Diluted earnings per share of $0.64, including a negative $0.05 impact from certain items on page 2 of the 4Q18 earnings release
CINCINNATI--(BUSINESS WIRE)--Fifth Third Bancorp (FITB):
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Key Highlights
(a)
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Strong financial performance and momentum
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•
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NIM(b) up 19 bps compared to adjusted 4Q17
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•
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Expenses flat compared to 4Q17
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•
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Adjusted PPNR(b) up 14% compared to 4Q17
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Average loans up 3% compared to 4Q17
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•
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Average core deposits up 4% compared to 4Q17
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Remain on-track to achieve NorthStar targets
(b)
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•
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ROTCE – 14.3% (adjusted 15.4%)
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•
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ROA – 1.25% (adjusted 1.34%)
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•
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Efficiency ratio – 58.8% (adjusted 56.8%)
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Record 4Q18 business and credit results
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•
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Record corporate banking revenue
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•
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Record middle market & corporate loan originations
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•
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~20 year low commercial criticized ratio (3.34%)
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•
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~20 year low NPA ratio (0.41%)
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Key Financial Data
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$ millions for all balance sheet and income statement items
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4Q18
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3Q18
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4Q17
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Income Statement Data
(a)
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Net income available to common shareholders
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$432
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$421
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$504
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Net interest income (U.S. GAAP)
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1,081
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1,043
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956
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Net interest income (FTE)
(b)
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1,085
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1,047
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963
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Noninterest income
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575
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563
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577
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Noninterest expense
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977
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970
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975
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Per Share Data
(a)
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Earnings per share, basic
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$0.65
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$0.62
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$0.71
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Earnings per share, diluted
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0.64
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0.61
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0.70
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Book value per share
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23.07
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21.70
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21.43
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Tangible book value per share
(b)
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19.17
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17.94
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17.86
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Balance Sheet & Credit Quality
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Average portfolio loans and leases
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$94,757
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$93,192
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$92,250
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Average deposits
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107,495
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104,666
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102,790
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Net charge-off ratio
(c)
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0.35
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%
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0.30
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%
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0.33
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%
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Nonperforming asset ratio
(d)
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0.41
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0.48
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0.53
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Financial Ratios
(a)
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Return on average assets
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1.25
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%
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1.22
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%
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1.48
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%
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Return on average common equity
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11.8
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11.4
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13.3
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Return on average tangible common equity
(b)
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14.3
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13.8
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16.0
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CET1 capital
(e)(f)(g)
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10.24
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10.67
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10.61
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Net interest margin
(b)
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3.29
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3.23
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3.02
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Efficiency
(b)
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58.8
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60.2
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63.3
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Other than the Quarterly Financial Review tables beginning on
page 14 of the 4Q18 earnings release, 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. Effective in the fourth quarter of 2018, Fifth Third
retrospectively applied a change in its accounting policy for
investments in affordable housing projects that qualify for
low-income housing tax credits (LIHTC) to all prior period amounts
presented. As a result, prior period financial results may differ
compared to previous disclosures. A summary reconciliation of the
change is provided on page 30 of the 4Q18 earnings release.
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CEO Commentary
“Our fourth quarter and full year results were very strong. In 2018,
we produced record results, generated profitable relationship growth,
benefited from our improved balance sheet resiliency, and diligently
managed our expenses while continuing to invest for future growth. We
returned $2 billion to our shareholders through repurchases and
dividends, including a nearly 40% increase in the dividend by the end of
the year, while maintaining very strong capital ratios.”
“We recently received the regulatory non-objection related to our
re-submitted capital plan, including the pro forma impact of MB
Financial. We remain confident in our ability to achieve the expected
financial synergies from the pending acquisition, and we continue to
expect the transaction to close in the first quarter of 2019.”
“With the conclusion of Project NorthStar at the end of 2019, the
ongoing MB Financial integration efforts, and a clearly-defined set of
strategic priorities for the future, we remain very confident in our
ability to achieve our long-term financial targets and outperform
through the cycle.”
-Greg D. Carmichael, Chairman, President and CEO
Effective in the fourth quarter of 2018, Fifth Third retrospectively
applied a change in its accounting policy for investments in affordable
housing projects that qualify for low-income housing tax credits (LIHTC)
to all prior period amounts presented. As a result, prior period
financial results may differ compared to previous disclosures. A summary
reconciliation of the change is provided on page 30 of the 4Q18 earnings
release.
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Income Statement Highlights
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($ in millions, except per share data)
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For the Three Months Ended
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% Change
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December
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September
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December
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2018
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2018
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2017
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Seq
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Yr/Yr
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Condensed Statements of Income
(a)
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Net interest income (NII)
(b)
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$1,085
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$1,047
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$963
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4
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%
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13
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%
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Provision for loan and lease losses
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95
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86
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67
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10
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%
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42
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%
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Noninterest income
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575
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563
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577
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2
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%
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-
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Noninterest expense
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977
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970
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975
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1
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%
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-
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Income before income taxes
(b)
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$588
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$554
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$498
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6
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%
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18
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%
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Taxable equivalent adjustment
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4
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4
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7
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-
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(43
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%)
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Applicable income tax expense (benefit)
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129
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114
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(36
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)
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13
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%
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NM
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Net income
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$455
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$436
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$527
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4
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%
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(14
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%)
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Less: Net income attributable to noncontrolling interests
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-
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-
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-
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NM
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NM
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Net income attributable to Bancorp
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$455
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$436
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$527
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4
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%
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(14
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%)
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Dividends on preferred stock
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23
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15
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23
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53
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%
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-
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Net income available to common shareholders
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$432
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$421
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$504
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3
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%
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(14
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%)
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Earnings per share, diluted
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$0.64
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$0.61
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$0.70
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5
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%
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(9
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%)
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Fifth Third Bancorp (Nasdaq: FITB) today reported fourth quarter 2018
net income of $455 million compared to net income of $527 million in the
year-ago quarter. Net income available to common shareholders was $432
million, or $0.64 per diluted share, compared to $504 million, or $0.70
per diluted share in the year-ago quarter. Prior quarter net income was
$436 million and net income available to common shareholders was $421
million, or $0.61 per diluted share.
Reported full year 2018 net income was $2.2 billion, compared to full
year 2017 net income of $2.2 billion. Full year 2018 net income
available to common shareholders was $2.1 billion, or $3.06 per diluted
share, compared to full year 2017 net income available to common
shareholders of $2.1 billion, or $2.81 per diluted share.
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Diluted earnings per share impact of certain items
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($ in millions, except per share data)
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Merger-related expenses, after-tax
(h)
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$
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21
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GreenSky equity securities losses, after-tax
(h)
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$
|
17
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Valuation of Visa total return swap, after-tax
(h)
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($6
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)
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After-tax impact
(h)
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$
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32
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Average diluted common shares outstanding (thousands)
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662,966
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Diluted earnings per share impact
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$
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0.05
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Net Interest Income
|
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(FTE; $ in millions)
(b)
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For the Three Months Ended
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% Change
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|
|
December
|
|
September
|
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December
|
|
|
|
|
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|
2018
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2018
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2017
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Seq
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Yr/Yr
|
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Interest Income
|
|
|
|
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|
|
|
|
|
|
|
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|
|
Interest income
|
|
$
|
1,397
|
|
|
|
$
|
1,319
|
|
|
|
$
|
1,151
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|
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|
6
|
%
|
|
21
|
%
|
|
Interest expense
|
|
|
312
|
|
|
|
|
272
|
|
|
|
|
188
|
|
|
|
15
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%
|
|
66
|
%
|
|
Net interest income (NII)
|
|
$
|
1,085
|
|
|
|
$
|
1,047
|
|
|
|
$
|
963
|
|
|
|
4
|
%
|
|
13
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%
|
|
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|
|
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|
|
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|
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|
|
|
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Average Yield/Rate Analysis
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|
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|
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|
bps Change
|
|
Yield on interest-earning assets
|
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|
4.23
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%
|
|
|
|
4.07
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%
|
|
|
|
3.61
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%
|
|
|
16
|
|
|
62
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|
Rate paid on interest-bearing liabilities
|
|
|
1.33
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%
|
|
|
|
1.20
|
%
|
|
|
|
0.88
|
%
|
|
|
13
|
|
|
45
|
|
|
|
|
|
|
|
|
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|
|
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Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread
|
|
|
2.90
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%
|
|
|
|
2.87
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%
|
|
|
|
2.73
|
%
|
|
|
3
|
|
|
17
|
|
|
Net interest margin
|
|
|
3.29
|
%
|
|
|
|
3.23
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%
|
|
|
|
3.02
|
%
|
|
|
6
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Compared to the year-ago quarter, NII increased $122 million, or 13
percent, which was impacted by a $27 million remeasurement related to
the tax treatment of leveraged leases in the year-ago quarter. Excluding
the remeasurement, NII increased $95 million, or 10 percent, reflecting
higher short-term market rates and growth in interest-earning assets,
partially offset by an increase in funding costs. NIM increased 27 bps,
which included an 8 bps impact from the remeasurement in the year-ago
quarter. Excluding the remeasurement, NIM increased 19 bps, reflecting
higher short-term market rates and growth in interest-earning assets.
Compared to the prior quarter, NII increased $38 million, or 4 percent,
reflecting growth in commercial and industrial (C&I) loans, securities
portfolio balance growth, and higher short-term market rates. NIM
increased 6 bps, primarily driven by higher short-term market rates and
growth in C&I loans.
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|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
December
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
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|
Yr/Yr
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
|
$
|
135
|
|
|
$
|
139
|
|
|
$
|
138
|
|
|
(3
|
%)
|
|
(2
|
%)
|
|
Corporate banking revenue
|
|
|
130
|
|
|
|
100
|
|
|
|
77
|
|
|
30
|
%
|
|
69
|
%
|
|
Mortgage banking net revenue
|
|
|
54
|
|
|
|
49
|
|
|
|
54
|
|
|
10
|
%
|
|
-
|
|
|
Wealth and asset management revenue
|
|
|
109
|
|
|
|
114
|
|
|
|
106
|
|
|
(4
|
%)
|
|
3
|
%
|
|
Card and processing revenue
|
|
|
84
|
|
|
|
82
|
|
|
|
80
|
|
|
2
|
%
|
|
5
|
%
|
|
Other noninterest income
|
|
|
93
|
|
|
|
86
|
|
|
|
123
|
|
|
8
|
%
|
|
(24
|
%)
|
|
Securities (losses) gains, net
|
|
|
(32
|
)
|
|
|
(6
|
)
|
|
|
1
|
|
|
433
|
%
|
|
NM
|
|
|
Securities gains (losses), net - non-qualifying
|
|
|
|
|
|
|
|
|
|
|
|
hedges on mortgage servicing rights
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
NM
|
|
|
NM
|
|
|
Total noninterest income
|
|
$
|
575
|
|
|
$
|
563
|
|
|
$
|
577
|
|
|
2
|
%
|
|
-
|
|
Reported noninterest income was flat from the year-ago quarter, and
increased $12 million, or 2 percent, from the prior quarter. The
comparisons reflect the impact of certain significant items in the table
below.
Compared to the year-ago quarter, service charges on deposits decreased
$3 million, or 2 percent. Corporate banking revenue increased $53
million, or 69 percent, which was impacted by a $25 million lease
remarketing impairment in the year-ago quarter. Excluding this impact,
corporate banking revenue increased $28 million, or 27 percent,
primarily driven by strong capital markets revenue led by record M&A
advisory fees as well as increased syndication revenues. Mortgage
banking net revenue was flat primarily driven by lower negative net
valuation adjustments and higher gross mortgage servicing fees,
partially offset by lower origination fees and gains on loan sales.
Mortgage originations of $1.6 billion decreased 18 percent. Wealth and
asset management revenue increased $3 million, or 3 percent, primarily
driven by higher personal asset management revenue reflecting positive
net inflows. Card and processing revenue increased $4 million, or 5
percent, reflecting increases in credit card spend and debit transaction
volumes, partially offset by higher rewards.
Compared to the prior quarter, service charges on deposits decreased $4
million, or 3 percent. Corporate banking revenue increased $30 million,
or 30 percent, primarily driven by increases in M&A advisory and
syndication revenues. Mortgage banking net revenue increased $5 million,
or 10 percent, primarily driven by lower negative net valuation
adjustments partially offset by lower origination fees and gains on loan
sales. Mortgage originations decreased 16 percent. Wealth and asset
management revenue decreased $5 million, or 4 percent, primarily driven
by lower institutional trust and brokerage fees. Card and processing
revenue increased $2 million, or 2 percent, reflecting increases in
credit card spend volumes, partially offset by higher rewards.
|
|
|
Noninterest Income excluding certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
December
|
|
September
|
|
December
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Income excluding certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income (U.S. GAAP)
|
|
$575
|
|
|
$563
|
|
|
$577
|
|
|
|
|
|
|
Valuation of Visa total return swap
|
|
(7)
|
|
|
17
|
|
|
11
|
|
|
|
|
|
|
GreenSky equity securities losses
|
|
21
|
|
|
8
|
|
|
-
|
|
|
|
|
|
|
Securities losses / (gains), net (excluding GreenSky)
|
|
11
|
|
|
(2)
|
|
|
(1)
|
|
|
|
|
|
|
Noninterest income excluding certain items
(b)
|
|
$600
|
|
|
$586
|
|
|
$587
|
|
|
2%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, noninterest income excluding the items
in the table above increased $13 million, or 2 percent. Compared to the
prior quarter, noninterest income excluding these items increased $14
million, or 2 percent.
Other noninterest income on a reported basis in the current and previous
quarters was impacted by the Visa total return swap valuation
adjustments. Excluding this item, other noninterest income of $86
million decreased $48 million, or 36 percent compared to the year-ago
quarter, primarily driven by a decrease in the revenue recognized from
Worldpay related to the tax receivable agreement and a decline in equity
method earnings from the ownership interest in Worldpay. Compared to the
prior quarter, other noninterest income excluding the Visa total return
swap valuation adjustments decreased $17 million, or 17 percent,
primarily driven by lower private equity investment income, partially
offset by the revenue recognized from Worldpay related to the tax
receivable agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
December
|
|
September
|
|
December
|
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Expense
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
$
|
506
|
|
|
$
|
503
|
|
|
$
|
500
|
|
|
1
|
%
|
|
1
|
%
|
|
Net occupancy expense
|
|
|
73
|
|
|
|
70
|
|
|
|
74
|
|
|
4
|
%
|
|
(1
|
%)
|
|
Technology and communications
|
|
|
79
|
|
|
|
71
|
|
|
|
68
|
|
|
11
|
%
|
|
16
|
%
|
|
Equipment expense
|
|
|
31
|
|
|
|
31
|
|
|
|
29
|
|
|
-
|
|
|
7
|
%
|
|
Card and processing expense
|
|
|
33
|
|
|
|
31
|
|
|
|
34
|
|
|
6
|
%
|
|
(3
|
%)
|
|
Other noninterest expense
|
|
|
255
|
|
|
|
264
|
|
|
|
270
|
|
|
(3
|
%)
|
|
(6
|
%)
|
|
Total noninterest expense
|
|
$
|
977
|
|
|
$
|
970
|
|
|
$
|
975
|
|
|
1
|
%
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, noninterest expense was flat,
including merger-related expenses in the current quarter. The
merger-related expenses primarily impacted other noninterest expense,
with a lesser impact on technology and communication expense. Excluding
these expenses in the current quarter, as well as one-time employee
bonuses following the recently-enacted tax reform and a Fifth Third
Foundation contribution in the year-ago quarter, noninterest expense
increased $5 million. Results reflected an increase in compensation and
benefits resulting from an increase in incentive based payments from
record commercial loan originations and capital markets activities, and
continued technology investments, offset by the elimination of the FDIC
surcharge.
Compared to the prior quarter, noninterest expense increased $7 million,
or 1 percent, reflecting merger-related expenses. Excluding the
merger-related expenses in the current quarter, noninterest expense
decreased $20 million, or 2 percent, despite elevated incentive based
payments reflecting record commercial loan originations and capital
markets activities. Results also reflect the elimination of the FDIC
surcharge and continued technology investments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Earning Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
December
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
Average Portfolio Loans and Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$
|
43,829
|
|
|
$
|
42,494
|
|
|
$
|
41,438
|
|
|
3
|
%
|
|
6
|
%
|
|
Commercial mortgage loans
|
|
|
6,864
|
|
|
|
6,635
|
|
|
|
6,751
|
|
|
3
|
%
|
|
2
|
%
|
|
Commercial construction loans
|
|
|
4,885
|
|
|
|
4,870
|
|
|
|
4,660
|
|
|
-
|
|
|
5
|
%
|
|
Commercial leases
|
|
|
3,632
|
|
|
|
3,738
|
|
|
|
4,016
|
|
|
(3
|
%)
|
|
(10
|
%)
|
|
Total commercial loans and leases
|
|
$
|
59,210
|
|
|
$
|
57,737
|
|
|
$
|
56,865
|
|
|
3
|
%
|
|
4
|
%
|
|
Consumer loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
$
|
15,520
|
|
|
$
|
15,598
|
|
|
$
|
15,590
|
|
|
(1
|
%)
|
|
-
|
|
|
Home equity
|
|
|
6,438
|
|
|
|
6,529
|
|
|
|
7,066
|
|
|
(1
|
%)
|
|
(9
|
%)
|
|
Automobile loans
|
|
|
8,970
|
|
|
|
8,969
|
|
|
|
9,175
|
|
|
-
|
|
|
(2
|
%)
|
|
Credit card
|
|
|
2,373
|
|
|
|
2,299
|
|
|
|
2,202
|
|
|
3
|
%
|
|
8
|
%
|
|
Other consumer loans
|
|
|
2,246
|
|
|
|
2,060
|
|
|
|
1,352
|
|
|
9
|
%
|
|
66
|
%
|
|
Total consumer loans
|
|
$
|
35,547
|
|
|
$
|
35,455
|
|
|
$
|
35,385
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio loans and leases
|
|
$
|
94,757
|
|
|
$
|
93,192
|
|
|
$
|
92,250
|
|
|
2
|
%
|
|
3
|
%
|
|
Loans held for sale
|
|
|
641
|
|
|
|
785
|
|
|
|
615
|
|
|
(18
|
%)
|
|
4
|
%
|
|
Securities and other short-term investments
|
|
|
35,674
|
|
|
|
34,822
|
|
|
|
33,756
|
|
|
2
|
%
|
|
6
|
%
|
|
Total average interest-earning assets
|
|
$
|
131,072
|
|
|
$
|
128,799
|
|
|
$
|
126,621
|
|
|
2
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, average portfolio loans and leases
increased 3 percent, primarily driven by higher C&I and other consumer
loans, partially offset by declines in home equity loans and commercial
leases. Period end portfolio loans and leases increased 4 percent
year-over-year. Compared to the prior quarter, average portfolio loans
and leases increased 2 percent, primarily driven by higher C&I and
commercial mortgage loans, partially offset by a decline in commercial
leases. Period end portfolio loans and leases increased 2 percent from
the prior quarter.
Compared to the year-ago quarter, average commercial portfolio loans and
leases increased 4 percent, primarily driven by higher C&I loans.
Compared to the prior quarter, average commercial portfolio loans and
leases increased 3 percent, primarily driven by growth in C&I and
commercial mortgage loans. Period end commercial line utilization was 36
percent, compared to 34 percent in the year-ago quarter and 35 percent
in the prior quarter.
Compared to the year-ago quarter, average consumer portfolio loans were
flat, primarily driven by higher other consumer loans resulting from an
increase in unsecured personal loans and growth in credit card loans,
offset by declines in home equity and automobile loans. Compared to the
prior quarter, average consumer portfolio loans were flat, as higher
other consumer loans resulting from an increase in unsecured personal
loans and growth in credit card loans were offset by declines in home
equity and residential mortgage loans.
Average securities and other short-term investments were $35.7 billion
compared to $33.8 billion in the year-ago quarter and $34.8 billion in
the prior quarter. Average available-for-sale debt and other securities
of $33.4 billion were up 7 percent compared to the year-ago quarter and
up 2 percent compared to the prior quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
December
|
|
September
|
|
December
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
Average Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
$
|
31,571
|
|
|
$
|
32,333
|
|
|
$
|
35,519
|
|
|
(2
|
%)
|
|
(11
|
%)
|
|
Interest checking
|
|
|
32,428
|
|
|
|
29,681
|
|
|
|
26,992
|
|
|
9
|
%
|
|
20
|
%
|
|
Savings
|
|
|
12,933
|
|
|
|
13,231
|
|
|
|
13,593
|
|
|
(2
|
%)
|
|
(5
|
%)
|
|
Money market
|
|
|
22,517
|
|
|
|
21,753
|
|
|
|
20,023
|
|
|
4
|
%
|
|
12
|
%
|
|
Foreign office
(i)
|
|
|
272
|
|
|
|
317
|
|
|
|
323
|
|
|
(14
|
%)
|
|
(16
|
%)
|
|
Total transaction deposits
|
|
$
|
99,721
|
|
|
$
|
97,315
|
|
|
$
|
96,450
|
|
|
2
|
%
|
|
3
|
%
|
|
Other time
|
|
|
4,366
|
|
|
|
4,177
|
|
|
|
3,792
|
|
|
5
|
%
|
|
15
|
%
|
|
Total core deposits
|
|
$
|
104,087
|
|
|
$
|
101,492
|
|
|
$
|
100,242
|
|
|
3
|
%
|
|
4
|
%
|
|
Certificates - $100,000 and over
|
|
|
2,662
|
|
|
|
2,596
|
|
|
|
2,429
|
|
|
3
|
%
|
|
10
|
%
|
|
Other deposits
|
|
|
746
|
|
|
|
578
|
|
|
|
119
|
|
|
29
|
%
|
|
527
|
%
|
|
Total average deposits
|
|
$
|
107,495
|
|
|
$
|
104,666
|
|
|
$
|
102,790
|
|
|
3
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, average transaction deposits increased
3 percent and core deposits increased 4 percent. Performance was
primarily driven by higher commercial interest checking deposits and
consumer money market deposits, partially offset by lower commercial
demand deposits reflecting continued migration from demand deposits to
interest-bearing accounts. Average commercial transaction deposits
increased 4 percent and average consumer transaction deposits increased
3 percent.
Compared to the prior quarter, average transaction deposits increased 2
percent and core deposits increased 3 percent. Performance continued to
partially reflect migration from demand deposits to interest-bearing
accounts. Average commercial transaction deposits increased 5 percent,
and average consumer transaction deposits were flat.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
% Change
|
|
|
|
December
|
|
September
|
|
December
|
|
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
Seq
|
|
Yr/Yr
|
|
Average Wholesale Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates - $100,000 and over
|
|
$
|
2,662
|
|
|
$
|
2,596
|
|
|
$
|
2,429
|
|
|
3
|
%
|
|
10
|
%
|
|
Other deposits
|
|
|
746
|
|
|
|
578
|
|
|
|
119
|
|
|
29
|
%
|
|
527
|
%
|
|
Federal funds purchased
|
|
|
2,254
|
|
|
|
1,987
|
|
|
|
602
|
|
|
13
|
%
|
|
274
|
%
|
|
Other short-term borrowings
|
|
|
578
|
|
|
|
1,018
|
|
|
|
2,316
|
|
|
(43
|
%)
|
|
(75
|
%)
|
|
Long-term debt
|
|
|
14,420
|
|
|
|
14,434
|
|
|
|
14,631
|
|
|
-
|
|
|
(1
|
%)
|
|
Total average wholesale funding
|
|
$
|
20,660
|
|
|
$
|
20,613
|
|
|
$
|
20,097
|
|
|
-
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, average wholesale funding increased 3
percent reflecting interest-earning asset growth over the past year.
Compared to the prior quarter, average wholesale funding was flat
reflecting higher federal funds borrowings, offset by a decline in other
short-term borrowings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonaccrual portfolio loans and leases (NPLs)
|
|
$
|
348
|
|
|
|
$
|
403
|
|
|
|
$
|
437
|
|
|
|
$
|
452
|
|
|
|
$
|
437
|
|
|
Repossessed property
|
|
|
10
|
|
|
|
|
8
|
|
|
|
|
7
|
|
|
|
|
9
|
|
|
|
|
9
|
|
|
OREO
|
|
|
37
|
|
|
|
|
37
|
|
|
|
|
36
|
|
|
|
|
43
|
|
|
|
|
43
|
|
|
Total nonperforming portfolio assets (NPAs)
|
|
$
|
395
|
|
|
|
$
|
448
|
|
|
|
$
|
480
|
|
|
|
$
|
504
|
|
|
|
$
|
489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPL ratio
(j)
|
|
|
0.37
|
%
|
|
|
|
0.43
|
%
|
|
|
|
0.47
|
%
|
|
|
|
0.49
|
%
|
|
|
|
0.48
|
%
|
|
NPA ratio
(d)
|
|
|
0.41
|
%
|
|
|
|
0.48
|
%
|
|
|
|
0.52
|
%
|
|
|
|
0.55
|
%
|
|
|
|
0.53
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 30-89 days past due (accrual)
|
|
|
297
|
|
|
|
|
270
|
|
|
|
|
217
|
|
|
|
|
299
|
|
|
|
|
280
|
|
|
Total loans and leases 90 days past due (accrual)
|
|
|
93
|
|
|
|
|
87
|
|
|
|
|
89
|
|
|
|
|
107
|
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
|
$
|
1,091
|
|
|
|
$
|
1,077
|
|
|
|
$
|
1,138
|
|
|
|
$
|
1,196
|
|
|
|
$
|
1,205
|
|
|
Total net losses charged-off
|
|
|
(83
|
)
|
|
|
|
(72
|
)
|
|
|
|
(94
|
)
|
|
|
|
(81
|
)
|
|
|
|
(76
|
)
|
|
Provision for loan and lease losses
|
|
|
95
|
|
|
|
|
86
|
|
|
|
|
33
|
|
|
|
|
23
|
|
|
|
|
67
|
|
|
Allowance for loan and lease losses, ending
|
|
$
|
1,103
|
|
|
|
$
|
1,091
|
|
|
|
$
|
1,077
|
|
|
|
$
|
1,138
|
|
|
|
$
|
1,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
|
$
|
129
|
|
|
|
$
|
131
|
|
|
|
$
|
151
|
|
|
|
$
|
161
|
|
|
|
$
|
157
|
|
|
Provision for (benefit from) unfunded commitments
|
|
|
2
|
|
|
|
|
(2
|
)
|
|
|
|
(20
|
)
|
|
|
|
(10
|
)
|
|
|
|
4
|
|
|
Reserve for unfunded commitments, ending
|
|
$
|
131
|
|
|
|
$
|
129
|
|
|
|
$
|
131
|
|
|
|
$
|
151
|
|
|
|
$
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for credit losses
|
|
$
|
1,234
|
|
|
|
$
|
1,220
|
|
|
|
$
|
1,208
|
|
|
|
$
|
1,289
|
|
|
|
$
|
1,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of portfolio loans and leases
|
|
|
1.16
|
%
|
|
|
|
1.17
|
%
|
|
|
|
1.17
|
%
|
|
|
|
1.24
|
%
|
|
|
|
1.30
|
%
|
|
As a percent of nonperforming portfolio loans and leases
|
|
|
317
|
%
|
|
|
|
270
|
%
|
|
|
|
247
|
%
|
|
|
|
252
|
%
|
|
|
|
274
|
%
|
|
As a percent of nonperforming portfolio assets
|
|
|
279
|
%
|
|
|
|
243
|
%
|
|
|
|
224
|
%
|
|
|
|
226
|
%
|
|
|
|
245
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses charged-off
|
|
$
|
(116
|
)
|
|
|
$
|
(112
|
)
|
|
|
$
|
(118
|
)
|
|
|
$
|
(103
|
)
|
|
|
$
|
(94
|
)
|
|
Total recoveries of losses previously charged-off
|
|
|
33
|
|
|
|
|
40
|
|
|
|
|
24
|
|
|
|
|
22
|
|
|
|
|
18
|
|
|
Total net losses charged-off
|
|
$
|
(83
|
)
|
|
|
$
|
(72
|
)
|
|
|
$
|
(94
|
)
|
|
|
$
|
(81
|
)
|
|
|
$
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-off ratio (NCO ratio)
(c)
|
|
|
0.35
|
%
|
|
|
|
0.30
|
%
|
|
|
|
0.41
|
%
|
|
|
|
0.36
|
%
|
|
|
|
0.33
|
%
|
|
Commercial NCO ratio
|
|
|
0.19
|
%
|
|
|
|
0.19
|
%
|
|
|
|
0.34
|
%
|
|
|
|
0.21
|
%
|
|
|
|
0.22
|
%
|
|
Consumer NCO ratio
|
|
|
0.61
|
%
|
|
|
|
0.50
|
%
|
|
|
|
0.52
|
%
|
|
|
|
0.60
|
%
|
|
|
|
0.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the year-ago quarter, NPLs decreased $89 million, or 20
percent, with the resulting NPL ratio of 0.37 percent decreasing 11 bps.
NPAs decreased $94 million, or 19 percent, with the resulting NPA ratio
of 0.41 percent decreasing 12 bps. Compared to the prior quarter, NPLs
decreased $55 million, or 14 percent, with the resulting NPL ratio
decreasing 6 bps. NPAs decreased $53 million, or 12 percent, with the
resulting NPA ratio decreasing 7 bps.
The provision for loan and lease losses totaled $95 million in the
current quarter compared to $67 million in the year-ago quarter and $86
million in the prior quarter. The resulting allowance for loan and lease
loss ratio represented 1.16 percent of total portfolio loans and leases
outstanding in the current quarter, compared with 1.30 percent in the
year-ago quarter and 1.17 in the prior quarter. The allowance for loan
and lease losses represented 317 percent of nonperforming loans and
leases and 279 percent of nonperforming assets in the current quarter.
Net charge-offs totaled $83 million in the current quarter compared to
$76 million in the year-ago quarter and $72 million in the prior
quarter. The resulting NCO ratio of 0.35 percent in the current quarter
increased 2 bps compared to the year-ago quarter and increased 5 bps
compared to the prior quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and Liquidity Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
Capital Position
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total Bancorp shareholders' equity as a percent of average
assets
|
|
10.95
|
%
|
|
|
11.29
|
%
|
|
|
11.28
|
%
|
|
11.41
|
%
|
|
|
11.58
|
%
|
|
Tangible equity
(b)
|
|
9.63
|
%
|
|
|
9.97
|
%
|
|
|
10.19
|
%
|
|
9.98
|
%
|
|
|
9.79
|
%
|
|
Tangible common equity (excluding unrealized gains/losses)
(b)
|
|
8.71
|
%
|
|
|
9.02
|
%
|
|
|
9.23
|
%
|
|
9.03
|
%
|
|
|
8.83
|
%
|
|
Tangible common equity (including unrealized gains/losses)
(b)
|
|
8.64
|
%
|
|
|
8.53
|
%
|
|
|
8.88
|
%
|
|
8.78
|
%
|
|
|
8.88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Capital and Liquidity Ratios
(g)
|
|
|
|
CET1 capital
(e)(f)
|
|
10.24
|
%
|
|
|
10.67
|
%
|
|
|
10.91
|
%
|
|
10.82
|
%
|
|
|
10.61
|
%
|
|
Tier I risk-based capital
(e)(f)
|
|
11.32
|
%
|
|
|
11.78
|
%
|
|
|
12.02
|
%
|
|
11.95
|
%
|
|
|
11.74
|
%
|
|
Total risk-based capital
(e)(f)
|
|
14.48
|
%
|
|
|
14.94
|
%
|
|
|
15.21
|
%
|
|
15.25
|
%
|
|
|
15.16
|
%
|
|
Tier I leverage
(f)
|
|
9.72
|
%
|
|
|
10.10
|
%
|
|
|
10.24
|
%
|
|
10.11
|
%
|
|
|
10.01
|
%
|
|
Modified liquidity coverage ratio (LCR)
|
|
128
|
%
|
|
|
119
|
%
|
|
|
116
|
%
|
|
113
|
%
|
|
|
129
|
%
|
Capital ratios remained strong during the quarter. The CET1 capital
ratio was 10.24 percent, the tangible common equity to tangible assets
ratio was 8.71 percent (excluding unrealized gains/losses), and 8.64
percent (including unrealized gains/losses). The Tier I risk-based
capital ratio was 11.32 percent, the Total risk-based capital ratio was
14.48 percent, and the Tier I leverage ratio was 9.72 percent. Current
period capital ratios were impacted by the accounting policy change
related to investments in affordable housing projects that qualify for
the LIHTC. The change in accounting policy reduced the current CET1
capital ratio by approximately 11 basis points.
During the fourth quarter of 2018, Fifth Third entered into open market
repurchase transactions of 14.9 million shares, or approximately $400
million, of its outstanding common stock, which settled between October
26, 2018, and November 14, 2018.
Tax Rate
The effective tax rate was 22.4 percent compared with negative 7.5
percent in the year-ago quarter and 20.7 percent in the prior quarter.
The effective tax rates in all periods were impacted by the decision to
retrospectively apply a change in accounting policy for investments in
affordable housing projects that qualify for the LIHTC.
Other
Fifth Third announced on December 28, 2018, that the Board of Governors
of the Federal Reserve System (“the Federal Reserve”) did not object to
Fifth Third’s Resubmitted Capital Plan for potential capital actions
through June 30, 2019.
The capital actions in Fifth Third’s Resubmitted Capital Plan through
June 30, 2019 remain unchanged compared to the originally submitted 2018
CCAR plan. The timing and amount of this activity is subject to market
conditions and applicable securities laws. Through December 2018, Fifth
Third has executed approximately $900 million of $1.81 billion in share
repurchases authorized under the 2018 CCAR process. Additionally, Fifth
Third continues to have the authorization to increase the common
dividend to $0.24 beginning the second quarter of 2019.
The pending acquisition of MB Financial, Inc. is expected to close in
the first quarter of 2019, subject to regulatory approvals and other
customary closing conditions.
As of December 31, 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 $76.43 on December 31, 2018,
Fifth Third’s interest in Worldpay was valued at approximately $780
million. 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 February 5, 2019
by dialing 800-585-8367 for domestic access or 404-537-3406 for
international access (passcode 4692779#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of December 31, 2018, the Company
had $146 billion in assets and operates 1,121 full-service Banking
Centers, and 2,419 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 52,000 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 December 31,
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 December 31, 2018, had $356 billion
in assets under care, of which it managed $37 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)
|
|
Effective in the fourth quarter of 2018, Fifth Third retrospectively
applied a change in its accounting policy for investments in
affordable housing projects that qualify for low-income housing tax
credits (LIHTC) to all prior period amounts presented. As a result,
prior period financial results may differ compared to previous
disclosures. See page 30 of the 4Q18 earnings release for the impact
of the change in accounting policy.
|
|
(b)
|
|
Non-GAAP measure; see discussion of non-GAAP and Reg. G
reconciliation beginning on page 26 of the 4Q18 earnings release.
|
|
(c)
|
|
Net losses charged-off as a percent of average portfolio loans and
leases.
|
|
(d)
|
|
Nonperforming portfolio assets as a percent of portfolio loans and
leases and OREO.
|
|
(e)
|
|
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.
|
|
(f)
|
|
Effective in the fourth quarter of 2018, Fifth Third retrospectively
applied a change in its accounting policy for investments in
affordable housing projects that qualify for low-income housing tax
credits (LIHTC). Prior period regulatory capital ratios reflect
amounts filed on the Bancorp’s FR Y-9C filings and were not required
to be restated as a result.
|
|
(g)
|
|
Current period regulatory capital and liquidity ratios are estimated.
|
|
(h)
|
|
Assumes a 21% tax rate.
|
|
(i)
|
|
Includes commercial customer Eurodollar sweep balances for which the
Bank pays rates comparable to other commercial deposit accounts.
|
|
(j)
|
|
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 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.
Investors:
Chris Doll, 513-534–2345
Media:
Larry Magnesen, 513-534–8055