UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 27, 2020
FIFTH THIRD BANCORP
(Exact Name of Registrant as Specified in Its Charter)
OHIO
(State or Other Jurisdiction of Incorporation)
001-33653 | 31-0854434 | |
(Commission File Number) | (IRS Employer Identification No.) |
Fifth Third Center 38 Fountain Square Plaza, Cincinnati, Ohio |
45263 | |
(Address of Principal Executive Offices) | (Zip Code) |
(800) 972-3030
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, Without Par Value | FITB | The NASDAQ Stock Market LLC | ||
Depositary Shares Representing a 1/1000th Ownership Interest in a Share of 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I | FITBI | The NASDAQ Stock Market LLC | ||
Depositary Shares Representing a 1/40th Ownership Interest in a Share of 6.00% Non-Cumulative Perpetual Class B Preferred Stock, Series A | FITBP | The NASDAQ Stock Market LLC | ||
Depositary Shares Representing a 1/1000th Ownership Interest in a Share of 4.95% Non-Cumulative Perpetual Preferred Stock, Series K | FITBO | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01 |
Other Events. |
Fifth Third Bancorp is filing the information in Exhibit 99.1 to this Current Report on Form 8-K to incorporate into its securities filing certain information from its July 23, 2020 earnings release for the second quarter of 2020.
Risk Factors
The following are changes and updates to the risk factors previously disclosed in Fifth Third Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2019 and in Fifth Third Bancorp’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. Unless otherwise mentioned or unless the context requires otherwise, all references in this Form 8-K to “Fifth Third Bancorp,” “Bancorp,” “Fifth Third,” “we,” “us,” “our” or similar references mean Fifth Third Bancorp and its subsidiaries.
The Bancorp’s ability to pay or increase dividends on its common stock or to repurchase its capital stock is restricted.
The Bancorp’s ability to pay dividends or repurchase stock is subject to regulatory requirements and expectations. As part of the Comprehensive Capital Analysis and Review (“CCAR”) process of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the Bancorp’s capital plan is generally subject to an annual assessment by the Federal Reserve Board, and the Federal Reserve Board may object to the Bancorp’s capital plan if the Bancorp does not demonstrate an ability to maintain capital above the minimum regulatory capital ratios under baseline and stressful conditions throughout a nine-quarter planning horizon. On June 25, 2020, the Federal Reserve Board provided the Bancorp with an indicative stress capital buffer of 2.5%. The indicative stress capital buffer of 2.5% is the floor under the regulatory capital rules, and without the floor, the Bancorp estimates its buffer would have been approximately 2.1%. The Federal Reserve Board will provide the Bancorp with a final stress capital buffer by August 31, 2020. If the Bancorp is unable to maintain capital in excess of these levels, it would be subject to limitations on its ability to make capital distributions, including paying dividends and repurchasing stock.
The Federal Reserve Board also took several actions in connection with its announcement of stress test results in light of the uncertainty caused by the novel coronavirus disease 2019 (“COVID-19”) pandemic. Specifically, for the third quarter of 2020, the Federal Reserve Board is requiring large banking organizations, including the Bancorp, to suspend share repurchases, cap dividend payments to the amount paid during the second quarter of 2020, and further limit dividends according to a formula based on recent income.
The Federal Reserve Board is also requiring large banking organizations, including the Bancorp, to re-evaluate their longer term capital plans, and such organizations will be required to update and resubmit their capital plans later this year to reflect current stresses caused by the COVID-19 pandemic. The Federal Reserve Board will conduct additional analysis each quarter to determine if adjustments to this response are appropriate.
The COVID-19 pandemic creates significant risks and uncertainties for our business.
In March 2020, the World Health Organization declared COVID-19 as a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels, all of which may become heightened concerns upon a second wave of infection or future developments. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities, including those in major markets in which the Bancorp is located or does business.
As a result, the demand for the Bancorp’s products and services has been, and will continue to be, significantly impacted. Furthermore, the pandemic could influence the recognition of credit losses in the Bancorp’s loan and lease portfolios and increase its allowance for credit losses as both businesses and consumers are negatively impacted by the economic downturn. In addition, governmental actions are meaningfully influencing the interest-rate environment, which could adversely affect the Bancorp’s results of operations and financial condition. The business operations of subsidiaries of the Bancorp, such as Fifth Third Bank, National Association, may also be disrupted if significant portions of their workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic, travel restrictions, technology limitations and/or disruptions. Furthermore, the business operations of subsidiaries of the Bancorp have been, and may again in the future be, disrupted due to vendors and third-party service providers being unable to work or provide services effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic.
In response to the pandemic, Fifth Third Bank, National Association, has also suspended residential property foreclosure sales, evictions, and involuntary automobile repossessions, and is offering fee waivers, payment deferrals, and other expanded assistance for credit card, automobile, mortgage, small business and personal lending customers. These programs, as well as certain accommodations made to commercial customers, are expected to negatively impact revenue and other results of operations of the Bancorp in the near term and, if not effective in mitigating the effect of COVID-19 on Bancorp customers, may adversely affect the Bancorp’s business and results of operations more substantially over a longer period of time.
Among other relief programs, the Bancorp is participating in the Paycheck Protection Program offered by the Small Business Administration (“SBA”) and has originated approximately 38,000 loans in the amount of $5.5 billion under the program as of June 30, 2020. Paycheck Protection Program loans are fixed, low interest rate loans that are guaranteed by the SBA and subject to numerous other regulatory requirements, and a borrower may apply to have all or a portion of the loan forgiven. If Paycheck Protection Program borrowers fail to qualify for loan forgiveness, the Bancorp faces a heightened risk of holding these loans at unfavorable interest rates for an extended period of time. While the Paycheck Protection Program loans are guaranteed by the SBA, various regulatory requirements will apply to the Bancorp’s ability to seek recourse under the guarantees, and related procedures are currently subject to uncertainty. If a borrower defaults on a Paycheck Protection Program loan, these requirements and uncertainties may limit the Bancorp’s ability to fully recover against the loan guarantee or to seek full recourse against the borrower.
The extent to which the COVID-19 pandemic impacts the Bancorp’s business, results of operations, and financial condition, as well as its regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic. Even after the COVID-19 pandemic subsides, the U.S. economy will likely require some time to recover from its effects, the length of which is unknown and during which time the U.S. may experience a recession. As a result, we anticipate our business may be materially and adversely affected during this recovery. Moreover, the effects of the COVID-19 pandemic may heighten many of the other risks described in in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K including, but not limited to, risks of credit deterioration, interest rate changes, rating agency actions, governmental actions, market volatility, theft, fraud, security breaches and technology interruptions.
Financial disruption or a prolonged economic downturn could materially and adversely affect our business.
Worldwide financial markets have recently experienced periods of extraordinary disruption and volatility, which has been exacerbated by the COVID-19 pandemic, resulting in heightened credit risk, reduced valuation of investments and decreased economic activity. Moreover, many companies have experienced reduced liquidity and uncertainty as to their ability to raise capital during such periods of market disruption and volatility. In the event that these conditions recur or result in a prolonged economic downturn, our results of operations, financial position and/or liquidity could be materially and adversely affected. These market conditions may affect the Bancorp’s ability to access debt and equity capital markets. In addition, as a result of recent financial events, we may face increased regulation. Many of the other risks described in in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K identify risks that result from, or are exacerbated by, a financial economic downturn. These include risks related to our investments portfolio, the competitive environment and regulatory developments.
Fifth Third is exposed to reputational risk.
Fifth Third’s actual or alleged conduct in activities, such as certain sales and lending practices, data security, corporate governance and acquisitions, inappropriate behavior or misconduct of employees, association with particular customers, business partners, investments or vendors, as well as developments from any of the other risks described above, may result in negative public opinion at large (or with certain segments of the public) and may damage Fifth Third’s reputation. Actions taken by government regulators, shareholder activists and community organizations may also damage Fifth Third’s reputation.
Additionally, whereas negative public opinion once was primarily driven by adverse news coverage in traditional media, the advent and expansion of social media facilitates the rapid dissemination of information or misinformation. Though Fifth Third monitors social media channels, the potential remains for rapid and widespread dissemination of inaccurate, misleading
or false information or other negative publicity that could damage Fifth Third’s reputation. Negative public opinion can adversely affect Fifth Third’s ability to attract and keep customers and can increase the risk that it will be a target of litigation and regulatory action. Social activists are increasingly targeting financial firms with public criticism for their relationships with clients that are engaged in certain sensitive industries, including businesses whose products are or are perceived to be harmful to health or the social good. Activist criticism of Fifth Third’s relationships with clients in sensitive industries could potentially engender dissatisfaction among clients, customers, investors and employees with how Fifth Third addresses social concerns through business activities which could negatively affect our reputation.
Furthermore, investors have begun to consider how corporations are addressing environmental, social and governance matters, commonly known as “ESG matters” when making investment decisions. For example, certain investors are beginning to incorporate the business risks of climate change and the adequacy of companies’ responses to climate change and other ESG matters as part of their investment theses. These shifts in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that we have not made sufficient progress on ESG matters.
Item 9.01 |
Financial Statements and Exhibits |
Exhibit 99.1 – Certain financial information contained in press release dated July 23, 2020.
Exhibit 104 – Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FIFTH THIRD BANCORP | ||||||
(Registrant) | ||||||
Date: July 27, 2020 |
/s/ Tayfun Tuzun |
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Tayfun Tuzun | ||||||
Executive Vice President and Chief Financial Officer |
Exhibit 99.1
Key Financial Data
$ millions for all balance sheet and income statement items |
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2Q20 | 1Q20 | 2Q19 | ||||||||||
Income Statement Data |
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Net income available to common shareholders |
$ | 163 | $ | 29 | $ | 427 | ||||||
Net interest income (U.S. GAAP) |
1,200 | 1,229 | 1,245 | |||||||||
Net interest income (FTE)(a) |
1,203 | 1,233 | 1,250 | |||||||||
Noninterest income |
650 | 671 | 660 | |||||||||
Noninterest expense |
1,121 | 1,200 | 1,243 | |||||||||
Per Share Data |
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Earnings per share, basic |
$ | 0.23 | $ | 0.04 | $ | 0.57 | ||||||
Earnings per share, diluted |
0.23 | 0.04 | 0.57 | |||||||||
Book value per share |
28.88 | 28.26 | 26.17 | |||||||||
Tangible book value per share(a) |
22.66 | 22.02 | 20.03 | |||||||||
Balance Sheet & Credit Quality |
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Average portfolio loans and leases |
$ | 118,506 | $ | 110,779 | $ | 110,095 | ||||||
Average deposits |
150,598 | 126,789 | 124,345 | |||||||||
Net charge-off ratio(b) |
0.44 | % | 0.44 | % | 0.29 | % | ||||||
Nonperforming asset ratio(c) |
0.65 | 0.60 | 0.51 | |||||||||
Financial Ratios |
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Return on average assets |
0.40 | % | 0.11 | % | 1.08 | % | ||||||
Return on average common equity |
3.2 | 0.6 | 9.1 | |||||||||
Return on average tangible common equity(a) |
4.3 | 1.0 | 12.3 | |||||||||
CET1 capital(d)(e) |
9.72 | 9.37 | 9.57 | |||||||||
Net interest margin(a) |
2.75 | 3.28 | 3.37 | |||||||||
Efficiency(a) |
60.5 | 63.0 | 65.1 | |||||||||
Other than the Quarterly Financial Review tables beginning on page 13, 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. |
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Income Statement Highlights
($ in millions, except per share data) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Condensed Statements of Income |
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Net interest income (NII)(a) |
$ | 1,203 | $ | 1,233 | $ | 1,250 | (2 | )% | (4 | )% | ||||||||||
Provision for credit losses |
485 | 640 | 85 | (24 | )% | 471 | % | |||||||||||||
Noninterest income |
650 | 671 | 660 | (3 | )% | (2 | )% | |||||||||||||
Noninterest expense |
1,121 | 1,200 | 1,243 | (7 | )% | (10 | )% | |||||||||||||
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Income before income taxes(a) |
$ | 247 | $ | 64 | $ | 582 | 286 | % | (58 | )% | ||||||||||
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Taxable equivalent adjustment |
$ | 3 | $ | 4 | $ | 5 | (25 | )% | (40 | )% | ||||||||||
Applicable income tax expense |
49 | 14 | 124 | 250 | % | (60 | )% | |||||||||||||
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Net income |
$ | 195 | $ | 46 | $ | 453 | 324 | % | (57 | )% | ||||||||||
Dividends on preferred stock |
32 | 17 | 26 | 88 | % | 23 | % | |||||||||||||
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Net income available to common shareholders |
$ | 163 | $ | 29 | $ | 427 | 462 | % | (62 | )% | ||||||||||
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Earnings per share, diluted |
$ | 0.23 | $ | 0.04 | $ | 0.57 | 475 | % | (60 | )% | ||||||||||
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Fifth Third Bancorp (NASDAQ®: FITB) today reported second quarter 2020 net income of $195 million compared to net income of $46 million in the prior quarter and $453 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $163 million, or $0.23 per diluted share, compared to $29 million, or $0.04 per diluted share, in the prior quarter and $427 million, or $0.57 per diluted share, in the year-ago quarter.
Diluted earnings per share impact of certain items - 2Q20
2
Net Interest Income
(FTE; $ in millions)(a) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Interest Income |
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Interest income |
$ | 1,406 | $ | 1,529 | $ | 1,641 | (8 | )% | (14 | )% | ||||||||||
Interest expense |
203 | 296 | 391 | (31 | )% | (48 | )% | |||||||||||||
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Net interest income (NII) |
$ | 1,203 | $ | 1,233 | $ | 1,250 | (2 | )% | (4 | )% | ||||||||||
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Adjusted NII(a) |
$ | 1,188 | $ | 1,217 | $ | 1,232 | (2 | )% | (4 | )% | ||||||||||
Average Yield/Rate Analysis | bps Change | |||||||||||||||||||
Yield on interest-earning assets |
3.21 | % | 4.07 | % | 4.42 | % | (86 | ) | (121 | ) | ||||||||||
Rate paid on interest-bearing liabilities |
0.66 | % | 1.09 | % | 1.47 | % | (43 | ) | (81 | ) | ||||||||||
Ratios |
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Net interest rate spread |
2.55 | % | 2.98 | % | 2.95 | % | (43 | ) | (40 | ) | ||||||||||
Net interest margin (NIM) |
2.75 | % | 3.28 | % | 3.37 | % | (53 | ) | (62 | ) | ||||||||||
Adjusted NIM(a) |
2.71 | % | 3.24 | % | 3.32 | % | (53 | ) | (61 | ) |
Compared to the prior quarter, reported NII decreased $30 million, or 2%. Excluding purchase accounting accretion of $15 million in the current quarter and $16 million in the prior quarter, adjusted NII decreased $29 million, or 2%. The decrease was driven by the impact of lower market rates on commercial loans, decreased mortgage loan balances due to an increase in prepayment activity, as well as a decline in home equity and credit card balances reflecting generally subdued demand. These impacts were partially offset by elevated average commercial revolving line of credit balances and growth from lower yielding PPP loans, as well as continued focus on reducing deposit costs and the favorable impact of previously executed hedges. Compared to the prior quarter, reported and adjusted NIM decreased 53 bps, also driven by lower market rates and the unfavorable impact from elevated cash balances (29 bps), and lower yielding PPP loans (1 bp), partially offset by benefits from lower deposit costs and previously executed hedges.
Compared to the year-ago quarter, reported NII decreased $47 million, or 4%. Excluding purchase accounting accretion, adjusted NII decreased $44 million, or 4%, primarily reflecting lower market rates, partially offset by the impact of elevated average commercial line draws and lower yielding PPP loans, as well as a continued focus on reducing deposit costs and the favorable impact of previously executed hedges. Compared to the year-ago quarter, reported NIM decreased 62 bps. Excluding purchase accounting accretion, adjusted NIM decreased 61 bps, primarily reflecting the impact of lower market rates on commercial loans and significantly elevated cash balances, partially offset by benefits from lower deposit costs and previously executed hedges.
3
Noninterest Income
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Noninterest Income |
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Service charges on deposits |
$ | 122 | $ | 148 | $ | 143 | (18 | )% | (15 | )% | ||||||||||
Commercial banking revenue |
137 | 124 | 107 | 10 | % | 28 | % | |||||||||||||
Mortgage banking net revenue |
99 | 120 | 63 | (18 | )% | 57 | % | |||||||||||||
Wealth and asset management revenue |
120 | 134 | 122 | (10 | )% | (2 | )% | |||||||||||||
Card and processing revenue |
82 | 86 | 92 | (5 | )% | (11 | )% | |||||||||||||
Leasing business revenue |
57 | 73 | 76 | (22 | )% | (25 | )% | |||||||||||||
Other noninterest income |
12 | 7 | 47 | 71 | % | (74 | )% | |||||||||||||
Securities gains (losses), net |
21 | (24 | ) | 8 | NM | 163 | % | |||||||||||||
Securities gains, net - non-qualifying hedges on mortgage servicing rights |
| 3 | 2 | (100 | )% | (100 | )% | |||||||||||||
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Total noninterest income |
$ | 650 | $ | 671 | $ | 660 | (3 | )% | (2 | )% | ||||||||||
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Reported noninterest income decreased $21 million, or 3%, from the prior quarter, and decreased $10 million, or 2%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below. Reported noninterest income results include securities gains/losses which were attributable predominantly to mark-to-market impacts related to non-qualified deferred compensation assets, and were offset in noninterest expense, resulting in an immaterial impact to pre-tax income.
Noninterest Income excluding certain items
($ in millions) | For the Three Months Ended | |||||||||||
June
2020 |
March
2020 |
June
2019 |
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Noninterest Income excluding certain items |
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Noninterest income (U.S. GAAP) |
$ | 650 | $ | 671 | $ | 660 | ||||||
Valuation of Visa total return swap |
29 | 22 | 22 | |||||||||
Branch and non-branch real estate charges |
12 | | | |||||||||
Net impairment on private equity investments |
| 15 | | |||||||||
Securities (gains) losses, net (excluding GreenSky) |
(21 | ) | 24 | (8 | ) | |||||||
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Noninterest income excluding certain items(a) |
$ | 670 | $ | 732 | $ | 674 | ||||||
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Compared to the prior quarter, noninterest income excluding certain items decreased $62 million, or 8%. Compared to the year-ago quarter, noninterest income excluding certain items decreased $4 million, or 1%.
Compared to the prior quarter, service charges on deposits decreased $26 million, or 18%, reflecting lower consumer and commercial deposit fees which were impacted by the record growth in deposit balances as well as hardship-related fee waivers granted throughout the quarter. Commercial banking revenue increased $13 million, or 10%, reflecting increases in both debt and equity capital markets revenue, as well as increased institutional brokerage revenue. Mortgage banking net revenue decreased $21 million, or 18%, as strong origination fees and gains on loan sales (reflecting improved margins) in the current quarter were more than offset by the MSR net valuation adjustment that returned to normalized levels compared to the prior quarter favorability, as well as lower origination volume and a decrease in gross servicing fee revenue in the current quarter. Current quarter mortgage originations of $3.4 billion decreased 15% compared to the prior quarter and were impacted by the decision to temporarily pause correspondent channel production. Mortgage originations excluding correspondent channel production increased 22% compared to the prior quarter. Wealth and asset management revenue decreased $14 million, or 10%, primarily driven by lower revenue given the equity market performance and seasonally strong tax preparation fees from the prior quarter. Card and processing revenue decreased
4
$4 million, or 5%, resulting from lower credit and debit volumes throughout the quarter reflecting customer behavioral changes in response to the pandemic, partially offset by lower rewards. Leasing business revenue decreased $16 million, or 22%, primarily driven by a decrease in lease syndication revenue.
Compared to the year-ago quarter, service charges on deposits decreased $21 million, or 15%, driven by lower consumer and commercial deposit fees, which were impacted by the record growth in deposit balances as well as hardship-related fee waivers granted throughout the quarter. Commercial banking revenue increased $30 million, or 28%, reflecting increases in both debt and equity capital markets revenue, as well as increased institutional brokerage and financial risk management revenue. Mortgage banking net revenue increased $36 million, or 57% primarily driven by strong origination fees and gains on loan sales reflecting improved margins. Originations excluding the correspondent channel increased 41% compared to the year-ago quarter. Wealth and asset management revenue decreased $2 million, or 2%. Card and processing revenue decreased by $10 million, or 11%, reflecting decreases in debit and credit volumes, partially offset by lower rewards. Leasing business revenue decreased $19 million, or 25% primarily reflecting lower business solutions revenue.
Noninterest Expense
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Noninterest Expense |
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Compensation and benefits |
$ | 627 | $ | 647 | $ | 641 | (3 | )% | (2 | )% | ||||||||||
Net occupancy expense |
82 | 82 | 88 | | (7 | )% | ||||||||||||||
Technology and communications |
90 | 93 | 136 | (3 | )% | (34 | )% | |||||||||||||
Equipment expense |
32 | 32 | 33 | | (3 | )% | ||||||||||||||
Card and processing expense |
29 | 31 | 34 | (6 | )% | (15 | )% | |||||||||||||
Leasing business expense |
33 | 35 | 38 | (6 | )% | (13 | )% | |||||||||||||
Marketing expense |
20 | 31 | 41 | (35 | )% | (51 | )% | |||||||||||||
Intangible amortization expense |
12 | 13 | 14 | (8 | )% | (14 | )% | |||||||||||||
Other noninterest expense |
196 | 236 | 218 | (17 | )% | (10 | )% | |||||||||||||
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Total noninterest expense |
$ | 1,121 | $ | 1,200 | $ | 1,243 | (7 | )% | (10 | )% | ||||||||||
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Impacts of Merger-Related Expenses
($ in millions) | For the Three Months Ended | |||||||||||
June
2020 |
March
2020 |
June
2019 |
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Merger-Related Expenses |
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Compensation and benefits |
$ | 2 | $ | 2 | $ | 41 | ||||||
Net occupancy expense |
2 | 1 | 6 | |||||||||
Technology and communications |
4 | 3 | 49 | |||||||||
Equipment expense |
| | 1 | |||||||||
Card and processing expense |
| | 1 | |||||||||
Leasing business expense |
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Marketing expense |
| | 3 | |||||||||
Intangible amortization expense |
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Other noninterest expense |
1 | 1 | 8 | |||||||||
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Total merger-related expenses |
$ | 9 | $ | 7 | $ | 109 | ||||||
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Noninterest Expense excluding Merger-Related Expenses(a)
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Noninterest Expense excluding Merger-Related Expenses |
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Compensation and benefits |
$ | 625 | $ | 645 | $ | 600 | (3 | )% | 4 | % | ||||||||||
Net occupancy expense |
80 | 81 | 82 | (1 | )% | (2 | )% | |||||||||||||
Technology and communications |
86 | 90 | 87 | (4 | )% | (1 | )% | |||||||||||||
Equipment expense |
32 | 32 | 32 | | % | | % | |||||||||||||
Card and processing expense |
29 | 31 | 33 | (6 | )% | (12 | )% | |||||||||||||
Leasing business expense |
33 | 35 | 38 | (6 | )% | (13 | )% | |||||||||||||
Marketing expense |
20 | 31 | 38 | (35 | )% | (47 | )% | |||||||||||||
Intangible amortization expense |
12 | 13 | 14 | (8 | )% | (14 | )% | |||||||||||||
Other noninterest expense |
195 | 235 | 210 | (17 | )% | (7 | )% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total noninterest expense excluding merger-related expenses |
$ | 1,112 | $ | 1,193 | $ | 1,134 | (7 | )% | (2 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
|
Compared to the prior quarter, reported noninterest expense decreased $79 million, or 7%. Excluding certain noninterest expense items shown on page 2 and in the reconciliation tables of the earnings release (including COVID-19-related expenses), as well as intangible amortization expense, noninterest expense decreased $62 million, or 5%, primarily reflecting lower compensation and benefits (which included $22 million from non-qualified deferred compensation expense in the current quarter compared to an expense benefit of $26 million in the prior quarter), lower other noninterest expense, declines in expenses directly associated with revenue-generating activities, and continued discipline managing expenses throughout the Company. Excluding the impacts of non-qualified deferred compensation expense (offset in noninterest income), expenses decreased $110 million, or 9%, compared to the prior quarter.
Compared to the year-ago quarter, reported noninterest expense decreased $122 million, or 10%. Excluding certain noninterest expenses shown on page 2 and in the reconciliation tables of the earnings release (including COVID-19-related expenses), as well as intangible amortization expense, noninterest expense decreased $38 million, or 3%, primarily reflecting lower marketing expense, lower other noninterest expense, and declines in expenses directly associated with business activities, partially offset by elevated compensation and benefits expenses (which included $22 million from non-qualified deferred compensation expense in the current quarter compared to $7 million in the year-ago quarter). Excluding the impacts of non-qualified deferred compensation expense (offset in noninterest income), expenses decreased $53 million, or 5%, compared to the year-ago quarter.
6
Average Interest-Earning Assets
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Average Portfolio Loans and Leases |
||||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ | 59,040 | $ | 51,586 | $ | 52,078 | 14 | % | 13 | % | ||||||||||
Commercial mortgage loans |
11,222 | 11,019 | 10,632 | 2 | % | 6 | % | |||||||||||||
Commercial construction loans |
5,548 | 5,132 | 5,248 | 8 | % | 6 | % | |||||||||||||
Commercial leases |
3,056 | 3,201 | 3,809 | (5 | )% | (20 | )% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans and leases |
$ | 78,866 | $ | 70,938 | $ | 71,767 | 11 | % | 10 | % | ||||||||||
Consumer loans: |
||||||||||||||||||||
Residential mortgage loans |
$ | 16,561 | $ | 16,732 | $ | 16,804 | (1 | )% | (1 | )% | ||||||||||
Home equity |
5,820 | 6,006 | 6,376 | (3 | )% | (9 | )% | |||||||||||||
Indirect secured consumer loans |
12,124 | 11,809 | 10,190 | 3 | % | 19 | % | |||||||||||||
Credit card |
2,248 | 2,498 | 2,408 | (10 | )% | (7 | )% | |||||||||||||
Other consumer loans |
2,887 | 2,796 | 2,550 | 3 | % | 13 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
$ | 39,640 | $ | 39,841 | $ | 38,328 | (1 | )% | 3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average portfolio loans and leases |
$ | 118,506 | $ | 110,779 | $ | 110,095 | 7 | % | 8 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average Loans and Leases Held for Sale |
||||||||||||||||||||
Commercial loans and leases held for sale |
$ | 68 | $ | 108 | $ | 113 | (37 | )% | (40 | )% | ||||||||||
Consumer loans held for sale |
844 | 1,293 | 785 | (35 | )% | 8 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average loans and leases held for sale |
$ | 912 | $ | 1,401 | $ | 898 | (35 | )% | 2 | % | ||||||||||
Securities and other short-term investments |
$ | 56,806 | $ | 39,033 | $ | 37,797 | 46 | % | 50 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average interest-earning assets |
$ | 176,224 | $ | 151,213 | $ | 148,790 | 17 | % | 18 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Compared to the prior quarter, total average portfolio loans and leases increased 7%, reflecting growth in commercial and industrial (C&I) loans, commercial construction and indirect secured consumer loans (predominantly indirect automobile). Average commercial portfolio loans and leases increased 11%, reflecting elevated C&I revolving line of credit utilization and the impact of PPP loans in the current quarter, as well as growth in commercial construction and commercial mortgage loans, partially offset by lower commercial leases. Average consumer portfolio loans decreased 1%, reflecting declines in credit card and home equity loans, partially offset by growth in indirect secured consumer loans.
Compared to the year-ago quarter, total average portfolio loans and leases increased 8%, reflecting growth in C&I loans as well as continued growth in indirect secured consumer loans (predominantly indirect automobile). Average commercial portfolio loans and leases increased 10%, reflecting elevated C&I balances predominantly from elevated corporate banking client line of credit utilization for part of the quarter, PPP loans, and growth in commercial mortgage loans, partially offset by a decline in commercial leases. Average consumer portfolio loans increased 3%, as higher indirect secured consumer loans were partially offset by lower credit card and home equity loans.
Total period-end commercial portfolio loans and leases of $75 billion included $5.2 billion in PPP loan balances and decreased $3 billion, or 3%, from the prior quarter, and increased $5 billion, or 7%, from the year-ago quarter, reflecting a normalization of commercial revolving line utilization throughout the current quarter. Period-end commercial revolving line utilization was 38%, compared to 47% in the prior quarter and 37% in the year-ago quarter.
Average available-for-sale debt and other securities of $36.1 billion increased 3% compared to the prior quarter and increased 4% compared to the year-ago quarter. Average other short-term investments (which includes interest-bearing cash) of $19.8 billion increased $16.9 billion compared to the prior quarter and increased $17.5 billion compared to the year-ago quarter.
7
Average Deposits
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Average Deposits |
||||||||||||||||||||
Demand |
$ | 45,761 | $ | 35,765 | $ | 35,818 | 28 | % | 28 | % | ||||||||||
Interest checking |
49,760 | 40,298 | 36,514 | 23 | % | 36 | % | |||||||||||||
Savings |
16,354 | 14,715 | 14,418 | 11 | % | 13 | % | |||||||||||||
Money market |
30,022 | 27,109 | 25,934 | 11 | % | 16 | % | |||||||||||||
Foreign office(g) |
182 | 209 | 163 | (13 | )% | 12 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total transaction deposits |
$ | 142,079 | $ | 118,096 | $ | 112,847 | 20 | % | 26 | % | ||||||||||
Other time |
4,421 | 5,081 | 5,678 | (13 | )% | (22 | )% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total core deposits |
$ | 146,500 | $ | 123,177 | $ | 118,525 | 19 | % | 24 | % | ||||||||||
Certificates - $100,000 and over |
4,067 | 3,355 | 5,780 | 21 | % | (30 | )% | |||||||||||||
Other deposits |
31 | 257 | 40 | (88 | )% | (23 | )% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average deposits |
$ | 150,598 | $ | 126,789 | $ | 124,345 | 19 | % | 21 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Compared to the prior quarter, average core deposits increased 19%, with double-digit growth in all deposit captions except other time and foreign office deposits. Average demand deposits represented 31% of total core deposits in the current quarter compared to 29% in the prior quarter. Average commercial transaction deposits increased 34% and average consumer transaction deposits increased 8%.
Compared to the year-ago quarter, average core deposits increased 24%, reflecting record growth in commercial and consumer balances. Average commercial transaction deposits increased 45% and average consumer transaction deposits increased 10%.
The period end loan-to-core deposit ratio was 75% in the current quarter, compared to 89% in the prior quarter and 91% in the year-ago quarter.
Average Wholesale Funding
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Average Wholesale Funding |
||||||||||||||||||||
Certificates - $100,000 and over |
$ | 4,067 | $ | 3,355 | $ | 5,780 | 21 | % | (30 | )% | ||||||||||
Other deposits |
31 | 257 | 40 | (88 | )% | (23 | )% | |||||||||||||
Federal funds purchased |
309 | 654 | 1,151 | (53 | )% | (73 | )% | |||||||||||||
Other short-term borrowings |
2,377 | 1,750 | 1,119 | 36 | % | 112 | % | |||||||||||||
Long-term debt |
16,955 | 15,816 | 15,543 | 7 | % | 9 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average wholesale funding |
$ | 23,739 | $ | 21,832 | $ | 23,633 | 9 | % | | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Compared to the prior quarter, average wholesale funding increased 9%, driven primarily by debt issuances of $1.25 billion during the quarter, as well as increases in jumbo CD balances and other short-term borrowings reflecting $3 billion in FHLB advances which were initiated in the first month of the quarter and subsequently extinguished, partially offset by decreased federal funds borrowings and other deposits. Compared to the year-ago quarter, average wholesale funding remained flat as decreases in jumbo CD balances, federal funds borrowings and other deposits were offset by increases in long-term debt and other short-term borrowings.
8
Credit Quality Summary
($ in millions) | As of and For the Three Months Ended | |||||||||||||||||||
June
2020 |
March
2020 |
December
2019 |
September
2019 |
June
2019 |
||||||||||||||||
Total nonaccrual portfolio loans and leases (NPLs) |
$ | 700 | $ | 647 | $ | 618 | $ | 482 | $ | 521 | ||||||||||
Repossessed property |
4 | 10 | 10 | 9 | 8 | |||||||||||||||
OREO |
43 | 52 | 52 | 28 | 31 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming portfolio loans and leases and OREO (NPAs) |
$ | 747 | $ | 709 | $ | 680 | $ | 519 | $ | 560 | ||||||||||
NPL ratio(h) |
0.61 | % | 0.55 | % | 0.56 | % | 0.44 | % | 0.48 | % | ||||||||||
NPA ratio(c) |
0.65 | % | 0.60 | % | 0.62 | % | 0.47 | % | 0.51 | % | ||||||||||
Total loans and leases 30-89 days past due (accrual) |
$ | 381 | $ | 409 | $ | 364 | $ | 402 | $ | 383 | ||||||||||
Total loans and leases 90 days past due (accrual) |
136 | 151 | 130 | 132 | 128 | |||||||||||||||
Allowance for loan and lease losses (ALLL), beginning |
$ | 2,348 | $ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | ||||||||||
Impact of CECL adoption |
| 643 | | | | |||||||||||||||
Total net losses charged-off |
(130 | ) | (122 | ) | (113 | ) | (99 | ) | (78 | ) | ||||||||||
Provision for loan and lease losses |
478 | 625 | 172 | 127 | 78 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
ALLL, ending |
$ | 2,696 | $ | 2,348 | $ | 1,202 | $ | 1,143 | $ | 1,115 | ||||||||||
Reserve for unfunded commitments, beginning |
$ | 169 | $ | 144 | $ | 154 | $ | 147 | $ | 133 | ||||||||||
Impact of CECL adoption |
| 10 | | | | |||||||||||||||
Reserve for acquired commitments |
| | | | 7 | |||||||||||||||
Provision for (benefit from) the reserve for unfunded commitments |
7 | 15 | (10 | ) | 7 | 7 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserve for unfunded commitments, ending |
$ | 176 | $ | 169 | $ | 144 | $ | 154 | $ | 147 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total allowance for credit losses (ACL) |
$ | 2,872 | $ | 2,517 | $ | 1,346 | $ | 1,297 | $ | 1,262 | ||||||||||
ACL ratios: |
||||||||||||||||||||
As a % of portfolio loans and leases |
2.50 | % | 2.13 | % | 1.23 | % | 1.19 | % | 1.15 | % | ||||||||||
As a % of nonperforming portfolio loans and leases |
410 | % | 389 | % | 218 | % | 269 | % | 242 | % | ||||||||||
As a % of nonperforming portfolio assets |
385 | % | 355 | % | 198 | % | 250 | % | 225 | % | ||||||||||
ALLL as a % of portfolio loans and leases |
2.34 | % | 1.99 | % | 1.10 | % | 1.04 | % | 1.02 | % | ||||||||||
Total losses charged-off |
$ | (163 | ) | $ | (159 | ) | $ | (152 | ) | $ | (130 | ) | $ | (119 | ) | |||||
Total recoveries of losses previously charged-off |
33 | 37 | 39 | 31 | 41 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net losses charged-off |
$ | (130 | ) | $ | (122 | ) | $ | (113 | ) | $ | (99 | ) | $ | (78 | ) | |||||
Net charge-off ratio (NCO ratio)(b) |
0.44 | % | 0.44 | % | 0.41 | % | 0.36 | % | 0.29 | % | ||||||||||
Commercial NCO ratio |
0.40 | % | 0.32 | % | 0.20 | % | 0.18 | % | 0.13 | % | ||||||||||
Consumer NCO ratio |
0.52 | % | 0.66 | % | 0.78 | % | 0.68 | % | 0.59 | % |
Nonperforming portfolio loans and leases were $700 million in the current quarter, with the resulting NPL ratio of 0.61%. Compared to the prior quarter, NPLs increased $53 million with the NPL ratio increasing 6 bps. Compared to the year-ago quarter, NPLs increased $179 million with the NPL ratio increasing 13 bps.
Nonperforming portfolio assets were $747 million in the current quarter, with the resulting NPA ratio of 0.65%. Compared to the prior quarter, NPAs increased $38 million with the NPA ratio increasing 5 bps. Compared to the year-ago quarter, NPAs increased $187 million with the NPA ratio increasing 14 bps.
9
The provision for credit losses totaled $485 million in the current quarter. The allowance for credit loss ratio represented 2.50% of total portfolio loans and leases in the current quarter, compared with 2.13% in the prior quarter and 1.15% in the year-ago quarter (using the incurred loss methodology). In the current quarter, the allowance for credit losses represented 410% of nonperforming portfolio loans and leases and 385% of nonperforming portfolio assets. The allowance for loan and lease losses ratio represented 2.34% of total portfolio loans and leases in the current quarter.
Net charge-offs were $130 million in the current quarter, with the resulting NCO ratio of 0.44%. Compared to the prior quarter, net charge-offs increased $8 million and the NCO ratio remained flat. Compared to the year-ago quarter, net charge-offs increased $52 million and the NCO ratio increased 15 bps.
Capital Position
As of and For the Three Months Ended | ||||||||||||||||||||
June
2020 |
March
2020 |
December
2019 |
September
2019 |
June
2019 |
||||||||||||||||
Capital Position |
||||||||||||||||||||
Average total Bancorp shareholders equity as a % of average assets |
11.30 | % | 12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | ||||||||||
Tangible equity(a) |
7.68 | % | 8.41 | % | 9.52 | % | 9.29 | % | 9.09 | % | ||||||||||
Tangible common equity (excluding AOCI)(a) |
6.77 | % | 7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | ||||||||||
Tangible common equity (including AOCI)(a) |
8.13 | % | 8.65 | % | 9.08 | % | 9.09 | % | 8.91 | % | ||||||||||
Regulatory Capital Ratios(e) |
||||||||||||||||||||
CET1 capital(d) |
9.72 | % | 9.37 | % | 9.75 | % | 9.56 | % | 9.57 | % | ||||||||||
Tier I risk-based capital(d) |
10.95 | % | 10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | ||||||||||
Total risk-based capital(d) |
14.23 | % | 13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | ||||||||||
Tier I leverage |
8.16 | % | 9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % |
Capital ratios remained strong during the quarter. The CET1 capital ratio was 9.72%, the tangible common equity to tangible assets ratio was 6.77% excluding AOCI, and 8.13% including AOCI. The Tier I risk-based capital ratio was 10.95%, the Total risk-based capital ratio was 14.23%, and the Tier I leverage ratio was 8.16%. Certain capital ratios, including the Tier I leverage ratio, were impacted by the significant increase in assets throughout the quarter, predominantly from growth in 0% risk-weighted assets resulting from an increase in interest-bearing cash as well as PPP loans.
On June 30, 2020, Fifth Third released its indicative stress capital buffer requirement resulting from the Federal Reserve Boards 2020 Comprehensive Capital Analysis and Review results incorporating the supervisory severely adverse scenario published in February 2020. Fifth Thirds indicative stress capital buffer under this scenario is 2.5%, effective October 1, 2020. The stress capital buffer of 2.5% is the floor under the regulatory capital rules. Without the floor, Fifth Third estimates its buffer would have been approximately 2.1%.
10
Tax Rate
The effective tax rate was 19.9% compared with 22.6% in the prior quarter and 21.5% in the year-ago quarter. The tax rate in the current quarter reflected a one-time $2 million tax benefit primarily due to various state items.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. As of June 30, 2020, the Company had $203 billion in assets and operates 1,122 full-service Banking Centers, and 2,456 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 53,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2020, had $405 billion in assets under care, of which it managed $49 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 Thirds common stock is traded on the NASDAQ® Global Select Market under the symbol FITB.
Earnings Release End Notes
(a) |
Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 19. |
(b) |
Net losses charged-off as a percent of average portfolio loans and leases. |
(c) |
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO. |
(d) |
Under the U.S. banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorps total risk-weighted assets. |
(e) |
Current period regulatory capital ratios are estimated. |
(f) |
Assumes a 23% tax rate. |
(g) |
Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts. |
(h) |
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO. |
11
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, is anticipated, 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 by our filings with the U.S. Securities and Exchange Commission (SEC). 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. We undertake no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this document.
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) effects of the global COVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Thirds ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Thirds capital plan; (21) regulation of Fifth Thirds derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates; (28) changes and trends in capital markets; (29) fluctuation of Fifth Thirds stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (35) risks relating to Fifth Thirds ability to realize the anticipated benefits of the merger with MB Financial, Inc.; (36) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (37) potential dilution from future acquisitions; (38) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (39) results of investments or acquired entities; (40) changes in accounting standards or interpretation or declines in the value of Fifth Thirds goodwill or other intangible assets; (41) inaccuracies or other failures from the use of models; (42) effects of critical accounting policies and judgments or the use of inaccurate estimates; (43) weather-related events, other natural disasters, or health emergencies; and (44) the impact of reputational risk created by these or other 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.
# # #
12
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income(a)
$ in millions
(unaudited)
For the Three Months Ended | % Change | Year to Date | % Change | |||||||||||||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr |
June
2020 |
June
2019 |
Yr/Yr | |||||||||||||||||||||||||
Interest Income |
||||||||||||||||||||||||||||||||
Interest and fees on loans and leases |
$ | 1,115 | $ | 1,235 | $ | 1,336 | (10 | %) | (17 | %) | $ | 2,350 | $ | 2,479 | (5 | %) | ||||||||||||||||
Interest on securities |
283 | 283 | 290 | | (2 | %) | 566 | 571 | (1 | %) | ||||||||||||||||||||||
Interest on other short-term investments |
5 | 7 | 10 | (29 | %) | (50 | %) | 12 | 19 | (37 | %) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest income |
1,403 | 1,525 | 1,636 | (8 | %) | (14 | %) | 2,928 | 3,069 | (5 | %) | |||||||||||||||||||||
Interest Expense |
||||||||||||||||||||||||||||||||
Interest on deposits |
83 | 166 | 243 | (50 | )% | (66 | %) | 248 | 449 | (45 | %) | |||||||||||||||||||||
Interest on federal funds purchased |
| 2 | 8 | (100 | )% | (100 | %) | 2 | 20 | (90 | %) | |||||||||||||||||||||
Interest on other short-term borrowings |
2 | 6 | 9 | (67 | )% | (78 | %) | 8 | 14 | (43 | %) | |||||||||||||||||||||
Interest on long-term debt |
118 | 122 | 131 | (3 | )% | (10 | %) | 241 | 259 | (7 | %) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest expense |
203 | 296 | 391 | (31 | )% | (48 | %) | 499 | 742 | (33 | %) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Interest Income |
1,200 | 1,229 | 1,245 | (2 | )% | (4 | %) | 2,429 | 2,327 | 4 | % | |||||||||||||||||||||
Provision for credit losses |
485 | 640 | 85 | (24 | %) | 471 | % | 1,125 | 175 | 543 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Interest Income After Provision for Credit Losses |
715 | 589 | 1,160 | 21 | % | (38 | %) | 1,304 | 2,152 | (39 | %) | |||||||||||||||||||||
Noninterest Income |
||||||||||||||||||||||||||||||||
Service charges on deposits |
122 | 148 | 143 | (18 | )% | (15 | %) | 270 | 274 | (1 | %) | |||||||||||||||||||||
Commercial banking revenue |
137 | 124 | 107 | 10 | % | 28 | % | 261 | 209 | 25 | % | |||||||||||||||||||||
Mortgage banking net revenue |
99 | 120 | 63 | (18 | )% | 57 | % | 219 | 119 | 84 | % | |||||||||||||||||||||
Wealth and asset management revenue |
120 | 134 | 122 | (10 | )% | (2 | %) | 255 | 234 | 9 | % | |||||||||||||||||||||
Card and processing revenue |
82 | 86 | 92 | (5 | )% | (11 | %) | 167 | 171 | (2 | %) | |||||||||||||||||||||
Leasing business revenue |
57 | 73 | 76 | (22 | )% | (25 | %) | 131 | 108 | 21 | % | |||||||||||||||||||||
Other noninterest income |
12 | 7 | 47 | 71 | % | (74 | %) | 18 | 616 | (97 | %) | |||||||||||||||||||||
Securities (losses) gains, net |
21 | (24 | ) | 8 | NM | 163 | % | (3 | ) | 25 | NM | |||||||||||||||||||||
Securities gains, net - non-qualifying hedges on mortgage servicing rights |
| 3 | 2 | (100 | %) | (100 | %) | 3 | 5 | (40 | %) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest income |
650 | 671 | 660 | (3 | )% | (2 | %) | 1,321 | 1,761 | (25 | %) | |||||||||||||||||||||
Noninterest Expense |
||||||||||||||||||||||||||||||||
Compensation and benefits |
627 | 647 | 641 | (3 | %) | (2 | %) | 1,274 | 1,251 | 2 | % | |||||||||||||||||||||
Net occupancy expense |
82 | 82 | 88 | | (7 | %) | 164 | 164 | | |||||||||||||||||||||||
Technology and communications |
90 | 93 | 136 | (3 | %) | (34 | %) | 183 | 219 | (16 | %) | |||||||||||||||||||||
Equipment expense |
32 | 32 | 33 | | (3 | %) | 64 | 63 | 2 | % | ||||||||||||||||||||||
Card and processing expense |
29 | 31 | 34 | (6 | %) | (15 | %) | 60 | 64 | (6 | %) | |||||||||||||||||||||
Leasing business expense |
33 | 35 | 38 | (6 | %) | (13 | %) | 68 | 57 | 19 | % | |||||||||||||||||||||
Marketing expense |
20 | 31 | 41 | (35 | %) | (51 | %) | 51 | 77 | (34 | %) | |||||||||||||||||||||
Other noninterest expense |
208 | 249 | 232 | (16 | %) | (10 | %) | 457 | 446 | 2 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest expense |
1,121 | 1,200 | 1,243 | (7 | %) | (10 | %) | 2,321 | 2,341 | (1 | %) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Income Before Income Taxes |
244 | 60 | 577 | 307 | % | (58 | %) | 304 | 1,572 | (81 | %) | |||||||||||||||||||||
Applicable income tax expense |
49 | 14 | 124 | 250 | % | (60 | %) | 61 | 344 | (82 | %) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Income |
195 | 46 | 453 | 324 | % | (57 | %) | 243 | 1,228 | (80 | %) | |||||||||||||||||||||
Dividends on preferred stock |
32 | 17 | 26 | 88 | % | 23 | % | 50 | 41 | 22 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Income Available to Common Shareholders |
$ | 163 | $ | 29 | $ | 427 | 462 | % | (62 | %) | $ | 193 | $ | 1,187 | (84 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||||||||||
June
2020 |
March
2020 |
December
2019 |
September
2019 |
June
2019 |
||||||||||||||||
Interest Income |
||||||||||||||||||||
Interest and fees on loans and leases |
$ | 1,115 | $ | 1,235 | $ | 1,252 | $ | 1,320 | $ | 1,336 | ||||||||||
Interest on securities |
283 | 283 | 299 | 291 | 290 | |||||||||||||||
Interest on other short-term investments |
5 | 7 | 8 | 14 | 10 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest income |
1,403 | 1,525 | 1,559 | 1,625 | 1,636 | |||||||||||||||
Interest Expense |
||||||||||||||||||||
Interest on deposits |
83 | 166 | 201 | 243 | 243 | |||||||||||||||
Interest on federal funds purchased |
| 2 | 5 | 4 | 8 | |||||||||||||||
Interest on other short-term borrowings |
2 | 6 | 5 | 8 | 9 | |||||||||||||||
Interest on long-term debt |
118 | 122 | 120 | 128 | 131 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest expense |
203 | 296 | 331 | 383 | 391 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Interest Income |
1,200 | 1,229 | 1,228 | 1,242 | 1,245 | |||||||||||||||
Provision for credit losses |
485 | 640 | 162 | 134 | 85 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Interest Income After Provision for Credit Losses |
715 | 589 | 1,066 | 1,108 | 1,160 | |||||||||||||||
Noninterest Income |
||||||||||||||||||||
Service charges on deposits |
122 | 148 | 149 | 143 | 143 | |||||||||||||||
Commercial banking revenue |
137 | 124 | 127 | 123 | 107 | |||||||||||||||
Mortgage banking net revenue |
99 | 120 | 73 | 95 | 63 | |||||||||||||||
Wealth and asset management revenue |
120 | 134 | 129 | 124 | 122 | |||||||||||||||
Card and processing revenue |
82 | 86 | 95 | 94 | 92 | |||||||||||||||
Leasing business revenue |
57 | 73 | 71 | 92 | 76 | |||||||||||||||
Other noninterest income |
12 | 7 | 382 | 64 | 47 | |||||||||||||||
Securities gains (losses), net |
21 | (24 | ) | 10 | 5 | 8 | ||||||||||||||
Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights |
| 3 | (1 | ) | | 2 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total noninterest income |
650 | 671 | 1,035 | 740 | 660 | |||||||||||||||
Noninterest Expense |
||||||||||||||||||||
Compensation and benefits |
627 | 647 | 576 | 584 | 641 | |||||||||||||||
Net occupancy expense |
82 | 82 | 84 | 84 | 88 | |||||||||||||||
Technology and communications |
90 | 93 | 103 | 100 | 136 | |||||||||||||||
Equipment expense |
32 | 32 | 33 | 33 | 33 | |||||||||||||||
Card and processing expense |
29 | 31 | 33 | 33 | 34 | |||||||||||||||
Leasing business expense |
33 | 35 | 36 | 40 | 38 | |||||||||||||||
Marketing expense |
20 | 31 | 44 | 40 | 41 | |||||||||||||||
Other noninterest expense |
208 | 249 | 251 | 245 | 232 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total noninterest expense |
1,121 | 1,200 | 1,160 | 1,159 | 1,243 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income Before Income Taxes |
244 | 60 | 941 | 689 | 577 | |||||||||||||||
Applicable income tax expense |
49 | 14 | 207 | 140 | 124 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Income |
195 | 46 | 734 | 549 | 453 | |||||||||||||||
Dividends on preferred stock |
32 | 17 | 33 | 19 | 26 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Income Available to Common Shareholders |
$ | 163 | $ | 29 | $ | 701 | $ | 530 | $ | 427 | ||||||||||
|
|
|
|
|
|
|
|
|
|
14
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | % Change | |||||||||||||||||||
June
2020 |
March
2020 |
June
2019 |
Seq | Yr/Yr | ||||||||||||||||
Assets |
||||||||||||||||||||
Cash and due from banks |
$ | 3,221 | $ | 3,282 | $ | 2,764 | (2 | %) | 17 | % | ||||||||||
Other short-term investments |
28,243 | 6,319 | 3,357 | 347 | % | 741 | % | |||||||||||||
Available-for-sale debt and other securities(a) |
38,599 | 38,645 | 35,753 | 0 | % | 8 | % | |||||||||||||
Held-to-maturity securities(b) |
16 | 17 | 21 | (6 | %) | (24 | %) | |||||||||||||
Trading debt securities |
526 | 433 | 322 | 21 | % | 63 | % | |||||||||||||
Equity securities |
273 | 459 | 485 | (41 | %) | (44 | %) | |||||||||||||
Loans and leases held for sale |
912 | 1,630 | 1,205 | (44 | %) | (24 | %) | |||||||||||||
Portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
55,661 | 58,250 | 51,104 | (4 | %) | 9 | % | |||||||||||||
Commercial mortgage loans |
11,233 | 11,160 | 10,717 | 1 | % | 5 | % | |||||||||||||
Commercial construction loans |
5,479 | 5,462 | 5,264 | 0 | % | 4 | % | |||||||||||||
Commercial leases |
3,061 | 3,123 | 3,677 | (2 | %) | (17 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans and leases |
75,434 | 77,995 | 70,762 | (3 | %) | 7 | % | |||||||||||||
Residential mortgage loans |
16,457 | 16,701 | 16,777 | (1 | %) | (2 | %) | |||||||||||||
Home equity |
5,681 | 5,963 | 6,325 | (5 | %) | (10 | %) | |||||||||||||
Indirect secured consumer loans |
12,395 | 12,050 | 10,403 | 3 | % | 19 | % | |||||||||||||
Credit card |
2,211 | 2,417 | 2,436 | (9 | %) | (9 | %) | |||||||||||||
Other consumer loans |
2,875 | 2,911 | 2,580 | (1 | %) | 11 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
39,619 | 40,042 | 38,521 | (1 | %) | 3 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases |
115,053 | 118,037 | 109,283 | (3 | %) | 5 | % | |||||||||||||
Allowance for loan and lease losses |
(2,696 | ) | (2,348 | ) | (1,115 | ) | 15 | % | 142 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases, net |
112,357 | 115,689 | 108,168 | (3 | %) | 4 | % | |||||||||||||
Bank premises and equipment |
2,053 | 2,009 | 2,074 | 2 | % | (1 | %) | |||||||||||||
Operating lease equipment |
809 | 819 | 894 | (1 | %) | (10 | %) | |||||||||||||
Goodwill |
4,261 | 4,261 | 4,284 | | (1 | %) | ||||||||||||||
Intangible assets |
171 | 184 | 215 | (7 | %) | (20 | %) | |||||||||||||
Servicing rights |
676 | 685 | 1,039 | (1 | %) | (35 | %) | |||||||||||||
Other assets |
10,789 | 10,959 | 8,221 | (2 | %) | 31 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 202,906 | $ | 185,391 | $ | 168,802 | 9 | % | 20 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Demand |
$ | 49,359 | $ | 39,533 | $ | 35,589 | 25 | % | 39 | % | ||||||||||
Interest checking |
51,586 | 44,520 | 37,491 | 16 | % | 38 | % | |||||||||||||
Savings |
16,896 | 15,557 | 14,484 | 9 | % | 17 | % | |||||||||||||
Money market |
30,881 | 27,775 | 26,465 | 11 | % | 17 | % | |||||||||||||
Foreign office |
191 | 177 | 175 | 8 | % | 9 | % | |||||||||||||
Other time |
3,913 | 4,683 | 5,759 | (16 | %) | (32 | %) | |||||||||||||
Certificates $100,000 and over |
4,120 | 2,816 | 5,429 | 46 | % | (24 | %) | |||||||||||||
Other deposits |
| | | NM | NM | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
156,946 | 135,061 | 125,392 | 16 | % | 25 | % | |||||||||||||
Federal funds purchased |
262 | 1,625 | 179 | (84 | %) | 46 | % | |||||||||||||
Other short-term borrowings |
1,285 | 4,542 | 957 | (72 | %) | 34 | % | |||||||||||||
Accrued taxes, interest and expenses |
2,582 | 2,432 | 2,397 | 6 | % | 8 | % | |||||||||||||
Other liabilities |
3,169 | 3,576 | 3,422 | (11 | %) | (7 | %) | |||||||||||||
Long-term debt |
16,327 | 16,282 | 15,784 | 0 | % | 3 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
180,571 | 163,518 | 148,131 | 10 | % | 22 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity |
||||||||||||||||||||
Common stock(c) |
2,051 | 2,051 | 2,051 | | | |||||||||||||||
Preferred stock |
1,770 | 1,770 | 1,331 | | 33 | % | ||||||||||||||
Capital surplus |
3,603 | 3,597 | 3,572 | 0 | % | 1 | % | |||||||||||||
Retained earnings |
17,643 | 17,677 | 17,431 | 0 | % | 1 | % | |||||||||||||
Accumulated other comprehensive income |
2,951 | 2,477 | 1,178 | 19 | % | 151 | % | |||||||||||||
Treasury stock |
(5,683 | ) | (5,699 | ) | (5,089 | ) | 0 | % | 12 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Bancorp shareholders equity |
22,335 | 21,873 | 20,474 | 2 | % | 9 | % | |||||||||||||
Noncontrolling interests |
| | 197 | NM | (100 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Equity |
22,335 | 21,873 | 20,671 | 2 | % | 8 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Equity |
$ | 202,906 | $ | 185,391 | $ | 168,802 | 9 | % | 20 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(a) Amortized cost |
$ | 35,780 | $ | 36,428 | $ | 34,731 | (2 | %) | 3 | % | ||||||||||
(b) Market values |
16 | 17 | 21 | (6 | %) | (24 | %) | |||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): |
||||||||||||||||||||
Authorized |
2,000,000 | 2,000,000 | 2,000,000 | | | |||||||||||||||
Outstanding,excluding treasury |
712,202 | 711,306 | 731,474 | | (3 | %) | ||||||||||||||
Treasury |
211,690 | 212,586 | 192,419 | | 10 | % |
15
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
As of | ||||||||||||||||||||
June
2020 |
March
2020 |
December
2019 |
September
2019 |
June
2019 |
||||||||||||||||
Assets |
||||||||||||||||||||
Cash and due from banks |
$ | 3,221 | $ | 3,282 | $ | 3,278 | $ | 3,261 | $ | 2,764 | ||||||||||
Other short-term investments |
28,243 | 6,319 | 1,950 | 3,235 | 3,357 | |||||||||||||||
Available-for-sale debt and other securities(a) |
38,599 | 38,645 | 36,028 | 37,178 | 35,753 | |||||||||||||||
Held-to-maturity securities(b) |
16 | 17 | 17 | 18 | 21 | |||||||||||||||
Trading debt securities |
526 | 433 | 297 | 297 | 322 | |||||||||||||||
Equity securities |
273 | 459 | 564 | 459 | 485 | |||||||||||||||
Loans and leases held for sale |
912 | 1,630 | 1,400 | 1,223 | 1,205 | |||||||||||||||
Portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
55,661 | 58,250 | 50,542 | 50,768 | 51,104 | |||||||||||||||
Commercial mortgage loans |
11,233 | 11,160 | 10,963 | 10,822 | 10,717 | |||||||||||||||
Commercial construction loans |
5,479 | 5,462 | 5,090 | 5,281 | 5,264 | |||||||||||||||
Commercial leases |
3,061 | 3,123 | 3,363 | 3,495 | 3,677 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans and leases |
75,434 | 77,995 | 69,958 | 70,366 | 70,762 | |||||||||||||||
Residential mortgage loans |
16,457 | 16,701 | 16,724 | 16,675 | 16,777 | |||||||||||||||
Home equity |
5,681 | 5,963 | 6,083 | 6,218 | 6,325 | |||||||||||||||
Indirect secured consumer loans |
12,395 | 12,050 | 11,538 | 11,026 | 10,403 | |||||||||||||||
Credit card |
2,211 | 2,417 | 2,532 | 2,467 | 2,436 | |||||||||||||||
Other consumer loans |
2,875 | 2,911 | 2,723 | 2,657 | 2,580 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
39,619 | 40,042 | 39,600 | 39,043 | 38,521 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases |
115,053 | 118,037 | 109,558 | 109,409 | 109,283 | |||||||||||||||
Allowance for loan and lease losses |
(2,696 | ) | (2,348 | ) | (1,202 | ) | (1,143 | ) | (1,115 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio loans and leases, net |
112,357 | 115,689 | 108,356 | 108,266 | 108,168 | |||||||||||||||
Bank premises and equipment |
2,053 | 2,009 | 1,995 | 2,053 | 2,074 | |||||||||||||||
Operating lease equipment |
809 | 819 | 848 | 869 | 894 | |||||||||||||||
Goodwill |
4,261 | 4,261 | 4,252 | 4,290 | 4,284 | |||||||||||||||
Intangible assets |
171 | 184 | 201 | 201 | 215 | |||||||||||||||
Servicing rights |
676 | 685 | 993 | 910 | 1,039 | |||||||||||||||
Other assets |
10,789 | 10,959 | 9,190 | 8,819 | 8,221 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 202,906 | $ | 185,391 | $ | 169,369 | $ | 171,079 | $ | 168,802 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Demand |
$ | 49,359 | $ | 39,533 | $ | 35,968 | $ | 35,893 | $ | 35,589 | ||||||||||
Interest checking |
51,586 | 44,520 | 40,409 | 36,965 | 37,491 | |||||||||||||||
Savings |
16,896 | 15,557 | 14,248 | 14,354 | 14,484 | |||||||||||||||
Money market |
30,881 | 27,775 | 27,277 | 27,370 | 26,465 | |||||||||||||||
Foreign office |
191 | 177 | 221 | 226 | 175 | |||||||||||||||
Other time |
3,913 | 4,683 | 5,237 | 5,662 | 5,759 | |||||||||||||||
Certificates $100,000 and over |
4,120 | 2,816 | 3,702 | 4,377 | 5,429 | |||||||||||||||
Other deposits |
| | | 500 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
156,946 | 135,061 | 127,062 | 125,347 | 125,392 | |||||||||||||||
Federal funds purchased |
262 | 1,625 | 260 | 876 | 179 | |||||||||||||||
Other short-term borrowings |
1,285 | 4,542 | 1,011 | 4,046 | 957 | |||||||||||||||
Accrued taxes, interest and expenses |
2,582 | 2,432 | 2,441 | 2,507 | 2,397 | |||||||||||||||
Other liabilities |
3,169 | 3,576 | 2,422 | 2,425 | 3,422 | |||||||||||||||
Long-term debt |
16,327 | 16,282 | 14,970 | 14,474 | 15,784 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
180,571 | 163,518 | 148,166 | 149,675 | 148,131 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity |
||||||||||||||||||||
Common stock(c) |
2,051 | 2,051 | 2,051 | 2,051 | 2,051 | |||||||||||||||
Preferred stock |
1,770 | 1,770 | 1,770 | 1,770 | 1,331 | |||||||||||||||
Capital surplus |
3,603 | 3,597 | 3,599 | 3,589 | 3,572 | |||||||||||||||
Retained earnings |
17,643 | 17,677 | 18,315 | 17,786 | 17,431 | |||||||||||||||
Accumulated other comprehensive income |
2,951 | 2,477 | 1,192 | 1,635 | 1,178 | |||||||||||||||
Treasury stock |
(5,683 | ) | (5,699 | ) | (5,724 | ) | (5,427 | ) | (5,089 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Bancorp shareholders equity |
22,335 | 21,873 | 21,203 | 21,404 | 20,474 | |||||||||||||||
Noncontrolling interests |
| | | | 197 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Equity |
22,335 | 21,873 | 21,203 | 21,404 | 20,671 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Equity |
$ | 202,906 | $ | 185,391 | $ | 169,369 | $ | 171,079 | $ | 168,802 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(a) Amortized cost |
$ | 35,780 | $ | 36,428 | $ | 34,966 | $ | 35,662 | $ | 34,731 | ||||||||||
(b) Market values |
16 | 17 | 17 | 18 | 21 | |||||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): |
||||||||||||||||||||
Authorized |
2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||||
Outstanding, excluding treasury |
712,202 | 711,306 | 708,916 | 718,583 | 731,474 | |||||||||||||||
Treasury |
211,690 | 212,586 | 214,977 | 205,309 | 192,419 |
16
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Equity
$ in millions
(unaudited)
For the Three Months Ended | Year to Date | |||||||||||||||
June
2020 |
June
2019 |
June
2020 |
June
2019 |
|||||||||||||
Total Equity, Beginning |
$ | 21,873 | $ | 19,844 | $ | 21,203 | $ | 16,250 | ||||||||
Net income |
195 | 453 | 243 | 1,228 | ||||||||||||
Other comprehensive income, net of tax: |
||||||||||||||||
Change in unrealized gains: |
||||||||||||||||
Available-for-sale debt securities |
456 | 577 | 1,338 | 1,008 | ||||||||||||
Qualifying cash flow hedges |
17 | 191 | 419 | 280 | ||||||||||||
Change in accumulated other comprehensive income related to employee benefit plans |
1 | 1 | 2 | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income |
669 | 1,222 | 2,002 | 2,518 | ||||||||||||
Cash dividends declared: |
||||||||||||||||
Common stock |
(195 | ) | (178 | ) | (390 | ) | (343 | ) | ||||||||
Preferred stock |
(32 | ) | (26 | ) | (50 | ) | (41 | ) | ||||||||
Impact of stock transactions under stock compensation plans, net |
20 | 10 | 43 | 35 | ||||||||||||
Shares acquired for treasury |
| (200 | ) | | (1,113 | ) | ||||||||||
Impact of acquisition |
| | | 3,159 | ||||||||||||
Noncontrolling interest |
| | | 197 | ||||||||||||
Other |
| (1 | ) | (1 | ) | (1 | ) | |||||||||
Impact of cumulative effect of change in accounting principles |
| | (472 | ) | 10 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Equity, Ending |
$ | 22,335 | $ | 20,671 | $ | 22,335 | $ | 20,671 | ||||||||
|
|
|
|
|
|
|
|
17
Fifth Third Bancorp and Subsidiaries
Regulatory Capital
$ in millions
(unaudited)
As of | ||||||||||||||||||||
June
2020(a) |
March
2020 |
December
2019 |
September
2019 |
June
2019 |
||||||||||||||||
Regulatory Capital |
||||||||||||||||||||
CET1 capital |
$ | 13,935 | $ | 13,840 | $ | 13,847 | $ | 13,568 | $ | 13,532 | ||||||||||
Additional tier I capital |
1,769 | 1,769 | 1,769 | 1,769 | 1,493 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tier I capital |
15,704 | 15,609 | 15,616 | 15,337 | 15,025 | |||||||||||||||
Tier II capital |
4,704 | 4,472 | 4,045 | 4,076 | 4,112 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total regulatory capital |
$ | 20,408 | $ | 20,081 | $ | 19,661 | $ | 19,413 | $ | 19,137 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Risk-weighted assets(b) |
$ | 143,407 | $ | 147,756 | $ | 142,065 | $ | 141,880 | $ | 141,421 | ||||||||||
Ratios |
||||||||||||||||||||
Average total Bancorp shareholders equity as a percent of average assets |
11.30 | % | 12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | ||||||||||
Regulatory Capital Ratios |
||||||||||||||||||||
Fifth Third Bancorp |
||||||||||||||||||||
CET1 capital(b) |
9.72 | % | 9.37 | % | 9.75 | % | 9.56 | % | 9.57 | % | ||||||||||
Tier I risk-based capital(b) |
10.95 | % | 10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | ||||||||||
Total risk-based capital(b) |
14.23 | % | 13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | ||||||||||
Tier I leverage |
8.16 | % | 9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % | ||||||||||
Fifth Third Bank |
||||||||||||||||||||
Tier I risk-based capital(b) |
11.75 | % | 11.36 | % | 11.86 | % | 11.79 | % | 11.67 | % | ||||||||||
Total risk-based capital(b) |
13.64 | % | 13.17 | % | 13.46 | % | 13.37 | % | 13.23 | % | ||||||||||
Tier I leverage |
8.80 | % | 10.16 | % | 10.36 | % | 10.26 | % | 10.59 | % |
(a) |
Current period regulatory capital data and ratios are estimated. |
(b) |
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 Bancorps total risk-weighted assets. |
18
Use of Non-GAAP Financial Measures
In addition to GAAP measures, management considers various non-GAAP measures when evaluating the performance of the business, including: net interest income (FTE), interest income (FTE), net interest margin (FTE), net interest rate spread (FTE), income before income taxes (FTE), tangible net income available to common shareholders, average tangible common equity, return on average tangible common equity, tangible common equity (excluding AOCI), tangible common equity (including AOCI), tangible equity, tangible book value per share, adjusted noninterest income, adjusted noninterest expense, pre-provision net revenue, adjusted efficiency ratio, adjusted return on average common equity, adjusted return on average tangible common equity, adjusted return on average tangible common equity, excluding accumulated other comprehensive income, adjusted net interest margin, adjusted pre-provision net revenue, adjusted return on average assets, efficiency ratio (FTE), total revenue (FTE), and certain ratios derived from these measures. The Bancorp believes these non-GAAP measures provide useful information to investors because these are among the measures used by the Fifth Third management team to evaluate operating performance and to make day-to-day operating decisions.
The FTE basis adjusts for the tax-favored status of income from certain loans and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income and net interest margin as it provides a relevant comparison between taxable and non-taxable amounts.
The Bancorp believes tangible net income available to common shareholders, average tangible common equity, tangible common equity (excluding AOCI), tangible common equity (including AOCI), tangible equity, tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of the business without the impacts of intangible items, whether acquired or created internally, in a manner comparable to other companies in the industry who present similar measures.
The Bancorp believes noninterest income, noninterest expense, net interest income, net interest margin, pre-provision net revenue, efficiency ratio, return on average common equity, return on average tangible common equity, and return on average assets are important measures that adjust for significant, unusual, or large transactions that may occur in a reporting period which management does not consider indicative of ongoing financial performance and enhances comparability of results with prior periods.
Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding AOCI), in addition to capital ratios defined by U.S. banking agencies. These calculations are intended to complement the capital ratios defined by U.S. banking agencies for both absolute and comparative purposes. These ratios are not formally defined by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to be non-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding AOCI on certain assets and liabilities enables investors and others to assess the Bancorps use of equity without the effects of changes in AOCI, some of which are uncertain; providing the tangible common equity ratio including AOCI enables investors and others to assess the Bancorps use of equity if components of AOCI, such as unrealized gains or losses, were to be monetized.
Please note that although non-GAAP financial measures provide useful insight, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures.
Please see Reg. G reconciliations of all historical non-GAAP measures used in this release to the most directly comparable GAAP measures, beginning on the following page.
19
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconciliation
$ and shares in millions
(unaudited)
As of and For the Three Months Ended | ||||||||||||||||||||
June
2020 |
March
2020 |
December
2019 |
September
2019 |
June
2019 |
||||||||||||||||
Net interest income |
$ | 1,200 | $ | 1,229 | $ | 1,228 | $ | 1,242 | $ | 1,245 | ||||||||||
Add: Taxable equivalent adjustment |
3 | 4 | 4 | 4 | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income (FTE) (a) |
1,203 | 1,233 | 1,232 | 1,246 | 1,250 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income (annualized) (b) |
4,826 | 4,943 | 4,872 | 4,928 | 4,994 | |||||||||||||||
Net interest income (FTE) (annualized) (c) |
4,838 | 4,959 | 4,888 | 4,943 | 5,014 | |||||||||||||||
Net interest income (FTE) |
1,203 | 1,233 | 1,232 | 1,246 | 1,250 | |||||||||||||||
Less: Net interest income impact from purchase accounting accretion |
15 | 16 | 18 | 28 | 18 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net interest income (FTE) (d) |
1,188 | 1,217 | 1,214 | 1,218 | 1,232 | |||||||||||||||
Adjusted net interest income (FTE) (annualized) (e) |
4,777 | 4,895 | 4,816 | 4,832 | 4,942 | |||||||||||||||
Interest income |
1,403 | 1,525 | 1,559 | 1,625 | 1,636 | |||||||||||||||
Add: Taxable equivalent adjustment |
3 | 4 | 4 | 4 | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest income (FTE) |
1,406 | 1,529 | 1,563 | 1,629 | 1,641 | |||||||||||||||
Interest income (FTE) (annualized) (f) |
5,655 | 6,150 | 6,201 | 6,463 | 6,582 | |||||||||||||||
Interest expense (annualized) (g) |
816 | 1,191 | 1,313 | 1,520 | 1,568 | |||||||||||||||
Average interest-earning assets (h) |
176,224 | 151,213 | 149,312 | 148,854 | 148,790 | |||||||||||||||
Average interest-bearing liabilities (i) |
124,478 | 109,244 | 107,573 | 107,633 | 106,340 | |||||||||||||||
Net interest margin (b) / (h) |
2.74 | % | 3.27 | % | 3.26 | % | 3.31 | % | 3.36 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest margin (FTE) (c) / (h) |
2.75 | % | 3.28 | % | 3.27 | % | 3.32 | % | 3.37 | % | ||||||||||
Adjusted net interest margin (e) / (h) |
2.71 | % | 3.24 | % | 3.22 | % | 3.25 | % | 3.32 | % | ||||||||||
Net interest rate spread (FTE) (f) / (h) - (g) / (i) |
2.55 | % | 2.98 | % | 2.93 | % | 2.93 | % | 2.95 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income before income taxes |
$ | 244 | $ | 60 | $ | 941 | $ | 689 | $ | 577 | ||||||||||
Add: Taxable equivalent adjustment |
3 | 4 | 4 | 4 | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income before income taxes (FTE) |
$ | 247 | $ | 64 | $ | 945 | $ | 693 | $ | 582 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income available to common shareholders |
$ | 163 | $ | 29 | $ | 701 | $ | 530 | $ | 427 | ||||||||||
Add: Intangible amortization, net of tax |
9 | 10 | 11 | 11 | 11 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible net income available to common shareholders (j) |
172 | 39 | 712 | 541 | 438 | |||||||||||||||
Tangible net income available to common shareholders (annualized) (k) |
692 | 157 | 2,825 | 2,146 | 1,757 | |||||||||||||||
Average Bancorp shareholders equity |
22,420 | 21,713 | 21,304 | 21,087 | 20,135 | |||||||||||||||
Less: Average preferred stock |
(1,770 | ) | (1,770 | ) | (1,770 | ) | (1,445 | ) | (1,331 | ) | ||||||||||
Average goodwill |
(4,261 | ) | (4,251 | ) | (4,260 | ) | (4,286 | ) | (4,301 | ) | ||||||||||
Average intangible assets |
(178 | ) | (193 | ) | (194 | ) | (208 | ) | (215 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible common equity, including AOCI (l) |
16,211 | 15,499 | 15,080 | 15,148 | 14,288 | |||||||||||||||
Less: Average AOCI |
(2,702 | ) | (1,825 | ) | (1,416 | ) | (1,444 | ) | (619 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible common equity, excluding AOCI (m) |
13,509 | 13,674 | 13,664 | 13,704 | 13,669 | |||||||||||||||
Total Bancorp shareholders equity |
22,335 | 21,873 | 21,203 | 21,404 | 20,474 | |||||||||||||||
Less: Preferred stock |
(1,770 | ) | (1,770 | ) | (1,770 | ) | (1,770 | ) | (1,331 | ) | ||||||||||
Goodwill |
(4,261 | ) | (4,261 | ) | (4,252 | ) | (4,290 | ) | (4,284 | ) | ||||||||||
Intangible assets |
(171 | ) | (184 | ) | (201 | ) | (201 | ) | (215 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible common equity, including AOCI (n) |
16,133 | 15,658 | 14,980 | 15,143 | 14,644 | |||||||||||||||
Less: AOCI |
(2,951 | ) | (2,477 | ) | (1,192 | ) | (1,635 | ) | (1,178 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible common equity, excluding AOCI (o) |
13,182 | 13,181 | 13,788 | 13,508 | 13,466 | |||||||||||||||
Add: Preferred stock |
1,770 | 1,770 | 1,770 | 1,770 | 1,331 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible equity (p) |
14,952 | 14,951 | 15,558 | 15,278 | 14,797 | |||||||||||||||
Total assets |
202,906 | 185,391 | 169,369 | 171,079 | 168,802 | |||||||||||||||
Less: Goodwill |
(4,261 | ) | (4,261 | ) | (4,252 | ) | (4,290 | ) | (4,284 | ) | ||||||||||
Intangible assets |
(171 | ) | (184 | ) | (201 | ) | (201 | ) | (215 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible assets, including AOCI (q) |
198,474 | 180,946 | 164,916 | 166,588 | 164,303 | |||||||||||||||
Less: AOCI, before tax |
(3,735 | ) | (3,135 | ) | (1,509 | ) | (2,070 | ) | (1,491 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible assets, excluding AOCI (r) |
$ | 194,739 | $ | 177,811 | $ | 163,407 | $ | 164,518 | $ | 162,812 | ||||||||||
Common shares outstanding (s) |
712 | 711 | 709 | 719 | 731 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible equity (p) / (r) |
7.68 | % | 8.41 | % | 9.52 | % | 9.29 | % | 9.09 | % | ||||||||||
Tangible common equity (excluding AOCI) (o) / (r) |
6.77 | % | 7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | ||||||||||
Tangible common equity (including AOCI) (n) / (q) |
8.13 | % | 8.65 | % | 9.08 | % | 9.09 | % | 8.91 | % | ||||||||||
Tangible book value per share (n) / (s) |
$ | 22.66 | $ | 22.02 | $ | 21.13 | $ | 21.06 | $ | 20.03 | ||||||||||
|
|
|
|
|
|
|
|
|
|
20
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconciliation
$ in millions
(unaudited)
For the Three Months Ended | ||||||||||||
June
2020 |
March
2020 |
June
2019 |
||||||||||
Net income (t) |
$ | 195 | $ | 46 | $ | 453 | ||||||
Net income (annualized) (u) |
784 | 185 | 1,817 | |||||||||
Adjustments (pre-tax items)(a) |
||||||||||||
Valuation of Visa total return swap |
29 | 22 | 22 | |||||||||
Branch and non-branch real estate charges |
12 | | | |||||||||
COVID-19-related expenses |
12 | | | |||||||||
Merger-related expenses |
9 | 7 | 109 | |||||||||
FHLB debt extinguishment charge |
6 | | | |||||||||
Unfavorable credit valuation adjustment (CVA) |
| 36 | | |||||||||
Net impairment of private equity investments |
| 15 | | |||||||||
|
|
|
|
|
|
|||||||
Adjustments, after-tax (v)(a) |
52 | 62 | 101 | |||||||||
Noninterest income (x) |
650 | 671 | 660 | |||||||||
Valuation of Visa total return swap |
29 | 22 | 22 | |||||||||
Branch and non-branch real estate charges |
12 | | | |||||||||
Net impairment of private equity investments |
| 15 | | |||||||||
|
|
|
|
|
|
|||||||
Adjusted noninterest income (y) |
691 | 708 | 682 | |||||||||
Noninterest expense (z) |
1,121 | 1,200 | 1,243 | |||||||||
COVID-19-related expenses |
(12 | ) | | | ||||||||
Merger-related expenses |
(9 | ) | (7 | ) | (109 | ) | ||||||
FHLB debt extinguishment charge |
(6 | ) | | | ||||||||
Unfavorable credit valuation adjustment (CVA) |
| (36 | ) | | ||||||||
|
|
|
|
|
|
|||||||
Adjusted noninterest expense (aa) |
1,094 | 1,157 | 1,134 | |||||||||
Intangible amortization expense |
12 | 13 | 14 | |||||||||
|
|
|
|
|
|
|||||||
Adjusted noninterest expense excluding intangible amortization expense (ab) |
1,082 | 1,144 | 1,120 | |||||||||
Adjusted net income (t) + (v) + (w) |
247 | 108 | 554 | |||||||||
Adjusted net income (annualized) (ac) |
993 | 434 | 2,222 | |||||||||
Adjusted tangible net income available to common shareholders (j) + (v) + (w) |
224 | 101 | 539 | |||||||||
Adjusted tangible net income available to common shareholders (annualized) (ad) |
901 | 406 | 2,162 | |||||||||
Average assets (ae) |
$ | 198,387 | $ | 171,871 | $ | 167,578 | ||||||
|
|
|
|
|
|
|||||||
Return on average tangible common equity (k) / (l) |
4.3 | % | 1.0 | % | 12.3 | % | ||||||
Adjusted return on average tangible common equity, including AOCI (ad) / (l) |
5.6 | % | 2.6 | % | 15.1 | % | ||||||
Adjusted return on average tangible common equity, excluding AOCI (ad) / (m) |
6.7 | % | 3.0 | % | 15.8 | % | ||||||
|
|
|
|
|
|
|||||||
Return on average assets (u) / (ae) |
0.40 | % | 0.11 | % | 1.08 | % | ||||||
|
|
|
|
|
|
|||||||
Adjusted return on average assets (ac) / (ae) |
0.50 | % | 0.25 | % | 1.33 | % | ||||||
Efficiency ratio (z) / [(a) + (x)] |
60.5 | % | 63.0 | % | 65.1 | % | ||||||
Adjusted efficiency ratio (ab) / [(d) + (y)] |
57.6 | % | 59.4 | % | 58.5 | % | ||||||
Total revenue (FTE) (a) + (x) |
$ | 1,853 | $ | 1,904 | $ | 1,910 | ||||||
Pre-provision net revenue (PPNR) (a) + (x) - (z) |
$ | 732 | $ | 704 | $ | 667 | ||||||
Adjusted pre-provision net revenue (PPNR) (d) + (y) - (ab) |
$ | 797 | $ | 781 | $ | 794 | ||||||
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(a) |
Assumes a 23% tax rate, except for merger-related expenses impacted by certain non-deductible items. |
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