CINCINNATI--(BUSINESS WIRE)--Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2016 net income of $333 million versus net income of $327 million in the first quarter of 2016 and $315 million in the second quarter of 2015. After preferred dividends, net income available to common shareholders was $310 million, or $0.40 per diluted share, in the second quarter of 2016, compared with $312 million, or $0.40 per diluted share, in the first quarter of 2016, and $292 million, or $0.36 per diluted share, in the second quarter of 2015.
Second quarter 2016 included:
Income
- $19 million positive valuation adjustment on the Vantiv warrant
- $11 million gain on sale of Pennsylvania branches as part of the previously announced branch consolidation and sales plan
- $11 million gain on the sale of the non-strategic agented bankcard loan portfolio
- ($50 million) charge related to the valuation of the Visa total return swap, primarily reflecting the rejection of the merchant litigation settlement
Expense
- ($9 million) in compensation-related expenses due to retirement eligibility changes
- ($3 million) in severance expense
First quarter 2016 included:
Income
- $47 million positive valuation adjustment on the Vantiv warrant
- $8 million gain on sale of certain St. Louis branches as part of the previously announced branch consolidation and sales plan
- $1 million benefit related to the valuation of the Visa total return swap
Expense
- ($15 million) in severance expense, primarily consisting of $14 million related to the voluntary early retirement program
Second quarter 2015 included:
Income
- $14 million positive valuation adjustment on the Vantiv warrant
- ($2 million) charge related to the valuation of the Visa total return swap
- ($97 million) non-cash impairment charge related to previously announced changes in the branch network
Expense
- ($2 million) in severance expense
| Earnings Highlights | ||||||||||||||||||||
| For the Three Months Ended | % Change | |||||||||||||||||||
| June | March | December | September | June | ||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | ||||||||||||||
| Earnings ($ in millions) | ||||||||||||||||||||
| Net income attributable to Bancorp | $ | 333 | $ | 327 | $ | 657 | $ | 381 | $ | 315 | 2 | % | 6 | % | ||||||
| Net income available to common shareholders | $ | 310 | $ | 312 | $ | 634 | $ | 366 | $ | 292 | (1 | %) | 6 | % | ||||||
| Common Share Data | ||||||||||||||||||||
| Earnings per share, basic | $ | 0.40 | $ | 0.40 | $ | 0.80 | $ | 0.46 | $ | 0.36 | - | 11 | % | |||||||
| Earnings per share, diluted | 0.40 | 0.40 | 0.79 | 0.45 | 0.36 | - | 11 | % | ||||||||||||
| Cash dividends per common share | 0.13 | 0.13 | 0.13 | 0.13 | 0.13 | - | - | |||||||||||||
| Financial Ratios | ||||||||||||||||||||
| Return on average assets | 0.94 | % | 0.93 | % | 1.83 | % | 1.07 | % | 0.90 | % | 1 | % | 4 | % | ||||||
| Return on average common equity | 8.2 | 8.3 | 17.2 | 10.0 | 8.1 | (1 | %) | 1 | % | |||||||||||
| Return on average tangible common equity(b) | 9.7 | 9.9 | 20.6 | 12.0 | 9.7 | (2 | %) | - | ||||||||||||
| CET1 capital(c) | 9.94 | 9.81 | 9.82 | 9.40 | 9.42 | 1 | % | 6 | % | |||||||||||
| Tier I risk-based capital(c) | 11.03 | 10.91 | 10.93 | 10.49 | 10.51 | 1 | % | 5 | % | |||||||||||
| CET1 capital (fully-phased in)(b)(c) | 9.86 | 9.72 | 9.72 | 9.30 | 9.31 | 1 | % | 6 | % | |||||||||||
| Net interest margin(a) | 2.88 | 2.91 | 2.85 | 2.89 | 2.90 | (1 | %) | (1 | %) | |||||||||||
| Efficiency(a) | 65.3 | 63.8 | 48.0 | 58.2 | 65.4 | 2 | % | - | ||||||||||||
| Common shares outstanding (in thousands) | 766,346 | 770,471 | 785,080 | 795,439 | 810,054 | (1 | %) | (5 | %) | |||||||||||
| Average common shares outstanding | ||||||||||||||||||||
| (in thousands): | ||||||||||||||||||||
| Basic | 759,105 | 773,564 | 784,855 | 795,793 | 803,965 | (2 | %) | (6 | %) | |||||||||||
| Diluted | 765,080 | 778,392 | 794,481 | 805,023 | 812,843 | (2 | %) | (6 | %) | |||||||||||
| (a) Presented on a fully taxable equivalent basis. | ||||||||||||||||||||
| (b) These ratios have been included herein to facilitate a greater understanding of the Bancorp's capital structure and financial condition. See the Regulation G Non-GAAP Reconciliation table for a reconciliation of these ratios to U.S. GAAP. | ||||||||||||||||||||
| (c) Under the banking agencies' Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp's total risk-weighted assets used in the calculation of the tier I risk-based capital and common equity tier 1 ratios. Current period regulatory capital ratios are estimated. | ||||||||||||||||||||
| NA: Not applicable. | ||||||||||||||||||||
“Operating leverage continues to be our top priority in this extended low growth, low rate environment”, said Greg D. Carmichael, President and CEO of Fifth Third Bancorp. “With a balanced focus on revenue growth and expense management we are making good progress even as we continue to make strategic investments.”
“With disciplined loan pricing and targeted relationship management, we generated positive momentum in our core business despite a challenging economic backdrop. We are very pleased with our growth in corporate banking fees and are also are taking share in capital markets with a broader offering of products and services. Additionally, we had strong growth in mortgage originations with a 17 percent increase in purchase volumes year-over-year.
“During the quarter we continued to make strategic investments in our core business, streamlining processes, and further enhancing our information technology, risk and compliance management infrastructure. We are also pleased with the regulatory response to our CCAR submission, enabling us to continue to focus on returning a significant amount of capital to our shareholders through dividends and share repurchases.
“Lastly, I am pleased to announce that we recently entered into a couple of significant transactions with Vantiv. We extended our processing agreement through 2024, which will generate revenue benefits and cost savings for Fifth Third. Additionally, we agreed to terminate and settle certain future TRA cash flows for an upfront payment of $116 million with the option to terminate and settle additional future cash flows. These agreements will enable us to repurchase shares using the realized gains, creating additional value for our shareholders.”
| Income Statement Highlights | |||||||||||||||||||||||||||||
| For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
| June | March | December | September | June | |||||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | |||||||||||||||||||||||
| Condensed Statements of Income ($ in millions) | |||||||||||||||||||||||||||||
| Net interest income (taxable equivalent) |
$ |
908 |
$ |
909 |
$ |
904 |
$ |
906 |
$ |
892 |
- | 2 | % | ||||||||||||||||
| Provision for loan and lease losses | 91 | 119 | 91 | 156 |
79 |
(24 | %) | 15 | % | ||||||||||||||||||||
| Total noninterest income | 599 | 637 | 1,104 | 713 | 556 | (6 | %) | 8 | % | ||||||||||||||||||||
| Total noninterest expense | 983 | 986 | 963 | 943 | 947 | - | 4 | % | |||||||||||||||||||||
| Income before income taxes (taxable equivalent) |
$ |
433 |
$ |
441 |
$ |
954 |
$ |
520 |
$ |
422 |
(2 | %) | 3 | % | |||||||||||||||
| Taxable equivalent adjustment | 6 | 6 | 5 | 5 | 5 | - | 20 | % | |||||||||||||||||||||
| Applicable income tax expense | 98 | 108 | 292 | 134 | 108 | (9 | %) | (9 | %) | ||||||||||||||||||||
| Net income |
$ |
329 |
$ |
327 |
$ |
657 |
$ |
381 |
$ |
309 |
1 | % | 6 | % | |||||||||||||||
| Less: Net income attributable to noncontrolling interests | (4 | ) | - | - | - | (6 | ) | 100 | % | (33 | %) | ||||||||||||||||||
| Net income attributable to Bancorp |
$ |
333 |
$ |
327 |
$ |
657 |
$ |
381 |
$ |
315 |
2 | % | 6 | % | |||||||||||||||
| Dividends on preferred stock | 23 | 15 | 23 | 15 | 23 | 53 | % | - | |||||||||||||||||||||
| Net income available to common shareholders |
$ |
310 |
$ |
312 |
$ |
634 |
$ |
366 |
$ |
292 |
(1 | %) | 6 | % | |||||||||||||||
| Earnings per share, diluted |
$ |
0.40 |
$ |
0.40 |
$ |
0.79 |
$ |
0.45 |
$ |
0.36 |
- | 11 | % | ||||||||||||||||
| Net Interest Income | |||||||||||||||||||||||||||||||
| For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||
| June | March | December | September | June | |||||||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | |||||||||||||||||||||||||
| Interest Income ($ in millions) | |||||||||||||||||||||||||||||||
| Total interest income (taxable equivalent) | $ | 1,052 | $ | 1,044 | $ | 1,035 | $ | 1,031 | $ | 1,008 | 1 | % | 4 | % | |||||||||||||||||
| Total interest expense | 144 | 135 | 131 | 125 | 116 | 7 | % | 24 | % | ||||||||||||||||||||||
| Net interest income (taxable equivalent) | $ | 908 | $ | 909 | $ | 904 | $ | 906 | $ | 892 | - | 2 | % | ||||||||||||||||||
| Average Yield | bps Change | ||||||||||||||||||||||||||||||
| Yield on interest-earning assets (taxable equivalent) | 3.34 | % | 3.34 | % | 3.26 | % | 3.29 | % | 3.28 | % | - | 6 | |||||||||||||||||||
| Rate paid on interest-bearing liabilities | 0.67 | % | 0.64 | % | 0.61 | % | 0.58 | % | 0.56 | % | 3 | 11 | |||||||||||||||||||
| Net interest rate spread (taxable equivalent) | 2.67 | % | 2.70 | % | 2.65 | % | 2.71 | % | 2.72 | % | (3 | ) | (5 | ) | |||||||||||||||||
| Net interest margin (taxable equivalent) | 2.88 | % | 2.91 | % | 2.85 | % | 2.89 | % | 2.90 | % | (3 | ) | (2 | ) | |||||||||||||||||
| Average Balances ($ in millions) | % Change | ||||||||||||||||||||||||||||||
| Loans and leases, including held for sale | $ | 94,807 | $ | 94,078 | $ | 94,587 | $ | 94,329 | $ | 92,739 | 1 | % | 2 | % | |||||||||||||||||
| Total securities and other short-term investments | 32,040 | 31,573 | 31,256 | 30,102 | 30,563 | 1 | % | 5 | % | ||||||||||||||||||||||
| Total interest-earning assets | 126,847 | 125,651 | 125,843 | 124,431 | 123,302 | 1 | % | 3 | % | ||||||||||||||||||||||
| Total interest-bearing liabilities | 86,145 | 85,450 | 85,381 | 85,171 | 83,480 | 1 | % | 3 | % | ||||||||||||||||||||||
| Bancorp shareholders' equity | 16,584 | 16,376 | 15,982 | 15,815 | 15,841 | 1 | % | 5 | % | ||||||||||||||||||||||
Net interest income of $908 million on a fully taxable equivalent basis decreased $1 million from the first quarter, primarily driven by the full quarter impact of $1.5 billion of unsecured debt issued in the first quarter of 2016 and from lower average consumer loan balances, partially offset by growth in commercial loans and securities.
The net interest margin was 2.88 percent, a decrease of 3 bps from the previous quarter. The decrease was primarily driven by the full quarter impact of the aforementioned debt issuance in the first quarter of 2016.
Compared to the second quarter of 2015, net interest income increased by $16 million and the net interest margin decreased by 2 bps. The increase in net interest income was driven by the impact of higher investment securities and loan balances, as well as short-term market rate improvements from the December 2015 Fed funds rate increase. The decrease in the net interest margin from the prior year was primarily driven by increased long-term debt balances, lower commercial loan yields, and reduced cash flow hedges, partially offset by lower cash balances held at the Fed as well as the December 2015 Fed funds rate increase.
Securities
Average securities and other short-term investments were $32.0 billion in the second quarter of 2016 compared to $31.6 billion in the previous quarter and $30.6 billion in the second quarter of 2015. Average balances of other short-term investments increased by $77 million sequentially to $2.0 billion.
| Loans | ||||||||||||||||||||||||||
| For the Three Months Ended | % Change | |||||||||||||||||||||||||
| June | March | December | September | June | ||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | ||||||||||||||||||||
| Average Portfolio Loans and Leases ($ in millions) | ||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||
| Commercial and industrial loans | $ | 43,876 | $ | 43,089 | $ | 43,154 | $ | 43,149 | $ | 42,550 | 2 | % | 3 | % | ||||||||||||
| Commercial mortgage loans | 6,831 | 6,886 | 7,032 | 7,023 | 7,148 | (1 | %) | (4 | %) | |||||||||||||||||
| Commercial construction loans | 3,551 | 3,297 | 3,141 | 2,965 | 2,549 | 8 | % | 39 | % | |||||||||||||||||
| Commercial leases | 3,898 | 3,874 | 3,839 | 3,846 | 3,776 | 1 | % | 3 | % | |||||||||||||||||
| Total commercial loans and leases | $ | 58,156 | $ | 57,146 | $ | 57,166 | $ | 56,983 | $ | 56,023 | 2 | % | 4 | % | ||||||||||||
| Consumer: | ||||||||||||||||||||||||||
| Residential mortgage loans | $ | 14,046 | $ | 13,788 | $ | 13,504 | $ | 13,144 | $ | 12,831 | 2 | % | 9 | % | ||||||||||||
| Home equity | 8,054 | 8,217 | 8,360 | 8,479 | 8,654 | (2 | %) | (7 | %) | |||||||||||||||||
| Automobile loans | 10,887 | 11,283 | 11,670 | 11,877 | 11,902 | (4 | %) | (9 | %) | |||||||||||||||||
| Credit card | 2,134 | 2,179 | 2,218 | 2,277 | 2,296 | (2 | %) | (7 | %) | |||||||||||||||||
| Other consumer loans and leases | 654 | 662 | 676 | 613 | 467 | (1 | %) | 40 | % | |||||||||||||||||
| Total consumer loans and leases | $ | 35,775 | $ | 36,129 | $ | 36,428 | $ | 36,390 | $ | 36,150 | (1 | %) | (1 | %) | ||||||||||||
| Total average portfolio loans and leases | $ | 93,931 | $ | 93,275 | $ | 93,594 | $ | 93,373 | $ | 92,173 | 1 | % | 2 | % | ||||||||||||
| Average loans held for sale | $ | 876 | $ | 803 | $ | 993 | $ | 956 | $ | 566 | 9 | % | 55 | % | ||||||||||||
Average loan and lease balances (excluding loans held-for-sale) increased $656 million sequentially and increased $1.8 billion, or 2 percent, from the second quarter of 2015. The sequential and year-over-year increases in average loans and leases were driven by increased commercial and industrial (C&I), residential mortgage and commercial construction loans. Period end loans and leases (excluding loans held-for-sale) of $93.9 billion increased $304 million sequentially and $1.2 billion, or 1 percent, from a year ago. The increase year-over-year was primarily due to an increase in residential mortgage and commercial construction loans, partially offset by a decrease in automobile loans.
Average commercial portfolio loan and lease balances increased $1.0 billion, or 2 percent, sequentially and increased $2.1 billion, or 4 percent, from the second quarter of 2015. Average C&I loans increased $787 million, or 2 percent, from the prior quarter and increased $1.3 billion, or 3 percent, from the second quarter of 2015. Average commercial real estate loans increased $199 million, or 2 percent, from the prior quarter and increased $685 million, or 7 percent, from the second quarter of 2015. Within commercial real estate, average commercial mortgage balances decreased $55 million and average commercial construction balances increased $254 million sequentially. Commercial line usage, on an end of period basis, was relatively stable from the first quarter of 2016 and decreased 54 bps from the second quarter of 2015.
Average consumer portfolio loan and lease balances decreased $354 million, or 1 percent, sequentially and decreased $375 million, or 1 percent, from the second quarter of 2015. This was primarily driven by average automobile loans which decreased 4 percent sequentially and 9 percent from a year ago. Average residential mortgage loans increased 2 percent sequentially and 9 percent from the previous year. Average home equity loans declined 2 percent sequentially and 7 percent from the second quarter of 2015. Average credit card loans decreased 2 percent sequentially and 7 percent from the second quarter of 2015.
| Deposits | |||||||||||||||||||||||||||
| For the Three Months Ended | % Change | ||||||||||||||||||||||||||
| June | March | December | September | June | |||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | |||||||||||||||||||||
| Average Deposits ($ in millions) | |||||||||||||||||||||||||||
| Demand | $ | 35,912 | $ | 35,201 | $ | 36,254 | $ | 35,231 | $ | 35,384 | 2 | % | 1 | % | |||||||||||||
| Interest checking | 24,714 | 25,740 | 25,296 | 25,590 | 26,894 | (4 | %) | (8 | %) | ||||||||||||||||||
| Savings | 14,576 | 14,601 | 14,615 | 14,868 | 15,156 | - | (4 | %) | |||||||||||||||||||
| Money market | 19,243 | 18,655 | 18,775 | 18,253 | 18,071 | 3 | % | 6 | % | ||||||||||||||||||
| Foreign office(a) | 484 | 483 | 736 | 718 | 955 | - | (49 | %) | |||||||||||||||||||
| Total transaction deposits | $ | 94,929 | $ | 94,680 | $ | 95,676 | $ | 94,660 | $ | 96,460 | - | (2 | %) | ||||||||||||||
| Other time | 4,044 | 4,035 | 4,052 | 4,057 | 4,074 | - | (1 | %) | |||||||||||||||||||
| Total core deposits | $ | 98,973 | $ | 98,715 | $ | 99,728 | $ | 98,717 | $ | 100,534 | - | (2 | %) | ||||||||||||||
| Certificates - $100,000 and over | 2,819 | 2,815 | 3,305 | 2,924 | 2,558 | - | 10 | % | |||||||||||||||||||
| Other | 467 | - | 7 | 222 | - | 100 | % | 100 | % | ||||||||||||||||||
| Total average deposits | $ | 102,259 | $ | 101,530 | $ | 103,040 | $ | 101,863 | $ | 103,092 | 1 | % | (1 | %) | |||||||||||||
|
(a) Includes commercial customer Eurodollar sweep balances for which the Bancorp pays rates comparable to other commercial deposit accounts.
|
|||||||||||||||||||||||||||
Average core deposits increased $258 million sequentially but decreased $1.6 billion, or 2 percent, from the second quarter of 2015. Average transaction deposits increased $249 million from the first quarter of 2016 and decreased $1.5 billion, or 2 percent, from the second quarter of 2015. Sequential performance was primarily driven by higher demand deposit and money market account balances, partially offset by lower interest checking account balances. The year-over-year decline was primarily driven by lower interest checking, savings and foreign office account balances, partially offset by higher demand deposit and money market account balances. Other time deposits were flat sequentially and decreased 1 percent compared with the second quarter of 2015. Average deposit balances were impacted by approximately $201 million due to the previously noted sale of branches in Pennsylvania. This sale included $302 million of primarily core consumer deposit balances. Additionally, average deposit balances were affected by the full quarter impact of $228 million in deposits from the sale of St. Louis branches in the first quarter of 2016.
Average commercial transaction deposits were down 2 percent sequentially and decreased 6 percent from the previous year. The sequential decline was primarily driven by lower interest checking account balances, partially offset by an increase in demand deposit account and money market account balances. The year-over-year decline reflected lower interest checking and foreign office account balances, partially offset by higher demand deposit and money market account balances.
Average consumer transaction deposits increased 2 percent sequentially and 3 percent from the second quarter of 2015. The sequential performance reflected broad-based growth across all deposit products. Year-over-year growth was driven by higher money market, interest checking, and demand deposit account balances, partially offset by lower savings account balances.
| Wholesale Funding | |||||||||||||||||||||||||||
| For the Three Months Ended | % Change | ||||||||||||||||||||||||||
| June | March | December | September | June | |||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | |||||||||||||||||||||
| Average Wholesale Funding ($ in millions) | |||||||||||||||||||||||||||
| Certificates - $100,000 and over | $ | 2,819 | $ | 2,815 | $ | 3,305 | $ | 2,924 | $ | 2,558 | - | 10 | % | ||||||||||||||
| Other deposits | 467 | - | 7 | 222 | - | 100 | % | 100 | % | ||||||||||||||||||
| Federal funds purchased | 693 | 608 | 1,182 | 1,978 | 326 | 14 | % | NM | |||||||||||||||||||
| Other short-term borrowings | 3,754 | 3,564 | 1,675 | 1,897 | 1,705 | 5 | % | NM | |||||||||||||||||||
| Long-term debt | 15,351 | 14,949 | 15,738 | 14,664 | 13,741 | 3 | % | 12 | % | ||||||||||||||||||
| Total average wholesale funding | $ | 23,084 | $ | 21,936 | $ | 21,907 | $ | 21,685 | $ | 18,330 | 5 | % | 26 | % | |||||||||||||
Average wholesale funding of $23.1 billion increased $1.1 billion, or 5 percent, sequentially, and increased $4.8 billion, or 26 percent, compared with the second quarter of 2015. The sequential increase in average wholesale funding was primarily driven by a $1.25 billion debt issuance to take advantage of favorable capital market conditions. The year-over-year increase reflected the impact of funding higher securities balances and replacing LCR punitive deposits with wholesale borrowings.
| Noninterest Income | |||||||||||||||||||||
| For the Three Months Ended | % Change | ||||||||||||||||||||
| June | March | December | September | June | |||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | |||||||||||||||
| Noninterest Income ($ in millions) | |||||||||||||||||||||
| Service charges on deposits | $ | 138 | $ | 137 | $ | 144 | $ | 145 | $ | 139 | 1 | % | (1 | %) | |||||||
| Corporate banking revenue | 117 | 102 | 104 | 104 | 113 | 15 | % | 4 | % | ||||||||||||
| Mortgage banking net revenue | 75 | 78 | 74 | 71 | 117 | (4 | %) | (36 | %) | ||||||||||||
| Wealth and asset management revenue | 101 | 102 | 102 | 103 | 105 | (1 | %) | (4 | %) | ||||||||||||
| Card and processing revenue | 82 | 79 | 77 | 77 | 77 | 4 | % | 6 | % | ||||||||||||
| Other noninterest income | 80 | 136 | 602 | 213 | 1 | (41 | %) | NM | |||||||||||||
| Securities gains, net | 6 | 3 | 1 | - | 4 | 100 | % | 50 | % | ||||||||||||
| Total noninterest income | $ | 599 | $ | 637 | $ | 1,104 | $ | 713 | $ | 556 | (6 | %) | 8 | % | |||||||
Noninterest income of $599 million decreased $38 million sequentially and increased $43 million compared with prior year results. The sequential and year-over-year comparisons reflect the impacts described below.
| Noninterest Income excluding certain items | ||||||||||||||||||
| For the Three Months Ended | % Change | |||||||||||||||||
| June | March | June | ||||||||||||||||
| 2016 | 2016 | 2015 | Seq | Yr/Yr | ||||||||||||||
| Noninterest Income excluding certain items ($ in millions) | ||||||||||||||||||
| Noninterest income (U.S. GAAP) | $ | 599 | $ | 637 | $ | 556 | ||||||||||||
| Vantiv warrant valuation | (19 | ) | (47 | ) | (14 | ) | ||||||||||||
| Gain on sale of certain branches | (11 | ) | (8 | ) | - | |||||||||||||
| Gain on sale of the non-strategic agented bankcard loan portfolio | (11 | ) | - | - | ||||||||||||||
| Valuation of Visa total return swap | 50 | (1 | ) | 2 | ||||||||||||||
| Branch / land valuation adjustments | - | - | 97 | |||||||||||||||
| Securities (gains) / losses | (6 | ) | (3 | ) | (4 | ) | ||||||||||||
| Noninterest income excluding certain items | $ | 602 | $ | 578 | $ | 637 | 4 | % | (5 | %) | ||||||||
Excluding the items in the table above, noninterest income of $602 million increased $24 million, or 4 percent, from the previous quarter and decreased $35 million, or 5 percent, from the second quarter of 2015. The sequential increase was primarily due to increases in corporate banking revenue. The year-over-year decrease was driven by a decrease in mortgage banking net revenue due to a significant positive MSR valuation adjustment in the second quarter of 2015.
Service charges on deposits of $138 million increased 1 percent from the first quarter of 2016, and decreased 1 percent compared with the same quarter last year. The sequential increase reflected a 3 percent increase in retail service charges. The decrease from the second quarter of 2015 was due to a 6 percent decrease in retail service charges.
Corporate banking revenue of $117 million increased $15 million compared to the first quarter of 2016 and increased $4 million from the second quarter of 2015. The sequential comparison reflects increases in loan syndication revenue and institutional sales revenue. The year-over-year increase was primarily driven by higher loan syndication revenue, partially offset by lower business lending fees and institutional sales revenue.
Mortgage banking net revenue was $75 million in the second quarter of 2016, down $3 million from the first quarter of 2016 and down $42 million from the second quarter of 2015. Originations were $2.7 billion in the current quarter, $1.8 billion in the previous quarter and $2.5 billion in the second quarter of 2015. Second quarter 2016 originations resulted in gains of $54 million on mortgages sold, compared with gains of $42 million during the previous quarter and $43 million during the second quarter of 2015. Mortgage servicing fees were $50 million this quarter, $52 million in the first quarter of 2016, and $56 million in the second quarter of 2015. Mortgage banking net revenue is also affected by net servicing asset valuation adjustments, which include mortgage servicing rights (MSR) amortization and MSR valuation adjustments (including mark-to-market adjustments on free-standing derivatives used to economically hedge the MSR portfolio). These net servicing asset valuation adjustments were negative $29 million in the second quarter of 2016 (reflecting MSR amortization of $35 million and MSR valuation adjustments of positive $6 million); negative $16 million in the first quarter of 2016 (MSR amortization of $27 million and MSR valuation adjustments of positive $11 million); and positive $18 million in the second quarter of 2015 (MSR amortization of $39 million and MSR valuation adjustments of positive $57 million). The mortgage servicing asset, net of the valuation reserve, was $621 million at quarter end on a servicing portfolio of $56 billion.
Wealth and asset management revenue of $101 million decreased 1 percent from the first quarter of 2016 due to seasonally lower tax-related private client services revenue, partially offset by an increase in personal asset management fees. The decrease of 4 percent from the prior year was primarily due to lower securities and brokerage fees.
Card and processing revenue of $82 million in the second quarter of 2016 increased 4 percent sequentially and increased 6 percent from the second quarter of 2015. The sequential increase reflected higher transaction volumes compared with seasonally weak first quarter volumes. The year-over-year increase reflected an increase in customer transactions and spend volume.
Other noninterest income totaled $80 million in the second quarter of 2016, compared with $136 million in the previous quarter and $1 million in the second quarter of 2015. As previously described, the results included the adjustments in the table on page 9 with the exception of securities gains in all comparable periods. Excluding these items, other noninterest income of $89 million increased approximately $9 million, or 11 percent, from the first quarter of 2016 and increased approximately $3 million, or 3 percent, from the second quarter of 2015.
Net gains on investment securities were $6 million in the second quarter of 2016, compared with $3 million in the previous quarter and $4 million in the second quarter of 2015.
| Noninterest Expense | ||||||||||||||||||||||||||
| For the Three Months Ended | % Change | |||||||||||||||||||||||||
| June | March | December | September | June | ||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | Seq | Yr/Yr | ||||||||||||||||||||
| Noninterest Expense ($ in millions) | ||||||||||||||||||||||||||
| Salaries, wages and incentives | $ | 407 | $ | 403 | $ | 386 | $ | 387 | $ | 383 | 1 | % | 6 | % | ||||||||||||
| Employee benefits | 85 | 100 | 74 | 72 | 78 | (15 | %) | 9 | % | |||||||||||||||||
| Net occupancy expense | 75 | 77 | 83 | 77 | 83 | (3 | %) | (10 | %) | |||||||||||||||||
| Technology and communications | 60 | 56 | 59 | 56 | 54 | 7 | % | 11 | % | |||||||||||||||||
| Equipment expense | 30 | 30 | 32 | 31 | 31 | - | (3 | %) | ||||||||||||||||||
| Card and processing expense | 37 | 35 | 40 | 40 | 38 | 6 | % | (3 | %) | |||||||||||||||||
| Other noninterest expense | 289 | 285 | 289 | 280 | 280 | 1 | % | 3 | % | |||||||||||||||||
| Total noninterest expense | $ | 983 | $ | 986 | $ | 963 | $ | 943 | $ | 947 | - | 4 | % | |||||||||||||
Noninterest expense of $983 million was down $3 million compared with the first quarter of 2016 and increased 4 percent compared with the second quarter of 2015. The sequential comparison reflected a seasonal decrease in FICA and unemployment tax expense recorded in employee benefits, partially offset by a $9 million compensation-related expense due to retirement eligibility changes. The year-over-year increase reflected higher compensation expense as a result of personnel additions primarily in risk and compliance and information technology.
| Credit Quality | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| June | March | December | September | June | |||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | |||||||||||||||
| Total net losses charged-off ($ in millions) | |||||||||||||||||||
| Commercial and industrial loans | ($39 | ) | ($46 | ) | ($30 | ) | ($128 | ) | ($34 | ) | |||||||||
| Commercial mortgage loans | (6 | ) | (6 | ) | (3 | ) | (11 | ) | (11 | ) | |||||||||
| Commercial construction loans | - | - | - | (3 | ) | - | |||||||||||||
| Commercial leases | (1 | ) | (2 | ) | (1 | ) | - | - | |||||||||||
| Residential mortgage loans | (2 | ) | (2 | ) | (3 | ) | (3 | ) | (5 | ) | |||||||||
| Home equity | (6 | ) | (8 | ) | (9 | ) | (9 | ) | (9 | ) | |||||||||
| Automobile loans | (8 | ) | (9 | ) | (9 | ) | (7 | ) | (4 | ) | |||||||||
| Credit card | (21 | ) | (20 | ) | (19 | ) | (21 | ) | (21 | ) | |||||||||
| Other consumer loans and leases | (4 | ) | (3 | ) | (6 | ) | (6 | ) | (2 | ) | |||||||||
| Total net losses charged-off | ($87 | ) | ($96 | ) | ($80 | ) | ($188 | ) | ($86 | ) | |||||||||
| Total losses charged-off | ($105 | ) | ($116 | ) | ($105 | ) | ($209 | ) | ($112 | ) | |||||||||
| Total recoveries of losses previously charged-off | 18 | 20 | 25 | 21 | 26 | ||||||||||||||
| Total net losses charged-off | ($87 | ) | ($96 | ) | ($80 | ) | ($188 | ) | ($86 | ) | |||||||||
| Ratios (annualized) | |||||||||||||||||||
|
Net losses charged-off as a percent of average portfolio loans and leases (excluding held for sale) |
0.37 | % | 0.42 | % | 0.34 | % | 0.80 | % | 0.37 | % | |||||||||
| Commercial | 0.32 | % | 0.38 | % | 0.24 | % | 0.99 | % | 0.32 | % | |||||||||
| Consumer | 0.45 | % | 0.48 | % | 0.49 | % | 0.51 | % | 0.46 | % | |||||||||
Net charge-offs were $87 million, or 37 bps of average portfolio loans and leases on an annualized basis, in the second quarter of 2016 compared with net charge-offs of $96 million, or 42 bps, in the first quarter of 2016 and $86 million, or 37 bps, in the second quarter of 2015.
Commercial net charge-offs were $46 million, or 32 bps, and were down $8 million sequentially. The decrease was primarily due to lower charge-offs of C&I loans, which decreased by $7 million from the first quarter of 2016. Commercial real estate net charge-offs were flat from the previous quarter.
Consumer net charge-offs were $41 million, or 45 bps, and were down $1 million sequentially. Compared with the previous quarter, net charge-offs on residential mortgage loans in the portfolio were flat and net charge-offs on the home equity portfolio decreased $2 million. Net charge-offs on the auto portfolio were down $1 million and net charge-offs on credit card loans were up $1 million from the first quarter of 2016. Net charge-offs on other consumer loans were $4 million, up $1 million from the previous quarter.
| For the Three Months Ended | ||||||||||||||||||||||||
| June | March | December | September | June | ||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||
| Allowance for Credit Losses ($ in millions) | ||||||||||||||||||||||||
| Allowance for loan and lease losses, beginning | $ | 1,295 | $ | 1,272 | $ | 1,261 | $ | 1,293 | $ | 1,300 | ||||||||||||||
| Total net losses charged-off | (87 | ) | (96 | ) | (80 | ) | (188 | ) | (86 | ) | ||||||||||||||
| Provision for loan and lease losses | 91 | 119 | 91 | 156 | 79 | |||||||||||||||||||
| Allowance for loan and lease losses, ending | $ | 1,299 | $ | 1,295 | $ | 1,272 | $ | 1,261 | $ | 1,293 | ||||||||||||||
| Reserve for unfunded commitments, beginning | $ | 144 | $ | 138 | $ | 134 | $ | 132 | $ | 130 | ||||||||||||||
| Provision for unfunded commitments | 7 | 6 | 4 | 2 | 2 | |||||||||||||||||||
| Reserve for unfunded commitments, ending | $ | 151 | $ | 144 | $ | 138 | $ | 134 | $ | 132 | ||||||||||||||
| Components of allowance for credit losses: | ||||||||||||||||||||||||
| Allowance for loan and lease losses | $ | 1,299 | $ | 1,295 | $ | 1,272 | $ | 1,261 | $ | 1,293 | ||||||||||||||
| Reserve for unfunded commitments | 151 | 144 | 138 | 134 | 132 | |||||||||||||||||||
| Total allowance for credit losses | $ | 1,450 | $ | 1,439 | $ | 1,410 | $ | 1,395 | $ | 1,425 | ||||||||||||||
| Allowance for loan and lease losses ratio | ||||||||||||||||||||||||
| As a percent of portfolio loans and leases | 1.38 | % | 1.38 | % | 1.37 | % | 1.35 | % | 1.39 | % | ||||||||||||||
| As a percent of nonperforming loans and leases(a) | 188 | % | 185 | % | 252 | % | 275 | % | 272 | % | ||||||||||||||
| As a percent of nonperforming assets(a) | 161 | % | 157 | % | 197 | % | 208 | % | 206 | % | ||||||||||||||
| (a) Excludes nonaccrual loans in loans held for sale. | ||||||||||||||||||||||||
Provision for loan and lease losses totaled $91 million in the second quarter of 2016. The allowance represented 1.38 percent of total portfolio loans and leases outstanding as of quarter end, compared with 1.38 percent last quarter, and represented 188 percent of nonperforming loans and leases, and 161 percent of nonperforming assets.
The provision decreased $28 million from the first quarter of 2016 and increased $12 million from the second quarter of 2015. The allowance for loan and lease losses increased $4 million sequentially. As of June 30, the reserve allocated to the energy portfolio was approximately 5.97%, down from approximately 6.20% last quarter.
| As of | ||||||||||||||||||||
| June | March | December | September | June | ||||||||||||||||
| Nonperforming Assets and Delinquent Loans ($ in millions) | 2016 | 2016 | 2015 | 2015 | 2015 | |||||||||||||||
| Nonaccrual portfolio loans and leases: | ||||||||||||||||||||
| Commercial and industrial loans | $ | 254 | $ | 278 | $ | 82 | $ | 47 | $ | 61 | ||||||||||
| Commercial mortgage loans | 39 | 51 | 56 | 60 | 49 | |||||||||||||||
| Commercial construction loans | - | - | - | - | - | |||||||||||||||
| Commercial leases | 4 | 4 | - | 2 | 2 | |||||||||||||||
| Residential mortgage loans | 27 | 25 | 28 | 31 | 35 | |||||||||||||||
| Home equity | 61 | 61 | 62 | 65 | 70 | |||||||||||||||
| Total nonaccrual portfolio loans and leases (excludes restructured loans) | $ | 385 | $ | 419 | $ | 228 | $ | 205 | $ | 217 | ||||||||||
| Nonaccrual restructured portfolio commercial loans and leases(b) | 242 | 210 | 203 | 177 | 175 | |||||||||||||||
| Nonaccrual restructured portfolio consumer loans and leases | 66 | 72 | 75 | 76 | 83 | |||||||||||||||
| Total nonaccrual portfolio loans and leases | $ | 693 | $ | 701 | $ | 506 | $ | 458 | $ | 475 | ||||||||||
| Repossessed property | 15 | 17 | 18 | 17 | 16 | |||||||||||||||
| OREO | 97 | 107 | i | 123 | i | 131 | i | 135 | i | |||||||||||
| Total nonperforming portfolio assets(a) | $ | 805 | $ | 825 | $ | 647 | $ | 606 | $ | 626 | ||||||||||
| Nonaccrual loans held for sale | 20 | 3 | 1 | 1 | 1 | |||||||||||||||
| Nonaccrual restructured loans held for sale | - | 2 | 11 | 1 | - | |||||||||||||||
| Total nonperforming assets | $ | 825 | $ | 830 | $ | 659 | $ | 608 | $ | 627 | ||||||||||
| Restructured Portfolio Consumer loans and leases (accrual) | $ | 982 | $ | 998 | $ | 979 | $ | 973 | $ | 970 | ||||||||||
| Restructured Portfolio Commercial loans and leases (accrual)(b) | $ | 431 | $ | 461 | $ | 491 | $ | 571 | $ | 769 | ||||||||||
| Total loans and leases 90 days past due | $ | 65 | $ | 73 | $ | 75 | $ | 70 | $ | 70 | ||||||||||
| Nonperforming loans and leases as a percent of portfolio loans, | ||||||||||||||||||||
| leases and other assets, including OREO(a) | 0.74 | % | 0.75 | % | 0.55 | % | 0.49 | % | 0.51 | % | ||||||||||
| Nonperforming portfolio assets as a percent of portfolio loans and | ||||||||||||||||||||
| leases and OREO(a) | 0.86 | % | 0.88 | % | 0.70 | % | 0.65 | % | 0.67 | % | ||||||||||
| (a) Does not include nonaccrual loans held for sale. | ||||||||||||||||||||
| (b) Excludes $20 million of restructured nonaccrual loans and $7 million of restructured accruing loans as of June 30, 2016, March 31, 2016 and December 31, 2015. Excludes $21 million of restructured nonaccrual loans and $7 million of restructured accruing loans as of September 30, 2015 and June 30, 2015. | ||||||||||||||||||||
Total nonperforming assets, including loans held-for-sale, decreased $5 million, or 1 percent, from the previous quarter to $825 million. Nonperforming loans (NPLs) at quarter-end decreased $8 million, or 1 percent, from the previous quarter to $693 million or 0.74 percent of total loans, leases and OREO.
Commercial NPAs decreased $9 million from the first quarter to $602 million, or 1.04 percent of commercial loans, leases and OREO. Commercial NPLs decreased $4 million from last quarter to $539 million, or 0.93 percent of commercial loans and leases. C&I NPAs increased $5 million from the prior quarter to $477 million. This increase primarily reflected non-energy NPAs which resulted in a stable reserve coverage of both NPLs and NPAs compared with those coverage levels in the first quarter of 2016. Energy NPLs were flat sequentially. Commercial mortgage NPAs decreased $12 million from the previous quarter to $114 million. Commercial construction NPAs decreased $1 million from the previous quarter to $7 million. Commercial lease NPAs were $4 million, down $1 million from the previous quarter. Commercial NPAs included $242 million of nonaccrual troubled debt restructurings (TDRs), compared with $210 million last quarter.
Consumer NPAs decreased $11 million from the first quarter to $203 million, or 0.57 percent of consumer loans, leases and OREO. Consumer NPLs decreased $4 million from last quarter to $154 million, or 0.43 percent of consumer loans and leases. Residential mortgage NPAs decreased $8 million from the second quarter to $69 million. Home equity NPAs decreased $1 million, sequentially, to $94 million. Consumer nonaccrual TDRs were $66 million in the second quarter of 2016, compared with $72 million in the first quarter of 2016.
Second quarter OREO balances included in NPA balances were down $10 million from the first quarter to $97 million, and included $56 million in commercial OREO and $41 million in consumer OREO. Repossessed personal property decreased $2 million from the prior quarter to $15 million.
Loans over 90 days past due and still accruing decreased $7 million from the first quarter of 2016 to $65 million. Commercial balances over 90 days past due were $2 million compared with $3 million in the prior quarter, and consumer balances 90 days past due decreased $7 million from the previous quarter to $63 million. Loans 30-89 days past due of $196 million were down $12 million from the previous quarter. Commercial balances 30-89 days past due decreased $17 million sequentially to $17 million and consumer balances 30-89 days past due were up $5 million from the first quarter at $179 million. The above delinquency figures exclude nonaccruals described previously.
| Capital and Liquidity Position | ||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||
| June | March | December | September | June | ||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||
| Capital Position | ||||||||||||||||||||||||
| Average total Bancorp shareholders' equity to average assets | 11.60 | % | 11.57 | % | 11.26 | % | 11.24 | % | 11.32 | % | ||||||||||||||
| Tangible equity(a) | 9.59 | % | 9.51 | % | 9.55 | % | 9.29 | % | 9.29 | % | ||||||||||||||
| Tangible common equity (excluding unrealized gains/losses)(a) | 8.64 | % | 8.55 | % | 8.59 | % | 8.33 | % | 8.33 | % | ||||||||||||||
| Tangible common equity (including unrealized gains/losses)(a) | 9.18 | % | 8.97 | % | 8.71 | % | 8.65 | % | 8.51 | % | ||||||||||||||
| Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses)(a)(b) | 9.92 | % | 9.78 | % | 9.80 | % | 9.37 | % | 9.39 | % | ||||||||||||||
|
Regulatory capital ratios: |
Basel III | |||||||||||||||||||||||
| Transitional | ||||||||||||||||||||||||
| CET1 capital(b) | 9.94 | % | 9.81 | % | 9.82 | % | 9.40 | % | 9.42 | % | ||||||||||||||
| Tier I risk-based capital(b) | 11.03 | % | 10.91 | % | 10.93 | % | 10.49 | % | 10.51 | % | ||||||||||||||
| Total risk-based capital(b) | 14.66 | % | 14.66 | % | 14.13 | % | 13.68 | % | 13.69 | % | ||||||||||||||
| Tier I leverage | 9.64 | % | 9.57 | % | 9.54 | % | 9.38 | % | 9.44 | % | ||||||||||||||
| CET1 capital (fully phased-in)(a)(b) | 9.86 | % | 9.72 | % | 9.72 | % | 9.30 | % | 9.31 | % | ||||||||||||||
| Book value per share | $ | 20.09 | $ | 19.46 | $ | 18.48 | $ | 18.22 | $ | 17.62 | ||||||||||||||
| Tangible book value per share(a) | $ | 16.93 | $ | 16.32 | $ | 15.39 | $ | 15.18 | $ | 14.62 | ||||||||||||||
| Modified liquidity coverage ratio (LCR)(c)(d) | 110 | % | 118 | % | N/A | N/A | N/A | |||||||||||||||||
| (a) | These ratios have been included herein to facilitate a greater understanding of the Bancorp's capital structure and financial condition. See the Regulation G Non-GAAP Reconciliation table for a reconciliation of these ratios to U.S. GAAP. | |||||||||||||||||||||||
| (b) | Under the banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp's total risk-weighted assets. | |||||||||||||||||||||||
| (c) | Current period regulatory capital and liquidity ratios are estimated. | |||||||||||||||||||||||
| (d) | The Bancorp became subject to the Modified LCR regulations effective January 1, 2016. | |||||||||||||||||||||||
Capital ratios remained strong during the quarter. The common equity Tier 1 ratio was 9.94 percent, the tangible common equity to tangible assets ratio* was 8.64 percent (excluding unrealized gains/losses), and 9.18 percent (including unrealized gains/losses). The Tier 1 risk-based capital ratio was 11.03 percent, the total risk-based capital ratio was 14.66 percent, and the Leverage ratio was 9.64 percent.
Book value per share at June 30, 2016 was $20.09 and tangible book value per share* was $16.93, compared with the March 31, 2016 book value per share of $19.46 and tangible book value per share* of $16.32.
Fifth Third entered into or completed multiple share repurchases during the quarter. Below is a summary of those share repurchases.
- On April 11, 2016, Fifth Third settled the forward contract related to the March 4, 2016 $240 million share repurchase agreement. An additional 1.87 million shares were repurchased in connection with the completion of this agreement.
- On June 14, 2016, Fifth Third executed open market share repurchases totaling $26 million, which reduced the second quarter share count by 1.44 million shares.
In total, common shares outstanding decreased by approximately 4 million shares in the second quarter of 2016 from the first quarter of 2016.
On June 29, 2016, Fifth Third announced that the Board of Governors of the Federal Reserve System did not object to Fifth Third’s 2016 CCAR capital plan for the period beginning July 1, 2016 and ending June 30, 2017. Our capital plan included the following components:
- An increase in the quarterly common stock dividend to $0.14 in 4Q16
- The repurchase of common shares in an amount up to $660 million, which includes $84 million in repurchases related to share issuances under employee benefit plans
- The additional ability to repurchase shares in the amount of any realized after-tax gains from the sale of Vantiv stock, if executed
- The additional ability to repurchase shares in the amount of any realized after-tax gains from the sale of any portion of the tax receivable agreement with Vantiv, if executed
* Non-GAAP measure; see discussion of non-GAAP measures and Reg. G reconciliation beginning on page 33 in Exhibit 99.1 of 8-K filing dated 7/28/16.
Tax Rate
The effective tax rate was 22.8 percent in the second quarter of 2016 compared with 25.0 percent in the first quarter of 2016 and 26.1 percent in the second quarter of 2015. The tax rate in the current period reflected an $8 million tax benefit related to a change in the estimated deductibility of a prior expense.
Other
On July 27, 2016, Fifth Third Bancorp entered into an agreement with Vantiv, Inc. under which a portion of its Tax Receivable Agreement (“TRA”) with Vantiv was terminated and settled in full for consideration of a cash payment in the amount of $116 million from Vantiv. Under the agreement, Fifth Third Bancorp sold certain TRA cash flows totaling an estimated $331 million. These cash flows were originally payable to Fifth Third from 2019 - 2035. This sale does not impact the TRA payment expected to be recognized in the fourth quarter of 2016 and the fourth quarter of 2017. Fifth Third will also have the ability to terminate and settle another $394 million of future cash flows for a total of $171 million dollars payable to Fifth Third in 2017 and 2018 in 8 separate quarterly optional executions. For more detail, see the 8-K dated July 28, 2016. Additionally, Fifth Third Bancorp announced a 5.5 year extension to the existing operating agreement with Vantiv. The new agreement will reflect reduced expenses for Fifth Third and enhanced revenue opportunities for both parties.
Fifth Third Bank owns approximately 35 million units representing an 18.3 percent interest in Vantiv Holding, LLC, convertible into shares of Vantiv, Inc., a publicly traded firm. Based upon Vantiv’s closing price of $56.60 on June 30, 2016, our interest in Vantiv was valued at approximately $2.0 billion. Next month in our 10-Q, we will update our disclosure of the carrying value of our interest in Vantiv stock, which was $374 million as of March 31, 2016. The difference between the market value and the book value of Fifth Third’s interest in Vantiv’s shares is not recognized in Fifth Third’s equity or capital. Additionally, Fifth Third has a warrant to purchase approximately 7.8 million additional shares in Vantiv which is carried as a derivative asset at a fair value of $327 million as of June 30, 2016.
Conference Call
Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live by Thomson Financial and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Fifth Third” then “Investor Relations”). Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).
Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available beginning approximately two hours after the conference call until Thursday, August 11, 2016 by dialing 855-859-2056 for domestic access or 404-537-3406 for international access (passcode 30557082#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of June 30, 2016, the Company had $144 billion in assets and operates 1,191 full-service Banking Centers, including 94 Bank Mart® locations, most open seven days a week, inside select grocery stores and 2,514 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third also has an 18.3% interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2016, had $305 billion in assets under care, of which it managed $26 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
FORWARD-LOOKING STATEMENTS
This release contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “anticipates,” “potential,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K as updated from time to time by our Quarterly Reports on Form 10-Q. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. There is a risk that additional information may become known during the company’s quarterly closing process or as a result of subsequent events that could affect the accuracy of the statements and financial information contained herein.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) general economic conditions or real estate market conditions, either nationally or in the states in which Fifth Third, one or more acquired entities and/or the combined company do business, weaken or are less favorable than expected; (2) deteriorating credit quality; (3) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (4) changes in the interest rate environment reduce interest margins; (5) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (6) Fifth Third’s ability to maintain required capital levels and adequate sources of funding and liquidity; (7) maintaining capital requirements and adequate sources of funding and liquidity may limit Fifth Third’s operations and potential growth; (8) changes and trends in capital markets; (9) problems encountered by larger or similar financial institutions may adversely affect the banking industry and/or Fifth Third; (10) competitive pressures among depository institutions increase significantly; (11) effects of critical accounting policies and judgments; (12) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies; (13) legislative or regulatory changes or actions, or significant litigation, adversely affect Fifth Third, one or more acquired entities and/or the combined company or the businesses in which Fifth Third, one or more acquired entities and/or the combined company are engaged, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; (14) ability to maintain favorable ratings from rating agencies; (15) fluctuation of Fifth Third’s stock price; (16) ability to attract and retain key personnel; (17) ability to receive dividends from its subsidiaries; (18) potentially dilutive effect of future acquisitions on current shareholders’ ownership of Fifth Third; (19) effects of accounting or financial results of one or more acquired entities; (20) difficulties from Fifth Third’s investment in, relationship with, and nature of the operations of Vantiv, LLC; (21) loss of income from any sale or potential sale of businesses; (22) difficulties in separating the operations of any branches or other assets divested; (23) inability to achieve expected benefits from branch consolidations and planned sales within desired timeframes, if at all; (24) ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; and (25) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity.
You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.
