Diluted earnings per share of $0.61
Reported results included a negative $0.03 from certain items as shown below
CINCINNATI--(BUSINESS WIRE)--Fifth Third Bancorp (FITB):
|
|
|
Key Highlights
|
|
Strengthened balance sheet
|
|
•
|
Commercial criticized ratio of 3.45% (17+ year low)
|
|
•
|
Total NPA ratio of 0.48% (14 year low)
|
|
•
|
Modified LCR of 119%(e)
|
|
Focused on profitable relationship growth
|
|
•
|
Households up 4% compared to 3Q17
|
|
•
|
Adjusted PPNR(a) up 9% compared to 3Q17
|
|
•
|
Core deposits up 3% compared to 3Q17
|
|
•
|
NIM(a) up 16 bps compared to 3Q17
|
|
Disciplined expense management
|
|
•
|
Expenses down 3% compared to prior quarter
|
|
•
|
Full-time equivalent employees down 4% compared to prior quarter
|
|
On-track to achieve NorthStar targets
(a)
|
|
•
|
ROTCE - 13.5% (adjusted 14%)
|
|
•
|
ROA - 1.21% (adjusted 1.26%)
|
|
•
|
Efficiency ratio ex. LIH - 60.2% (adjusted 59.3%)
|
|
|
|
|
3Q18 Key Financial Data
|
|
$ in millions for all balance sheet and income statement items
|
|
|
|
3Q18
|
2Q18
|
3Q17
|
|
|
|
|
|
|
|
|
|
|
Income Statement Data
|
|
|
|
|
|
|
|
|
Net income available to common shareholders
|
|
$418
|
|
$563
|
|
$999
|
|
|
Net interest income (U.S. GAAP)
|
|
1,043
|
|
1,020
|
|
970
|
|
|
Net interest income (FTE)
(a)
|
|
1,047
|
|
1,024
|
|
977
|
|
|
Noninterest income
|
|
563
|
|
743
|
|
1,561
|
|
|
Noninterest expense
|
|
1,008
|
|
1,037
|
|
975
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
|
$0.62
|
|
$0.81
|
|
$1.37
|
|
|
Earnings per share, diluted
|
|
0.61
|
|
0.80
|
|
1.35
|
|
|
Book value per share
|
|
21.92
|
|
21.97
|
|
21.30
|
|
|
Tangible book value per share
(a)
|
|
18.17
|
|
18.30
|
|
17.86
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet & Credit Quality
|
|
|
|
|
|
|
|
|
Average portfolio loans and leases
|
|
$93,192
|
|
$92,557
|
|
$91,906
|
|
|
Average deposits
|
|
104,666
|
|
103,945
|
|
101,834
|
|
|
Net charge-off ratio
(b)
|
|
0.30
|
%
|
0.41
|
%
|
0.29
|
%
|
|
Nonperforming asset ratio
(c)
|
|
0.48
|
|
0.52
|
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios, as reported
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
1.21
|
%
|
1.66
|
%
|
2.85
|
%
|
|
Return on average common equity
|
|
11.2
|
|
15.3
|
|
25.6
|
|
|
Return on average tangible common equity
(a)
|
|
13.5
|
|
18.4
|
|
30.4
|
|
|
CET1 capital
(d)(e)
|
|
10.67
|
|
10.91
|
|
10.59
|
|
|
Net interest margin
(a)
|
|
3.23
|
|
3.21
|
|
3.07
|
|
|
Efficiency
(a)
|
|
62.6
|
|
58.7
|
|
38.4
|
|
|
Commentary is on a fully taxable-equivalent (FTE) basis unless
otherwise noted. Consistent with SEC guidance in Industry Guide 3
that contemplates the calculation of tax-exempt income on a
taxable-equivalent basis, net interest income, net interest
margin, net interest rate spread, total revenue and the efficiency
ratio are provided on an FTE basis. LIH refers to low
income housing expense.
|
|
|
CEO Commentary
“Our strong quarterly results again reflected the progress we have
made toward achieving our long-term financial targets. Our balance sheet
continued to become more resilient, as evidenced by the consistent
improvement in key credit quality metrics. Although market dynamics
remained challenging during the quarter, our net interest margin
increased and we generated solid loan, deposit, and household growth. We
continued to diligently manage expenses as we drive toward achieving our
long-term efficiency target.
“Five months after we initially announced our planned acquisition of
MB Financial, we remain confident in our ability to achieve the expected
financial synergies from the transaction. We have received the necessary
shareholder approvals for the acquisition and have recently re-submitted
our pro-forma capital plans. We continue to expect the transaction to
close in the first quarter of 2019.
“With improving returns and a strengthened balance sheet, we remain
very confident in our ability to achieve our long-term financial targets
under Project NorthStar and remain well-positioned to outperform through
the cycle.”
-Greg D. Carmichael, Chairman, President and CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Highlights
|
|
|
($ in millions, except per-share data)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Condensed Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (NII)
(a)
|
|
$1,047
|
|
$1,024
|
|
$977
|
|
2%
|
|
7%
|
|
|
Provision for loan and lease losses
|
|
86
|
|
33
|
|
67
|
|
161%
|
|
28%
|
|
|
Noninterest income
|
|
563
|
|
743
|
|
1,561
|
|
(24%)
|
|
(64%)
|
|
|
Noninterest expense
|
|
1,008
|
|
1,037
|
|
975
|
|
(3%)
|
|
3%
|
|
|
Income before income taxes
(a)
|
|
$516
|
|
$697
|
|
$1,496
|
|
(26%)
|
|
(66%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment
|
|
4
|
|
4
|
|
7
|
|
-
|
|
(43%)
|
|
|
Applicable income tax expense
|
|
79
|
|
107
|
|
475
|
|
(26%)
|
|
(83%)
|
|
|
Net income
|
|
$433
|
|
$586
|
|
$1,014
|
|
(26%)
|
|
(57%)
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
-
|
|
-
|
|
-
|
|
NM
|
|
NM
|
|
|
Net income attributable to Bancorp
|
|
$433
|
|
$586
|
|
$1,014
|
|
(26%)
|
|
(57%)
|
|
|
Dividends on preferred stock
|
|
15
|
|
23
|
|
15
|
|
(35%)
|
|
-
|
|
|
Net income available to common shareholders
|
|
$418
|
|
$563
|
|
$999
|
|
(26%)
|
|
(58%)
|
|
|
Earnings per share, diluted
|
|
$0.61
|
|
$0.80
|
|
$1.35
|
|
(24%)
|
|
(55%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifth Third Bancorp (Nasdaq: FITB) today reported third quarter 2018 net
income of $433 million compared to net income of $1.0 billion in the
year-ago quarter. Net income available to common shareholders was $418
million, or $0.61 per diluted share, compared to $999 million, or $1.35
per diluted share in the year-ago quarter. Prior quarter net income was
$586 million and net income available to common shareholders was $563
million, or $0.80 per diluted share.
|
Diluted earnings per share impact of certain items
|
|
|
|
($ in millions, except per-share data)
|
|
|
|
|
|
|
|
Valuation of Visa total return swap, after-tax
(f)
|
|
$14
|
|
GreenSky equity securities losses, after-tax
(f)
|
|
$6
|
|
After-tax impact
(f)
|
|
$20
|
|
|
|
|
|
Average diluted common shares outstanding (thousands)
|
|
679,199
|
|
|
|
|
|
Diluted earnings per share impact
|
|
$0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
|
|
|
|
|
(FTE; $ in millions)
(a)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$1,319
|
|
$1,273
|
|
$1,159
|
|
4%
|
|
14%
|
|
|
Interest expense
|
|
272
|
|
249
|
|
182
|
|
9%
|
|
49%
|
|
|
Net interest income (NII)
|
|
$1,047
|
|
$1,024
|
|
$977
|
|
2%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield/Rate Analysis
|
|
|
|
|
|
|
|
bps Change
|
|
|
Yield on interest-earning assets
|
|
4.07%
|
|
3.98%
|
|
3.64%
|
|
9
|
|
43
|
|
|
Rate paid on interest-bearing liabilities
|
|
1.20%
|
|
1.12%
|
|
0.85%
|
|
8
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread
|
|
2.87%
|
|
2.86%
|
|
2.79%
|
|
1
|
|
8
|
|
|
Net interest margin
|
|
3.23%
|
|
3.21%
|
|
3.07%
|
|
2
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, NII increased $70 million, or 7
percent, reflecting higher short-term market rates and growth in
interest-earning assets, partially offset by an increase in funding
costs. NIM increased 16 bps, primarily driven by higher short-term
market rates.
Compared to the prior quarter, NII increased $23 million, or 2 percent,
reflecting higher short-term market rates and a higher day count. NIM
increased 2 bps, primarily driven by higher short-term market rates,
loan growth, and an increase in higher-yielding consumer loans,
partially offset by a higher day count.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
|
$139
|
|
$137
|
|
$138
|
|
1%
|
|
1%
|
|
|
Corporate banking revenue
|
|
100
|
|
120
|
|
101
|
|
(17%)
|
|
(1%)
|
|
|
Mortgage banking net revenue
|
|
49
|
|
53
|
|
63
|
|
(8%)
|
|
(22%)
|
|
|
Wealth and asset management revenue
|
|
114
|
|
108
|
|
102
|
|
6%
|
|
12%
|
|
|
Card and processing revenue
|
|
82
|
|
84
|
|
79
|
|
(2%)
|
|
4%
|
|
|
Other noninterest income
|
|
86
|
|
250
|
|
1,076
|
|
(66%)
|
|
(92%)
|
|
|
Securities (losses) gains, net
|
|
(6)
|
|
(5)
|
|
-
|
|
(20%)
|
|
NM
|
|
|
Securities (losses) gains, net - non-qualifying hedges on mortgage
servicing rights
|
|
(1)
|
|
(4)
|
|
2
|
|
75%
|
|
NM
|
|
|
Total noninterest income
|
|
$563
|
|
$743
|
|
$1,561
|
|
(24%)
|
|
(64%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported noninterest income decreased $998 million, or 64 percent, from
the year-ago quarter, and decreased $180 million, or 24 percent, from
the prior quarter. The comparisons reflect the impact of certain
significant items in the table shown below.
Compared to the year-ago quarter, corporate banking revenue decreased $1
million, or 1 percent, as a decline in loan syndication and equity
capital markets revenue was partially offset by higher financial risk
management fees. Mortgage banking net revenue decreased $14 million, or
22 percent, primarily driven by lower origination fees and gains on loan
sales. Mortgage originations of $1.9 billion decreased 12 percent.
Wealth and asset management revenue increased $12 million, or 12
percent, primarily driven by higher personal asset management revenue
and brokerage fees. Card and processing revenue increased $3 million, or
4 percent, due to higher credit card spend volume and higher debit
transaction volume, partially offset by higher rewards.
Compared to the prior quarter, corporate banking revenue decreased $20
million, or 17 percent, primarily driven by decreases in loan
syndication revenue and corporate bond fees. Mortgage banking net
revenue decreased $4 million, or 8 percent, primarily driven by lower
origination fees and gains on loan sales as well as elevated negative
net valuation adjustments. Mortgage originations decreased 12 percent.
Wealth and asset management revenue increased $6 million, or 6 percent,
primarily driven by higher personal asset management revenue and
brokerage fees. Card and processing revenue decreased $2 million, or 2
percent, reflecting higher rewards.
|
|
|
|
|
Noninterest Income excluding certain items
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Noninterest Income excluding certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income (U.S. GAAP)
|
|
$563
|
|
|
$743
|
|
|
$1,561
|
|
|
|
|
|
|
|
Valuation of Visa total return swap
|
|
17
|
|
|
10
|
|
|
47
|
|
|
|
|
|
|
|
Branch and land network impairment charge
|
|
-
|
|
|
30
|
|
|
-
|
|
|
|
|
|
|
|
Gain from GreenSky IPO
|
|
-
|
|
|
(16)
|
|
|
-
|
|
|
|
|
|
|
|
Gain on sale of Worldpay shares
|
|
-
|
|
|
(205)
|
|
|
(1,037)
|
|
|
|
|
|
|
|
GreenSky equity securities losses
|
|
8
|
|
|
5
|
|
|
-
|
|
|
|
|
|
|
|
Securities losses / (gains), net (excluding GreenSky)
|
|
(2)
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Noninterest income excluding certain items
(a)
|
|
$586
|
|
|
$567
|
|
|
$571
|
|
|
3%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, noninterest income excluding the items
in the table above increased $15 million, or 3 percent. Compared to the
prior quarter, noninterest income excluding these items increased $19
million, or 3 percent.
Other noninterest income on a reported basis in the current and previous
quarters was impacted by the items disclosed in the table above with the
exception of all securities losses / (gains). Excluding these items,
other noninterest income of $103 million increased $17 million, or 20
percent compared to the year-ago quarter. Compared to the prior quarter,
other noninterest income excluding these items increased $34 million, or
49 percent. Performance compared to the year-ago and prior quarter
reflected higher private equity investment income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and incentives
|
|
$421
|
|
|
$471
|
|
|
$407
|
|
|
(11%)
|
|
3%
|
|
|
Employee benefits
|
|
82
|
|
|
78
|
|
|
77
|
|
|
5%
|
|
6%
|
|
|
Net occupancy expense
|
|
70
|
|
|
74
|
|
|
74
|
|
|
(5%)
|
|
(5%)
|
|
|
Technology and communications
|
|
71
|
|
|
67
|
|
|
62
|
|
|
6%
|
|
15%
|
|
|
Equipment expense
|
|
31
|
|
|
30
|
|
|
30
|
|
|
3%
|
|
3%
|
|
|
Card and processing expense
|
|
31
|
|
|
30
|
|
|
32
|
|
|
3%
|
|
(3%)
|
|
|
Other noninterest expense
|
|
302
|
|
|
287
|
|
|
293
|
|
|
5%
|
|
3%
|
|
|
Total noninterest expense
|
|
$1,008
|
|
|
$1,037
|
|
|
$975
|
|
|
(3%)
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, noninterest expense increased $33
million, or 3 percent, primarily driven by higher compensation related
expense as well as technology and communication expense.
Compared to the prior quarter, noninterest expense decreased $29
million, or 3 percent. Excluding both a $19 million compensation
expense, primarily related to a staffing review, and a $10 million
contribution to the Fifth Third Foundation from the prior quarter,
noninterest expense was flat. Performance primarily reflected lower
compensation expense partially offset by higher technology and
communications expense, as well as increased marketing expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Earning Assets
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Average Portfolio Loans and Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$42,494
|
|
|
$42,292
|
|
|
$41,302
|
|
|
-
|
|
3%
|
|
|
Commercial mortgage loans
|
|
6,635
|
|
|
6,514
|
|
|
6,807
|
|
|
2%
|
|
(3%)
|
|
|
Commercial construction loans
|
|
4,870
|
|
|
4,743
|
|
|
4,533
|
|
|
3%
|
|
7%
|
|
|
Commercial leases
|
|
3,738
|
|
|
3,847
|
|
|
4,072
|
|
|
(3%)
|
|
(8%)
|
|
|
Total commercial loans and leases
|
|
$57,737
|
|
|
$57,396
|
|
|
$56,714
|
|
|
1%
|
|
2%
|
|
|
Consumer loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
$15,598
|
|
|
$15,581
|
|
|
$15,523
|
|
|
-
|
|
-
|
|
|
Home equity
|
|
6,529
|
|
|
6,672
|
|
|
7,207
|
|
|
(2%)
|
|
(9%)
|
|
|
Automobile loans
|
|
8,969
|
|
|
8,968
|
|
|
9,267
|
|
|
-
|
|
(3%)
|
|
|
Credit card
|
|
2,299
|
|
|
2,221
|
|
|
2,140
|
|
|
4%
|
|
7%
|
|
|
Other consumer loans
|
|
2,060
|
|
|
1,719
|
|
|
1,055
|
|
|
20%
|
|
95%
|
|
|
Total consumer loans
|
|
$35,455
|
|
|
$35,161
|
|
|
$35,192
|
|
|
1%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio loans and leases
|
|
$93,192
|
|
|
$92,557
|
|
|
$91,906
|
|
|
1%
|
|
1%
|
|
|
Loans held for sale
|
|
785
|
|
|
675
|
|
|
711
|
|
|
16%
|
|
10%
|
|
|
Securities and other short-term investments
|
|
34,822
|
|
|
34,935
|
|
|
33,826
|
|
|
-
|
|
3%
|
|
|
Total average interest-earning assets
|
|
$128,799
|
|
|
$128,167
|
|
|
$126,443
|
|
|
-
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, average portfolio loans and leases
increased 1 percent, primarily driven by higher commercial and
industrial (C&I) and other consumer loans, partially offset by declines
in home equity loans, commercial leases, and automobile loans. Period
end portfolio loans and leases increased 2 percent. Compared to the
prior quarter, average portfolio loans and leases increased 1 percent,
primarily driven by higher other consumer and C&I loans, partially
offset by a decline in home equity loans. Period end portfolio loans and
leases increased 2 percent.
Compared to the year-ago quarter, average commercial portfolio loans and
leases increased 2 percent, primarily driven by higher C&I loans led by
growth in corporate banking and middle market lending. Compared to the
prior quarter, average commercial portfolio loans and leases increased 1
percent, primarily driven by growth in C&I and commercial real estate
loans. Period end commercial line utilization was 35 percent, stable
compared to both the year-ago and prior quarter.
Compared to the year-ago quarter, average consumer portfolio loans
increased 1 percent, primarily driven by higher other consumer loans,
partially offset by declines in home equity and automobile loans.
Compared to the prior quarter, average consumer portfolio loans
increased 1 percent, primarily driven by higher other consumer loans,
partially offset by a decline in home equity.
Average securities and other short-term investments were $34.8 billion
compared to $33.8 billion in the year-ago quarter, and $34.9 billion in
the prior quarter. Average available-for-sale debt and other securities
of $32.6 billion were up 4 percent compared to the year-ago quarter, and
flat compared to the prior quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Average Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
$32,333
|
|
|
$32,834
|
|
|
$34,850
|
|
|
(2%)
|
|
(7%)
|
|
|
Interest checking
|
|
29,681
|
|
|
28,715
|
|
|
25,765
|
|
|
3%
|
|
15%
|
|
|
Savings
|
|
13,231
|
|
|
13,618
|
|
|
13,889
|
|
|
(3%)
|
|
(5%)
|
|
|
Money market
|
|
21,753
|
|
|
22,036
|
|
|
20,028
|
|
|
(1%)
|
|
9%
|
|
|
Foreign office
(g)
|
|
317
|
|
|
371
|
|
|
395
|
|
|
(15%)
|
|
(20%)
|
|
|
Total transaction deposits
|
|
$97,315
|
|
|
$97,574
|
|
|
$94,927
|
|
|
-
|
|
3%
|
|
|
Other time
|
|
4,177
|
|
|
4,018
|
|
|
3,722
|
|
|
4%
|
|
12%
|
|
|
Total core deposits
|
|
$101,492
|
|
|
$101,592
|
|
|
$98,649
|
|
|
-
|
|
3%
|
|
|
Certificates - $100,000 and over
|
|
2,596
|
|
|
2,155
|
|
|
2,625
|
|
|
20%
|
|
(1%)
|
|
|
Other deposits
|
|
578
|
|
|
198
|
|
|
560
|
|
|
192%
|
|
3%
|
|
|
Total average deposits
|
|
$104,666
|
|
|
$103,945
|
|
|
$101,834
|
|
|
1%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, both average transaction and core
deposits increased 3 percent. Performance was primarily driven by higher
commercial interest checking deposits and consumer money market
deposits, partially offset by lower commercial demand deposits.
Commercial transaction deposits increased 2 percent and consumer
transaction deposits increased 3 percent.
Compared to the prior quarter, both average transaction and core
deposits were flat. Performance continued to reflect migration from
demand deposits to interest-bearing accounts. Commercial transaction
deposits increased 1 percent, and consumer transaction deposits
decreased 1 percent.
|
|
|
Average Wholesale Funding
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
|
September
|
|
June
|
|
September
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
|
Average Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates - $100,000 and over
|
|
$2,596
|
|
|
$2,155
|
|
|
$2,625
|
|
|
20%
|
|
(1%)
|
|
|
Other deposits
|
|
578
|
|
|
198
|
|
|
560
|
|
|
192%
|
|
3%
|
|
|
Federal funds purchased
|
|
1,987
|
|
|
1,080
|
|
|
675
|
|
|
84%
|
|
194%
|
|
|
Other short-term borrowings
|
|
1,018
|
|
|
2,452
|
|
|
4,212
|
|
|
(58%)
|
|
(76%)
|
|
|
Long-term debt
|
|
14,434
|
|
|
14,579
|
|
|
13,457
|
|
|
(1%)
|
|
7%
|
|
|
Total average wholesale funding
|
|
$20,613
|
|
|
$20,464
|
|
|
$21,529
|
|
|
1%
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, average wholesale funding decreased 4
percent, as strong deposit growth outpaced growth in interest-earning
assets. Compared to the prior quarter, average wholesale funding
increased 1 percent. Performance reflected higher federal funds
borrowings, partially offset by a decline in other short-term borrowings.
|
|
|
Credit Quality Summary
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
|
|
September
|
|
June
|
|
March
|
|
December
|
|
September
|
|
|
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonaccrual portfolio loans and leases (NPLs)
|
|
$403
|
|
|
$437
|
|
|
$452
|
|
|
$437
|
|
|
$506
|
|
|
Repossessed property
|
|
8
|
|
|
7
|
|
|
9
|
|
|
9
|
|
|
10
|
|
|
OREO
|
|
37
|
|
|
36
|
|
|
43
|
|
|
43
|
|
|
39
|
|
|
Total nonperforming portfolio assets (NPAs)
|
|
$448
|
|
|
$480
|
|
|
$504
|
|
|
$489
|
|
|
$555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPL ratio
(h)
|
|
0.43%
|
|
|
0.47%
|
|
|
0.49%
|
|
|
0.48%
|
|
|
0.55%
|
|
|
NPA ratio
(c)
|
|
0.48%
|
|
|
0.52%
|
|
|
0.55%
|
|
|
0.53%
|
|
|
0.60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 30-89 days past due (accrual)
|
|
270
|
|
|
217
|
|
|
299
|
|
|
280
|
|
|
252
|
|
|
Total loans and leases 90 days past due (accrual)
|
|
87
|
|
|
89
|
|
|
107
|
|
|
97
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
|
$1,077
|
|
|
$1,138
|
|
|
$1,196
|
|
|
$1,205
|
|
|
$1,226
|
|
|
Total net losses charged-off
|
|
(72)
|
|
|
(94)
|
|
|
(81)
|
|
|
(76)
|
|
|
(68)
|
|
|
Provision for loan and lease losses
|
|
86
|
|
|
33
|
|
|
23
|
|
|
67
|
|
|
67
|
|
|
Deconsolidation of a variable interest entity
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(20)
|
|
|
Allowance for loan and lease losses, ending
|
|
$1,091
|
|
|
$1,077
|
|
|
$1,138
|
|
|
$1,196
|
|
|
$1,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
|
$131
|
|
|
$151
|
|
|
$161
|
|
|
$157
|
|
|
$162
|
|
|
(Benefit from) provision for unfunded commitments
|
|
(2)
|
|
|
(20)
|
|
|
(10)
|
|
|
4
|
|
|
(5)
|
|
|
Reserve for unfunded commitments, ending
|
|
$129
|
|
|
$131
|
|
|
$151
|
|
|
$161
|
|
|
$157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for credit losses
|
|
$1,220
|
|
|
$1,208
|
|
|
$1,289
|
|
|
$1,357
|
|
|
$1,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of portfolio loans and leases
|
|
1.17%
|
|
|
1.17%
|
|
|
1.24%
|
|
|
1.30%
|
|
|
1.31%
|
|
|
As a percent of nonperforming portfolio loans and leases
|
|
270%
|
|
|
247%
|
|
|
252%
|
|
|
274%
|
|
|
238%
|
|
|
As a percent of nonperforming portfolio assets
|
|
243%
|
|
|
224%
|
|
|
226%
|
|
|
245%
|
|
|
217%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses charged-off
|
|
$(112)
|
|
|
$(118)
|
|
|
$(103)
|
|
|
$(94)
|
|
|
$(85)
|
|
|
Total recoveries of losses previously charged-off
|
|
40
|
|
|
24
|
|
|
22
|
|
|
18
|
|
|
17
|
|
|
Total net losses charged-off
|
|
$(72)
|
|
|
$(94)
|
|
|
$(81)
|
|
|
$(76)
|
|
|
$(68)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-off ratio (NCO ratio)
(b)
|
|
0.30%
|
|
|
0.41%
|
|
|
0.36%
|
|
|
0.33%
|
|
|
0.29%
|
|
|
Commercial NCO ratio
|
|
0.19%
|
|
|
0.34%
|
|
|
0.21%
|
|
|
0.22%
|
|
|
0.21%
|
|
|
Consumer NCO ratio
|
|
0.50%
|
|
|
0.52%
|
|
|
0.60%
|
|
|
0.51%
|
|
|
0.43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, NPLs decreased $103 million, or 20
percent, with the resulting NPL ratio of 0.43 percent decreasing 12 bps.
Repossessed personal property decreased $2 million and OREO balances
decreased $2 million. NPAs decreased $107 million, or 19 percent, with
the resulting NPA ratio of 0.48 percent, decreasing 12 bps.
Compared to the prior quarter, NPLs decreased $34 million, or 8 percent,
with the resulting NPL ratio decreasing 4 bps. Repossessed personal
property increased $1 million and OREO balances increased $1 million.
NPAs decreased $32 million, or 7 percent, with the resulting NPA ratio
decreasing 4 bps.
The provision for loan and lease losses totaled $86 million in the
current quarter compared to $67 million in the year-ago quarter and $33
million in the prior quarter. The resulting allowance for loan and lease
loss ratio represented 1.17 percent of total portfolio loans and leases
outstanding in the current quarter, compared with 1.31 percent in the
year-ago quarter and 1.17 in the prior quarter. The allowance for loan
and lease losses represented 270 percent of nonperforming loans and
leases, and 243 percent of nonperforming assets in the current quarter.
Net losses charged-off totaled $72 million in the current quarter
compared to $68 million in the year-ago quarter and $94 million in the
prior quarter. The resulting NCO ratio of 0.30 percent in the current
quarter increased 1 bp compared to the year-ago quarter and decreased 11
bps compared to the prior quarter.
|
|
|
Capital and Liquidity Position
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
September
|
|
June
|
|
March
|
|
December
|
|
September
|
|
|
|
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2017
|
|
|
Capital Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total Bancorp shareholders' equity as a percent of average
assets
|
|
11.39%
|
|
|
11.38%
|
|
|
11.52%
|
|
11.69%
|
|
|
11.93%
|
|
|
Tangible equity
(a)
|
|
10.07%
|
|
|
10.29%
|
|
|
10.09%
|
|
9.90%
|
|
|
9.84%
|
|
|
Tangible common equity (excluding unrealized gains/losses)
(a)
|
|
9.12%
|
|
|
9.33%
|
|
|
9.14%
|
|
8.94%
|
|
|
8.89%
|
|
|
Tangible common equity (including unrealized gains/losses)
(a)
|
|
8.63%
|
|
|
8.98%
|
|
|
8.89%
|
|
8.99%
|
|
|
9.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Capital and Liquidity Ratios
(e)
|
|
|
|
|
CET1 capital
(d)
|
|
10.67%
|
|
|
10.91%
|
|
|
10.82%
|
|
10.61%
|
|
|
10.59%
|
|
|
Tier I risk-based capital
(d)
|
|
11.78%
|
|
|
12.02%
|
|
|
11.95%
|
|
11.74%
|
|
|
11.72%
|
|
|
Total risk-based capital
(d)
|
|
15.01%
|
|
|
15.21%
|
|
|
15.25%
|
|
15.16%
|
|
|
15.16%
|
|
|
Tier I leverage
|
|
10.10%
|
|
|
10.24%
|
|
|
10.11%
|
|
10.01%
|
|
|
9.97%
|
|
|
Modified liquidity coverage ratio (LCR)
|
|
119%
|
|
|
116%
|
|
|
113%
|
|
129%
|
|
|
124%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratios remained strong during the quarter. The CET1 ratio was
10.67 percent, the tangible common equity to tangible assets ratio was
9.12 percent (excluding unrealized gains/losses), and 8.63 percent
(including unrealized gains/losses). The Tier I risk-based capital ratio
was 11.78 percent, the Total risk-based capital ratio was 15.01 percent,
and the Tier I leverage ratio was 10.10 percent.
During the third quarter of 2018, Fifth Third entered into open market
repurchase transactions of 16.9 million shares, or approximately $500
million, of its outstanding common stock, which settled between July 24,
2018 and August 6, 2018.
Tax Rate
The effective tax rate was 15.6 percent compared with 31.9 percent in
the year-ago quarter and 15.5 percent in the prior quarter.
Other
Fifth Third has re-submitted its CCAR 2018 capital plan to the Federal
Reserve, recognizing the pro forma impact of the combined Fifth Third MB
Financial post-merger entity. In the meantime, Fifth Third expects to
resume capital distribution activities consistent with the
originally-submitted April 2018 capital plan. The timing and amount of
this activity is subject to market conditions and applicable securities
laws.
On September 18, 2018, MB Financial, Inc. common stockholders approved
Fifth Third’s acquisition originally announced May 21, 2018. The
acquisition is expected to close in the first quarter of 2019, subject
to regulatory approvals and other customary closing conditions.
As of September 30, 2018, Fifth Third Bank owned approximately 10.3
million units representing a 3.3 percent interest in Worldpay Holding,
LLC, convertible into shares of Worldpay, Inc., a publicly traded firm.
Based upon Worldpay’s closing price of $101.27 on September 30, 2018,
Fifth Third’s interest in Worldpay was valued at approximately $1.04
billion. The difference between the market value and the book value of
Fifth Third’s interest in Worldpay’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 November 6, 2018
by dialing 800-585-8367 for domestic access or 404-537-3406 for
international access (passcode 4083528#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of September 30, 2018, the Company
had $142 billion in assets and operates 1,152 full-service Banking
Centers, and 2,443 Fifth Third branded ATMs in Ohio, Kentucky, Indiana,
Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North
Carolina. In total, Fifth Third provides its customers with access to
approximately 53,000 fee-free ATMs across the United States. Fifth Third
operates four main businesses: Commercial Banking, Branch Banking,
Consumer Lending, and Wealth & Asset Management. As of September 30,
2018, Fifth Third also had a 3.3% interest in Worldpay Holding, LLC, a
subsidiary of Worldpay, Inc. Fifth Third is among the largest money
managers in the Midwest and, as of September 30, 2018, had $376 billion
in assets under care, of which it managed $38 billion for individuals,
corporations and not-for-profit organizations through its Trust and
Registered Investment Advisory 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)
|
|
Non-GAAP measure; see discussion of non-GAAP and Reg. G
reconciliation beginning on page 25 in Exhibit 99.1 of 8-K filing
dated 10/23/2018
|
|
(b)
|
|
Net losses charged-off as a percent of average portfolio loans
and leases
|
|
(c)
|
|
Nonperforming portfolio assets as a percent of portfolio loans
and leases and OREO
|
|
(d)
|
|
Under the U.S. 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.
|
|
(e)
|
|
Current period regulatory capital and liquidity ratios are
estimated
|
|
(f)
|
|
Assumes a 21% tax rate
|
|
(g)
|
|
Includes commercial customer Eurodollar sweep balances for
which the Bank pays rates comparable to other commercial deposit
accounts
|
|
(h)
|
|
Nonperforming portfolio loans and leases as a percent of
portfolio loans and leases and OREO
|
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Fifth Third Bancorp has filed
with the SEC a Registration Statement on Form S-4 that includes the
Proxy Statement of MB Financial, Inc. and a Prospectus of Fifth Third
Bancorp, as well as other relevant documents concerning the proposed
transaction. This communication does not constitute an offer to sell or
the solicitation of an offer to buy any securities or a solicitation of
any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE
MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other
filings containing information about Fifth Third Bancorp and MB
Financial, Inc., may be obtained at the SEC’s Internet site (
http://www.sec.gov
).
You will also be able to obtain these documents, free of charge, from
Fifth Third Bancorp at
ir.53.com
or from MB Financial, Inc. by accessing MB Financial, Inc.’s website at
investor.mbfinancial.com.
Copies of the Proxy Statement/Prospectus can also be obtained, free
of charge, by directing a request to Fifth Third Investor Relations at
Fifth Third Investor Relations, MD 1090QC, 38 Fountain Square Plaza,
Cincinnati, OH 45263, by calling (866) 670-0468, or by sending an e-mail
to
ir@53.com
or to MB
Financial, Attention: Corporate Secretary, at 6111 North River Road,
Rosemont, Illinois 60018, by calling (847) 653-1992 or by sending an
e-mail to
dkoros@mbfinancial.com
.
Fifth Third Bancorp and certain of their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of MB Financial, Inc. in
respect of the transaction described in the Proxy Statement/Prospectus.
Information regarding Fifth Third Bancorp’s directors and executive
officers is contained in Fifth Third Bancorp’s Annual Report on Form
10-K for the year ended December 31, 2017 and its Proxy Statement on
Schedule 14A, dated March 6, 2018, which are filed with the SEC.
Information regarding MB Financial, Inc.’s directors and executive
officers is contained in its Proxy Statement on Schedule 14A filed with
the SEC on April 3, 2018. Additional information regarding the interests
of those participants and other persons who may be deemed participants
in the transaction may be obtained by reading the Proxy
Statement/Prospectus regarding the proposed merger. Free copies of this
document may be obtained as described in the preceding paragraph.
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
including, but not limited to, Fifth Third Bancorp’s and MB Financial,
Inc.’s expectations or predictions of future financial or business
performance or conditions. Forward-looking statements are typically
identified by words such as “believe,” “expect,” “anticipate,” “intend,”
“target,” “estimate,” “continue,” “positions,” “plan,” “predict,”
“project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,”
“possible” or “potential,” by future conditional verbs such as “assume,”
“will,” “would,” “should,” “could” or “may”, or by variations of such
words or by similar expressions. These forward-looking statements are
subject to numerous assumptions, risks and uncertainties, which change
over time. Forward-looking statements speak only as of the date they are
made and we assume no duty to update forward-looking statements. Actual
results may differ materially from current projections.
In addition to factors previously disclosed in Fifth Third Bancorp’s
and MB Financial, Inc.’s reports filed with or furnished to the SEC and
those identified elsewhere in this communication, the following factors,
among others, could cause actual results to differ materially from
forward-looking statements or historical performance: the ability to
obtain regulatory approvals and meet other closing conditions to the
merger, including approval of the merger by MB Financial, Inc.’s
stockholders on the expected terms and schedule, including the risk that
regulatory approvals required for the merger are not obtained or are
obtained subject to conditions that are not anticipated; delay in
closing the merger; difficulties and delays in integrating the
businesses of MB Financial, Inc. or fully realizing cost savings and
other benefits; business disruption following the merger; changes in
asset quality and credit risk; the inability to sustain revenue and
earnings growth; changes in interest rates and capital markets;
inflation; customer acceptance of Fifth Third Bancorp’s products and
services; customer borrowing, repayment, investment and deposit
practices; customer disintermediation; the introduction, withdrawal,
success and timing of business initiatives; competitive conditions; the
inability to realize cost savings or revenues or to implement
integration plans and other consequences associated with mergers,
acquisitions and divestitures; economic conditions; and the impact,
extent and timing of technological changes, capital management
activities, and other actions of the Federal Reserve Board and
legislative and regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are used for
illustrative purpose only, are not forecasts and may not reflect actual
results.
Fifth Third Bancorp
Investor contact:
Sameer Gokhale, 513-534-2219
or
Media contact:
Larry Magnesen, 513-534-8055