- 1Q17 net income available to common shareholders of $290 million, or $0.38 per diluted common share
- Results included the following items which had a net neutral impact on reported 1Q17 earnings per share:
- A $13 million pre-tax (~$8 million after-tax)(a) charge related to the valuation of the Visa total return swap
- A $12 million pre-tax (~$8 million after-tax)(a) benefit related to the revision to the 4Q16 estimated charge to net interest income for refunds to certain bankcard customers
- Reported net interest income of $933 million; taxable equivalent net interest income of $939 million(b), up 3% from both 4Q16 and 1Q16; excluding the 4Q16 and 1Q17 card remediation impacts, flat from 4Q16 and up 2% from 1Q16(b)
- Taxable equivalent net interest margin of 3.02%(b), up 16 bps from 4Q16 and up 11 bps from 1Q16; adjusted net interest margin, excluding the 4Q16 and 1Q17 card remediation impact, of 2.98%(b), up 7 bps both from 4Q16 and 1Q16
- Average portfolio loans and leases of $92.1 billion, down 1% from 4Q16 and down 1% from 1Q16
- Noninterest income of $523 million compared with $620 million in 4Q16 and $637 million in 1Q16; sequential decline primarily driven by the $33 million annual payment recognized from Vantiv pursuant to the tax receivable agreement in the prior quarter and other items mentioned on page 9
- Noninterest expense of $986 million, up 3% from 4Q16 and flat from 1Q16; sequential increase primarily driven by seasonally higher compensation-related expenses and $18 million in long-term incentive expense that would have otherwise been recognized in the second quarter without a change in the grant date
- Net charge-offs (NCOs) of $89 million, up $16 million from 4Q16 and down $7 million from 1Q16; NCO ratio of 0.40% compared to 0.31% in 4Q16 and 0.42% in 1Q16
- Portfolio nonperforming asset (NPA) ratio of 0.79% down 1 bp from 4Q16 and down 9 bps from 1Q16
- 1Q17 provision expense of $74 million compared to $54 million in 4Q16 and $119 million in 1Q16
- Common equity Tier 1 (CET1)(c) ratio of 10.76%; fully phased-in CET1 ratio(b)(c) of 10.66%
- Tangible common equity ratio of 9.20%(b); 9.15% excluding unrealized gains/losses(b)
- Book value per share of $20.13 up 2% from 4Q16 and up 3% from 1Q16; tangible book value per share(b) of $16.89 up 2% from 4Q16 and up 3% from 1Q16
Fifth Third Bancorp (Nasdaq: FITB) today reported first quarter 2017 net
income of $305 million versus net income of $395 million in the fourth
quarter of 2016 and $326 million in the first quarter of 2016. After
preferred dividends, net income available to common shareholders was
$290 million, or $0.38 per diluted share, in the first quarter of 2017,
compared with $372 million, or $0.49 per diluted share, in the fourth
quarter of 2016, and $311 million, or $0.40 per diluted share, in the
first quarter of 2016.
First quarter 2017 included:
Income
-
$12 million benefit related to the revision to the 4Q16 estimated
charge to net interest income for refunds to certain bankcard customers
-
($13 million) charge related to the valuation of the Visa total return
swap
Fourth quarter 2016 included:
Income
-
$9 million gain on the Vantiv warrant net exercise and share sale
-
$6 million benefit related to the valuation of the Visa total return
swap
-
($16 million) reduction to net interest income for estimated refunds
to be offered to certain bankcard customers
Expenses
-
($5 million) contribution to Fifth Third Foundation
Results also included a $6 million tax benefit from the early adoption
of an accounting standard, and a $33 million annual payment recognized
from Vantiv pursuant to the tax receivable agreement, which was recorded
in other noninterest income.
First quarter 2016 included:
Income
-
$47 million positive valuation adjustment on the remaining Vantiv
warrant
-
$8 million gain on sale of certain St. Louis branches as part of the
previously announced branch consolidation and sales plan
-
$1 million benefit related to the valuation of the Visa total return
swap
Expenses
-
($15 million) in severance expense, primarily consisting of $14
million related to the voluntary early retirement program
|
Earnings Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016(d)
|
|
2016(d)
|
|
2016(d)
|
|
Seq
|
|
Yr/Yr
|
|
Earnings ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Bancorp
|
|
$305
|
|
|
$395
|
|
|
$516
|
|
|
$328
|
|
|
$326
|
|
|
(23%)
|
|
(6%)
|
|
Net income available to common shareholders
|
|
$290
|
|
|
$372
|
|
|
$501
|
|
|
$305
|
|
|
$311
|
|
|
(22%)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
|
$0.38
|
|
|
$0.49
|
|
|
$0.66
|
|
|
$0.40
|
|
|
$0.40
|
|
|
(22%)
|
|
(5%)
|
|
Earnings per share, diluted
|
|
0.38
|
|
|
0.49
|
|
|
0.65
|
|
|
0.39
|
|
|
0.40
|
|
|
(22%)
|
|
(5%)
|
|
Cash dividends per common share
|
|
0.14
|
|
|
0.14
|
|
|
0.13
|
|
|
0.13
|
|
|
0.13
|
|
|
-
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (in thousands)
|
|
750,145
|
|
|
750,479
|
|
|
755,582
|
|
|
766,346
|
|
|
770,471
|
|
|
-
|
|
(3%)
|
|
Average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
747,668
|
|
|
746,367
|
|
|
750,886
|
|
|
759,105
|
|
|
773,564
|
|
|
-
|
|
(3%)
|
|
Diluted
|
|
760,809
|
|
|
757,704
|
|
|
757,856
|
|
|
764,811
|
|
|
777,758
|
|
|
-
|
|
(2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bps Change
|
|
Return on average assets
|
|
0.88
|
%
|
|
1.11
|
%
|
|
1.44
|
%
|
|
0.92
|
%
|
|
0.93
|
%
|
|
(23)
|
|
(5)
|
|
Return on average common equity
|
|
7.8
|
|
|
9.7
|
|
|
12.8
|
|
|
8.0
|
|
|
8.3
|
|
|
(190)
|
|
(50)
|
|
Return on average tangible common equity(b)
|
|
9.3
|
|
|
11.6
|
|
|
15.2
|
|
|
9.6
|
|
|
9.9
|
|
|
(230)
|
|
(60)
|
|
CET1 capital(c)
|
|
10.76
|
|
|
10.39
|
|
|
10.17
|
|
|
9.94
|
|
|
9.81
|
|
|
37
|
|
95
|
|
Tier I risk-based capital(c)
|
|
11.90
|
|
|
11.50
|
|
|
11.27
|
|
|
11.03
|
|
|
10.91
|
|
|
40
|
|
99
|
|
CET1 capital (fully-phased in)(b)(c)
|
|
10.66
|
|
|
10.29
|
|
|
10.09
|
|
|
9.86
|
|
|
9.72
|
|
|
37
|
|
94
|
|
Net interest margin (taxable equivalent)(b)
|
|
3.02
|
|
|
2.86
|
|
|
2.88
|
|
|
2.88
|
|
|
2.91
|
|
|
16
|
|
11
|
|
Efficiency (taxable equivalent)(b)
|
|
67.4
|
|
|
62.8
|
|
|
55.5
|
|
|
65.3
|
|
|
63.8
|
|
|
460
|
|
360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“During the first quarter we continued to make progress towards our long
term performance goals under North Star,” said Greg D. Carmichael,
President and CEO of Fifth Third Bancorp.
“Our net interest margin continued to improve as our balance sheet
positioning allowed us to benefit from increased short term market
rates. The growth in our net interest income and our focus on expense
management are indicative of our ability to achieve positive operating
leverage. Credit quality metrics also continue to support a benign
credit outlook for the foreseeable future.”
|
Income Statement Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except per-share data)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016(d)
|
|
2016(d)
|
|
2016(d)
|
|
Seq
|
|
Yr/Yr
|
|
Condensed Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable equivalent)(b)
|
|
$939
|
|
$909
|
|
$913
|
|
$908
|
|
$909
|
|
3%
|
|
3%
|
|
Provision for loan and lease losses
|
|
74
|
|
54
|
|
80
|
|
91
|
|
119
|
|
37%
|
|
(38%)
|
|
Total noninterest income
|
|
523
|
|
620
|
|
840
|
|
599
|
|
637
|
|
(16%)
|
|
(18%)
|
|
Total noninterest expense
|
|
986
|
|
960
|
|
973
|
|
983
|
|
986
|
|
3%
|
|
-
|
|
Income before income taxes (taxable equivalent)(b)
|
|
$402
|
|
$515
|
|
$700
|
|
$433
|
|
$441
|
|
(22%)
|
|
(9%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment
|
|
6
|
|
6
|
|
6
|
|
6
|
|
6
|
|
-
|
|
-
|
|
Applicable income tax expense
|
|
91
|
|
114
|
|
178
|
|
103
|
|
109
|
|
(20%)
|
|
(17%)
|
|
Net income
|
|
$305
|
|
$395
|
|
$516
|
|
$324
|
|
$326
|
|
(23%)
|
|
(6%)
|
|
Less: Net income attributable to noncontrolling interests
|
|
-
|
|
-
|
|
-
|
|
(4)
|
|
-
|
|
-
|
|
-
|
|
Net income attributable to Bancorp
|
|
$305
|
|
$395
|
|
$516
|
|
$328
|
|
$326
|
|
(23%)
|
|
(6%)
|
|
Dividends on preferred stock
|
|
15
|
|
23
|
|
15
|
|
23
|
|
15
|
|
(35%)
|
|
-
|
|
Net income available to common shareholders
|
|
$290
|
|
$372
|
|
$501
|
|
$305
|
|
$311
|
|
(22%)
|
|
(7%)
|
|
Earnings per share, diluted
|
|
$0.38
|
|
$0.49
|
|
$0.65
|
|
$0.39
|
|
$0.40
|
|
(22%)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Taxable equivalent basis; $ in millions)(b)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Seq
|
|
Yr/Yr
|
|
Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$1,092
|
|
|
$1,058
|
|
|
$1,063
|
|
|
$1,052
|
|
|
$1,044
|
|
|
3%
|
|
5%
|
|
Total interest expense
|
|
153
|
|
|
149
|
|
|
150
|
|
|
144
|
|
|
135
|
|
|
3%
|
|
13%
|
|
Net interest income
|
|
$939
|
|
|
$909
|
|
|
$913
|
|
|
$908
|
|
|
$909
|
|
|
3%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bps Change
|
|
Yield on interest-earning assets
|
|
3.51%
|
|
|
3.33%
|
|
|
3.36%
|
|
|
3.34%
|
|
|
3.34%
|
|
|
18
|
|
17
|
|
Rate paid on interest-bearing liabilities
|
|
0.73%
|
|
|
0.70%
|
|
|
0.70%
|
|
|
0.67%
|
|
|
0.64%
|
|
|
3
|
|
9
|
|
Net interest rate spread
|
|
2.78%
|
|
|
2.63%
|
|
|
2.66%
|
|
|
2.67%
|
|
|
2.70%
|
|
|
15
|
|
8
|
|
Net interest margin
|
|
3.02%
|
|
|
2.86%
|
|
|
2.88%
|
|
|
2.88%
|
|
|
2.91%
|
|
|
16
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
Loans and leases, including held for sale
|
|
$92,791
|
|
|
$93,981
|
|
|
$94,417
|
|
|
$94,807
|
|
|
$94,078
|
|
|
(1%)
|
|
(1%)
|
|
Total securities and other short-term investments
|
|
33,177
|
|
|
32,567
|
|
|
31,675
|
|
|
32,040
|
|
|
31,573
|
|
|
2%
|
|
5%
|
|
Total interest-earning assets
|
|
125,968
|
|
|
126,548
|
|
|
126,092
|
|
|
126,847
|
|
|
125,651
|
|
|
-
|
|
-
|
|
Total interest-bearing liabilities
|
|
84,890
|
|
|
84,552
|
|
|
85,193
|
|
|
86,145
|
|
|
85,450
|
|
|
-
|
|
(1%)
|
|
Bancorp shareholders' equity(d)
|
|
16,429
|
|
|
16,545
|
|
|
16,883
|
|
|
16,584
|
|
|
16,376
|
|
|
(1%)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income for the fourth quarter of 2016 included a $16
million estimated charge for refunds to certain bankcard customers. In
the first quarter of 2017 with the completion of the analysis, this
charge was revised and resulted in a $12 million reversal of the prior
charge. Excluding the impact of these items, net interest income was up
$2 million from the fourth quarter of 2016, reflecting higher short-term
market rates and lower wholesale funding balances, partially offset by
declining loan balances and a lower day count. The adjusted net interest
margin was 2.98 percent, up 7 bps from the prior quarter’s adjusted net
interest margin, primarily driven by higher short-term market rates and
a lower day count, partially offset by lower investment yields resulting
from lower net discount accretion.
Compared to the first quarter of 2016, adjusted taxable equivalent net
interest income was up 2 percent, primarily driven by higher short-term
market rates. The adjusted net interest margin was up 7 bps from the
first quarter of 2016, driven primarily by higher short-term market
rates.
Securities
Average securities and other short-term investments were $33.2 billion
in the first quarter of 2017 compared to $32.6 billion in the previous
quarter and $31.6 billion in the first quarter of 2016. Average balances
of other short-term investments decreased by $502 million sequentially
to $1.3 billion.
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Seq
|
|
Yr/Yr
|
|
Average Portfolio Loans and Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$41,854
|
|
|
$42,548
|
|
|
$43,116
|
|
|
$43,876
|
|
|
$43,089
|
|
|
(2%)
|
|
(3%)
|
|
Commercial mortgage loans
|
|
6,941
|
|
|
6,957
|
|
|
6,888
|
|
|
6,831
|
|
|
6,886
|
|
|
-
|
|
1%
|
|
Commercial construction loans
|
|
3,987
|
|
|
3,890
|
|
|
3,848
|
|
|
3,551
|
|
|
3,297
|
|
|
2%
|
|
21%
|
|
Commercial leases
|
|
3,901
|
|
|
3,921
|
|
|
3,962
|
|
|
3,898
|
|
|
3,874
|
|
|
(1%)
|
|
1%
|
|
Total commercial loans and leases
|
|
$56,683
|
|
|
$57,316
|
|
|
$57,814
|
|
|
$58,156
|
|
|
$57,146
|
|
|
(1%)
|
|
(1%)
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
$15,200
|
|
|
$14,854
|
|
|
$14,455
|
|
|
$14,046
|
|
|
$13,788
|
|
|
2%
|
|
10%
|
|
Home equity
|
|
7,581
|
|
|
7,779
|
|
|
7,918
|
|
|
8,054
|
|
|
8,217
|
|
|
(3%)
|
|
(8%)
|
|
Automobile loans
|
|
9,786
|
|
|
10,162
|
|
|
10,508
|
|
|
10,887
|
|
|
11,283
|
|
|
(4%)
|
|
(13%)
|
|
Credit card
|
|
2,141
|
|
|
2,180
|
|
|
2,165
|
|
|
2,134
|
|
|
2,179
|
|
|
(2%)
|
|
(2%)
|
|
Other consumer loans and leases
|
|
755
|
|
|
673
|
|
|
651
|
|
|
654
|
|
|
662
|
|
|
12%
|
|
14%
|
|
Total consumer loans and leases
|
|
$35,463
|
|
|
$35,648
|
|
|
$35,697
|
|
|
$35,775
|
|
|
$36,129
|
|
|
(1%)
|
|
(2%)
|
|
Total average portfolio loans and leases
|
|
$92,146
|
|
|
$92,964
|
|
|
$93,511
|
|
|
$93,931
|
|
|
$93,275
|
|
|
(1%)
|
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans held for sale
|
|
$645
|
|
|
$1,017
|
|
|
$906
|
|
|
$876
|
|
|
$803
|
|
|
(37%)
|
|
(20%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average portfolio loan and lease balances decreased $818 million, or 1
percent, sequentially and decreased $1.1 billion, or 1 percent, from the
first quarter of 2016. The sequential and year-over-year decrease was
primarily driven by declines in automobile and commercial and industrial
(C&I) loans. The decline in auto loans continues to reflect our 2016
decision to reduce lower-return auto loan originations to improve
returns on shareholders’ equity. The decline in C&I loans was partially
due to deliberate exits from certain C&I loans that did not meet
risk-adjusted profitability targets, as well as softer loan
demand. Period end portfolio loans and leases of $91.6 billion decreased
$470 million, or 1 percent, sequentially and $2.0 billion, or 2 percent,
from a year ago. On both a sequential and year-over-year basis, the
average and period end loan decrease was primarily due to declines in
C&I and automobile loans, partially offset by increases in residential
mortgage and commercial construction loans.
Average commercial portfolio loan and lease balances decreased $633
million, or 1 percent, sequentially, and were down $463 million, or 1
percent, from the first quarter of 2016. Average C&I loans decreased
$694 million, or 2 percent, from the prior quarter and decreased $1.2
billion, or 3 percent, from the first quarter of 2016. Average
commercial real estate loans increased $81 million, or 1 percent, from
the prior quarter and increased $745 million, or 7 percent, from the
first quarter of 2016. Within commercial real estate, average commercial
mortgage balances decreased $16 million and average commercial
construction balances increased $97 million sequentially. Period end
commercial line utilization of 34% was flat from the fourth quarter of
2016 and decreased 1 percent from the first quarter of 2016.
Average consumer portfolio loan and lease balances were down $185
million, or 1 percent, sequentially and decreased $666 million, or 2
percent, from the first quarter of 2016. This was primarily driven by
average automobile loans which decreased 4 percent sequentially and 13
percent from a year ago. Average residential mortgage loans increased 2
percent sequentially and 10 percent from the previous year. Average home
equity loans decreased 3 percent sequentially and 8 percent from the
first quarter of 2016. Average credit card loans decreased 2 percent
sequentially and decreased 2 percent from the first quarter of 2016.
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Seq
|
|
Yr/Yr
|
|
Average Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
$35,084
|
|
|
$36,412
|
|
|
$35,918
|
|
|
$35,912
|
|
|
$35,201
|
|
|
(4%)
|
|
-
|
|
Interest checking
|
|
26,760
|
|
|
25,644
|
|
|
24,475
|
|
|
24,714
|
|
|
25,740
|
|
|
4%
|
|
4%
|
|
Savings
|
|
14,117
|
|
|
13,979
|
|
|
14,232
|
|
|
14,576
|
|
|
14,601
|
|
|
1%
|
|
(3%)
|
|
Money market
|
|
20,603
|
|
|
20,476
|
|
|
19,706
|
|
|
19,243
|
|
|
18,655
|
|
|
1%
|
|
10%
|
|
Foreign office(e)
|
|
454
|
|
|
497
|
|
|
524
|
|
|
484
|
|
|
483
|
|
|
(9%)
|
|
(6%)
|
|
Total transaction deposits
|
|
$97,018
|
|
|
$97,008
|
|
|
$94,855
|
|
|
$94,929
|
|
|
$94,680
|
|
|
-
|
|
2%
|
|
Other time
|
|
3,827
|
|
|
3,941
|
|
|
4,020
|
|
|
4,044
|
|
|
4,035
|
|
|
(3%)
|
|
(5%)
|
|
Total core deposits
|
|
$100,845
|
|
|
$100,949
|
|
|
$98,875
|
|
|
$98,973
|
|
|
$98,715
|
|
|
-
|
|
2%
|
|
Certificates - $100,000 and over
|
|
2,579
|
|
|
2,539
|
|
|
2,768
|
|
|
2,819
|
|
|
2,815
|
|
|
2%
|
|
(8%)
|
|
Other
|
|
162
|
|
|
115
|
|
|
749
|
|
|
467
|
|
|
-
|
|
|
41%
|
|
NM
|
|
Total average deposits
|
|
$103,586
|
|
|
$103,603
|
|
|
$102,392
|
|
|
$102,259
|
|
|
$101,530
|
|
|
-
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average core deposits were flat sequentially and increased $2.1 billion,
or 2 percent, from the first quarter of 2016. Average transaction
deposits were also flat sequentially and increased $2.3 billion, or 2
percent, from the first quarter of 2016. Sequential performance was
primarily driven by increases in commercial and consumer interest
checking account balances, offset by lower commercial demand deposit
account balances. The year-over-year increase was primarily driven by
higher consumer money market and interest checking account balances,
partially offset by lower savings account balances. Other time deposits
decreased by 3 percent sequentially and 5 percent year-over-year.
Average total commercial transaction deposits of $44 billion decreased 3
percent sequentially and decreased 1 percent from the first quarter of
2016. Average total consumer transaction deposits of $53 billion
increased 2 percent sequentially and increased 5 percent from the first
quarter of 2016.
|
Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Seq
|
|
Yr/Yr
|
|
Average Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates - $100,000 and over
|
|
$2,579
|
|
|
$2,539
|
|
|
$2,768
|
|
|
$2,819
|
|
|
$2,815
|
|
|
2%
|
|
(8%)
|
|
Other deposits
|
|
162
|
|
|
115
|
|
|
749
|
|
|
467
|
|
|
-
|
|
|
41%
|
|
NM
|
|
Federal funds purchased
|
|
639
|
|
|
280
|
|
|
446
|
|
|
693
|
|
|
608
|
|
|
NM
|
|
5%
|
|
Other short-term borrowings
|
|
1,893
|
|
|
1,908
|
|
|
2,171
|
|
|
3,754
|
|
|
3,564
|
|
|
(1%)
|
|
(47%)
|
|
Long-term debt
|
|
13,856
|
|
|
15,173
|
|
|
16,102
|
|
|
15,351
|
|
|
14,949
|
|
|
(9%)
|
|
(7%)
|
|
Total average wholesale funding
|
|
$19,129
|
|
|
$20,015
|
|
|
$22,236
|
|
|
$23,084
|
|
|
$21,936
|
|
|
(4%)
|
|
(13%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average wholesale funding of $19.1 billion decreased $886 million, or 4
percent, sequentially and decreased $2.8 billion, or 13 percent,
compared with the first quarter of 2016. The sequential decrease in
average wholesale funding was primarily driven by a decline in long-term
debt reflecting the full quarter impact of debt maturing in the previous
quarter as well as debt maturing at the beginning of the current
quarter. The year-over-year decline in wholesale funding was primarily
driven by lower short-term borrowings and debt maturities in response to
declining asset balances.
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
|
$138
|
|
$141
|
|
$143
|
|
$138
|
|
$137
|
|
(2%)
|
|
1%
|
|
Corporate banking revenue
|
|
74
|
|
101
|
|
111
|
|
117
|
|
102
|
|
(27%)
|
|
(27%)
|
|
Mortgage banking net revenue
|
|
52
|
|
65
|
|
66
|
|
75
|
|
78
|
|
(20%)
|
|
(33%)
|
|
Wealth and asset management revenue
|
|
108
|
|
100
|
|
101
|
|
101
|
|
102
|
|
8%
|
|
6%
|
|
Card and processing revenue
|
|
74
|
|
79
|
|
79
|
|
82
|
|
79
|
|
(6%)
|
|
(6%)
|
|
Other noninterest income
|
|
77
|
|
137
|
|
336
|
|
80
|
|
136
|
|
(44%)
|
|
(43%)
|
|
Securities gains (losses), net
|
|
-
|
|
(3)
|
|
4
|
|
6
|
|
3
|
|
NM
|
|
NM
|
|
Total noninterest income
|
|
$523
|
|
$620
|
|
$840
|
|
$599
|
|
$637
|
|
(16%)
|
|
(18%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income of $523 million decreased $97 million sequentially
and decreased $114 million compared with prior year results. The
sequential and year-over-year comparisons reflect the impacts described
below.
|
Noninterest Income excluding certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
March
|
|
December
|
|
March
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Income excluding certain items
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income (U.S. GAAP)
|
|
$523
|
|
$620
|
|
$637
|
|
|
|
|
|
Valuation of Visa total return swap
|
|
13
|
|
(6)
|
|
(1)
|
|
|
|
|
|
Gain on Vantiv warrant actions
|
|
-
|
|
(9)
|
|
-
|
|
|
|
|
|
Gain on sale of certain branches
|
|
-
|
|
-
|
|
(8)
|
|
|
|
|
|
Vantiv warrant valuation
|
|
-
|
|
-
|
|
(47)
|
|
|
|
|
|
Securities (gains) / losses
|
|
-
|
|
3
|
|
(3)
|
|
|
|
|
|
Noninterest income excluding certain items(b)
|
|
$536
|
|
$608
|
|
$578
|
|
(12%)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding the items in the table above, noninterest income of $536
million decreased $72 million, or 12 percent, from the previous quarter
and decreased $42 million, or 7 percent, from the first quarter of 2016.
The sequential decrease was primarily due to the $33 million annual
payment recognized from Vantiv pursuant to the tax receivable agreement
in the fourth quarter of 2016, and decreases in corporate banking
revenue and mortgage banking net revenue, partially offset by an
increase in wealth and asset management revenue. The year-over-year
decrease was driven by declines in corporate banking revenue and
mortgage banking net revenue.
Service charges on deposits of $138 million decreased 2 percent from the
fourth quarter of 2016, and increased 1 percent compared with the first
quarter of 2016. The sequential decrease was primarily driven by a
seasonal decrease in retail service charges. The increase from the first
quarter of 2016 was primarily due to both increases in commercial and
retail service charges.
Corporate banking revenue of $74 million decreased 27 percent both
sequentially and from the first quarter of 2016. The sequential and
year-over-year decreases were primarily driven by a $31 million lease
remarketing impairment related to an oilfield services exposure.
Excluding the impact of the lease impairment, corporate banking revenue
increased 4 percent compared to the fourth quarter of 2016 and increased
3 percent from the first quarter of 2016. The sequential and
year-over-year performance was driven by increases in institutional
sales and syndication fees, partially offset by a decrease in foreign
exchange fees.
Mortgage banking net revenue was $52 million in the first quarter of
2017, down $13 million from the fourth quarter of 2016 and down $26
million from the first quarter of 2016. Originations of $1.9 billion in
the current quarter decreased 29 percent sequentially and increased 10
percent from the first quarter of 2016. First quarter 2017 originations
resulted in $29 million of origination fees and gains on loan sales,
compared with $30 million during the previous quarter and $42 million
during the first quarter of 2016. Effective January 1, 2017, the Bancorp
elected to measure its MSR portfolio at fair value rather than at
amortized cost. Net mortgage servicing revenue (which consists of gross
mortgage servicing fees, MSR decay/amortization, net valuation
adjustments on MSRs and mark-to-market adjustments on free-standing
derivatives used to economically hedge the MSR portfolio) was $23
million this quarter, $35 million in the fourth quarter of 2016, and $36
million in the first quarter of 2016. Gross mortgage servicing fees were
$47 million this quarter, $48 million in the fourth quarter of 2016, and
$52 million in the first quarter of 2016. MSR decay/amortization was $27
million this quarter, $35 million in the fourth quarter of 2016, and $27
million in the first quarter of 2016. Net servicing asset valuation
adjustments resulted in a positive $3 million impact in the first
quarter of 2017, positive $23 million in the fourth quarter of 2016, and
positive $11 million in the first quarter of 2016.
Wealth and asset management revenue of $108 million increased 8 percent
from the fourth quarter of 2016 and increased 6 percent from the first
quarter of 2016. The sequential increase was primarily driven by strong
brokerage revenue and seasonally strong tax-related private client
service revenue. The year-over-year increase was primarily driven by
higher personal asset management and brokerage revenue.
Card and processing revenue of $74 million in the first quarter of 2017
decreased 6 percent both sequentially and from the first quarter of
2016. The sequential decrease reflected lower transaction volumes
compared with seasonally strong fourth quarter volumes, while the
year-over-year decrease was impacted by higher reward expense and the
sale of the agent bankcard portfolio in the second quarter of last year.
Other noninterest income totaled $77 million in the first quarter of
2017, compared with $137 million in the previous quarter and $136
million in the first quarter of 2016. The reported results included the
valuation of the Visa total return swap, the gain on sale of certain
branches and Vantiv-related adjustments shown in the table on page 9.
For the first quarter of 2017, excluding these items, other noninterest
income of $90 million decreased approximately $32 million, or 26
percent, from the fourth quarter of 2016 and was up 13 percent from the
first quarter of 2016. The sequential decrease was primarily due to the
$33 million annual payment recognized from Vantiv pursuant to the tax
receivable agreement in the fourth quarter of 2016.
Net gains on investment securities were immaterial in the first quarter
of 2017, compared with a $3 million net loss in the previous quarter and
a $3 million net gain in the first quarter of 2016.
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
March
|
|
|
December
|
|
|
September
|
|
|
June
|
|
|
March
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and incentives
|
|
$411
|
|
|
$403
|
|
|
$400
|
|
|
$407
|
|
|
$403
|
|
|
2%
|
|
2%
|
|
Employee benefits
|
|
111
|
|
|
76
|
|
|
78
|
|
|
85
|
|
|
100
|
|
|
46%
|
|
11%
|
|
Net occupancy expense
|
|
78
|
|
|
73
|
|
|
73
|
|
|
75
|
|
|
77
|
|
|
7%
|
|
1%
|
|
Technology and communications
|
|
58
|
|
|
56
|
|
|
62
|
|
|
60
|
|
|
56
|
|
|
4%
|
|
4%
|
|
Equipment expense
|
|
28
|
|
|
29
|
|
|
29
|
|
|
30
|
|
|
30
|
|
|
(3%)
|
|
(7%)
|
|
Card and processing expense
|
|
30
|
|
|
31
|
|
|
30
|
|
|
37
|
|
|
35
|
|
|
(3%)
|
|
(14%)
|
|
Other noninterest expense
|
|
270
|
|
|
292
|
|
|
301
|
|
|
289
|
|
|
285
|
|
|
(8%)
|
|
(5%)
|
|
Total noninterest expense
|
|
$986
|
|
|
$960
|
|
|
$973
|
|
|
$983
|
|
|
$986
|
|
|
3%
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense of $986 million increased $26 million, or 3 percent,
compared with the fourth quarter of 2016 and was flat compared with the
first quarter of 2016. The sequential increase primarily reflected
seasonally higher compensation-related expenses driven by FICA and other
employee benefits expense as well as long-term incentive expense,
partially offset by declines in loan and lease expense, losses and
adjustments, and other noninterest expense. The year-over-year
performance was impacted by lower losses and adjustments, other
noninterest expense, and lower card and processing expense,
predominantly due to contract renegotiations, partially offset by the
impact of $18 million in long-term incentive expense that would have
otherwise been recognized in the second quarter without a change in the
grant date.
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Total net losses charged-off
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
($36)
|
|
|
($25)
|
|
|
($61)
|
|
|
($39)
|
|
|
($46)
|
|
|
Commercial mortgage loans
|
|
(5)
|
|
|
(2)
|
|
|
(2)
|
|
|
(6)
|
|
|
(6)
|
|
|
Commercial construction loans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Commercial leases
|
|
(1)
|
|
|
(1)
|
|
|
-
|
|
|
(1)
|
|
|
(2)
|
|
|
Residential mortgage loans
|
|
(5)
|
|
|
(2)
|
|
|
(2)
|
|
|
(2)
|
|
|
(2)
|
|
|
Home equity
|
|
(6)
|
|
|
(6)
|
|
|
(7)
|
|
|
(6)
|
|
|
(8)
|
|
|
Automobile loans
|
|
(11)
|
|
|
(11)
|
|
|
(9)
|
|
|
(8)
|
|
|
(9)
|
|
|
Credit card
|
|
(22)
|
|
|
(19)
|
|
|
(20)
|
|
|
(21)
|
|
|
(20)
|
|
|
Other consumer loans and leases
|
|
(3)
|
|
|
(7)
|
|
|
(6)
|
|
|
(4)
|
|
|
(3)
|
|
Total net losses charged-off
|
|
($89)
|
|
|
($73)
|
|
|
($107)
|
|
|
($87)
|
|
|
($96)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses charged-off
|
|
($107)
|
|
|
($97)
|
|
|
($137)
|
|
|
($105)
|
|
|
($116)
|
|
Total recoveries of losses previously charged-off
|
|
18
|
|
|
24
|
|
|
30
|
|
|
18
|
|
|
20
|
|
Total net losses charged-off
|
|
($89)
|
|
|
($73)
|
|
|
($107)
|
|
|
($87)
|
|
|
($96)
|
|
Ratios (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses charged-off as a percent of average portfolio loans and
leases (excluding held for sale)
|
|
0.40%
|
|
|
0.31%
|
|
|
0.45%
|
|
|
0.37%
|
|
|
0.42%
|
|
|
Commercial
|
|
0.29%
|
|
|
0.20%
|
|
|
0.43%
|
|
|
0.32%
|
|
|
0.38%
|
|
|
Consumer
|
|
0.56%
|
|
|
0.49%
|
|
|
0.49%
|
|
|
0.45%
|
|
|
0.48%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs were $89 million, or 40 bps of average portfolio loans
and leases on an annualized basis, in the first quarter of 2017 compared
with net charge-offs of $73 million, or 31 bps, in the fourth quarter of
2016 and $96 million, or 42 bps, in the first quarter of 2016.
Commercial net charge-offs of $42 million, or 29 bps, were up $14
million sequentially. The increase was primarily due to higher
charge-offs of C&I loans, which increased by $11 million from the fourth
quarter of 2016. Commercial real estate net charge-offs were up $3
million from the previous quarter.
Consumer net charge-offs of $47 million, or 56 bps, were up $2 million
sequentially. Compared with the previous quarter, net charge-offs on
residential mortgage loans were up $3 million. Net charge-offs on the
home equity and auto portfolios were flat from the previous quarter. Net
charge-offs on credit card loans were up $3 million from the fourth
quarter of 2016. Net charge-offs on other consumer loans of $3 million
were down $4 million sequentially.
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Allowance for Credit Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
|
$1,253
|
|
|
$1,272
|
|
|
$1,299
|
|
|
$1,295
|
|
|
$1,272
|
|
Total net losses charged-off
|
|
(89)
|
|
|
(73)
|
|
|
(107)
|
|
|
(87)
|
|
|
(96)
|
|
Provision for loan and lease losses
|
|
74
|
|
|
54
|
|
|
80
|
|
|
91
|
|
|
119
|
|
Allowance for loan and lease losses, ending
|
|
$1,238
|
|
|
$1,253
|
|
|
$1,272
|
|
|
$1,299
|
|
|
$1,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
|
$161
|
|
|
$162
|
|
|
$151
|
|
|
$144
|
|
|
$138
|
|
Provision for unfunded commitments
|
|
(2)
|
|
|
(1)
|
|
|
11
|
|
|
7
|
|
|
6
|
|
Reserve for unfunded commitments, ending
|
|
$159
|
|
|
$161
|
|
|
$162
|
|
|
$151
|
|
|
$144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses
|
|
$1,238
|
|
|
$1,253
|
|
|
$1,272
|
|
|
$1,299
|
|
|
$1,295
|
|
Reserve for unfunded commitments
|
|
159
|
|
|
161
|
|
|
162
|
|
|
151
|
|
|
144
|
|
Total allowance for credit losses
|
|
$1,397
|
|
|
$1,414
|
|
|
$1,434
|
|
|
$1,450
|
|
|
$1,439
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of portfolio loans and leases
|
|
1.35%
|
|
|
1.36%
|
|
|
1.37%
|
|
|
1.38%
|
|
|
1.38%
|
|
As a percent of nonperforming loans and leases(f)
|
|
188%
|
|
|
190%
|
|
|
212%
|
|
|
188%
|
|
|
185%
|
|
As a percent of nonperforming assets(f)
|
|
172%
|
|
|
170%
|
|
|
182%
|
|
|
161%
|
|
|
157%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses totaled $74 million in the first
quarter of 2017. The allowance represented 1.35 percent of total
portfolio loans and leases outstanding as of quarter end, compared with
1.36 percent last quarter, and represented 188 percent of nonperforming
loans and leases, and 172 percent of nonperforming assets.
Provision for loan and lease losses increased $20 million from the
fourth quarter of 2016, primarily driven by an increase in net
charge-offs, and decreased $45 million from the first quarter of 2016,
impacted by improving criticized assets and nonperforming loans. The
allowance for loan and lease losses decreased $15 million sequentially.
As of March 31, the reserve allocated to the energy portfolio was
approximately 4.20%, up from approximately 4.04% last quarter.
|
|
|
|
|
($ in millions)
|
|
As of
|
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
Nonperforming Assets and Delinquent Loans
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Nonaccrual portfolio loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$251
|
|
$302
|
|
$235
|
|
$254
|
|
$278
|
|
|
Commercial mortgage loans
|
|
21
|
|
27
|
|
31
|
|
39
|
|
51
|
|
|
Commercial construction loans
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Commercial leases
|
|
-
|
|
2
|
|
-
|
|
4
|
|
4
|
|
|
Residential mortgage loans
|
|
21
|
|
17
|
|
19
|
|
27
|
|
25
|
|
|
Home equity
|
|
53
|
|
55
|
|
59
|
|
61
|
|
61
|
|
|
|
Total nonaccrual portfolio loans and leases (excludes restructured
loans)
|
|
$346
|
|
$403
|
|
$344
|
|
$385
|
|
$419
|
|
|
Nonaccrual restructured portfolio commercial loans and leases(g)
|
|
251
|
|
192
|
|
194
|
|
242
|
|
210
|
|
|
Nonaccrual restructured portfolio consumer loans and leases
|
|
60
|
|
65
|
|
63
|
|
66
|
|
72
|
|
|
|
Total nonaccrual portfolio loans and leases
|
|
$657
|
|
$660
|
|
$601
|
|
$693
|
|
$701
|
|
Repossessed property
|
|
14
|
|
15
|
|
13
|
|
15
|
|
17
|
|
OREO
|
|
50
|
|
63
|
|
84
|
|
97
|
|
107
|
|
|
|
Total nonperforming portfolio assets(f)
|
|
$721
|
|
$738
|
|
$698
|
|
$805
|
|
$825
|
|
Nonaccrual loans held for sale
|
|
7
|
|
4
|
|
91
|
|
20
|
|
3
|
|
Nonaccrual restructured loans held for sale
|
|
2
|
|
9
|
|
9
|
|
-
|
|
2
|
|
Total nonperforming assets
|
|
$730
|
|
$751
|
|
$798
|
|
$825
|
|
$830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructured Portfolio consumer loans and leases (accrual)
|
|
$950
|
|
$959
|
|
$972
|
|
$982
|
|
$998
|
|
Restructured Portfolio commercial loans and leases (accrual)(g)
|
|
$277
|
|
$321
|
|
$408
|
|
$431
|
|
$461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 30-89 days past due (accrual)
|
|
$180
|
|
$231
|
|
$205
|
|
$196
|
|
$208
|
|
Total loans and leases 90 days past due (accrual)
|
|
$75
|
|
$84
|
|
$76
|
|
$65
|
|
$73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming portfolio loans and leases as a percent of portfolio
loans, leases and other assets, including OREO(f)
|
|
0.72%
|
|
0.72%
|
|
0.64%
|
|
0.74%
|
|
0.75%
|
|
Nonperforming portfolio assets as a percent of portfolio loans and
leases and OREO(f)
|
|
0.79%
|
|
0.80%
|
|
0.75%
|
|
0.86%
|
|
0.88%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming portfolio assets decreased $17 million, or 2
percent, from the previous quarter to $721 million. Portfolio
nonperforming loans (NPLs) at quarter-end decreased $3 million from the
previous quarter to $657 million, or 0.72 percent of total portfolio
loans, leases and OREO.
Commercial portfolio NPLs were flat from last quarter at $523 million,
or 0.93 percent of commercial portfolio loans, leases and OREO. Consumer
portfolio NPLs decreased $3 million from last quarter to $134 million,
or 0.38 percent of consumer portfolio loans, leases and OREO.
OREO balances were down $13 million from the prior quarter to $50
million, and included $29 million in commercial OREO and $21 million in
consumer OREO. Repossessed personal property decreased $1 million from
the prior quarter to $14 million.
Loans over 90 days past due and still accruing decreased $9 million from
the fourth quarter of 2016 to $75 million. Loans 30-89 days past due of
$180 million were down $51 million from the previous quarter.
|
Capital and Liquidity Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
March
|
|
December
|
|
September
|
|
June
|
|
March
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
Capital Position
|
|
|
|
|
|
|
|
|
|
|
|
Average total Bancorp shareholders' equity to average assets
|
|
11.72%
|
|
11.66%
|
|
11.83%
|
|
11.60%
|
|
11.57%
|
|
Tangible equity(b)
|
|
10.12%
|
|
9.82%
|
|
9.73%
|
|
9.59%
|
|
9.51%
|
|
Tangible common equity (excluding unrealized gains/losses)(b)
|
|
9.15%
|
|
8.87%
|
|
8.78%
|
|
8.64%
|
|
8.55%
|
|
Tangible common equity (including unrealized gains/losses)(b)
|
|
9.20%
|
|
8.91%
|
|
9.24%
|
|
9.18%
|
|
8.97%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory capital ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CET1 capital(c)
|
|
10.76%
|
|
10.39%
|
|
10.17%
|
|
9.94%
|
|
9.81%
|
|
|
Tier I risk-based capital(c)
|
|
11.90%
|
|
11.50%
|
|
11.27%
|
|
11.03%
|
|
10.91%
|
|
|
Total risk-based capital(c)
|
|
15.45%
|
|
15.02%
|
|
14.88%
|
|
14.66%
|
|
14.66%
|
|
|
Tier I leverage
|
|
10.15%
|
|
9.90%
|
|
9.80%
|
|
9.64%
|
|
9.57%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CET1 capital (fully phased-in)(b)(c)
|
|
10.66%
|
|
10.29%
|
|
10.09%
|
|
9.86%
|
|
9.72%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$20.13
|
|
$19.82
|
|
$20.44
|
|
$20.09
|
|
$19.46
|
|
Tangible book value per share(b)
|
|
$16.89
|
|
$16.60
|
|
$17.22
|
|
$16.93
|
|
$16.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modified liquidity coverage ratio (LCR)(h)
|
|
119%
|
|
128%
|
|
115%
|
|
110%
|
|
118%
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratios remained strong and grew during the quarter. The CET1
ratio was 10.76 percent, the tangible common equity to tangible assets
ratio(b) was 9.15 percent (excluding unrealized
gains/losses), and 9.20 percent (including unrealized gains/losses). The
Tier I risk-based capital ratio was 11.90 percent, the Total risk-based
capital ratio was 15.45 percent, and the Tier I leverage ratio was 10.15
percent.
Book value per share at March 31, 2017 was $20.13 and tangible book
value per share(b) was $16.89, compared with the December 31,
2016 book value per share of $19.82 and tangible book value per share(b)
of $16.60.
On February 6, 2017, Fifth Third settled the forward contract related to
the $155 million share repurchase agreement initially settled on
December 20, 2016. An additional 1.1 million shares were repurchased in
connection with the completion of this agreement.
Tax Rate
The effective tax rate was 22.9 percent in the first quarter of 2017
compared with 22.6 percent in the fourth quarter of 2016 and 25.1
percent in the first quarter of 2016. The tax rate in the first quarter
of 2017 was impacted by an $8 million tax benefit associated with the
exercise and vesting of employee equity awards. The tax rate in the
fourth quarter of 2016 was impacted by a $6 million tax benefit
associated with the early adoption of ASU 2016-09, “Improvements to
Employee Share-Based Payment Accounting”, using the modified
retrospective transition method.
Other
Fifth Third Bank owns approximately 35 million units representing a 17.8
percent interest in Vantiv Holding, LLC, convertible into shares of
Vantiv, Inc., a publicly traded firm. Based upon Vantiv’s closing price
of $64.12 on March 31, 2017, our interest in Vantiv was valued at
approximately $2.2 billion. Next month in our 10-Q, we will update our
disclosure of the carrying value of our interest in Vantiv stock, which
was $414 million as of December 31, 2016. 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.
Conference Call
Fifth Third will host a conference call to discuss these financial
results at 9:00 a.m. (Eastern Time) today. This conference call will be
webcast live and may be accessed through the Fifth Third Investor
Relations website at www.53.com
(click on “About Us” then “Investor Relations”).
Those unable to listen to the live webcast may access a webcast replay
through the Fifth Third Investor Relations website at the same web
address. Additionally, a telephone replay of the conference call will be
available after the conference call until approximately May 9, 2017 by
dialing 800-585-8367 for domestic access or 404-537-3406 for
international access (passcode 44811759#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of March 31, 2017, the Company had
$140 billion in assets and operates 1,155 full-service Banking Centers,
and 2,471 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida,
Tennessee, West Virginia, Georgia and North Carolina. Fifth Third
operates four main businesses: Commercial Banking, Branch Banking,
Consumer Lending, and Wealth & Asset Management. Fifth Third also has a
17.8% interest in Vantiv Holding, LLC. Fifth Third is among the largest
money managers in the Midwest and, as of March 31, 2017, had $323
billion in assets under care, of which it managed $33 billion for
individuals, corporations and not-for-profit organizations through its
Trust, Brokerage and Insurance businesses. 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.”
Earnings Release End Notes
|
(a)
|
|
Assumes a 35% tax rate.
|
|
|
|
|
|
(b)
|
|
Non-GAAP measure; see discussion of non-GAAP and Reg. G
reconciliation beginning on page 31 in Exhibit 99.1 of 8-K filing
dated 04/25/17.
|
|
|
|
|
|
(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. Current period regulatory capital ratios are
estimated.
|
|
|
|
|
|
(d)
|
|
Net tax deficiencies of $1 million, $5 million and $0 were
reclassified from capital surplus to applicable income tax expense
at March 31, 2016, June 30, 2016 and September 30, 2016,
respectively, related to the early adoption of ASU 2016-09 during
the fourth quarter of 2016, with an effective date of January 1,
2016.
|
|
|
|
|
|
(e)
|
|
Includes commercial customer Eurodollar sweep balances for
which the Bancorp pays rates comparable to other commercial
deposit accounts.
|
|
|
|
|
|
(f)
|
|
Excludes nonaccrual loans in loans held for sale.
|
|
|
|
|
|
(g)
|
|
As of March 31, 2017 and December 31, 2016, excludes $7 million
of restructured accruing loans and $19 million of restructured
nonaccrual loans associated with a consolidated VIE in which the
Bancorp has no continuing credit risk due to the risk being
assumed by a third party. As of September 30, 2016, June 30, 2016
and March 31, 2016 , excludes $7 million of restructured accruing
loans and $20 million of restructured nonaccrual loans associated
with a consolidated VIE in which the Bancorp has no continuing
credit risk due to the risk being assumed by a third party.
|
|
|
|
|
|
(h)
|
|
The Bancorp became subject to the Modified LCR regulations
effective January 1, 2016. (Current period LCR is estimated)
|
|
|
|
|
FORWARD-LOOKING STATEMENTS
This 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,” “anticipates,” “potential,” “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 from
time to time 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 is a risk that additional information may become known during
the company’s quarterly closing process or as a result of subsequent
events that could affect the accuracy of the statements and financial
information contained herein.
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 or real estate
market conditions, either nationally or in the states in which Fifth
Third, one or more acquired entities and/or the combined company do
business, weaken or 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)
changes in customer preferences or information technology systems; (12)
effects of critical accounting policies and judgments; (13) changes in
accounting policies or procedures as may be required by the Financial
Accounting Standards Board (FASB) or other regulatory agencies; (14)
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; (15) ability
to maintain favorable ratings from rating agencies; (16) failure of
models or risk management systems or controls; (17) fluctuation of Fifth
Third’s stock price; (18) ability to attract and retain key personnel;
(19) ability to receive dividends from its subsidiaries; (20)
potentially dilutive effect of future acquisitions on current
shareholders’ ownership of Fifth Third; (21) declines in the value of
Fifth Third’s goodwill or other intangible assets; (22) effects of
accounting or financial results of one or more acquired entities; (23)
difficulties from Fifth Third’s investment in, relationship with, and
nature of the operations of Vantiv Holding, LLC; (24) loss of income
from any sale or potential sale of businesses (25) difficulties in
separating the operations of any branches or other assets divested; (26)
losses or adverse impacts on the carrying values of branches and
long-lived assets in connection with their sales or anticipated sales;
(27) inability to achieve expected benefits from branch consolidations
and planned sales within desired timeframes, if at all; (28) ability to
secure confidential information and deliver products and services
through the use of computer systems and telecommunications networks; and
(29) 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.
In this release, we may sometimes provide non-GAAP financial
information. Please note that although non-GAAP financial measures
provide useful insight to analysts, investors and regulators, they
should not be considered in isolation or relied upon as a substitute for
analysis using GAAP measures. We provide GAAP reconciliations for
non-GAAP measures in a later slide in this presentation as well as in
our earnings release, both of which are available in the investor
relations section of our website, www.53.com.
Fifth Third Bancorp
Sameer Gokhale (Investors), 513-534-2219
or
Larry Magnesen (Media), 513-534-8055