income decreased
$17 million and the net interest margin decreased 25 bps. The decrease
in net interest income was driven by the effect of loan repricing and
higher interest expense resulting from increased long-term debt balances
partially offset by higher investment securities balances and loan
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 $27.6 billion
in the fourth quarter of 2014 compared with $24.9 billion in the
previous quarter and $23.0 billion in the fourth quarter of 2013.
Average securities of $22.4 billion decreased $216 million from the
prior quarter reflecting the decision to not reinvest portfolio cash
flows. Other short-term investments average balances of $5.2 billion
increased $2.9 billion sequentially while end of period balances
increased $4.3 billion reflecting higher cash balances held at the
Federal Reserve.
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Average Portfolio Loans and Leases ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
$41,277
|
|
|
$41,477
|
|
|
$41,374
|
|
|
$40,377
|
|
|
$38,835
|
|
|
-
|
|
|
6
|
%
|
|
Commercial mortgage loans
|
7,480
|
|
|
7,633
|
|
|
7,885
|
|
|
7,981
|
|
|
8,047
|
|
|
(2
|
%)
|
|
(7
|
%)
|
|
Commercial construction loans
|
1,909
|
|
|
1,563
|
|
|
1,362
|
|
|
1,116
|
|
|
952
|
|
|
22
|
%
|
|
NM
|
|
|
Commercial leases
|
3,600
|
|
|
3,571
|
|
|
3,555
|
|
|
3,607
|
|
|
3,578
|
|
|
1
|
%
|
|
1
|
%
|
|
Subtotal - commercial loans and leases
|
54,266
|
|
|
54,244
|
|
|
54,176
|
|
|
53,081
|
|
|
51,412
|
|
|
-
|
|
|
6
|
%
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
13,046
|
|
|
12,785
|
|
|
12,611
|
|
|
12,659
|
|
|
12,609
|
|
|
2
|
%
|
|
3
|
%
|
|
Home equity
|
8,937
|
|
|
9,009
|
|
|
9,101
|
|
|
9,194
|
|
|
9,296
|
|
|
(1
|
%)
|
|
(4
|
%)
|
|
Automobile loans
|
12,073
|
|
|
12,105
|
|
|
12,070
|
|
|
12,023
|
|
|
12,019
|
|
|
-
|
|
|
-
|
|
|
Credit card
|
2,324
|
|
|
2,295
|
|
|
2,232
|
|
|
2,230
|
|
|
2,202
|
|
|
1
|
%
|
|
6
|
%
|
|
Other consumer loans and leases
|
395
|
|
|
361
|
|
|
359
|
|
|
343
|
|
|
357
|
|
|
9
|
%
|
|
11
|
%
|
|
Subtotal - consumer loans and leases
|
36,775
|
|
|
36,555
|
|
|
36,373
|
|
|
36,449
|
|
|
36,483
|
|
|
1
|
%
|
|
1
|
%
|
|
Total average loans and leases (excluding held for sale)
|
$91,041
|
|
|
$90,799
|
|
|
$90,549
|
|
|
$89,530
|
|
|
$87,895
|
|
|
-
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans held for sale
|
540
|
|
|
629
|
|
|
692
|
|
|
708
|
|
|
970
|
|
|
(14
|
%)
|
|
(44
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loan and lease balances (excluding loans held-for-sale)
increased $242 million sequentially and increased $3.1 billion, or 4
percent, from the fourth quarter of 2013. The sequential increase in
average loans and leases was primarily driven by growth in commercial
construction and residential mortgage loans. Sequential growth was
partially offset by declines in commercial and industrial (C&I),
commercial mortgage, and home equity loans. Period end loans and leases
(excluding loans held-for-sale) of $90.1 billion decreased $540 million
sequentially, reflecting the impact of $720 million residential mortgage
loans classified as troubled debt restructurings transferred to
held-for-sale during the quarter, and increased $1.5 billion, or 2
percent, from a year ago.
Average commercial portfolio loan and lease balances were flat
sequentially and increased $2.9 billion, or 6 percent, from the fourth
quarter of 2013. Average C&I loans decreased $200 million from the prior
quarter and increased $2.4 billion from the fourth quarter of 2013.
Within commercial real estate, average commercial mortgage balances
continued to decline and average commercial construction balances
increased for the eighth consecutive quarter. Commercial line usage, on
an end of period basis, was 32 percent of committed lines in the fourth
quarter of 2014 compared with 32 percent in the third quarter of 2014
and 29 percent in the fourth quarter of 2013.
Average consumer portfolio loan and lease balances increased $220
million, or 1 percent, sequentially and increased $292 million, or 1
percent, year-over-year. Average residential mortgage loans increased 2
percent sequentially and 3 percent from a year ago. Average home equity
loans declined 1 percent sequentially and 4 percent from the fourth
quarter of 2013. Average credit card loans increased 1 percent
sequentially and 6 percent from the fourth quarter of 2013.
Average loans held-for-sale balances of $540 million decreased $89
million sequentially and $430 million compared with the fourth quarter
of 2013. Period end loans held-for-sale of $1.3 billion increased $620
million from the previous quarter and $317 million from the fourth
quarter of 2013 primarily due to the transfer of certain residential
mortgage loans classified as troubled debt restructurings to
held-for-sale.
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Average Deposits ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
$33,301
|
|
|
$31,790
|
|
|
$31,275
|
|
|
$30,626
|
|
|
$30,765
|
|
|
5
|
%
|
|
8
|
%
|
|
Interest checking
|
25,478
|
|
|
24,926
|
|
|
25,222
|
|
|
25,911
|
|
|
24,650
|
|
|
2
|
%
|
|
3
|
%
|
|
Savings
|
15,173
|
|
|
15,759
|
|
|
16,509
|
|
|
16,903
|
|
|
17,323
|
|
|
(4
|
%)
|
|
(12
|
%)
|
|
Money market
|
17,023
|
|
|
15,222
|
|
|
13,942
|
|
|
12,439
|
|
|
11,285
|
|
|
12
|
%
|
|
51
|
%
|
|
Foreign office(a)
|
1,439
|
|
|
1,663
|
|
|
2,200
|
|
|
2,017
|
|
|
1,717
|
|
|
(13
|
%)
|
|
(16
|
%)
|
|
Subtotal - Transaction deposits
|
92,414
|
|
|
89,360
|
|
|
89,148
|
|
|
87,896
|
|
|
85,740
|
|
|
3
|
%
|
|
8
|
%
|
|
Other time
|
3,936
|
|
|
3,800
|
|
|
3,693
|
|
|
3,616
|
|
|
3,529
|
|
|
4
|
%
|
|
12
|
%
|
|
Subtotal - Core deposits
|
96,350
|
|
|
93,160
|
|
|
92,841
|
|
|
91,512
|
|
|
89,269
|
|
|
3
|
%
|
|
8
|
%
|
|
Certificates - $100,000 and over
|
2,998
|
|
|
3,339
|
|
|
3,840
|
|
|
5,576
|
|
|
7,456
|
|
|
(10
|
%)
|
|
(60
|
%)
|
|
Other
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
NM
|
|
|
NM
|
|
|
Total deposits
|
$99,348
|
|
|
$96,499
|
|
|
$96,681
|
|
|
$97,088
|
|
|
$96,725
|
|
|
3
|
%
|
|
3
|
%
|
|
(a)
|
|
Includes commercial customer Eurodollar sweep balances for which
the Bancorp pays rates comparable to other commercial deposit
accounts.
|
|
|
|
|
Average core deposits increased $3.2 billion sequentially and increased
$7.1 billion, or 8 percent, from the fourth quarter of 2013. Average
transaction deposits increased $3.1 billion from the third quarter of
2014 primarily driven by higher money market account, demand deposit,
and interest checking balances, partially offset by lower savings and
foreign office balances. Year-over-year transaction deposits increased
$6.7 billion, or 8 percent, driven by higher money market account,
demand deposit, and interest checking balances, partially offset by
lower savings and foreign office balances. Other time deposits increased
4 percent sequentially and 12 percent compared with the fourth quarter
of 2013.
Average commercial transaction deposits increased 5 percent sequentially
and 10 percent from the previous year. Sequential performance reflected
higher demand deposit, money market account, and interest checking
balances, partially offset by lower foreign office balances.
Year-over-year growth reflected higher demand deposit, interest
checking, and money market account balances as customers are holding
higher balances.
Average consumer transaction deposits increased 2 percent sequentially
and increased 6 percent from the fourth quarter of 2013. The sequential
performance reflected higher money market account, interest checking,
and demand deposit balances partially offset by lower savings balances.
Year-over-year growth was driven by increased money market account and
demand deposit balances partially offset by lower savings and interest
checking balances.
|
|
|
Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Average Wholesale Funding ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates - $100,000 and over
|
$2,998
|
|
|
$3,339
|
|
|
$3,840
|
|
|
$5,576
|
|
|
$7,456
|
|
|
(10
|
%)
|
|
(60
|
%)
|
|
Other deposits
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
NM
|
|
|
NM
|
|
|
Federal funds purchased
|
161
|
|
|
520
|
|
|
606
|
|
|
547
|
|
|
301
|
|
|
(69
|
%)
|
|
(47
|
%)
|
|
Other short-term borrowings
|
1,481
|
|
|
1,973
|
|
|
2,234
|
|
|
1,808
|
|
|
2,177
|
|
|
(25
|
%)
|
|
(32
|
%)
|
|
Long-term debt
|
14,855
|
|
|
13,955
|
|
|
12,524
|
|
|
10,313
|
|
|
9,135
|
|
|
6
|
%
|
|
63
|
%
|
|
Total wholesale funding
|
$19,495
|
|
|
$19,787
|
|
|
$19,204
|
|
|
$18,244
|
|
|
$19,069
|
|
|
(1
|
%)
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average wholesale funding of $19.5 billion decreased $292 million, or 1
percent, sequentially and increased $426 million, or 2 percent, compared
with the fourth quarter of 2013. The sequential decrease was driven by a
decrease in other short-term borrowings, federal funds purchased, and
certificates $100,000 and over, partially offset by an increase in
long-term debt. Average other short-term borrowings decreased $492
million from the prior quarter primarily due to a decrease in FHLB
borrowings. The year-over-year increase in average wholesale funding
reflected an increase in long-term debt, partially offset by a decrease
in certificates $100,000 and over and other short-term borrowings.
Average long-term debt balances reflected the $1.0 billion on-balance
sheet auto securitization executed in the fourth quarter of 2014, as
well as the full quarter impact of $850 million of bank senior debt
issued in the third quarter of 2014.
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
$ 142
|
|
$ 145
|
|
$ 139
|
|
$ 133
|
|
$ 142
|
|
(2
|
%)
|
|
-
|
|
|
Corporate banking revenue
|
120
|
|
100
|
|
107
|
|
104
|
|
94
|
|
20
|
%
|
|
27
|
%
|
|
Mortgage banking net revenue
|
61
|
|
61
|
|
78
|
|
109
|
|
126
|
|
-
|
|
|
(51
|
%)
|
|
Investment advisory revenue
|
100
|
|
103
|
|
102
|
|
102
|
|
98
|
|
(2
|
%)
|
|
2
|
%
|
|
Card and processing revenue
|
76
|
|
75
|
|
76
|
|
68
|
|
71
|
|
2
|
%
|
|
7
|
%
|
|
Other noninterest income
|
150
|
|
33
|
|
226
|
|
41
|
|
170
|
|
NM
|
|
|
(13
|
%)
|
|
Securities gains, net
|
4
|
|
3
|
|
8
|
|
7
|
|
2
|
|
15
|
%
|
|
NM
|
|
|
Securities gains, net - non-qualifying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
hedges on mortgage servicing rights
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
|
Total noninterest income
|
$ 653
|
|
$ 520
|
|
$ 736
|
|
$ 564
|
|
$ 703
|
|
26
|
%
|
|
(7
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income of $653 million increased $133 million sequentially
and decreased $50 million compared with prior year results. These
comparisons reflect the impacts described below.
For the quarters ending December 31, 2014, September 30, 2014, and
December 31, 2013, the impacts of Vantiv warrant valuation adjustments
were positive $56 million, negative $53 million, and positive $91
million, respectively. Quarterly results also included charges related
to the valuation of the total return swap entered into as part of the
2009 sale of Visa, Inc. Class B shares. Valuation adjustments on this
swap were a negative $19 million, negative $3 million, and negative $18
million in the fourth quarter of 2014, the third quarter of 2014, and
the fourth quarter of 2013, respectively. Excluding these items and net
securities gains in all periods, noninterest income of $612 million
increased $39 million, or 7 percent, from the previous quarter and
decreased $16 million, or 3 percent, from the fourth quarter of 2013.
The sequential increase was primarily due to the $23 million annual
payment received from Vantiv pursuant to the tax receivable agreement in
the fourth quarter of 2014 and an increase in corporate banking revenue.
The year-over-year decline was primarily due to lower mortgage banking
net revenue partially offset by higher corporate banking revenue and
higher payments received from Vantiv pursuant to the tax receivable
agreement in the fourth quarter of 2014 compared to the fourth quarter
of 2013, which were $23 million and $9 million, respectively.
Service charges on deposits of $142 million decreased 2 percent from the
third quarter and were flat compared with the same quarter last year.
The sequential decline was due to a 2 percent decrease in commercial
service charges as well as a 2 percent decrease in retail service
charges due to lower overdraft occurrences.
Corporate banking revenue of $120 million increased 20 percent from the
third quarter of 2014 and 27 percent from the fourth quarter of 2013.
The sequential increase was due to higher syndication fees, business
lending fees, and foreign exchange fees, partially offset by a decrease
in institutional sales revenue. The year-over-year increase was driven
by higher syndication fees, lease remarketing fees, letter of credit
fees, and foreign exchange fees, partially offset by a decrease in
institutional sales revenue.
Mortgage banking net revenue was $61 million in the fourth quarter of
2014, flat from the third quarter of 2014 and a 51 percent decrease from
the fourth quarter of 2013. Fourth quarter 2014 originations were $1.7
billion, compared with $2.1 billion in the previous quarter and $2.6
billion in the fourth quarter of 2013. Fourth quarter 2014 originations
resulted in gains of $36 million on mortgages sold, compared with gains
of $34 million during the previous quarter and $60 million during the
fourth quarter of 2013. The sequential increase was driven by higher
gain on sale margins, partially offset by lower production. The decrease
from the prior year reflected lower production, including Fifth Third’s
exit from the broker channel, partially offset by higher gain on sale
margins. Mortgage servicing fees were $60 million this quarter, $61
million in the third quarter of 2014, and $64 million in the fourth
quarter of 2013. 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 $34 million in the fourth quarter of
2014 (reflecting MSR amortization of $32 million and MSR valuation
adjustments of negative $2 million); negative $34 million in the third
quarter of 2014 (MSR amortization of $33 million and MSR valuation
adjustments of negative $1 million); and positive $3 million in the
fourth quarter of 2013 (MSR amortization of $23 million and MSR
valuation adjustments of positive $26 million). The mortgage servicing
asset, net of the valuation reserve, was $856 million at quarter-end on
a servicing portfolio of $65 billion.
Investment advisory revenue of $100 million decreased 2 percent from the
third quarter and increased 2 percent year-over-year. The sequential
decline reflected a decrease in personal specialty and insurance fees
relative to elevated levels in the third quarter, as well as a decrease
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, partially offset by a decrease in securities and
brokerage fees.
Card and processing revenue of $76 million in the fourth quarter of 2014
increased 2 percent sequentially and increased 7 percent from the fourth
quarter of 2013. The sequential and year-over-year increases reflect an
increase in the number of actively used cards and an increase in
customer spend volume.
Other noninterest income totaled $150 million in the fourth quarter of
2014, compared with $33 million in the previous quarter and $170 million
in the fourth quarter of 2013. As previously described, the results
included the impact of Vantiv warrant valuation adjustments and charges
related to the valuation of the Visa total return swap. Excluding these
items, other noninterest income of $113 million increased approximately
$24 million, or 27 percent, from the third quarter of 2014 and increased
approximately $16 million, or 16 percent, from the fourth quarter of
2013. The sequential and year-over-year increases were primarily due to
payments received from Vantiv pursuant to the tax receivable agreement
of $23 million in the fourth quarter of 2014 and $9 million in the
fourth quarter of 2013.
Net gains on investment securities were $4 million in the fourth quarter
of 2014, compared with $3 million in the previous quarter and $2 million
in the fourth quarter of 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
December
|
|
September
|
|
|
June
|
|
|
March
|
|
|
December
|
|
|
|
|
|
|
|
2014
|
|
2014
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Expense ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and incentives
|
$366
|
|
|
$357
|
|
|
$368
|
|
|
$359
|
|
|
$388
|
|
|
3
|
%
|
|
(6
|
%)
|
|
Employee benefits
|
79
|
|
|
75
|
|
|
79
|
|
|
101
|
|
|
78
|
|
|
5
|
%
|
|
1
|
%
|
|
Net occupancy expense
|
77
|
|
|
78
|
|
|
79
|
|
|
80
|
|
|
77
|
|
|
(1
|
%)
|
|
-
|
|
|
Technology and communications
|
54
|
|
|
53
|
|
|
52
|
|
|
53
|
|
|
53
|
|
|
2
|
%
|
|
2
|
%
|
|
Equipment expense
|
30
|
|
|
30
|
|
|
30
|
|
|
30
|
|
|
29
|
|
|
-
|
|
|
3
|
%
|
|
Card and processing expense
|
36
|
|
|
37
|
|
|
37
|
|
|
31
|
|
|
37
|
|
|
(1
|
%)
|
|
(2
|
%)
|
|
Other noninterest expense
|
276
|
|
|
258
|
|
|
309
|
|
|
296
|
|
|
327
|
|
|
7
|
%
|
|
(16
|
%)
|
|
Total noninterest expense
|
$918
|
|
|
$888
|
|
|
$954
|
|
|
$950
|
|
|
$989
|
|
|
3
|
%
|
|
(7
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense of $918 million increased 3 percent compared with
the third quarter of 2014 and decreased 7 percent compared with the
fourth quarter of 2013.
Fourth quarter 2014 expenses included a $3 million reversal of
litigation reserves, compared with $4 million in charges to litigation
reserves in the third quarter of 2014 and $69 million in charges to
litigation reserves in the fourth quarter of 2013. Fourth quarter 2014
expenses also included $6 million in severance expense compared with $2
million in the third quarter of 2014 and $8 million in the fourth
quarter of 2013. Fourth quarter of 2013 also included $8 million of debt
extinguishment costs associated with the redemption of Fifth Third
Capital Trust IV and an $8 million contribution to Fifth Third
Foundation. Excluding these items, noninterest expense of $915 million
was up $33 million, or 4 percent, sequentially and increased $19
million, or 2 percent, year-over-year. The sequential increase reflected
higher credit-related costs and compensation-related expense. The
year-over-year increase reflected increased credit-related costs,
partially offset by lower compensation-related expense, primarily due to
changes in our mortgage and retail staffing.
Credit costs related to problem assets recorded as noninterest expense
totaled $33 million in the fourth quarter of 2014, compared with $13
million in the third quarter of 2014, and a benefit of $12 million in
the fourth quarter of 2013. Credit-related expenses included provision
for mortgage repurchases that was an immaterial amount in the fourth
quarter of 2014, compared with expense of $3 million in the third
quarter of 2014. The fourth quarter of 2013 included a benefit of $26
million reflecting the reduction in the mortgage representation and
warranty reserve primarily related to Fifth Third’s settlement with
Freddie Mac and corresponding expectations for future repurchase
requests and file claims. (Realized mortgage repurchase losses were $2
million in the fourth quarter of 2014, compared with $3 million in the
third quarter of 2014, and $33 million in the fourth quarter of 2013.)
Provision for unfunded commitments was an expense of $1 million in the
current quarter, compared with a benefit of $8 million last quarter and
a benefit of $5 million a year ago. Derivative valuation adjustments
related to customer credit risk were negative $10 million for the
current quarter, positive $1 million in the third quarter, and positive
$2 million for the year ago quarter. Other problem asset-related
expenses were $17 million in the fourth quarter, compared with $15
million in the previous quarter, and $17 million in the same period last
year.
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Total net losses charged off ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
($44
|
)
|
|
|
($50
|
)
|
|
|
($31
|
)
|
|
|
($97
|
)
|
|
|
($66
|
)
|
|
|
Commercial mortgage loans
|
(10
|
)
|
|
|
(5
|
)
|
|
|
(9
|
)
|
|
|
(3
|
)
|
|
|
(8
|
)
|
|
|
Commercial construction loans
|
-
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
Commercial leases
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Residential mortgage loans
|
(94
|
)
|
|
|
(9
|
)
|
|
|
(8
|
)
|
|
|
(15
|
)
|
|
|
(13
|
)
|
|
|
Home equity
|
(11
|
)
|
|
|
(14
|
)
|
|
|
(18
|
)
|
|
|
(16
|
)
|
|
|
(26
|
)
|
|
|
Automobile loans
|
(7
|
)
|
|
|
(7
|
)
|
|
|
(5
|
)
|
|
|
(8
|
)
|
|
|
(6
|
)
|
|
|
Credit card
|
(20
|
)
|
|
|
(23
|
)
|
|
|
(21
|
)
|
|
|
(19
|
)
|
|
|
(21
|
)
|
|
|
Other consumer loans and leases
|
(4
|
)
|
|
|
(7
|
)
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
Total net losses charged off
|
(191
|
)
|
|
|
(115
|
)
|
|
|
(101
|
)
|
|
|
(168
|
)
|
|
|
(148
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses
|
(215
|
)
|
|
|
(146
|
)
|
|
|
(127
|
)
|
|
|
(190
|
)
|
|
|
(183
|
)
|
|
Total recoveries
|
24
|
|
|
|
31
|
|
|
|
26
|
|
|
|
22
|
|
|
|
35
|
|
|
Total net losses charged off
|
($191
|
)
|
|
|
($115
|
)
|
|
|
($101
|
)
|
|
|
($168
|
)
|
|
|
($148
|
)
|
|
Ratios (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses charged off as a percent of average loans and leases
(excluding held for sale)
|
0.83
|
%
|
|
|
0.50
|
%
|
|
|
0.45
|
%
|
|
|
0.76
|
%
|
|
|
0.67
|
%
|
|
|
Commercial
|
0.40
|
%
|
|
|
0.40
|
%
|
|
|
0.35
|
%
|
|
|
0.79
|
%
|
|
|
0.60
|
%
|
|
|
Consumer
|
1.47
|
%
|
|
|
0.66
|
%
|
|
|
0.60
|
%
|
|
|
0.72
|
%
|
|
|
0.76
|
%
|
Net charge-offs were $191 million, or 83 bps of average loans on an
annualized basis, in the fourth quarter of 2014 compared with net
charge-offs of $115 million, or 50 bps, in the third quarter of 2014 and
$148 million, or 67 bps, in the fourth quarter of 2013. The fourth
quarter of 2014 net charge-offs included $87 million (38 bps) related to
the transfer of residential mortgage loans classified as troubled debt
restructurings to held-for-sale. Excluding these, net charge-offs were
$104 million, or 45 bps, in the fourth quarter of 2014. For comparison
purposes, the fourth quarter of 2013 included a single large credit that
was restructured which resulted in a charge-off of $43 million (19 bps).
Commercial net charge-offs were $55 million, or 40 bps, and were flat
sequentially. C&I net charge-offs of $44 million decreased $6 million
from the previous quarter and commercial real estate net charge-offs
increased $5 million from the previous quarter.
Consumer net charge-offs were $136 million, or 147 bps, up $76 million
sequentially. Net charge-offs on residential mortgage loans in the
portfolio were $94 million, up $85 million from the previous quarter
primarily reflecting the impact of the charge-offs mentioned above. Home
equity net charge-offs were $11 million, down $3 million from the third
quarter of 2014, and net charge-offs in the auto portfolio of $7 million
were flat compared with the prior quarter. Net charge-offs on consumer
credit card loans were $20 million, down $3 million from the third
quarter. Net charge-offs on other consumer loans were $4 million, down
$3 million compared with the previous quarter.
|
|
|
|
|
For the Three Months Ended
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Allowance for Credit Losses ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
$1,414
|
|
|
|
$1,458
|
|
|
|
$1,483
|
|
|
|
$1,582
|
|
|
|
$1,677
|
|
|
Total net losses charged off
|
(191
|
)
|
|
|
(115
|
)
|
|
|
(101
|
)
|
|
|
(168
|
)
|
|
|
(148
|
)
|
|
Provision for loan and lease losses
|
99
|
|
|
|
71
|
|
|
|
76
|
|
|
|
69
|
|
|
|
53
|
|
|
Allowance for loan and lease losses, ending
|
1,322
|
|
|
|
1,414
|
|
|
|
1,458
|
|
|
|
1,483
|
|
|
|
1,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
134
|
|
|
|
142
|
|
|
|
153
|
|
|
|
162
|
|
|
|
167
|
|
|
Provision (benefit) for unfunded commitments
|
1
|
|
|
|
(8
|
)
|
|
|
(11
|
)
|
|
|
(9
|
)
|
|
|
(5
|
)
|
|
Reserve for unfunded commitments, ending
|
135
|
|
|
|
134
|
|
|
|
142
|
|
|
|
153
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses
|
1,322
|
|
|
|
1,414
|
|
|
|
1,458
|
|
|
|
1,483
|
|
|
|
1,582
|
|
|
Reserve for unfunded commitments
|
135
|
|
|
|
134
|
|
|
|
142
|
|
|
|
153
|
|
|
|
162
|
|
|
Total allowance for credit losses
|
$1,457
|
|
|
|
$1,548
|
|
|
|
$1,600
|
|
|
|
$1,636
|
|
|
|
$1,744
|
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of loans and leases
|
1.47
|
%
|
|
|
1.56
|
%
|
|
|
1.61
|
%
|
|
|
1.65
|
%
|
|
|
1.79
|
%
|
|
As a percent of nonperforming loans and leases(a)
|
228
|
%
|
|
|
228
|
%
|
|
|
228
|
%
|
|
|
202
|
%
|
|
|
211
|
%
|
|
As a percent of nonperforming assets(a)
|
178
|
%
|
|
|
178
|
%
|
|
|
175
|
%
|
|
|
157
|
%
|
|
|
161
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes nonaccrual loans and leases in loans held for sale.
|
|
|
Provision for loan and lease losses totaled $99 million in the fourth
quarter of 2014 and included a $23 million impact related to the
transfer of residential mortgage loans classified as troubled debt
restructurings to held-for-sale. The provision increased $28 million
from the third quarter of 2014 and increased $46 million from the fourth
quarter of 2013. The allowance for loan and lease losses declined $92
million sequentially reflecting a $64 million reduction related to the
aforementioned transfer of loans to held-for-sale, as well as the
portfolio’s overall risk profile and charges to the allowance. The
allowance represented 1.47 percent of total loans and leases outstanding
as of quarter end, compared with 1.56 percent last quarter, and
represented 228 percent of nonperforming loans and leases, and 178
percent of nonperforming assets.
|
|
|
|
As of
|
|
|
|
|
December
|
|
September
|
June
|
|
March
|
|
December
|
|
Nonperforming Assets and Delinquent Loans ($ in millions)
|
2014
|
|
2014
|
2014
|
|
2014
|
|
2013
|
|
Nonaccrual portfolio loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
$86
|
|
|
$102
|
|
|
$103
|
|
|
$153
|
|
|
$127
|
|
|
|
Commercial mortgage loans
|
64
|
|
|
77
|
|
|
86
|
|
|
96
|
|
|
90
|
|
|
|
Commercial construction loans
|
-
|
|
|
2
|
|
|
3
|
|
|
3
|
|
|
10
|
|
|
|
Commercial leases
|
3
|
|
|
3
|
|
|
2
|
|
|
3
|
|
|
3
|
|
|
|
Residential mortgage loans
|
44
|
|
|
52
|
|
|
56
|
|
|
68
|
|
|
83
|
|
|
|
Home equity
|
72
|
|
|
69
|
|
|
73
|
|
|
75
|
|
|
74
|
|
|
|
Automobile loans
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Other consumer loans and leases
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
Total nonaccrual loans and leases (excludes restructured loans)
|
$269
|
|
|
$305
|
|
|
$323
|
|
|
$398
|
|
|
$387
|
|
|
|
Restructured loans - commercial (nonaccrual)(c)
|
214
|
|
|
201
|
|
|
202
|
|
|
209
|
|
|
228
|
|
|
|
Restructured loans - consumer (nonaccrual)
|
96
|
|
|
114
|
|
|
115
|
|
|
126
|
|
|
136
|
|
|
|
|
Total nonaccrual portfolio loans and leases
|
$579
|
|
|
$620
|
|
|
$640
|
|
|
$733
|
|
|
$751
|
|
|
Repossessed personal property
|
18
|
|
|
19
|
|
|
18
|
|
|
6
|
|
|
7
|
|
|
Other real estate owned(a)
|
147
|
|
|
157
|
|
|
174
|
|
|
207
|
|
|
222
|
|
|
|
|
Total nonperforming assets(b)
|
$744
|
|
|
$796
|
|
|
$832
|
|
|
$946
|
|
|
$980
|
|
|
Nonaccrual loans held for sale
|
24
|
|
|
4
|
|
|
5
|
|
|
3
|
|
|
6
|
|
|
Restructured loans - (nonaccrual) held for sale
|
15
|
|
|
3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Total nonperforming assets including loans held for sale
|
$783
|
|
|
$803
|
|
|
$837
|
|
|
$949
|
|
|
$986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructured Consumer loans and leases (accrual)
|
$905
|
|
|
$1,610
|
|
|
$1,623
|
|
|
$1,682
|
|
|
$1,685
|
|
|
Restructured Commercial loans and leases (accrual)(c)
|
$844
|
|
|
$885
|
|
|
$914
|
|
|
$847
|
|
|
$869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 90 days past due
|
$87
|
|
|
$87
|
|
|
$94
|
|
|
$94
|
|
|
$103
|
|
|
Nonperforming loans and leases as a percent of portfolio loans,
leases and other assets, including other real estate owned(b)
|
0.64
|
%
|
|
0.68
|
%
|
|
0.70
|
%
|
|
0.82
|
%
|
|
0.84
|
%
|
|
Nonperforming assets as a percent of portfolio loans, leases and
other assets, including other real estate owned(b)
|
0.82
|
%
|
|
0.88
|
%
|
|
0.92
|
%
|
|
1.05
|
%
|
|
1.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 December 31, 2014,
September 30, 2014, June 30, 2014, and March 31, 2014 and excludes
$21 million of restructured nonaccrual loans and $8 million of
restructured accruing loans as of December 31, 2013 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 $783
million, a decline of $20 million, or 3 percent, from the previous
quarter. Nonperforming loans (NPLs) at quarter-end were $579 million or
0.64 percent of total loans, leases and OREO, and decreased $41 million,
or 7 percent, from the previous quarter. The fourth quarter NPLs
declined $24 million related to the transfer of residential mortgage
loans classified as troubled debt restructurings to held-for-sale.
Commercial NPAs were $461 million, or 0.85 percent of commercial loans,
leases and OREO, and decreased $26 million, or 5 percent, from the third
quarter. Commercial NPLs were $367 million, or 0.68 percent of
commercial loans and leases, and decreased $18 million from last
quarter. C&I NPAs of $246 million decreased $32 million from the prior
quarter. Commercial mortgage NPAs were $195 million, up $9 million from
the previous quarter. Commercial construction NPAs were $16 million, a
decrease of $3 million from the previous quarter. Commercial lease NPAs
were $4 million, flat from the previous quarter. Commercial NPAs
included $214 million of nonaccrual troubled debt restructurings (TDRs),
compared with $201 million last quarter.
Consumer NPAs of $283 million, or 0.78 percent of consumer loans, leases
and OREO, decreased $26 million from the third quarter. Consumer NPLs
were $212 million, or 0.59 percent of consumer loans and leases and
decreased $23 million from last quarter. The declines in consumer NPAs
and NPLs were driven by the residential mortgage loans moved to
held-for-sale in the fourth quarter. Residential mortgage NPAs were $126
million, $38 million lower than last quarter reflecting the
aforementioned NPAs moved to held-for-sale. Home equity NPAs of $108
million increased $7 million sequentially and credit card NPAs of $41
million were up $4 million compared with the previous quarter. Consumer
nonaccrual TDRs were $96 million in the fourth quarter of 2014, compared
with $114 million in the third quarter of 2014.
Fourth quarter OREO balances included in NPA balances were $147 million,
down $10 million from the third quarter, and included $83 million in
commercial OREO and $64 million in consumer OREO. Repossessed personal
property of $18 million decreased $1 million from the prior quarter.
Loans over 90 days past due and still accruing were $87 million, flat
from the third quarter of 2014. Commercial balances over 90 days past
due were less than $1 million compared with $1 million in the prior
quarter, and consumer balances 90 days past due of $87 million were up
$1 million from the previous quarter. Loans 30-89 days past due of $250
million were down $29 million from the previous quarter. Commercial
balances 30-89 days past due of $16 million were down $1 million
sequentially and consumer balances 30-89 days past due of $234 million
decreased $28 million from the third quarter. The above delinquencies
figures exclude nonaccruals described previously.
|
Capital Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
Capital Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shareholders' equity to average assets
|
11.54
|
%
|
|
|
11.71
|
%
|
|
|
11.57
|
%
|
|
|
11.53
|
%
|
|
|
11.51
|
%
|
|
Tangible equity(a)
|
9.41
|
%
|
|
|
9.65
|
%
|
|
|
9.77
|
%
|
|
|
9.61
|
%
|
|
|
9.44
|
%
|
|
Tangible common equity (excluding unrealized gains/losses)(a)
|
8.43
|
%
|
|
|
8.64
|
%
|
|
|
8.74
|
%
|
|
|
8.79
|
%
|
|
|
8.63
|
%
|
|
Tangible common equity (including unrealized gains/losses)(a)
|
8.71
|
%
|
|
|
8.84
|
%
|
|
|
9.00
|
%
|
|
|
8.93
|
%
|
|
|
8.69
|
%
|
|
Tangible common equity as a percent of risk-weighted assets
(excluding unrealized gains/losses)(a)(b)
|
9.70
|
%
|
|
|
9.70
|
%
|
|
|
9.67
|
%
|
|
|
9.57
|
%
|
|
|
9.52
|
%
|
|
Regulatory capital ratios:(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier I risk-based capital
|
10.83
|
%
|
|
|
10.83
|
%
|
|
|
10.80
|
%
|
|
|
10.45
|
%
|
|
|
10.43
|
%
|
|
|
Total risk-based capital
|
14.33
|
%
|
|
|
14.34
|
%
|
|
|
14.30
|
%
|
|
|
14.02
|
%
|
|
|
14.17
|
%
|
|
|
Tier I leverage
|
9.66
|
%
|
|
|
9.82
|
%
|
|
|
9.86
|
%
|
|
|
9.71
|
%
|
|
|
9.73
|
%
|
|
|
Tier I common equity(a)
|
9.65
|
%
|
|
|
9.64
|
%
|
|
|
9.61
|
%
|
|
|
9.51
|
%
|
|
|
9.45
|
%
|
|
Book value per share
|
17.35
|
|
|
|
16.87
|
|
|
|
16.74
|
|
|
|
16.27
|
|
|
|
15.85
|
|
|
Tangible book value per share(a)
|
14.40
|
|
|
|
13.95
|
|
|
|
13.86
|
|
|
|
13.40
|
|
|
|
13.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
(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.
|
|
(c)
|
|
Current period regulatory capital data ratios are estimated.
|
|
|
|
|
Capital ratios remained strong during the quarter, reflecting growth in
retained earnings, the payment of preferred dividends, and share
repurchase activity. Compared with the prior quarter, the Tier 1 common
equity ratio* of 9.65 percent increased 1 bp. The tangible common equity
to tangible assets ratio* was 8.43 percent (excluding unrealized
gains/losses) and 8.71 percent (including unrealized gains/losses). The
Tier 1 risk-based capital ratio was 10.83 percent and was flat compared
to the prior quarter. The total risk-based capital ratio decreased 1 bps
to 14.33 percent and the Leverage ratio decreased 16 bps to 9.66 percent.
Our current estimate of the pro-forma fully phased in Tier I common
equity ratio at December 31, 2014 under the final capital rule, assuming
the Company elected to maintain the current treatment of AOCI components
in capital, would be approximately 9.4 percent**. This would compare
with 9.7 percent* as calculated under the currently prevailing Basel I
capital framework. Were Fifth Third to make the election to include AOCI
components in capital, the December 31, 2014 pro forma Basel III Tier 1
common ratio would be increased by approximately 35 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.
Book value per share at December 31, 2014 was $17.35 and tangible book
value per share* was $14.40, compared with the September 30, 2014 book
value per share of $16.87 and tangible book value per share of $13.95.
As previously announced, Fifth Third entered into a share repurchase
agreement with a counterparty on October 20, 2014, whereby Fifth Third
would purchase approximately $180 million of its outstanding common
stock. This transaction reduced Fifth Third’s fourth quarter share count
by 8.34 million shares on October 23, 2014. Settlement of the forward
contract related to this agreement occurred on January 5, 2015 and an
additional 0.79 million shares were repurchased upon completion of the
agreement. In addition, the settlement of the forward contract related
to the July 21, 2014 $225 million share repurchase agreement occurred on
October 14, 2014. An additional 1.90 million shares were repurchased
upon completion of the agreement. In total, the incremental impact to
the average diluted share count in the fourth quarter of 2014 was
approximately 10.53 million shares due to share repurchase transactions
in the third and fourth quarters of 2014.
* Non-GAAP measure; see Reg. G reconciliation on page 33 in Exhibit
99.1 of 8-k filing dated 1/21/15.
** 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 the Basel III Final Rule
approved in July 2013.
Tax Rate
The effective tax rate was 25.9 percent this quarter compared with 26.7
percent in the third quarter of 2014 and 28.4 percent in the fourth
quarter of 2013.
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 $33.92 on December 31, 2014, our interest in Vantiv was valued
at approximately $1.5 billion. Next month in our 10-K, we will update
our disclosure of the carrying value of our interest in Vantiv stock,
which was $388 million as of September 30, 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 $415
million as of December 31, 2014.
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 Wednesday, February 4, 2015 by dialing 800-585-8367 for domestic
access or 404-537-3406 for international access (passcode 46038333#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of December 31, 2014, the Company
had $139 billion in assets and operated 15 affiliates with 1,302
full-service Banking Centers, including 101 Bank Mart® locations, most
open seven days a week, inside select grocery stores and 2,638 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 December 31, 2014, 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 as updated by
our Quarterly Reports on Form 10-Q. 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