FITB 8-K
Fifth Third Bancorp (FITB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| |
|
| ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| |
| |
| (Address of Principal Executive Offices) |
(Zip Code) |
(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 | ||
| |
|
| ||
|
|
|
| ||
| |
|
| ||
| |
|
|
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 2.02 | Results of Operations and Financial Condition. |
On April 21, 2020, Fifth Third Bancorp issued a press release announcing its earnings release for the first quarter of 2020. A copy of this press release is attached as Exhibit 99.1. This information is furnished under both Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure.
The information in this Item 2.02 of Form 8-K and Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference.
| Item 7.01 | Regulation FD Disclosure. |
On April 21, 2020, Fifth Third Bancorp issued a press release announcing its earnings release for the first quarter of 2020. A copy of this press release is attached as Exhibit 99.1. This information is furnished under both Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure.
For the benefit of its investors, Fifth Third Bancorp is also furnishing a presentation regarding its earnings conference call. A copy of this item is attached as Exhibit 99.2.
The information in this Item 7.01 of Form 8-K and Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference.
| Item 8.01 | Other Events. |
The following risk factor supplements the “Risk Factors” section in our 2019 Annual Report and item 1A of our 2019 Form 10-K.
The COVID-19 Pandemic Creates Significant Risks and Uncertainties for Our Business.
In March 2020, the World Health Organization declared novel coronavirus disease 2019 (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. 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.
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. Moreover, the effects of the COVID-19 pandemic may heighten many of the other risks described in the section entitled “Risk Factors” 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.
| Item 9.01 | Financial Statements and Exhibits |
Exhibit 99.1 – Press release dated April 21, 2020
Exhibit 99.2 – First Quarter 2020 Earnings Presentation
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: April 21, 2020 |
|
/s/ TAYFUN TUZUN | ||||
| Tayfun Tuzun | ||||||
| Executive Vice President and |
Exhibit 99.1
Fifth Third Announces First Quarter 2020 Results
Reported diluted earnings per share of $0.04
Reported results included a negative $0.64 impact from certain items on page 2, including $0.09 from notable items,
and $0.55 from provision in excess of net charge-offs
| Key Financial Data
$ millions for all balance sheet and income statement items |
||||||||||||
| 1Q20 | 4Q19 | 1Q19 | ||||||||||
| Income Statement Data |
||||||||||||
| Net income available to common shareholders |
$ | 29 | $ | 701 | $ | 760 | ||||||
| Net interest income (U.S. GAAP) |
1,229 | 1,228 | 1,082 | |||||||||
| Net interest income (FTE)(a) |
1,233 | 1,232 | 1,086 | |||||||||
| Noninterest income |
671 | 1,035 | 1,101 | |||||||||
| Noninterest expense |
1,200 | 1,160 | 1,097 | |||||||||
| Per Share Data |
||||||||||||
| Earnings per share, basic |
$ | 0.04 | $ | 0.97 | $ | 1.14 | ||||||
| Earnings per share, diluted |
0.04 | 0.96 | 1.12 | |||||||||
| Book value per share |
28.26 | 27.41 | 24.77 | |||||||||
| Tangible book value per share(a) |
22.02 | 21.13 | 18.64 | |||||||||
| Balance Sheet & Credit Quality |
||||||||||||
| Average portfolio loans and leases |
$ | 110,779 | $ | 109,787 | $ | 97,773 | ||||||
| Average deposits |
126,789 | 126,116 | 109,591 | |||||||||
| Net charge-off ratio(b) |
0.44 | % | 0.41 | % | 0.32 | % | ||||||
| Nonperforming asset ratio(c) |
0.60 | 0.62 | 0.45 | |||||||||
| Financial Ratios |
||||||||||||
| Return on average assets |
0.11 | % | 1.72 | % | 2.11 | % | ||||||
| Return on average common equity |
0.6 | 14.2 | 19.6 | |||||||||
| Return on average tangible common equity(a) |
1.0 | 18.7 | 23.9 | |||||||||
| CET1 capital(d)(e) |
9.36 | 9.75 | 9.60 | |||||||||
| Net interest margin(a) |
3.28 | 3.27 | 3.28 | |||||||||
| Efficiency(a) |
63.0 | 51.2 | 50.2 | |||||||||
|
Other than the Quarterly Financial Review tables beginning on page 14, 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. 1Refers to the current expected credit losses (CECL) methodology implemented upon the Bancorp’s adoption of ASU 2016-13. |
| |||||||||||
CEO Commentary
“The unprecedented nature of the environment that we are operating in today undoubtedly reprioritizes our focus to the significant and ongoing actions we are taking for our customers, our employees, and our communities. We are leveraging our balance sheet strength to help solve the spiraling economic effects of this health crisis, and we will continue to respond rapidly and do what is necessary to help mitigate the effects of the downturn. I am very proud of the way our employees have responded in extraordinary ways to support our customers and each other.
Our operating results during the first quarter were very strong given the speed and extent of the deterioration in the economic environment that we experienced in the latter part of the quarter. The results show the impact of the strength of our franchise and the strategic decisions we have made in managing our balance sheet, our interest rate risk and our liquidity risk exposures. Net interest income, net interest margin, noninterest income, and expenses all performed in-line with or better than our January guidance, with the net charge off ratio also consistent with our previous expectations.
Our allowance for credit losses now reflects both the adoption of the new CECL methodology and the impact of COVID-19. After assessing the impact of the deteriorating economic conditions and the counter impact of the unprecedented fiscal and monetary stimulus programs on our loan portfolios, we increased our reserves compared to last quarter, which includes the impact of the loan growth that we experienced during the quarter.
(continued)
| Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed Loyd (513) 534-6397 | April 21, 2020 |
While we do not know the duration or severity of the crisis, we have spent the past decade strengthening our balance sheet, diversifying our revenue streams, and stress testing our firm-wide resilience under a range of conditions worse than the last crisis and more severe than the regulatory-run stress tests. During that time, we have consistently communicated our ‘through-the-cycle’ principles of disciplined client selection, conservative underwriting, and an overall balance sheet management approach focused on a long-term performance horizon. Our unwavering adherence to these principles and our balance sheet strength give us confidence as we navigate this uncertain environment.”
-Greg D. Carmichael, Chairman, President and CEO
Income Statement Highlights
| ($ in millions, except per share data) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Condensed Statements of Income |
||||||||||||||||||||
| Net interest income (NII)(a) |
$ | 1,233 | $ | 1,232 | $ | 1,086 | — | 14 | % | |||||||||||
| Provision for credit losses |
640 | 162 | 90 | 295 | % | 611 | % | |||||||||||||
| Noninterest income |
671 | 1,035 | 1,101 | (35 | %) | (39 | %) | |||||||||||||
| Noninterest expense |
1,200 | 1,160 | 1,097 | 3 | % | 9 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before income taxes(a) |
$ | 64 | $ | 945 | $ | 1,000 | (93 | %) | (94 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Taxable equivalent adjustment |
4 | 4 | 4 | — | — | |||||||||||||||
| Applicable income tax expense |
14 | 207 | 221 | (93 | %) | (94 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income |
$ | 46 | $ | 734 | $ | 775 | (94 | %) | (94 | %) | ||||||||||
| Dividends on preferred stock |
17 | 33 | 15 | (48 | %) | 13 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income available to common shareholders |
$ | 29 | $ | 701 | $ | 760 | (96 | %) | (96 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Earnings per share, diluted |
$ | 0.04 | $ | 0.96 | $ | 1.12 | (96 | %) | (97 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fifth Third Bancorp (Nasdaq: FITB) today reported first quarter 2020 net income of $46 million compared to net income of $775 million in the year-ago quarter. Net income available to common shareholders was $29 million, or $0.04 per diluted share, compared to $760 million, or $1.12 per diluted share in the year-ago quarter. Prior quarter net income was $734 million and net income available to common shareholders was $701 million, or $0.96 per diluted share.
| Diluted earnings per share impact of certain items - 1Q20 | ||||
| (after-tax impacts(f); $ in millions, except per share data) | ||||
| Provision in excess of net charge-offs |
($ | 399 | ) | |
|
|
|
|||
| Diluted earnings per share impact from provision in excess of net charge-offs |
($ | 0.55 | ) | |
| Unfavorable credit valuation adjustment (CVA) within other noninterest expense |
($ | 28 | ) | |
| Valuation of Visa total return swap within other noninterest income |
($ | 17 | ) | |
| Net impairment on private equity investments |
($ | 12 | ) | |
| Merger-related expenses |
($ | 5 | ) | |
|
|
|
|||
| After-tax impact(f) of other notable items |
($ | 62 | ) | |
| Diluted earnings per share impact of other notable items |
($ | 0.09 | ) | |
| Diluted earnings per share impact reflect 720.363 million average diluted shares outstanding |
||||
2
Net Interest Income
| (FTE; $ in millions)(a) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Interest Income |
||||||||||||||||||||
| Interest income |
$ | 1,529 | $ | 1,563 | $ | 1,437 | (2 | %) | 6 | % | ||||||||||
| Interest expense |
296 | 331 | 351 | (11 | %) | (16 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income (NII) |
$ | 1,233 | $ | 1,232 | $ | 1,086 | — | 14 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted NII(a) |
$ | 1,217 | $ | 1,214 | $ | 1,085 | — | 12 | % | |||||||||||
| Average Yield/Rate Analysis | bps Change | |||||||||||||||||||
| Yield on interest-earning assets |
4.07 | % | 4.15 | % | 4.33 | % | (8 | ) | (26 | ) | ||||||||||
| Rate paid on interest-bearing liabilities |
1.09 | % | 1.22 | % | 1.46 | % | (13 | ) | (37 | ) | ||||||||||
| Ratios |
||||||||||||||||||||
| Net interest rate spread |
2.98 | % | 2.93 | % | 2.87 | % | 5 | 11 | ||||||||||||
| Net interest margin (NIM) |
3.28 | % | 3.27 | % | 3.28 | % | 1 | — | ||||||||||||
| Adjusted NIM(a) |
3.24 | % | 3.22 | % | 3.28 | % | 2 | (4 | ) | |||||||||||
Compared to the year-ago quarter, reported NII increased $147 million, or 14%. Excluding purchase accounting accretion of $16 million in the current quarter and $1 million in the year-ago quarter, adjusted NII increased $132 million, or 12%, reflecting an increase in interest-earning assets, including the impact from the MB Financial acquisition, partially offset by the declining-rate environment. Compared to the year-ago quarter, reported NIM remained flat, and decreased 4 bps excluding purchase accounting accretion.
Compared to the prior quarter, reported NII increased $1 million. Excluding purchase accounting accretion, adjusted NII increased $3 million, reflecting loan growth, the favorable impact of previously executed cash flow hedges, and the benefit of elevated short-term LIBOR rates on loan yields relative to funding costs, partially offset by seasonally strong securities portfolio income in the prior quarter as well as the impact of a lower day count. Compared to the prior quarter, reported NIM increased 1 bp. Excluding purchase accounting accretion, adjusted NIM increased 2 bps, reflecting the favorable impact of previously executed hedges, proactive management of deposit rates, and a lower day count, partially offset by the aforementioned securities portfolio income from the prior quarter and a 3 bps unfavorable impact from elevated cash balances.
3
Noninterest Income
| ($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Noninterest Income |
||||||||||||||||||||
| Service charges on deposits |
$ | 148 | $ | 149 | $ | 131 | (1 | %) | 13 | % | ||||||||||
| Commercial banking revenue |
124 | 127 | 103 | (2 | %) | 20 | % | |||||||||||||
| Mortgage banking net revenue |
120 | 73 | 56 | 64 | % | 114 | % | |||||||||||||
| Wealth and asset management revenue |
134 | 129 | 112 | 4 | % | 20 | % | |||||||||||||
| Card and processing revenue |
86 | 95 | 79 | (9 | %) | 9 | % | |||||||||||||
| Leasing business revenue |
73 | 71 | 32 | 3 | % | 128 | % | |||||||||||||
| Other noninterest income |
7 | 382 | 569 | (98 | %) | (99 | %) | |||||||||||||
| Securities (losses) gains, net |
(24 | ) | 10 | 16 | NM | NM | ||||||||||||||
| Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights |
3 | (1 | ) | 3 | NM | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest income |
$ | 671 | $ | 1,035 | $ | 1,101 | (35 | %) | (39 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
(In the first quarter 2020, as a result of updating internal management reporting processes and to provide more detailed information, certain noninterest income disclosures were adjusted. Leasing business revenue is a new line item with revenue previously included in the Corporate banking revenue - with the remaining revenue shown as Commercial banking revenue - and Other noninterest income line items. These adjustments were retrospectively applied to prior periods presented.)
Reported noninterest income decreased $430 million, or 39%, from the year-ago quarter, and decreased $364 million, or 35%, from the prior quarter. The reported results reflect the impact of certain items in the table below, primarily from Worldpay transactions, in both the prior quarter and the year-ago quarter.
Noninterest Income excluding certain items
| ($ in millions) | For the Three Months Ended | |||||||||||
| March 2020 |
December 2019 |
March 2019 |
||||||||||
| Noninterest Income excluding certain items |
||||||||||||
| Noninterest income (U.S. GAAP) |
$ | 671 | $ | 1,035 | $ | 1,101 | ||||||
| Valuation of Visa total return swap |
22 | 44 | 31 | |||||||||
| Net impairment on private equity investments |
15 | — | — | |||||||||
| Merger-related branch network impairment charge |
— | — | 13 | |||||||||
| Gain on sale of Worldpay shares |
— | — | (562 | ) | ||||||||
| Gain recognized from Worldpay TRA transaction |
— | (345 | ) | — | ||||||||
| GreenSky equity securities (gain) |
— | — | (9 | ) | ||||||||
| Securities (gains) losses, net (excluding GreenSky) |
24 | (10 | ) | (7 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Noninterest income excluding certain items(a) |
$ | 732 | $ | 724 | $ | 567 | ||||||
|
|
|
|
|
|
|
|||||||
Compared to the year-ago quarter, noninterest income excluding the items in the preceding table increased $165 million, or 29%. Compared to the prior quarter, noninterest income excluding the items in the preceding table increased $8 million, or 1%.
Compared to the year-ago quarter, service charges on deposits increased $17 million, or 13%, driven by higher commercial deposit fees. Commercial banking revenue increased $21 million, or 20%, primarily driven by increases in financial risk management revenue and corporate bond fees, partially offset by a decrease in loan syndications revenue. Mortgage banking net revenue increased $64 million, or 114% primarily driven by an improved gain on sale margin on higher mortgage originations of $4 billion in the current quarter compared to $1.6 billion in the year-ago quarter. Wealth and asset management revenue increased $22 million, or 20%, primarily driven by higher personal asset management revenue and brokerage fees. Card and processing revenue increased by $7 million, or 9%, reflecting increases in credit and debit transaction volumes, partially offset by higher rewards. Leasing business revenue increased $41 million, or 128%, primarily reflecting the impacts from the MB Financial acquisition.
4
Compared to the prior quarter, service charges on deposits decreased $1 million, or 1%, due to lower consumer deposit fees, partially offset by higher commercial deposit fees. Commercial banking revenue decreased $3 million, or 2%, primarily driven by decreases in loan syndications and M&A advisory revenue, partially offset by increases in financial risk management revenue and corporate bond fees. Mortgage banking net revenue increased $47 million, or 64%, primarily driven by an improved gain on sale margin, a 6% increase in origination volumes, and the impact of the MSR valuation, net of hedges. Wealth and asset management revenue increased $5 million, or 4%, primarily driven by higher brokerage fees, partially offset by lower personal asset management revenue. Card processing revenue decreased $9 million, or 9%, reflecting decreases in credit and debit volumes in the final month of the quarter, partially offset by lower rewards. Leasing business revenue increased $2 million, or 3%, primarily driven by an increase in lease syndication fees, partially offset by a decrease in business solutions revenue.
Noninterest Expense
| ($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Noninterest Expense |
||||||||||||||||||||
| Compensation and benefits |
$ | 647 | $ | 576 | $ | 610 | 12 | % | 6 | % | ||||||||||
| Net occupancy expense |
82 | 84 | 75 | (2 | %) | 9 | % | |||||||||||||
| Technology and communications |
93 | 103 | 83 | (10 | %) | 12 | % | |||||||||||||
| Equipment expense |
32 | 33 | 30 | (3 | %) | 7 | % | |||||||||||||
| Card and processing expense |
31 | 33 | 31 | (6 | %) | — | ||||||||||||||
| Leasing business expense |
35 | 36 | 19 | (3 | %) | 84 | % | |||||||||||||
| Marketing expense |
31 | 44 | 36 | (30 | %) | (14 | %) | |||||||||||||
| Intangible amortization expense |
13 | 14 | 3 | (7 | %) | NM | ||||||||||||||
| Other noninterest expense |
236 | 237 | 210 | — | 12 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest expense |
$ | 1,200 | $ | 1,160 | $ | 1,097 | 3 | % | 9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
(In the first quarter 2020, as a result of updating internal management reporting processes and to provide more detailed information, certain noninterest expense disclosures were adjusted. Leasing business expense and Marketing expense are new line items shown reflecting expenses previously included in the Other noninterest expense line item. These adjustments were retrospectively applied to prior periods presented.)
Impacts of Merger-Related Expenses
| ($ in millions) | For the Three Months Ended | |||||||||||
| March 2020 |
December 2019 |
March 2019 |
||||||||||
| Merger-Related Expenses |
||||||||||||
| Compensation and benefits |
$ | 2 | $ | 1 | $ | 35 | ||||||
| Net occupancy expense |
1 | 3 | — | |||||||||
| Technology and communications |
3 | 4 | 11 | |||||||||
| Equipment expense |
— | — | — | |||||||||
| Card and processing expense |
— | — | — | |||||||||
| Leasing business expense |
— | — | — | |||||||||
| Marketing expense |
— | — | 4 | |||||||||
| Intangible amortization expense |
— | — | — | |||||||||
| Other noninterest expense |
1 | 1 | 26 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total merger-related expenses |
$ | 7 | $ | 9 | $ | 76 | ||||||
|
|
|
|
|
|
|
|||||||
5
Noninterest Expense excluding Merger-Related Expenses(a)
| ($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Noninterest Expense excluding Merger-Related Expenses |
||||||||||||||||||||
| Compensation and benefits |
$ | 645 | $ | 575 | $ | 575 | 12 | % | 12 | % | ||||||||||
| Net occupancy expense |
81 | 81 | 75 | — | 8 | % | ||||||||||||||
| Technology and communications |
90 | 99 | 72 | (9 | %) | 25 | % | |||||||||||||
| Equipment expense |
32 | 33 | 30 | (3 | %) | 7 | % | |||||||||||||
| Card and processing expense |
31 | 33 | 31 | (6 | %) | — | ||||||||||||||
| Leasing business expense |
35 | 36 | 19 | (3 | %) | 84 | % | |||||||||||||
| Marketing expense |
31 | 44 | 32 | (30 | %) | (3 | %) | |||||||||||||
| Intangible amortization expense |
13 | 14 | 3 | (7 | %) | NM | ||||||||||||||
| Other noninterest expense |
235 | 236 | 184 | — | 28 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest expense excluding merger-related expenses |
$ | 1,193 | $ | 1,151 | $ | 1,021 | 4 | % | 17 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Compared to the year-ago quarter, reported noninterest expense increased $103 million, or 9%. Excluding the merger-related expenses, intangible amortization expense, and an unfavorable CVA within other noninterest expense of $36 million in the current quarter, noninterest expense increased $126 million, or 12%, reflecting the operating expenses resulting from the MB Financial acquisition as well as continued technology investments.
Compared to the prior quarter, reported noninterest expense increased $40 million, or 3%. Excluding the aforementioned merger-related expenses, intangible amortization expense, unfavorable CVA, and a $20 million contribution to the Fifth Third Foundation (included in other noninterest expense) in the prior quarter, noninterest expense increased $27 million, or 2%, as seasonally higher compensation and benefits as well as $3 million in special payments to employees providing essential banking services through the COVID-19 pandemic were partially offset by lower marketing and technology expenses.
6
Average Interest-Earning Assets
| ($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Average Portfolio Loans and Leases |
||||||||||||||||||||
| Commercial loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 51,586 | $ | 50,938 | $ | 46,011 | 1 | % | 12 | % | ||||||||||
| Commercial mortgage loans |
11,019 | 10,831 | 7,414 | 2 | % | 49 | % | |||||||||||||
| Commercial construction loans |
5,132 | 5,334 | 4,838 | (4 | %) | 6 | % | |||||||||||||
| Commercial leases |
3,201 | 3,384 | 3,555 | (5 | %) | (10 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
$ | 70,938 | $ | 70,487 | $ | 61,818 | 1 | % | 15 | % | ||||||||||
| Consumer loans: |
||||||||||||||||||||
| Residential mortgage loans |
$ | 16,732 | $ | 16,697 | $ | 15,624 | — | 7 | % | |||||||||||
| Home equity |
6,006 | 6,147 | 6,355 | (2 | %) | (5 | %) | |||||||||||||
| Indirect secured consumer loans |
11,809 | 11,281 | 9,176 | 5 | % | 29 | % | |||||||||||||
| Credit card |
2,498 | 2,496 | 2,396 | — | 4 | % | ||||||||||||||
| Other consumer loans |
2,796 | 2,679 | 2,404 | 4 | % | 16 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
$ | 39,841 | $ | 39,300 | $ | 35,955 | 1 | % | 11 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average portfolio loans and leases |
$ | 110,779 | $ | 109,787 | $ | 97,773 | 1 | % | 13 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average Loans and Leases Held for Sale |
||||||||||||||||||||
| Commercial loans and leases held for sale |
$ | 108 | $ | 43 | $ | 62 | 151 | % | 74 | % | ||||||||||
| Consumer loans held for sale |
1,293 | 1,156 | 527 | 12 | % | 145 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average loans and leases held for sale |
$ | 1,401 | $ | 1,199 | $ | 589 | 17 | % | 138 | % | ||||||||||
| Securities and other short-term investments |
$ | 39,033 | $ | 38,326 | $ | 36,101 | 2 | % | 8 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average interest-earning assets |
$ | 151,213 | $ | 149,312 | $ | 134,463 | 1 | % | 12 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Compared to the year-ago quarter, total average portfolio loans and leases increased 13%, reflecting the impact of the MB Financial acquisition. Average commercial portfolio loans and leases increased 15%, reflecting the impact of MB Financial as well as higher commercial and industrial (C&I) and commercial mortgage loans, partially offset by a decline in commercial leases. Average consumer portfolio loans increased 11%, reflecting growth in indirect secured consumer loans (predominantly indirect automobile) as well as the impact of MB Financial.
Compared to the prior quarter, total average portfolio loans and leases increased 1%, as higher C&I loans and indirect secured consumer loans were partially offset by lower commercial construction loans and commercial leases. Average commercial portfolio loans and leases increased 1%, reflecting elevated C&I line draws near the end of the quarter and growth in commercial mortgage loans, partially offset by lower commercial construction loans and commercial leases. Average consumer portfolio loans increased 1%, reflecting growth in indirect secured consumer loans (predominantly indirect automobile) and other consumer loans, partially offset by a decline in home equity loans.
Total period end commercial loans and leases of $78 billion increased $6 billion, or 9%, from the year-ago quarter and increased $8 billion, or 11%, from the prior quarter, primarily due to the aforementioned C&I line draw activity. Period end commercial revolving line utilization was 47%, compared to 38% in the year-ago quarter and 36% in the prior quarter, reflecting line draw activity at the end of the quarter predominantly from corporate banking clients.
Average available-for-sale debt and other securities of $35.1 billion increased 5% compared to the year-ago quarter and decreased 1% compared to the prior quarter. Average other short-term investments (which includes interest-bearing cash) of $2.9 billion increased 65% compared to the year-ago quarter and increased 44% compared to the prior quarter.
7
Average Deposits
| ($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Average Deposits |
||||||||||||||||||||
| Demand |
$ | 35,765 | $ | 35,710 | $ | 30,557 | — | 17 | % | |||||||||||
| Interest checking |
40,298 | 38,628 | 33,697 | 4 | % | 20 | % | |||||||||||||
| Savings |
14,715 | 14,274 | 13,052 | 3 | % | 13 | % | |||||||||||||
| Money market |
27,109 | 27,429 | 23,133 | (1 | %) | 17 | % | |||||||||||||
| Foreign office(g) |
209 | 244 | 208 | (14 | %) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total transaction deposits |
$ | 118,096 | $ | 116,285 | $ | 100,647 | 2 | % | 17 | % | ||||||||||
| Other time |
5,081 | 5,507 | 4,860 | (8 | %) | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total core deposits |
$ | 123,177 | $ | 121,792 | $ | 105,507 | 1 | % | 17 | % | ||||||||||
| Certificates - $100,000 and over |
3,355 | 4,072 | 3,358 | (18 | %) | — | ||||||||||||||
| Other deposits |
257 | 252 | 726 | 2 | % | (65 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average deposits |
$ | 126,789 | $ | 126,116 | $ | 109,591 | 1 | % | 16 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Compared to the year-ago quarter, average core deposits increased 17%, reflecting the impact of the MB Financial acquisition. Average core deposit growth was primarily driven by an increase in interest checking, demand, and money market deposits. Average commercial transaction deposits increased 25% and average consumer transaction deposits increased 11%.
Compared to the prior quarter, average core deposits increased 1%, primarily driven by an increase in interest checking and savings deposits. Average demand deposits represented 29% of total core deposits in both the current and prior quarter. Average commercial transaction deposits increased 1%, and average consumer transaction deposits increased 2%.
Period end total transaction deposits of $128 billion increased $9 billion, or 8%, compared to the prior quarter. Performance was primarily driven by commercial transaction growth of $8 billion, or 14%, partially reflecting deposits from the aforementioned C&I line draw activity near the end of the quarter.
Average Wholesale Funding
| ($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Average Wholesale Funding |
||||||||||||||||||||
| Certificates - $100,000 and over |
$ | 3,355 | $ | 4,072 | $ | 3,358 | (18 | %) | — | |||||||||||
| Other deposits |
257 | 252 | 726 | 2 | % | (65 | %) | |||||||||||||
| Federal funds purchased |
654 | 1,174 | 2,019 | (44 | %) | (68 | %) | |||||||||||||
| Other short-term borrowings |
1,750 | 1,133 | 646 | 54 | % | 171 | % | |||||||||||||
| Long-term debt |
15,816 | 14,860 | 15,438 | 6 | % | 2 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average wholesale funding |
$ | 21,832 | $ | 21,491 | $ | 22,187 | 2 | % | (2 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Compared to the year-ago quarter, average wholesale funding decreased 2% primarily driven by a decrease in federal funds borrowings, partially offset by an increase in other short-term borrowings. Compared to the prior quarter, average wholesale funding increased 2% primarily driven by debt issuances of $1.25 billion during the quarter and an increase in other short-term borrowings, partially offset by decreases in jumbo CD balances and federal funds borrowings.
8
Credit Quality Summary
| ($ in millions) | For the Three Months Ended | |||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Total nonaccrual portfolio loans and leases (NPLs) |
$ | 647 | $ | 618 | $ | 482 | $ | 521 | $ | 450 | ||||||||||
| Repossessed property |
10 | 10 | 9 | 8 | 11 | |||||||||||||||
| OREO |
52 | 52 | 28 | 31 | 37 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total nonperforming portfolio loans and leases and OREO (NPAs) |
$ | 709 | $ | 680 | $ | 519 | $ | 560 | $ | 498 | ||||||||||
| NPL ratio(h) |
0.55 | % | 0.56 | % | 0.44 | % | 0.48 | % | 0.41 | % | ||||||||||
| NPA ratio(c) |
0.60 | % | 0.62 | % | 0.47 | % | 0.51 | % | 0.45 | % | ||||||||||
| Total loans and leases 30-89 days past due (accrual) |
409 | 364 | 402 | 383 | 322 | |||||||||||||||
| Total loans and leases 90 days past due (accrual) |
151 | 130 | 132 | 128 | 132 | |||||||||||||||
| Allowance for loan and lease losses, beginning |
$ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | $ | 1,103 | ||||||||||
| Impact of CECL adoption |
643 | — | — | — | — | |||||||||||||||
| Total net losses charged-off |
(122 | ) | (113 | ) | (99 | ) | (78 | ) | (77 | ) | ||||||||||
| Provision for loan and lease losses |
625 | 172 | 127 | 78 | 89 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Allowance for loan and lease losses, ending |
$ | 2,348 | $ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | ||||||||||
| Reserve for unfunded commitments, beginning |
$ | 144 | $ | 154 | $ | 147 | $ | 133 | $ | 131 | ||||||||||
| Impact of CECL adoption |
10 | — | — | — | — | |||||||||||||||
| Reserve for acquired commitments |
— | — | — | 7 | 1 | |||||||||||||||
| Provision for (benefit from) the reserve for unfunded commitments |
15 | (10 | ) | 7 | 7 | 1 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Reserve for unfunded commitments, ending |
$ | 169 | $ | 144 | $ | 154 | $ | 147 | $ | 133 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total allowance for credit losses |
$ | 2,517 | $ | 1,346 | $ | 1,297 | $ | 1,262 | $ | 1,248 | ||||||||||
| Allowance for loan and lease losses ratios: |
||||||||||||||||||||
| As a percent of portfolio loans and leases |
1.99 | % | 1.10 | % | 1.04 | % | 1.02 | % | 1.02 | % | ||||||||||
| As a percent of nonperforming portfolio loans and leases |
363 | % | 194 | % | 237 | % | 214 | % | 248 | % | ||||||||||
| As a percent of nonperforming portfolio assets |
331 | % | 177 | % | 221 | % | 199 | % | 224 | % | ||||||||||
| Allowance for credit losses as a percent of portfolio loans and leases |
2.13 | % | 1.23 | % | 1.19 | % | 1.15 | % | 1.14 | % | ||||||||||
| Total losses charged-off |
$ | (159 | ) | $ | (152 | ) | $ | (130 | ) | $ | (119 | ) | $ | (108 | ) | |||||
| Total recoveries of losses previously charged-off |
37 | 39 | 31 | 41 | 31 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total net losses charged-off |
$ | (122 | ) | $ | (113 | ) | $ | (99 | ) | $ | (78 | ) | $ | (77 | ) | |||||
| Net charge-off ratio (NCO ratio)(b) |
0.44 | % | 0.41 | % | 0.36 | % | 0.29 | % | 0.32 | % | ||||||||||
| Commercial NCO ratio |
0.32 | % | 0.20 | % | 0.18 | % | 0.13 | % | 0.11 | % | ||||||||||
| Consumer NCO ratio |
0.66 | % | 0.78 | % | 0.68 | % | 0.59 | % | 0.68 | % | ||||||||||
Nonperforming portfolio loans and leases were $647 million in the current quarter, with the resulting NPL ratio of 0.55%. Compared to the year-ago quarter, NPLs increased $197 million with the NPL ratio increasing 14 bps. Compared to the prior quarter, NPLs increased $29 million with the NPL ratio decreasing 1 bp.
Nonperforming portfolio assets were $709 million in the current quarter, with the resulting NPA ratio of 0.60%. Compared to the year-ago quarter, NPAs increased $211 million with the NPA ratio increasing 15 bps. Compared to the prior quarter, NPAs increased $29 million with the NPA ratio decreasing 2 bps.
9
The provision for loan and lease losses totaled $625 million in the current quarter. The allowance for loan and lease losses ratio represented 1.99% of total portfolio loans and leases in the current quarter, compared with 1.02% in the year-ago quarter and 1.10% in the prior quarter. In the current quarter, the allowance for loan and lease losses represented 363% of nonperforming portfolio loans and leases and 331% of nonperforming portfolio assets. The allowance for credit losses ratio represented 2.13% of total portfolio loans and leases in the current quarter, reflecting the impacts of the CECL adoption and COVID-19.
Net charge-offs were $122 million in the current quarter, with the resulting NCO ratio of 0.44%. Compared to the year-ago quarter, net charge-offs increased $45 million and the NCO ratio increased 12 bps. Compared to the prior quarter, net charge-offs increased $9 million and the NCO ratio increased 3 bps.
In response to the COVID-19 pandemic, beginning in March 2020 Fifth Third began providing financial hardship relief in the form of payment deferrals and forbearances to consumer and business customers across a wide array of lending products, as well as the suspension of vehicle repossessions and home foreclosures. The payment deferrals and forbearances are currently expected to cover periods of three to six months. In most cases, these offers are not classified as troubled debt restructurings (TDRs) and do not result in loans being placed on nonaccrual status. However, for the residential mortgage loan portfolio, the forbearance program is expected to result in increases in loans reported as past due.
Capital Position
| For the Three Months Ended | ||||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Capital Position |
||||||||||||||||||||
| Average total Bancorp shareholders’ equity as a percent of average assets |
12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | 11.43 | % | ||||||||||
| Tangible equity(a) |
8.41 | % | 9.52 | % | 9.29 | % | 9.09 | % | 9.03 | % | ||||||||||
| Tangible common equity (excluding AOCI)(a) |
7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | 8.21 | % | ||||||||||
| Tangible common equity (including AOCI)(a) |
8.65 | % | 9.08 | % | 9.09 | % | 8.91 | % | 8.44 | % | ||||||||||
| Regulatory Capital Ratios(e) |
||||||||||||||||||||
| CET1 capital(d) |
9.36 | % | 9.75 | % | 9.56 | % | 9.57 | % | 9.60 | % | ||||||||||
| Tier I risk-based capital(d) |
10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | 10.67 | % | ||||||||||
| Total risk-based capital(d) |
13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | 13.57 | % | ||||||||||
| Tier I leverage |
9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % | 10.32 | % | ||||||||||
Capital ratios remained strong during the quarter. The CET1 capital ratio was 9.36%, the tangible common equity to tangible assets ratio was 7.41% excluding AOCI, and 8.65% including AOCI. The Tier I risk-based capital ratio was 10.56%, the Total risk-based capital ratio was 13.59%, and the Tier I leverage ratio was 9.37%.
Fifth Third’s regulatory capital ratio estimates for the first quarter of 2020 reflect the ‘five-year transition’ from the banking agencies’ interim final rule announced on March 27, 2020. This five-year transition election allows banking organizations to defer certain effects of the CECL accounting standard on their regulatory capital. Specifically, this interim final rule allows for 25% of the cumulative increase in allowance since the adoption of CECL and 100% of the day-one impact of CECL adoption to be deferred for a two-year period. This two-year period will be followed by a three-year transition period to phase-in the impact of the deferred amounts on regulatory capital. As a result of the transition election, the increase in credit reserves negatively impacted the current quarter CET1 capital ratio approximately 18 bps.
10
Tax Rate
The effective tax rate was 22.6% compared with 22.2% in the year-ago quarter and 22.0% in the prior quarter.
Other
The Bancorp adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments (commonly referred to as Current Expected Credit Losses, or CECL), on January 1, 2020. Upon adoption, the Bancorp recorded an increase to reserves of $653 million. The impact of the cumulative effect of the change was a $472 million decrease to equity.
Conference Call
Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor Relations”).
Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available after the conference call until approximately May 4, 2020, by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 4109509#).
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 March 31, 2020, the Company had $185 billion in assets and operates 1,123 full-service Banking Centers, and 2,464 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 March 31, 2020, had $374 billion in assets under care, of which it managed $42 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
Earnings Release End Notes
| (a) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 27. |
| (b) | Net losses charged-off as a percent of average portfolio loans and leases. |
| (c) | Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO. |
| (d) | Under the U.S. banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
| (e) | Current period regulatory capital 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 Third’s 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 Third’s capital plan; (21) regulation of Fifth Third’s 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 Third’s 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 Third’s 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 Third’s 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
Quarterly Financial Review for March 31, 2020
Table of Contents
| Financial Highlights |
14-15 | |||
| Consolidated Statements of Income |
16-17 | |||
| Consolidated Balance Sheets |
18-19 | |||
| Consolidated Statements of Changes in Equity |
20 | |||
| Average Balance Sheet and Yield Analysis |
21-22 | |||
| Summary of Loans and Leases |
23 | |||
| Regulatory Capital |
24 | |||
| Summary of Credit Loss Experience |
25 | |||
| Asset Quality |
26 | |||
| Regulation G Non-GAAP Reconciliation |
27-29 | |||
| Segment Presentation |
30 |
13
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| % / bps | ||||||||||||||||||||
| For the Three Months Ended | Change | |||||||||||||||||||
| March | December | March | ||||||||||||||||||
| 2020 | 2019 | 2019 | Seq | Yr/Yr | ||||||||||||||||
| Income Statement Data |
||||||||||||||||||||
| Net interest income |
$ | 1,229 | $ | 1,228 | $ | 1,082 | — | 14 | % | |||||||||||
| Net interest income (FTE)(a) |
1,233 | 1,232 | 1,086 | — | 14 | % | ||||||||||||||
| Noninterest income |
671 | 1,035 | 1,101 | (35 | %) | (39 | %) | |||||||||||||
| Total revenue (FTE)(a) |
1,904 | 2,267 | 2,187 | (16 | %) | (13 | %) | |||||||||||||
| Provision for credit losses |
640 | 162 | 90 | 295 | % | 611 | % | |||||||||||||
| Noninterest expense |
1,200 | 1,160 | 1,097 | 3 | % | 9 | % | |||||||||||||
| Net income |
46 | 734 | 775 | (94 | %) | (94 | %) | |||||||||||||
| Net income available to common shareholders |
29 | 701 | 760 | (96 | %) | (96 | %) | |||||||||||||
| Earnings Per Share Data |
||||||||||||||||||||
| Net income allocated to common shareholders |
$ | 28 | $ | 696 | $ | 752 | (96 | %) | (96 | %) | ||||||||||
| Average common shares outstanding (in thousands): |
||||||||||||||||||||
| Basic |
713,556 | 715,137 | 661,057 | ( | %) | 8 | % | |||||||||||||
| Diluted |
720,363 | 724,968 | 670,685 | (1 | %) | 7 | % | |||||||||||||
| Earnings per share, basic |
$ | 0.04 | $ | 0.97 | $ | 1.14 | (96 | %) | (97 | %) | ||||||||||
| Earnings per share, diluted |
0.04 | 0.96 | 1.12 | (96 | %) | (97 | %) | |||||||||||||
| Common Share Data |
||||||||||||||||||||
| Cash dividends per common share |
$ | 0.27 | $ | 0.24 | $ | 0.22 | 13 | % | 23 | % | ||||||||||
| Book value per share |
28.26 | 27.41 | 24.77 | 3 | % | 14 | % | |||||||||||||
| Market price per share |
14.85 | 30.74 | 25.22 | (52 | %) | (41 | %) | |||||||||||||
| Common shares outstanding (in thousands) |
711,306 | 708,916 | 739,406 | — | (4 | %) | ||||||||||||||
| Market capitalization |
$ | 10,563 | $ | 21,792 | $ | 18,648 | (52 | %) | (43 | %) | ||||||||||
| Financial Ratios |
||||||||||||||||||||
| Return on average assets |
0.11 | % | 1.72 | % | 2.11 | % | (161 | ) | (200 | ) | ||||||||||
| Return on average common equity |
0.6 | % | 14.2 | % | 19.6 | % | (1360 | ) | (1900 | ) | ||||||||||
| Return on average tangible common equity(a) |
1.0 | % | 18.7 | % | 23.9 | % | (1770 | ) | (2290 | ) | ||||||||||
| Noninterest income as a percent of total revenue(a) |
35 | % | 46 | % | 50 | % | (1100 | ) | (1500 | ) | ||||||||||
| Dividend payout |
675.0 | % | 24.7 | % | 19.3 | % | 65030 | 65570 | ||||||||||||
| Average total Bancorp shareholders’ equity as a percent of average assets |
12.63 | % | 12.58 | % | 11.43 | % | 5 | 120 | ||||||||||||
| Tangible common equity(a) |
7.41 | % | 8.44 | % | 8.21 | % | (103 | ) | (80 | ) | ||||||||||
| Net interest margin (FTE)(a) |
3.28 | % | 3.27 | % | 3.28 | % | 1 | — | ||||||||||||
| Efficiency (FTE)(a) |
63.0 | % | 51.2 | % | 50.2 | % | 1180 | 1280 | ||||||||||||
| Effective tax rate |
22.6 | % | 22.0 | % | 22.2 | % | 60 | 40 | ||||||||||||
| Credit Quality |
||||||||||||||||||||
| Net losses charged-off |
$ | 122 | $ | 113 | $ | 77 | 8 | % | 58 | % | ||||||||||
| Net losses charged-off as a percent of average portfolio loans and leases |
0.44 | % | 0.41 | % | 0.32 | % | 3 | 12 | ||||||||||||
| ALLL as a percent of portfolio loans and leases |
1.99 | % | 1.10 | % | 1.02 | % | 89 | 97 | ||||||||||||
| Allowance for credit losses as a percent of portfolio loans and leases(g) |
2.13 | % | 1.23 | % | 1.14 | % | 90 | 99 | ||||||||||||
| Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO |
0.60 | % | 0.62 | % | 0.45 | % | (2 | ) | 15 | |||||||||||
| Average Balances |
||||||||||||||||||||
| Loans and leases, including held for sale |
$ | 112,180 | $ | 110,986 | $ | 98,362 | 1 | % | 14 | % | ||||||||||
| Securities and other short-term investments |
39,033 | 38,326 | 36,101 | 2 | % | 8 | % | |||||||||||||
| Assets |
171,871 | 169,327 | 148,968 | 2 | % | 15 | % | |||||||||||||
| Transaction deposits(b) |
118,096 | 116,285 | 100,647 | 2 | % | 17 | % | |||||||||||||
| Core deposits(c) |
123,177 | 121,792 | 105,507 | 1 | % | 17 | % | |||||||||||||
| Wholesale funding(d) |
21,832 | 21,491 | 22,187 | 2 | % | (2 | %) | |||||||||||||
| Bancorp shareholders’ equity |
21,713 | 21,304 | 17,025 | 2 | % | 28 | % | |||||||||||||
| Regulatory Capital Ratios(e) |
||||||||||||||||||||
| CET1 capital(f) |
9.36 | % | 9.75 | % | 9.60 | % | (39 | ) | (24 | ) | ||||||||||
| Tier I risk-based capital(f) |
10.56 | % | 10.99 | % | 10.67 | % | (43 | ) | (11 | ) | ||||||||||
| Total risk-based capital(f) |
13.59 | % | 13.84 | % | 13.57 | % | (25 | ) | 2 | |||||||||||
| Tier I leverage |
9.37 | % | 9.54 | % | 10.32 | % | (17 | ) | (95 | ) | ||||||||||
| Operations |
||||||||||||||||||||
| Banking centers |
1,123 | 1,149 | 1,207 | (2 | %) | (7 | %) | |||||||||||||
| ATMs |
2,464 | 2,481 | 2,559 | (1 | %) | (4 | %) | |||||||||||||
| Full-time equivalent employees |
20,182 | 19,869 | 20,115 | 2 | % | — | ||||||||||||||
| (a) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 27. |
| (b) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers. |
| (c) | Includes transaction deposits plus other time deposits. |
| (d) | Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
| (e) | Current period regulatory capital ratios are estimates. |
| (f) | Under the U.S. banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
| (g) | The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
14
Fifth Third Bancorp and Subsidiaries
Financial Highlights
$ in millions, except per share data
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March | December | September | June | March | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| Income Statement Data |
||||||||||||||||||||
| Net interest income |
$ | 1,229 | $ | 1,228 | $ | 1,242 | $ | 1,245 | $ | 1,082 | ||||||||||
| Net interest income (FTE)(a) |
1,233 | 1,232 | 1,246 | 1,250 | 1,086 | |||||||||||||||
| Noninterest income |
671 | 1,035 | 740 | 660 | 1,101 | |||||||||||||||
| Total revenue (FTE)(a) |
1,904 | 2,267 | 1,986 | 1,910 | 2,187 | |||||||||||||||
| Provision for credit losses |
640 | 162 | 134 | 85 | 90 | |||||||||||||||
| Noninterest expense |
1,200 | 1,160 | 1,159 | 1,243 | 1,097 | |||||||||||||||
| Net income |
46 | 734 | 549 | 453 | 775 | |||||||||||||||
| Net income available to common shareholders |
29 | 701 | 530 | 427 | 760 | |||||||||||||||
| Earnings Per Share Data |
||||||||||||||||||||
| Net income allocated to common shareholders |
$ | 28 | $ | 696 | $ | 526 | $ | 423 | $ | 752 | ||||||||||
| Average common shares outstanding (in thousands): |
||||||||||||||||||||
| Basic |
713,556 | 715,137 | 726,716 | 738,051 | 661,057 | |||||||||||||||
| Diluted |
720,363 | 724,968 | 736,086 | 747,750 | 670,685 | |||||||||||||||
| Earnings per share, basic |
$ | 0.04 | $ | 0.97 | $ | 0.72 | $ | 0.57 | $ | 1.14 | ||||||||||
| Earnings per share, diluted |
0.04 | 0.96 | 0.71 | 0.57 | 1.12 | |||||||||||||||
| Common Share Data |
||||||||||||||||||||
| Cash dividends per common share |
$ | 0.27 | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.22 | ||||||||||
| Book value per share |
28.26 | 27.41 | 27.32 | 26.17 | 24.77 | |||||||||||||||
| Market value per share |
14.85 | 30.74 | 27.38 | 27.90 | 25.22 | |||||||||||||||
| Common shares outstanding (in thousands) |
711,306 | 708,916 | 718,583 | 731,474 | 739,406 | |||||||||||||||
| Market capitalization |
$ | 10,563 | $ | 21,792 | $ | 19,675 | $ | 20,408 | $ | 18,648 | ||||||||||
| Financial Ratios |
||||||||||||||||||||
| Return on average assets |
0.11 | % | 1.72 | % | 1.28 | % | 1.08 | % | 2.11 | % | ||||||||||
| Return on average common equity |
0.6 | % | 14.2 | % | 10.7 | % | 9.1 | % | 19.6 | % | ||||||||||
| Return on average tangible common equity(a) |
1.0 | % | 18.7 | % | 14.2 | % | 12.3 | % | 23.9 | % | ||||||||||
| Noninterest income as a percent of total revenue(a) |
35 | % | 46 | % | 37 | % | 35 | % | 50 | % | ||||||||||
| Dividend payout |
675.0 | % | 24.7 | % | 33.3 | % | 42.1 | % | 19.3 | % | ||||||||||
| Average total Bancorp shareholders’ equity as a percent of average assets |
12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | 11.43 | % | ||||||||||
| Tangible common equity(a) |
7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | 8.21 | % | ||||||||||
| Net interest margin (FTE)(a) |
3.28 | % | 3.27 | % | 3.32 | % | 3.37 | % | 3.28 | % | ||||||||||
| Efficiency (FTE)(a) |
63.0 | % | 51.2 | % | 58.4 | % | 65.1 | % | 50.2 | % | ||||||||||
| Effective tax rate |
22.6 | % | 22.0 | % | 20.2 | % | 21.5 | % | 22.2 | % | ||||||||||
| Credit Quality |
||||||||||||||||||||
| Net losses charged-off |
$ | 122 | $ | 113 | $ | 99 | $ | 78 | $ | 77 | ||||||||||
| Net losses charged-off as a percent of average portfolio loans and leases |
0.44 | % | 0.41 | % | 0.36 | % | 0.29 | % | 0.32 | % | ||||||||||
| ALLL as a percent of portfolio loans and leases |
1.99 | % | 1.10 | % | 1.04 | % | 1.02 | % | 1.02 | % | ||||||||||
| Allowance for credit losses as a percent of portfolio loans and leases(g) |
2.13 | % | 1.23 | % | 1.19 | % | 1.15 | % | 1.14 | % | ||||||||||
| Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO |
0.60 | % | 0.62 | % | 0.47 | % | 0.51 | % | 0.45 | % | ||||||||||
| Average Balances |
||||||||||||||||||||
| Loans and leases, including held for sale |
$ | 112,180 | $ | 110,986 | $ | 110,666 | $ | 110,993 | $ | 98,362 | ||||||||||
| Securities and other short-term investments |
39,033 | 38,326 | 38,188 | 37,797 | 36,101 | |||||||||||||||
| Assets |
171,871 | 169,327 | 169,585 | 167,578 | 148,968 | |||||||||||||||
| Transaction deposits(b) |
118,096 | 116,285 | 114,541 | 112,847 | 100,647 | |||||||||||||||
| Core deposits(c) |
123,177 | 121,792 | 120,364 | 118,525 | 105,507 | |||||||||||||||
| Wholesale funding(d) |
21,832 | 21,491 | 22,492 | 23,633 | 22,187 | |||||||||||||||
| Bancorp shareholders’ equity |
21,713 | 21,304 | 21,087 | 20,135 | 17,025 | |||||||||||||||
| Regulatory Capital Ratios(e) |
||||||||||||||||||||
| CET1 capital(f) |
9.36 | % | 9.75 | % | 9.56 | % | 9.57 | % | 9.60 | % | ||||||||||
| Tier I risk-based capital(f) |
10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | 10.67 | % | ||||||||||
| Total risk-based capital(f) |
13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | 13.57 | % | ||||||||||
| Tier I leverage |
9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % | 10.32 | % | ||||||||||
| Operations |
||||||||||||||||||||
| Banking centers |
1,123 | 1,149 | 1,143 | 1,207 | 1,207 | |||||||||||||||
| ATMs |
2,464 | 2,481 | 2,487 | 2,551 | 2,559 | |||||||||||||||
| Full-time equivalent employees |
20,182 | 19,869 | 19,478 | 19,758 | 20,115 | |||||||||||||||
| (a) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 27. |
| (b) | Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers. |
| (c) | Includes transaction deposits plus other time deposits. |
| (d) | Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
| (e) | Current period regulatory capital ratios are estimates. |
| (f) | Under the U.S. banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets. |
| (g) | The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
15
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income(a)
$ in millions
(unaudited)
| For the Three Months Ended | % Change | |||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Interest Income |
||||||||||||||||||||
| Interest and fees on loans and leases |
$ | 1,235 | $ | 1,252 | $ | 1,143 | (1 | %) | 8 | % | ||||||||||
| Interest on securities |
283 | 299 | 281 | (5 | %) | 1 | % | |||||||||||||
| Interest on other short-term investments |
7 | 8 | 9 | (13 | %) | (22 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest income |
1,525 | 1,559 | 1,433 | (2 | %) | 6 | % | |||||||||||||
| Interest Expense |
||||||||||||||||||||
| Interest on deposits |
166 | 201 | 205 | (17 | %) | (19 | %) | |||||||||||||
| Interest on federal funds purchased |
2 | 5 | 12 | (60 | %) | (83 | %) | |||||||||||||
| Interest on other short-term borrowings |
6 | 5 | 6 | 20 | % | — | ||||||||||||||
| Interest on long-term debt |
122 | 120 | 128 | 2 | % | (5 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest expense |
296 | 331 | 351 | (11 | %) | (16 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Interest Income |
1,229 | 1,228 | 1,082 | — | 14 | % | ||||||||||||||
| Provision for credit losses |
640 | 162 | 90 | 295 | % | 611 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Interest Income After Provision for Credit Losses |
589 | 1,066 | 992 | (45 | %) | (41 | %) | |||||||||||||
| Noninterest Income |
||||||||||||||||||||
| Service charges on deposits |
148 | 149 | 131 | (1 | %) | 13 | % | |||||||||||||
| Commercial banking revenue |
124 | 127 | 103 | (2 | %) | 20 | % | |||||||||||||
| Mortgage banking net revenue |
120 | 73 | 56 | 64 | % | 114 | % | |||||||||||||
| Wealth and asset management revenue |
134 | 129 | 112 | 4 | % | 20 | % | |||||||||||||
| Card and processing revenue |
86 | 95 | 79 | (9 | %) | 9 | % | |||||||||||||
| Leasing business revenue |
73 | 71 | 32 | 3 | % | 128 | % | |||||||||||||
| Other noninterest income |
7 | 382 | 569 | (98 | %) | (99 | %) | |||||||||||||
| Securities (losses) gains, net |
(24 | ) | 10 | 16 | NM | NM | ||||||||||||||
| Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights |
3 | (1 | ) | 3 | NM | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest income |
671 | 1,035 | 1,101 | (35 | %) | (39 | %) | |||||||||||||
| Noninterest Expense |
||||||||||||||||||||
| Compensation and benefits |
647 | 576 | 610 | 12 | % | 6 | % | |||||||||||||
| Net occupancy expense |
82 | 84 | 75 | (2 | %) | 9 | % | |||||||||||||
| Technology and communications |
93 | 103 | 83 | (10 | %) | 12 | % | |||||||||||||
| Equipment expense |
32 | 33 | 30 | (3 | %) | 7 | % | |||||||||||||
| Card and processing expense |
31 | 33 | 31 | (6 | %) | — | ||||||||||||||
| Leasing business expense |
35 | 36 | 19 | (3 | %) | 84 | % | |||||||||||||
| Marketing expense |
31 | 44 | 36 | (30 | %) | (14 | %) | |||||||||||||
| Other noninterest expense |
249 | 251 | 213 | (1 | %) | 17 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest expense |
1,200 | 1,160 | 1,097 | 3 | % | 9 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income Before Income Taxes |
60 | 941 | 996 | (94 | %) | (94 | %) | |||||||||||||
| Applicable income tax expense |
14 | 207 | 221 | (93 | %) | (94 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Income |
46 | 734 | 775 | (94 | %) | (94 | %) | |||||||||||||
| Dividends on preferred stock |
17 | 33 | 15 | (48 | %) | 13 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Income Available to Common Shareholders |
$ | 29 | $ | 701 | $ | 760 | (96 | %) | (96 | %) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
16
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Income
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Interest Income |
||||||||||||||||||||
| Interest and fees on loans and leases |
$ | 1,235 | $ | 1,252 | $ | 1,320 | $ | 1,336 | $ | 1,143 | ||||||||||
| Interest on securities |
283 | 299 | 291 | 290 | 281 | |||||||||||||||
| Interest on other short-term investments |
7 | 8 | 14 | 10 | 9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest income |
1,525 | 1,559 | 1,625 | 1,636 | 1,433 | |||||||||||||||
| Interest Expense |
||||||||||||||||||||
| Interest on deposits |
166 | 201 | 243 | 243 | 205 | |||||||||||||||
| Interest on federal funds purchased |
2 | 5 | 4 | 8 | 12 | |||||||||||||||
| Interest on other short-term borrowings |
6 | 5 | 8 | 9 | 6 | |||||||||||||||
| Interest on long-term debt |
122 | 120 | 128 | 131 | 128 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest expense |
296 | 331 | 383 | 391 | 351 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Interest Income |
1,229 | 1,228 | 1,242 | 1,245 | 1,082 | |||||||||||||||
| Provision for credit losses |
640 | 162 | 134 | 85 | 90 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Interest Income After Provision for Credit Losses |
589 | 1,066 | 1,108 | 1,160 | 992 | |||||||||||||||
| Noninterest Income |
||||||||||||||||||||
| Service charges on deposits |
148 | 149 | 143 | 143 | 131 | |||||||||||||||
| Commercial banking revenue |
124 | 127 | 123 | 107 | 103 | |||||||||||||||
| Mortgage banking net revenue |
120 | 73 | 95 | 63 | 56 | |||||||||||||||
| Wealth and asset management revenue |
134 | 129 | 124 | 122 | 112 | |||||||||||||||
| Card and processing revenue |
86 | 95 | 94 | 92 | 79 | |||||||||||||||
| Leasing business revenue |
73 | 71 | 92 | 76 | 32 | |||||||||||||||
| Other noninterest income |
7 | 382 | 64 | 47 | 569 | |||||||||||||||
| Securities (losses) gains, net |
(24 | ) | 10 | 5 | 8 | 16 | ||||||||||||||
| Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights |
3 | (1 | ) | — | 2 | 3 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest income |
671 | 1,035 | 740 | 660 | 1,101 | |||||||||||||||
| Noninterest Expense |
||||||||||||||||||||
| Compensation and benefits |
647 | 576 | 584 | 641 | 610 | |||||||||||||||
| Net occupancy expense |
82 | 84 | 84 | 88 | 75 | |||||||||||||||
| Technology and communications |
93 | 103 | 100 | 136 | 83 | |||||||||||||||
| Equipment expense |
32 | 33 | 33 | 33 | 30 | |||||||||||||||
| Card and processing expense |
31 | 33 | 33 | 34 | 31 | |||||||||||||||
| Leasing business expense |
35 | 36 | 40 | 38 | 19 | |||||||||||||||
| Marketing expense |
31 | 44 | 40 | 41 | 36 | |||||||||||||||
| Other noninterest expense |
249 | 251 | 245 | 232 | 213 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest expense |
1,200 | 1,160 | 1,159 | 1,243 | 1,097 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income Before Income Taxes |
60 | 941 | 689 | 577 | 996 | |||||||||||||||
| Applicable income tax expense |
14 | 207 | 140 | 124 | 221 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Income |
46 | 734 | 549 | 453 | 775 | |||||||||||||||
| Dividends on preferred stock |
17 | 33 | 19 | 26 | 15 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Income Available to Common Shareholders |
$ | 29 | $ | 701 | $ | 530 | $ | 427 | $ | 760 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
17
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| As of | % Change | |||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Assets |
||||||||||||||||||||
| Cash and due from banks |
$ | 3,282 | $ | 3,278 | $ | 2,749 | — | 19 | % | |||||||||||
| Other short-term investments |
6,319 | 1,950 | 3,556 | 224 | % | 78 | % | |||||||||||||
| Available-for-sale debt and other securities(a) |
38,645 | 36,028 | 35,048 | 7 | % | 10 | % | |||||||||||||
| Held-to-maturity securities(b) |
17 | 17 | 21 | — | (19 | %) | ||||||||||||||
| Trading debt securities |
433 | 297 | 325 | 46 | % | 33 | % | |||||||||||||
| Equity securities |
459 | 564 | 426 | (19 | %) | 8 | % | |||||||||||||
| Loans and leases held for sale |
1,630 | 1,400 | 692 | 16 | % | 136 | % | |||||||||||||
| Portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
58,250 | 50,542 | 51,862 | 15 | % | 12 | % | |||||||||||||
| Commercial mortgage loans |
11,160 | 10,963 | 10,686 | 2 | % | 4 | % | |||||||||||||
| Commercial construction loans |
5,462 | 5,090 | 5,231 | 7 | % | 4 | % | |||||||||||||
| Commercial leases |
3,123 | 3,363 | 3,909 | (7 | %) | (20 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
77,995 | 69,958 | 71,688 | 11 | % | 9 | % | |||||||||||||
| Residential mortgage loans |
16,701 | 16,724 | 16,811 | — | (1 | %) | ||||||||||||||
| Home equity |
5,963 | 6,083 | 6,435 | (2 | %) | (7 | %) | |||||||||||||
| Indirect secured consumer loans |
12,050 | 11,538 | 10,031 | 4 | % | 20 | % | |||||||||||||
| Credit card |
2,417 | 2,532 | 2,388 | (5 | %) | 1 | % | |||||||||||||
| Other consumer loans |
2,911 | 2,723 | 2,489 | 7 | % | 17 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
40,042 | 39,600 | 38,154 | 1 | % | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Portfolio loans and leases |
118,037 | 109,558 | 109,842 | 8 | % | 7 | % | |||||||||||||
| Allowance for loan and lease losses |
(2,348 | ) | (1,202 | ) | (1,115 | ) | 95 | % | 111 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Portfolio loans and leases, net |
115,689 | 108,356 | 108,727 | 7 | % | 6 | % | |||||||||||||
| Bank premises and equipment |
2,009 | 1,995 | 2,092 | 1 | % | (4 | %) | |||||||||||||
| Operating lease equipment |
819 | 848 | 908 | (3 | %) | (10 | %) | |||||||||||||
| Goodwill |
4,261 | 4,252 | 4,321 | — | (1 | %) | ||||||||||||||
| Intangible assets |
184 | 201 | 218 | (8 | %) | (16 | %) | |||||||||||||
| Servicing rights |
685 | 993 | 1,141 | (31 | %) | (40 | %) | |||||||||||||
| Other assets |
10,959 | 9,190 | 7,629 | 19 | % | 44 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Assets |
$ | 185,391 | $ | 169,369 | $ | 167,853 | 9 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Liabilities |
||||||||||||||||||||
| Deposits: |
||||||||||||||||||||
| Demand |
$ | 39,533 | $ | 35,968 | $ | 35,963 | 10 | % | 10 | % | ||||||||||
| Interest checking |
44,520 | 40,409 | 35,746 | 10 | % | 25 | % | |||||||||||||
| Savings |
15,557 | 14,248 | 14,451 | 9 | % | 8 | % | |||||||||||||
| Money market |
27,775 | 27,277 | 25,942 | 2 | % | 7 | % | |||||||||||||
| Foreign office |
177 | 221 | 154 | (20 | %) | 15 | % | |||||||||||||
| Other time |
4,683 | 5,237 | 5,539 | (11 | %) | (15 | %) | |||||||||||||
| Certificates $100,000 and over |
2,816 | 3,702 | 5,569 | (24 | %) | (49 | %) | |||||||||||||
| Other deposits |
— | — | 300 | — | (100 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total deposits |
135,061 | 127,062 | 123,664 | 6 | % | 9 | % | |||||||||||||
| Federal funds purchased |
1,625 | 260 | 2,630 | 525 | % | (38 | %) | |||||||||||||
| Other short-term borrowings |
4,542 | 1,011 | 1,329 | 349 | % | 242 | % | |||||||||||||
| Accrued taxes, interest and expenses |
2,432 | 2,441 | 2,242 | — | 8 | % | ||||||||||||||
| Other liabilities |
3,576 | 2,422 | 2,661 | 48 | % | 34 | % | |||||||||||||
| Long-term debt |
16,282 | 14,970 | 15,483 | 9 | % | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities |
163,518 | 148,166 | 148,009 | 10 | % | 10 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Equity |
||||||||||||||||||||
| Common stock(c) |
2,051 | 2,051 | 2,051 | — | — | |||||||||||||||
| Preferred stock |
1,770 | 1,770 | 1,331 | — | 33 | % | ||||||||||||||
| Capital surplus |
3,597 | 3,599 | 3,444 | — | 4 | % | ||||||||||||||
| Retained earnings |
17,677 | 18,315 | 17,184 | (3 | %) | 3 | % | |||||||||||||
| Accumulated other comprehensive income |
2,477 | 1,192 | 409 | 108 | % | 506 | % | |||||||||||||
| Treasury stock |
(5,699 | ) | (5,724 | ) | (4,772 | ) | — | 19 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Bancorp shareholders’ equity |
21,873 | 21,203 | 19,647 | 3 | % | 11 | % | |||||||||||||
| Noncontrolling interests |
— | — | 197 | — | (100 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Equity |
21,873 | 21,203 | 19,844 | 3 | % | 10 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities and Equity |
$ | 185,391 | $ | 169,369 | $ | 167,853 | 9 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) Amortized cost |
$ | 36,428 | $ | 34,966 | $ | 34,784 | 4 | % | 5 | % | ||||||||||
| (b) Market values |
17 | 17 | 21 | — | (19 | %) | ||||||||||||||
| (c) Common shares, stated value $2.22 per share (in thousands): |
||||||||||||||||||||
| Authorized |
2,000,000 | 2,000,000 | 2,000,000 | — | — | |||||||||||||||
| Outstanding, excluding treasury |
711,306 | 708,916 | 739,406 | — | (4 | %) | ||||||||||||||
| Treasury |
212,586 | 214,977 | 184,486 | (1 | %) | 15 | % | |||||||||||||
18
Fifth Third Bancorp and Subsidiaries
Consolidated Balance Sheets
$ in millions, except per share data
(unaudited)
| As of | ||||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Assets |
||||||||||||||||||||
| Cash and due from banks |
$ | 3,282 | $ | 3,278 | $ | 3,261 | $ | 2,764 | $ | 2,749 | ||||||||||
| Other short-term investments |
6,319 | 1,950 | 3,235 | 3,357 | 3,556 | |||||||||||||||
| Available-for-sale debt and other securities(a) |
38,645 | 36,028 | 37,178 | 35,753 | 35,048 | |||||||||||||||
| Held-to-maturity securities(b) |
17 | 17 | 18 | 21 | 21 | |||||||||||||||
| Trading debt securities |
433 | 297 | 297 | 322 | 325 | |||||||||||||||
| Equity securities |
459 | 564 | 459 | 485 | 426 | |||||||||||||||
| Loans and leases held for sale |
1,630 | 1,400 | 1,223 | 1,205 | 692 | |||||||||||||||
| Portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
58,250 | 50,542 | 50,768 | 51,104 | 51,862 | |||||||||||||||
| Commercial mortgage loans |
11,160 | 10,963 | 10,822 | 10,717 | 10,686 | |||||||||||||||
| Commercial construction loans |
5,462 | 5,090 | 5,281 | 5,264 | 5,231 | |||||||||||||||
| Commercial leases |
3,123 | 3,363 | 3,495 | 3,677 | 3,909 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
77,995 | 69,958 | 70,366 | 70,762 | 71,688 | |||||||||||||||
| Residential mortgage loans |
16,701 | 16,724 | 16,675 | 16,777 | 16,811 | |||||||||||||||
| Home equity |
5,963 | 6,083 | 6,218 | 6,325 | 6,435 | |||||||||||||||
| Indirect secured consumer loans |
12,050 | 11,538 | 11,026 | 10,403 | 10,031 | |||||||||||||||
| Credit card |
2,417 | 2,532 | 2,467 | 2,436 | 2,388 | |||||||||||||||
| Other consumer loans |
2,911 | 2,723 | 2,657 | 2,580 | 2,489 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
40,042 | 39,600 | 39,043 | 38,521 | 38,154 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Portfolio loans and leases |
118,037 | 109,558 | 109,409 | 109,283 | 109,842 | |||||||||||||||
| Allowance for loan and lease losses |
(2,348 | ) | (1,202 | ) | (1,143 | ) | (1,115 | ) | (1,115 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Portfolio loans and leases, net |
115,689 | 108,356 | 108,266 | 108,168 | 108,727 | |||||||||||||||
| Bank premises and equipment |
2,009 | 1,995 | 2,053 | 2,074 | 2,092 | |||||||||||||||
| Operating lease equipment |
819 | 848 | 869 | 894 | 908 | |||||||||||||||
| Goodwill |
4,261 | 4,252 | 4,290 | 4,284 | 4,321 | |||||||||||||||
| Intangible assets |
184 | 201 | 201 | 215 | 218 | |||||||||||||||
| Servicing rights |
685 | 993 | 910 | 1,039 | 1,141 | |||||||||||||||
| Other assets |
10,959 | 9,190 | 8,819 | 8,221 | 7,629 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Assets |
$ | 185,391 | $ | 169,369 | $ | 171,079 | $ | 168,802 | $ | 167,853 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Liabilities |
||||||||||||||||||||
| Deposits: |
||||||||||||||||||||
| Demand |
$ | 39,533 | $ | 35,968 | $ | 35,893 | $ | 35,589 | $ | 35,963 | ||||||||||
| Interest checking |
44,520 | 40,409 | 36,965 | 37,491 | 35,746 | |||||||||||||||
| Savings |
15,557 | 14,248 | 14,354 | 14,484 | 14,451 | |||||||||||||||
| Money market |
27,775 | 27,277 | 27,370 | 26,465 | 25,942 | |||||||||||||||
| Foreign office |
177 | 221 | 226 | 175 | 154 | |||||||||||||||
| Other time |
4,683 | 5,237 | 5,662 | 5,759 | 5,539 | |||||||||||||||
| Certificates $100,000 and over |
2,816 | 3,702 | 4,377 | 5,429 | 5,569 | |||||||||||||||
| Other deposits |
— | — | 500 | — | 300 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total deposits |
135,061 | 127,062 | 125,347 | 125,392 | 123,664 | |||||||||||||||
| Federal funds purchased |
1,625 | 260 | 876 | 179 | 2,630 | |||||||||||||||
| Other short-term borrowings |
4,542 | 1,011 | 4,046 | 957 | 1,329 | |||||||||||||||
| Accrued taxes, interest and expenses |
2,432 | 2,441 | 2,507 | 2,397 | 2,242 | |||||||||||||||
| Other liabilities |
3,576 | 2,422 | 2,425 | 3,422 | 2,661 | |||||||||||||||
| Long-term debt |
16,282 | 14,970 | 14,474 | 15,784 | 15,483 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities |
163,518 | 148,166 | 149,675 | 148,131 | 148,009 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Equity |
||||||||||||||||||||
| Common stock(c) |
2,051 | 2,051 | 2,051 | 2,051 | 2,051 | |||||||||||||||
| Preferred stock |
1,770 | 1,770 | 1,770 | 1,331 | 1,331 | |||||||||||||||
| Capital surplus |
3,597 | 3,599 | 3,589 | 3,572 | 3,444 | |||||||||||||||
| Retained earnings |
17,677 | 18,315 | 17,786 | 17,431 | 17,184 | |||||||||||||||
| Accumulated other comprehensive income |
2,477 | 1,192 | 1,635 | 1,178 | 409 | |||||||||||||||
| Treasury stock |
(5,699 | ) | (5,724 | ) | (5,427 | ) | (5,089 | ) | (4,772 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Bancorp shareholders’ equity |
21,873 | 21,203 | 21,404 | 20,474 | 19,647 | |||||||||||||||
| Noncontrolling interests |
— | — | — | 197 | 197 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Equity |
21,873 | 21,203 | 21,404 | 20,671 | 19,844 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities and Equity |
$ | 185,391 | $ | 169,369 | $ | 171,079 | $ | 168,802 | $ | 167,853 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) Amortized cost |
$ | 36,428 | $ | 34,966 | $ | 35,662 | $ | 34,731 | $ | 34,784 | ||||||||||
| (b) Market values |
17 | 17 | 18 | 21 | 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 |
711,306 | 708,916 | 718,583 | 731,474 | 739,406 | |||||||||||||||
| Treasury |
212,586 | 214,977 | 205,309 | 192,419 | 184,486 | |||||||||||||||
19
Fifth Third Bancorp and Subsidiaries
Consolidated Statements of Changes in Equity
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||
| March | March | |||||||
| 2020 | 2019 | |||||||
| Total Equity, Beginning |
$ | 21,203 | $ | 16,250 | ||||
| Net income |
46 | 775 | ||||||
| Other comprehensive income, net of tax: |
||||||||
| Change in unrealized gains: |
||||||||
| Available-for-sale debt securities |
882 | 431 | ||||||
| Qualifying cash flow hedges |
402 | 89 | ||||||
| Change in accumulated other comprehensive income related to employee benefit plans |
1 | 1 | ||||||
|
|
|
|
|
|||||
| Comprehensive income |
$ | 1,331 | $ | 1,296 | ||||
| Cash dividends declared: |
||||||||
| Common stock |
(195 | ) | (165 | ) | ||||
| Preferred stock |
(17 | ) | (15 | ) | ||||
| Impact of stock transactions under stock compensation plans, net |
23 | 25 | ||||||
| Shares acquired for treasury |
— | (913 | ) | |||||
| Impact of acquisition |
— | 3,159 | ||||||
| Noncontrolling interest |
— | 197 | ||||||
| Impact of cumulative effect of change in accounting principles |
(472 | ) | 10 | |||||
|
|
|
|
|
|||||
| Total Equity, Ending |
$ | 21,873 | $ | 19,844 | ||||
|
|
|
|
|
|||||
20
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield/Rate Analysis
$ in millions
(unaudited)
| For the Three Months Ended | % Change | |||||||||||||||||||
| March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | ||||||||||||||||
| Assets |
||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 51,693 | $ | 50,980 | $ | 46,070 | 1 | % | 12 | % | ||||||||||
| Commercial mortgage loans |
11,020 | 10,832 | 7,417 | 2 | % | 49 | % | |||||||||||||
| Commercial construction loans |
5,132 | 5,334 | 4,838 | (4 | %) | 6 | % | |||||||||||||
| Commercial leases |
3,201 | 3,384 | 3,555 | (5 | %) | (10 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
71,046 | 70,530 | 61,880 | 1 | % | 15 | % | |||||||||||||
| Residential mortgage loans |
18,024 | 17,853 | 16,150 | 1 | % | 12 | % | |||||||||||||
| Home equity |
6,006 | 6,147 | 6,356 | (2 | %) | (6 | %) | |||||||||||||
| Indirect secured consumer loans |
11,809 | 11,281 | 9,176 | 5 | % | 29 | % | |||||||||||||
| Credit card |
2,498 | 2,496 | 2,396 | — | 4 | % | ||||||||||||||
| Other consumer loans |
2,797 | 2,679 | 2,404 | 4 | % | 16 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
41,134 | 40,456 | 36,482 | 2 | % | 13 | % | |||||||||||||
| Taxable securities |
35,973 | 36,255 | 34,320 | (1 | %) | 5 | % | |||||||||||||
| Tax exempt securities |
162 | 57 | 28 | 184 | % | 479 | % | |||||||||||||
| Other short-term investments |
2,898 | 2,014 | 1,753 | 44 | % | 65 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-earning assets |
151,213 | 149,312 | 134,463 | 1 | % | 12 | % | |||||||||||||
| Cash and due from banks |
2,880 | 3,063 | 2,217 | (6 | %) | 30 | % | |||||||||||||
| Other assets |
19,623 | 18,096 | 13,391 | 8 | % | 47 | % | |||||||||||||
| Allowance for loan and lease losses |
(1,845 | ) | (1,144 | ) | (1,103 | ) | 61 | % | 67 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Assets |
$ | 171,871 | $ | 169,327 | $ | 148,968 | 2 | % | 15 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Liabilities |
||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||
| Interest checking deposits |
$ | 40,298 | $ | 38,628 | $ | 33,697 | 4 | % | 20 | % | ||||||||||
| Savings deposits |
14,715 | 14,274 | 13,052 | 3 | % | 13 | % | |||||||||||||
| Money market deposits |
27,109 | 27,429 | 23,133 | (1 | %) | 17 | % | |||||||||||||
| Foreign office deposits |
209 | 244 | 208 | (14 | %) | — | ||||||||||||||
| Other time deposits |
5,081 | 5,507 | 4,860 | (8 | %) | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing core deposits |
87,412 | 86,082 | 74,950 | 2 | % | 17 | % | |||||||||||||
| Certificates $100,000 and over |
3,355 | 4,072 | 3,358 | (18 | %) | — | ||||||||||||||
| Other deposits |
257 | 252 | 726 | 2 | % | (65 | %) | |||||||||||||
| Federal funds purchased |
654 | 1,174 | 2,019 | (44 | %) | (68 | %) | |||||||||||||
| Other short-term borrowings |
1,750 | 1,133 | 646 | 54 | % | 171 | % | |||||||||||||
| Long-term debt |
15,816 | 14,860 | 15,438 | 6 | % | 2 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing liabilities |
109,244 | 107,573 | 97,137 | 2 | % | 12 | % | |||||||||||||
| Demand deposits |
35,765 | 35,710 | 30,557 | — | 17 | % | ||||||||||||||
| Other liabilities |
5,149 | 4,740 | 4,227 | 9 | % | 22 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities |
150,158 | 148,023 | 131,921 | 1 | % | 14 | % | |||||||||||||
| Total Equity |
21,713 | 21,304 | 17,047 | 2 | % | 27 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities and Equity |
$ | 171,871 | $ | 169,327 | $ | 148,968 | 2 | % | 15 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| For the Three Months Ended | bps Change | |||||||||||||||||||
| Yield/Rate Analysis | March 2020 |
December 2019 |
March 2019 |
Seq | Yr/Yr | |||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||
| Commercial and industrial loans(a) |
4.25 | % | 4.32 | % | 4.67 | % | (7 | ) | (42 | ) | ||||||||||
| Commercial mortgage loans(a) |
4.44 | % | 4.48 | % | 4.80 | % | (4 | ) | (36 | ) | ||||||||||
| Commercial construction loans(a) |
4.82 | % | 4.88 | % | 5.55 | % | (6 | ) | (73 | ) | ||||||||||
| Commercial leases(a) |
3.46 | % | 3.30 | % | 3.08 | % | 16 | 38 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
4.28 | % | 4.34 | % | 4.66 | % | (6 | ) | (38 | ) | ||||||||||
| Residential mortgage loans |
3.63 | % | 3.57 | % | 3.71 | % | 6 | (8 | ) | |||||||||||
| Home equity |
4.71 | % | 4.80 | % | 5.34 | % | (9 | ) | (63 | ) | ||||||||||
| Indirect secured consumer loans |
4.09 | % | 4.16 | % | 3.79 | % | (7 | ) | 30 | |||||||||||
| Credit card |
12.13 | % | 12.37 | % | 12.63 | % | (24 | ) | (50 | ) | ||||||||||
| Other consumer loans |
7.71 | % | 7.75 | % | 7.49 | % | (4 | ) | 22 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
4.71 | % | 4.74 | % | 4.85 | % | (3 | ) | (14 | ) | ||||||||||
| Total loans and leases |
4.44 | % | 4.49 | % | 4.73 | % | (5 | ) | (29 | ) | ||||||||||
| Taxable securities |
3.15 | % | 3.27 | % | 3.32 | % | (12 | ) | (17 | ) | ||||||||||
| Tax exempt securities(a) |
3.04 | % | 4.44 | % | 4.80 | % | (140 | ) | (176 | ) | ||||||||||
| Other short-term investments |
0.97 | % | 1.65 | % | 1.97 | % | (68 | ) | (100 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-earning assets |
4.07 | % | 4.15 | % | 4.33 | % | (8 | ) | (26 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||
| Interest checking deposits |
0.75 | % | 0.88 | % | 1.18 | % | (13 | ) | (43 | ) | ||||||||||
| Savings deposits |
0.13 | % | 0.14 | % | 0.15 | % | (1 | ) | (2 | ) | ||||||||||
| Money market deposits |
0.72 | % | 0.89 | % | 1.03 | % | (17 | ) | (31 | ) | ||||||||||
| Foreign office deposits |
0.57 | % | 0.95 | % | 0.60 | % | (38 | ) | (3 | ) | ||||||||||
| Other time deposits |
1.56 | % | 1.75 | % | 1.80 | % | (19 | ) | (24 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing core deposits |
0.68 | % | 0.82 | % | 0.99 | % | (14 | ) | (31 | ) | ||||||||||
| Certificates $100,000 and over |
2.09 | % | 2.14 | % | 2.13 | % | (5 | ) | (4 | ) | ||||||||||
| Other deposits |
0.85 | % | 1.75 | % | 2.43 | % | (90 | ) | (158 | ) | ||||||||||
| Federal funds purchased |
1.13 | % | 1.74 | % | 2.43 | % | (61 | ) | (130 | ) | ||||||||||
| Other short-term borrowings |
1.32 | % | 1.89 | % | 3.62 | % | (57 | ) | (230 | ) | ||||||||||
| Long-term debt |
3.12 | % | 3.22 | % | 3.35 | % | (10 | ) | (23 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing liabilities |
1.09 | % | 1.22 | % | 1.46 | % | (13 | ) | (37 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | Presented on an FTE basis. |
21
Fifth Third Bancorp and Subsidiaries
Average Balance Sheet and Yield/Rate Analysis
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Assets |
||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 51,693 | $ | 50,980 | $ | 51,364 | $ | 52,187 | $ | 46,070 | ||||||||||
| Commercial mortgage loans |
11,020 | 10,832 | 10,695 | 10,635 | 7,417 | |||||||||||||||
| Commercial construction loans |
5,132 | 5,334 | 5,267 | 5,248 | 4,838 | |||||||||||||||
| Commercial leases |
3,201 | 3,384 | 3,563 | 3,811 | 3,555 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
71,046 | 70,530 | 70,889 | 71,881 | 61,880 | |||||||||||||||
| Residential mortgage loans |
18,024 | 17,853 | 17,733 | 17,589 | 16,150 | |||||||||||||||
| Home equity |
6,006 | 6,147 | 6,267 | 6,376 | 6,356 | |||||||||||||||
| Indirect secured consumer loans |
11,809 | 11,281 | 10,707 | 10,190 | 9,176 | |||||||||||||||
| Credit card |
2,498 | 2,496 | 2,448 | 2,408 | 2,396 | |||||||||||||||
| Other consumer loans |
2,797 | 2,679 | 2,622 | 2,549 | 2,404 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
41,134 | 40,456 | 39,777 | 39,112 | 36,482 | |||||||||||||||
| Taxable securities |
35,973 | 36,255 | 35,653 | 35,467 | 34,320 | |||||||||||||||
| Tax exempt securities |
162 | 57 | 38 | 40 | 28 | |||||||||||||||
| Other short-term investments |
2,898 | 2,014 | 2,497 | 2,290 | 1,753 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-earning assets |
151,213 | 149,312 | 148,854 | 148,790 | 134,463 | |||||||||||||||
| Cash and due from banks |
2,880 | 3,063 | 2,769 | 2,931 | 2,217 | |||||||||||||||
| Other assets |
19,623 | 18,096 | 19,077 | 16,972 | 13,391 | |||||||||||||||
| Allowance for loan and lease losses |
(1,845 | ) | (1,144 | ) | (1,115 | ) | (1,115 | ) | (1,103 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Assets |
$ | 171,871 | $ | 169,327 | $ | 169,585 | $ | 167,578 | $ | 148,968 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Liabilities |
||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||
| Interest checking deposits |
$ | 40,298 | $ | 38,628 | $ | 37,729 | $ | 36,514 | $ | 33,697 | ||||||||||
| Savings deposits |
14,715 | 14,274 | 14,405 | 14,418 | 13,052 | |||||||||||||||
| Money market deposits |
27,109 | 27,429 | 26,962 | 25,934 | 23,133 | |||||||||||||||
| Foreign office deposits |
209 | 244 | 222 | 163 | 208 | |||||||||||||||
| Other time deposits |
5,081 | 5,507 | 5,823 | 5,678 | 4,860 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing core deposits |
87,412 | 86,082 | 85,141 | 82,707 | 74,950 | |||||||||||||||
| Certificates $100,000 and over |
3,355 | 4,072 | 4,795 | 5,780 | 3,358 | |||||||||||||||
| Other deposits |
257 | 252 | 47 | 40 | 726 | |||||||||||||||
| Federal funds purchased |
654 | 1,174 | 739 | 1,151 | 2,019 | |||||||||||||||
| Other short-term borrowings |
1,750 | 1,133 | 1,278 | 1,119 | 646 | |||||||||||||||
| Long-term debt |
15,816 | 14,860 | 15,633 | 15,543 | 15,438 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing liabilities |
109,244 | 107,573 | 107,633 | 106,340 | 97,137 | |||||||||||||||
| Demand deposits |
35,765 | 35,710 | 35,223 | 35,818 | 30,557 | |||||||||||||||
| Other liabilities |
5,149 | 4,740 | 5,522 | 5,088 | 4,227 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities |
150,158 | 148,023 | 148,378 | 147,246 | 131,921 | |||||||||||||||
| Total Equity |
21,713 | 21,304 | 21,207 | 20,332 | 17,047 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities and Equity |
$ | 171,871 | $ | 169,327 | $ | 169,585 | $ | 167,578 | $ | 148,968 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Yield/Rate Analysis |
||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||
| Commercial and industrial loans(a) |
4.25 | % | 4.32 | % | 4.66 | % | 4.79 | % | 4.67 | % | ||||||||||
| Commercial mortgage loans(a) |
4.44 | % | 4.48 | % | 4.86 | % | 5.11 | % | 4.80 | % | ||||||||||
| Commercial construction loans(a) |
4.82 | % | 4.88 | % | 5.39 | % | 5.71 | % | 5.55 | % | ||||||||||
| Commercial leases(a) |
3.46 | % | 3.30 | % | 3.34 | % | 3.51 | % | 3.08 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
4.28 | % | 4.34 | % | 4.68 | % | 4.84 | % | 4.66 | % | ||||||||||
| Residential mortgage loans |
3.63 | % | 3.57 | % | 3.67 | % | 3.70 | % | 3.71 | % | ||||||||||
| Home equity |
4.71 | % | 4.80 | % | 5.20 | % | 5.30 | % | 5.34 | % | ||||||||||
| Indirect secured consumer loans |
4.09 | % | 4.16 | % | 4.22 | % | 4.11 | % | 3.79 | % | ||||||||||
| Credit card |
12.13 | % | 12.37 | % | 12.57 | % | 12.38 | % | 12.63 | % | ||||||||||
| Other consumer loans |
7.71 | % | 7.75 | % | 7.69 | % | 7.58 | % | 7.49 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
4.71 | % | 4.74 | % | 4.87 | % | 4.85 | % | 4.85 | % | ||||||||||
| Total loans and leases |
4.44 | % | 4.49 | % | 4.75 | % | 4.84 | % | 4.73 | % | ||||||||||
| Taxable securities |
3.15 | % | 3.27 | % | 3.24 | % | 3.28 | % | 3.32 | % | ||||||||||
| Tax exempt securities(a) |
3.04 | % | 4.44 | % | 3.18 | % | 3.50 | % | 4.80 | % | ||||||||||
| Other short-term investments |
0.97 | % | 1.65 | % | 2.18 | % | 1.80 | % | 1.97 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-earning assets |
4.07 | % | 4.15 | % | 4.34 | % | 4.42 | % | 4.33 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||
| Interest checking deposits |
0.75 | % | 0.88 | % | 1.12 | % | 1.17 | % | 1.18 | % | ||||||||||
| Savings deposits |
0.13 | % | 0.14 | % | 0.18 | % | 0.17 | % | 0.15 | % | ||||||||||
| Money market deposits |
0.72 | % | 0.89 | % | 1.13 | % | 1.14 | % | 1.03 | % | ||||||||||
| Foreign office deposits |
0.57 | % | 0.95 | % | 0.37 | % | 0.53 | % | 0.60 | % | ||||||||||
| Other time deposits |
1.56 | % | 1.75 | % | 1.79 | % | 1.84 | % | 1.80 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing core deposits |
0.68 | % | 0.82 | % | 1.01 | % | 1.03 | % | 0.99 | % | ||||||||||
| Certificates $100,000 and over |
2.09 | % | 2.14 | % | 2.20 | % | 2.10 | % | 2.13 | % | ||||||||||
| Other deposits |
0.85 | % | 1.75 | % | 1.97 | % | 2.92 | % | 2.43 | % | ||||||||||
| Federal funds purchased |
1.13 | % | 1.74 | % | 2.06 | % | 2.61 | % | 2.43 | % | ||||||||||
| Other short-term borrowings |
1.32 | % | 1.89 | % | 2.55 | % | 3.08 | % | 3.62 | % | ||||||||||
| Long-term debt |
3.12 | % | 3.22 | % | 3.26 | % | 3.39 | % | 3.35 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest-bearing liabilities |
1.09 | % | 1.22 | % | 1.41 | % | 1.47 | % | 1.46 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios: |
||||||||||||||||||||
| Net interest margin (FTE)(b) |
3.28 | % | 3.27 | % | 3.32 | % | 3.37 | % | 3.28 | % | ||||||||||
| Net interest rate spread (FTE)(b) |
2.98 | % | 2.93 | % | 2.93 | % | 2.95 | % | 2.87 | % | ||||||||||
| Interest-bearing liabilities to interest-earning assets |
72.24 | % | 72.05 | % | 72.31 | % | 71.47 | % | 72.24 | % | ||||||||||
| (a) | Presented on an FTE basis. |
| (b) | Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 27. |
22
Fifth Third Bancorp and Subsidiaries
Summary of Loans and Leases
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Average Portfolio Loans and Leases |
||||||||||||||||||||
| Commercial loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 51,586 | $ | 50,938 | $ | 51,241 | $ | 52,078 | $ | 46,011 | ||||||||||
| Commercial mortgage loans |
11,019 | 10,831 | 10,692 | 10,632 | 7,414 | |||||||||||||||
| Commercial construction loans |
5,132 | 5,334 | 5,267 | 5,248 | 4,838 | |||||||||||||||
| Commercial leases |
3,201 | 3,384 | 3,562 | 3,809 | 3,555 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
70,938 | 70,487 | 70,762 | 71,767 | 61,818 | |||||||||||||||
| Consumer loans: |
||||||||||||||||||||
| Residential mortgage loans |
16,732 | 16,697 | 16,736 | 16,804 | 15,624 | |||||||||||||||
| Home equity |
6,006 | 6,147 | 6,267 | 6,376 | 6,355 | |||||||||||||||
| Indirect secured consumer loans |
11,809 | 11,281 | 10,707 | 10,190 | 9,176 | |||||||||||||||
| Credit card |
2,498 | 2,496 | 2,448 | 2,408 | 2,396 | |||||||||||||||
| Other consumer loans |
2,796 | 2,679 | 2,621 | 2,550 | 2,404 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
39,841 | 39,300 | 38,779 | 38,328 | 35,955 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average portfolio loans and leases |
$ | 110,779 | $ | 109,787 | $ | 109,541 | $ | 110,095 | $ | 97,773 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average Loans and Leases Held for Sale |
||||||||||||||||||||
| Average commercial loans and leases held for sale |
$ | 108 | $ | 43 | $ | 127 | $ | 113 | $ | 62 | ||||||||||
| Average consumer loans held for sale |
1,293 | 1,156 | 998 | 785 | 527 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average loans and leases held for sale |
$ | 1,401 | $ | 1,199 | $ | 1,125 | $ | 898 | $ | 589 | ||||||||||
| End of Period Portfolio Loans and Leases |
||||||||||||||||||||
| Commercial loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 58,250 | $ | 50,542 | $ | 50,768 | $ | 51,104 | $ | 51,862 | ||||||||||
| Commercial mortgage loans |
11,160 | 10,963 | 10,822 | 10,717 | 10,686 | |||||||||||||||
| Commercial construction loans |
5,462 | 5,090 | 5,281 | 5,264 | 5,231 | |||||||||||||||
| Commercial leases |
3,123 | 3,363 | 3,495 | 3,677 | 3,909 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
77,995 | 69,958 | 70,366 | 70,762 | 71,688 | |||||||||||||||
| Consumer loans: |
||||||||||||||||||||
| Residential mortgage loans |
16,701 | 16,724 | 16,675 | 16,777 | 16,811 | |||||||||||||||
| Home equity |
5,963 | 6,083 | 6,218 | 6,325 | 6,435 | |||||||||||||||
| Indirect secured consumer loans |
12,050 | 11,538 | 11,026 | 10,403 | 10,031 | |||||||||||||||
| Credit card |
2,417 | 2,532 | 2,467 | 2,436 | 2,388 | |||||||||||||||
| Other consumer loans |
2,911 | 2,723 | 2,657 | 2,580 | 2,489 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
40,042 | 39,600 | 39,043 | 38,521 | 38,154 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total portfolio loans and leases |
$ | 118,037 | $ | 109,558 | $ | 109,409 | $ | 109,283 | $ | 109,842 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| End of Period Loans and Leases Held for Sale |
||||||||||||||||||||
| Commercial loans and leases held for sale |
$ | 65 | $ | 136 | $ | 86 | $ | 174 | $ | 66 | ||||||||||
| Consumer loans held for sale |
1,565 | 1,264 | 1,137 | 1,031 | 626 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Loans and leases held for sale |
$ | 1,630 | $ | 1,400 | $ | 1,223 | $ | 1,205 | $ | 692 | ||||||||||
| Operating lease equipment |
$ | 819 | $ | 848 | $ | 869 | $ | 894 | $ | 908 | ||||||||||
| Loans and Leases Serviced for Others(a) |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 947 | $ | 922 | $ | 916 | $ | 977 | $ | 1,024 | ||||||||||
| Commercial mortgage loans |
545 | 454 | 446 | 438 | 467 | |||||||||||||||
| Commercial construction loans |
462 | 397 | 392 | 323 | 261 | |||||||||||||||
| Commercial leases |
302 | 322 | 345 | 358 | 216 | |||||||||||||||
| Residential mortgage loans |
81,901 | 80,734 | 82,702 | 84,597 | 83,900 | |||||||||||||||
| Other consumer loans |
50 | 50 | 50 | 50 | 50 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total loans and leases serviced for others |
84,207 | 82,879 | 84,851 | 86,743 | 85,918 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total loans and leases serviced |
$ | 204,693 | $ | 194,685 | $ | 196,352 | $ | 198,125 | $ | 197,360 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | Fifth Third sells certain loans and leases and obtains servicing responsibilities. |
23
Fifth Third Bancorp and Subsidiaries
Regulatory Capital
$ in millions
(unaudited)
| As of | ||||||||||||||||||||
| March 2020(a) |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Regulatory Capital |
||||||||||||||||||||
| CET1 capital |
$ | 13,840 | $ | 13,847 | $ | 13,568 | $ | 13,532 | $ | 13,430 | ||||||||||
| Additional tier I capital |
1,769 | 1,769 | 1,769 | 1,493 | 1,493 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tier I capital |
15,609 | 15,616 | 15,337 | 15,025 | 14,923 | |||||||||||||||
| Tier II capital |
4,472 | 4,045 | 4,076 | 4,112 | 4,048 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total regulatory capital |
$ | 20,081 | 19,661 | $ | 19,413 | $ | 19,137 | $ | 18,971 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Risk-weighted assets(b) |
$ | 147,795 | $ | 142,065 | $ | 141,880 | $ | 141,421 | $ | 139,844 | ||||||||||
| Ratios |
||||||||||||||||||||
| Average total Bancorp shareholders’ equity as a percent of average assets |
12.63 | % | 12.58 | % | 12.43 | % | 12.02 | % | 11.43 | % | ||||||||||
| Regulatory Capital Ratios |
||||||||||||||||||||
| Fifth Third Bancorp |
||||||||||||||||||||
| CET1 capital(b) |
9.36 | % | 9.75 | % | 9.56 | % | 9.57 | % | 9.60 | % | ||||||||||
| Tier I risk-based capital(b) |
10.56 | % | 10.99 | % | 10.81 | % | 10.62 | % | 10.67 | % | ||||||||||
| Total risk-based capital(b) |
13.59 | % | 13.84 | % | 13.68 | % | 13.53 | % | 13.57 | % | ||||||||||
| Tier I leverage |
9.37 | % | 9.54 | % | 9.36 | % | 9.24 | % | 10.32 | % | ||||||||||
| Fifth Third Bank |
||||||||||||||||||||
| Tier I risk-based capital(b) |
11.36 | % | 11.86 | % | 11.79 | % | 11.67 | % | 12.22 | % | ||||||||||
| Total risk-based capital(b) |
13.17 | % | 13.46 | % | 13.37 | % | 13.23 | % | 13.86 | % | ||||||||||
| Tier I leverage |
10.16 | % | 10.36 | % | 10.26 | % | 10.59 | % | 10.49 | % | ||||||||||
| (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 Bancorp’s total risk-weighted assets. |
24
Fifth Third Bancorp and Subsidiaries
Summary of Credit Loss Experience
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March 2020 |
December 2019 |
September 2019 |
June 2019 |
March 2019 |
||||||||||||||||
| Average portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 51,586 | $ | 50,938 | $ | 51,241 | $ | 52,078 | $ | 46,011 | ||||||||||
| Commercial mortgage loans |
11,019 | 10,831 | 10,692 | 10,632 | 7,414 | |||||||||||||||
| Commercial construction loans |
5,132 | 5,334 | 5,267 | 5,248 | 4,838 | |||||||||||||||
| Commercial leases |
3,201 | 3,384 | 3,562 | 3,809 | 3,555 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
70,938 | 70,487 | 70,762 | 71,767 | 61,818 | |||||||||||||||
| Residential mortgage loans |
16,732 | 16,697 | 16,736 | 16,804 | 15,624 | |||||||||||||||
| Home equity |
6,006 | 6,147 | 6,267 | 6,376 | 6,355 | |||||||||||||||
| Indirect secured consumer loans |
11,809 | 11,281 | 10,707 | 10,190 | 9,176 | |||||||||||||||
| Credit card |
2,498 | 2,496 | 2,448 | 2,408 | 2,396 | |||||||||||||||
| Other consumer loans |
2,796 | 2,679 | 2,621 | 2,550 | 2,404 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
39,841 | 39,300 | 38,779 | 38,328 | 35,955 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total average portfolio loans and leases |
$ | 110,779 | $ | 109,787 | $ | 109,541 | $ | 110,095 | $ | 97,773 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Losses charged-off: |
||||||||||||||||||||
| Commercial and industrial loans |
($ | 54 | ) | ($ | 40 | ) | ($ | 30 | ) | ($ | 30 | ) | ($ | 20 | ) | |||||
| Commercial mortgage loans |
(2 | ) | — | — | — | — | ||||||||||||||
| Commercial leases |
(5 | ) | — | (4 | ) | (3 | ) | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
(61 | ) | (40 | ) | (34 | ) | (33 | ) | (20 | ) | ||||||||||
| Residential mortgage loans |
(2 | ) | (4 | ) | (2 | ) | (1 | ) | (2 | ) | ||||||||||
| Home equity |
(5 | ) | (12 | ) | (5 | ) | (6 | ) | (6 | ) | ||||||||||
| Indirect secured consumer loans |
(21 | ) | (24 | ) | (21 | ) | (15 | ) | (20 | ) | ||||||||||
| Credit card |
(42 | ) | (40 | ) | (38 | ) | (40 | ) | (38 | ) | ||||||||||
| Other consumer loans |
(28 | ) | (32 | ) | (30 | ) | (24 | ) | (22 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
(98 | ) | (112 | ) | (96 | ) | (86 | ) | (88 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total losses charged-off |
($ | 159 | ) | ($ | 152 | ) | ($ | 130 | ) | ($ | 119 | ) | ($ | 108 | ) | |||||
| Recoveries of losses previously charged-off: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 4 | $ | 4 | $ | 1 | $ | 10 | $ | 2 | ||||||||||
| Commercial mortgage loans |
— | — | — | — | 1 | |||||||||||||||
| Commercial leases |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
4 | 4 | 1 | 10 | 3 | |||||||||||||||
| Residential mortgage loans |
1 | 1 | 1 | 2 | 1 | |||||||||||||||
| Home equity |
2 | 3 | 3 | 3 | 3 | |||||||||||||||
| Indirect secured consumer loans |
9 | 8 | 8 | 8 | 7 | |||||||||||||||
| Credit card |
6 | 7 | 5 | 5 | 5 | |||||||||||||||
| Other consumer loans |
15 | 16 | 13 | 13 | 12 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
33 | 35 | 30 | 31 | 28 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total recoveries of losses previously charged-off |
$ | 37 | $ | 39 | $ | 31 | $ | 41 | $ | 31 | ||||||||||
| Net losses charged-off: |
||||||||||||||||||||
| Commercial and industrial loans |
($ | 50 | ) | ($ | 36 | ) | ($ | 29 | ) | ($ | 20 | ) | ($ | 18 | ) | |||||
| Commercial mortgage loans |
(2 | ) | — | — | — | 1 | ||||||||||||||
| Commercial leases |
(5 | ) | — | (4 | ) | (3 | ) | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
(57 | ) | (36 | ) | (33 | ) | (23 | ) | (17 | ) | ||||||||||
| Residential mortgage loans |
(1 | ) | (3 | ) | (1 | ) | 1 | (1 | ) | |||||||||||
| Home equity |
(3 | ) | (9 | ) | (2 | ) | (3 | ) | (3 | ) | ||||||||||
| Indirect secured consumer loans |
(12 | ) | (16 | ) | (13 | ) | (7 | ) | (13 | ) | ||||||||||
| Credit card |
(36 | ) | (33 | ) | (33 | ) | (35 | ) | (33 | ) | ||||||||||
| Other consumer loans |
(13 | ) | (16 | ) | (17 | ) | (11 | ) | (10 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
(65 | ) | (77 | ) | (66 | ) | (55 | ) | (60 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total net losses charged-off |
($ | 122 | ) | ($ | 113 | ) | ($ | 99 | ) | ($ | 78 | ) | ($ | 77 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net losses charged-off as a percent of average portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
0.39 | % | 0.28 | % | 0.22 | % | 0.15 | % | 0.16 | % | ||||||||||
| Commercial mortgage loans |
0.06 | % | (0.02 | %) | (0.01 | %) | 0.00 | % | (0.05 | %) | ||||||||||
| Commercial leases |
0.60 | % | 0.06 | % | 0.41 | % | 0.32 | % | 0.02 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
0.32 | % | 0.20 | % | 0.18 | % | 0.13 | % | 0.11 | % | ||||||||||
| Residential mortgage loans |
0.02 | % | 0.07 | % | 0.03 | % | (0.02 | %) | 0.02 | % | ||||||||||
| Home equity |
0.17 | % | 0.59 | % | 0.16 | % | 0.18 | % | 0.20 | % | ||||||||||
| Indirect secured consumer loans |
0.43 | % | 0.56 | % | 0.50 | % | 0.30 | % | 0.57 | % | ||||||||||
| Credit card |
5.87 | % | 5.21 | % | 5.41 | % | 5.75 | % | 5.60 | % | ||||||||||
| Other consumer loans |
1.87 | % | 2.51 | % | 2.47 | % | 1.84 | % | 1.76 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
0.66 | % | 0.78 | % | 0.68 | % | 0.59 | % | 0.68 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total net losses charged-off as a percent of average portfolio loans and leases |
0.44 | % | 0.41 | % | 0.36 | % | 0.29 | % | 0.32 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
25
Fifth Third Bancorp and Subsidiaries
Asset Quality
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March | December | September | June | March | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| Allowance for Credit Losses |
||||||||||||||||||||
| Allowance for loan and lease losses, beginning |
$ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | $ | 1,103 | ||||||||||
| Impact of CECL adoption |
643 | — | — | — | — | |||||||||||||||
| Total net losses charged-off |
(122 | ) | (113 | ) | (99 | ) | (78 | ) | (77 | ) | ||||||||||
| Provision for loan and lease losses |
625 | 172 | 127 | 78 | 89 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Allowance for loan and lease losses, ending |
$ | 2,348 | $ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Reserve for unfunded commitments, beginning |
$ | 144 | $ | 154 | $ | 147 | $ | 133 | $ | 131 | ||||||||||
| Impact of CECL adoption |
10 | — | — | — | — | |||||||||||||||
| Reserve for acquired commitments |
— | — | — | 7 | 1 | |||||||||||||||
| Provision for (benefit from) the reserve for unfunded commitments |
15 | (10 | ) | 7 | 7 | 1 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Reserve for unfunded commitments, ending |
$ | 169 | $ | 144 | $ | 154 | $ | 147 | $ | 133 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Components of allowance for credit losses: |
||||||||||||||||||||
| Allowance for loan and lease losses |
$ | 2,348 | $ | 1,202 | $ | 1,143 | $ | 1,115 | $ | 1,115 | ||||||||||
| Reserve for unfunded commitments |
169 | 144 | 154 | 147 | 133 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total allowance for credit losses |
$ | 2,517 | $ | 1,346 | $ | 1,297 | $ | 1,262 | $ | 1,248 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| As of | ||||||||||||||||||||
| March | December | September | June | March | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| Nonperforming Assets and Delinquent Loans |
||||||||||||||||||||
| Nonaccrual portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 100 | $ | 118 | $ | 70 | $ | 135 | $ | 112 | ||||||||||
| Commercial mortgage loans |
83 | 21 | 17 | 20 | 24 | |||||||||||||||
| Commercial construction loans |
1 | 1 | — | — | — | |||||||||||||||
| Commercial leases |
18 | 26 | 27 | 31 | 18 | |||||||||||||||
| Residential mortgage loans |
12 | 13 | 12 | 11 | 15 | |||||||||||||||
| Home equity |
54 | 54 | 63 | 61 | 62 | |||||||||||||||
| Indirect secured consumer loans |
1 | 1 | 1 | 1 | 2 | |||||||||||||||
| Other consumer loans |
2 | 2 | 2 | 2 | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total nonaccrual portfolio loans and leases (excludes restructured loans) |
271 | 236 | 192 | 261 | 235 | |||||||||||||||
| Nonaccrual restructured portfolio commercial loans and leases |
243 | 231 | 235 | 204 | 159 | |||||||||||||||
| Nonaccrual restructured portfolio consumer loans and leases |
133 | 151 | 55 | 56 | 56 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total nonaccrual portfolio loans and leases |
647 | 618 | 482 | 521 | 450 | |||||||||||||||
| Repossessed property |
10 | 10 | 9 | 8 | 11 | |||||||||||||||
| OREO |
52 | 52 | 28 | 31 | 37 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total nonperforming portfolio loans and leases and OREO |
709 | 680 | 519 | 560 | 498 | |||||||||||||||
| Nonaccrual loans held for sale |
— | — | — | 4 | — | |||||||||||||||
| Nonaccrual restructured loans held for sale |
1 | 7 | 13 | 23 | 14 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total nonperforming assets |
$ | 710 | $ | 687 | $ | 532 | $ | 587 | $ | 512 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Restructured portfolio consumer loans and leases (accrual) |
$ | 976 | $ | 965 | $ | 958 | $ | 958 | $ | 950 | ||||||||||
| Restructured portfolio commercial loans and leases (accrual) |
$ | 63 | $ | 23 | $ | 34 | $ | 32 | $ | 59 | ||||||||||
| Loans and leases 90 days past due (accrual): |
||||||||||||||||||||
| Commercial and industrial loans |
$ | 13 | $ | 11 | $ | 15 | $ | 19 | $ | 15 | ||||||||||
| Commercial mortgage loans |
20 | 15 | 18 | 11 | 20 | |||||||||||||||
| Commercial construction loans |
— | — | 1 | 1 | — | |||||||||||||||
| Commercial leases |
10 | — | 1 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans and leases |
43 | 26 | 35 | 31 | 35 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Residential mortgage loans |
54 | 50 | 48 | 47 | 48 | |||||||||||||||
| Home equity |
— | 1 | — | 1 | 1 | |||||||||||||||
| Indirect secured consumer loans |
11 | 10 | 10 | 11 | 9 | |||||||||||||||
| Credit card |
42 | 42 | 38 | 37 | 38 | |||||||||||||||
| Other consumer loans |
1 | 1 | 1 | 1 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
108 | 104 | 97 | 97 | 97 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total loans and leases 90 days past due (accrual)(b) |
$ | 151 | $ | 130 | $ | 132 | $ | 128 | $ | 132 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios |
||||||||||||||||||||
| Net losses charged-off as a percent of average portfolio loans and leases |
0.44 | % | 0.41 | % | 0.36 | % | 0.29 | % | 0.32 | % | ||||||||||
| Allowance for loan and lease losses: |
||||||||||||||||||||
| As a percent of portfolio loans and leases |
1.99 | % | 1.10 | % | 1.04 | % | 1.02 | % | 1.02 | % | ||||||||||
| As a percent of nonperforming portfolio loans and leases(a) |
363 | % | 194 | % | 237 | % | 214 | % | 248 | % | ||||||||||
| As a percent of nonperforming portfolio assets(a) |
331 | % | 177 | % | 221 | % | 199 | % | 224 | % | ||||||||||
| Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(a) |
0.55 | % | 0.56 | % | 0.44 | % | 0.48 | % | 0.41 | % | ||||||||||
| Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(a) |
0.60 | % | 0.62 | % | 0.47 | % | 0.51 | % | 0.45 | % | ||||||||||
| Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property |
0.59 | % | 0.62 | % | 0.48 | % | 0.53 | % | 0.46 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | Excludes nonaccrual loans held for sale. |
| (b) | Excludes loans held for sale. |
26
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 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 they provide 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, compared 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 on-going 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 the U.S. banking agencies. These calculations are intended to complement the capital ratios defined by the 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 Bancorp’s use of equity without the effects of changes in AOCI some of which are uncertain and providing the tangible common equity ratio including AOCI enables investors and others to assess the Bancorp’s 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.
27
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconciliation
$ and shares in millions
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| March | December | September | June | March | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| Net interest income |
$ | 1,229 | $ | 1,228 | $ | 1,242 | $ | 1,245 | $ | 1,082 | ||||||||||
| Add: Taxable equivalent adjustment |
4 | 4 | 4 | 5 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income (FTE) (a) |
1,233 | 1,232 | 1,246 | 1,250 | 1,086 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income (annualized) (b) |
4,943 | 4,872 | 4,928 | 4,994 | 4,388 | |||||||||||||||
| Net interest income (FTE) (annualized) (c) |
4,959 | 4,888 | 4,943 | 5,014 | 4,404 | |||||||||||||||
| Net interest income (FTE) |
1,233 | 1,232 | 1,246 | 1,250 | 1,086 | |||||||||||||||
| Less: Net interest income impact from purchase accounting accretion |
16 | 18 | 28 | 18 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted net interest income (FTE) (d) |
1,217 | 1,214 | 1,218 | 1,232 | 1,085 | |||||||||||||||
| Adjusted net interest income (FTE) (annualized) (e) |
4,895 | 4,816 | 4,832 | 4,942 | 4,400 | |||||||||||||||
| Interest income |
1,525 | 1,559 | 1,625 | 1,636 | 1,433 | |||||||||||||||
| Add: Taxable equivalent adjustment |
4 | 4 | 4 | 5 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Interest income (FTE) |
1,529 | 1,563 | 1,629 | 1,641 | 1,437 | |||||||||||||||
| Interest income (FTE) (annualized) (f) |
6,150 | 6,201 | 6,463 | 6,582 | 5,828 | |||||||||||||||
| Interest expense (annualized) (g) |
1,191 | 1,313 | 1,520 | 1,568 | 1,424 | |||||||||||||||
| Average interest-earning assets (h) |
151,213 | 149,312 | 148,854 | 148,790 | 134,463 | |||||||||||||||
| Average interest-bearing liabilities (i) |
109,244 | 107,573 | 107,633 | 106,340 | 97,137 | |||||||||||||||
| Net interest margin (b) / (h) |
3.27 | % | 3.26 | % | 3.31 | % | 3.36 | % | 3.26 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest margin (FTE) (c) / (h) |
3.28 | % | 3.27 | % | 3.32 | % | 3.37 | % | 3.28 | % | ||||||||||
| Adjusted net interest margin (e) / (h) |
3.24 | % | 3.22 | % | 3.25 | % | 3.32 | % | 3.28 | % | ||||||||||
| Net interest rate spread (FTE) (f) / (h) - (g) / (i) |
2.98 | % | 2.93 | % | 2.93 | % | 2.95 | % | 2.87 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before income taxes |
$ | 60 | $ | 941 | $ | 689 | $ | 577 | $ | 996 | ||||||||||
| Add: Taxable equivalent adjustment |
4 | 4 | 4 | 5 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before income taxes (FTE) |
$ | 64 | $ | 945 | $ | 693 | $ | 582 | $ | 1,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income available to common shareholders |
$ | 29 | $ | 701 | $ | 530 | $ | 427 | $ | 760 | ||||||||||
| Add: Intangible amortization, net of tax |
10 | 11 | 11 | 11 | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible net income available to common shareholders (j) |
39 | 712 | 541 | 438 | 762 | |||||||||||||||
| Tangible net income available to common shareholders (annualized) (k) |
157 | 2,825 | 2,146 | 1,757 | 3,090 | |||||||||||||||
| Average Bancorp shareholders’ equity |
21,713 | 21,304 | 21,087 | 20,135 | 17,025 | |||||||||||||||
| Less: Average preferred stock |
(1,770 | ) | (1,770 | ) | (1,445 | ) | (1,331 | ) | (1,331 | ) | ||||||||||
| Average goodwill |
(4,251 | ) | (4,260 | ) | (4,286 | ) | (4,301 | ) | (2,682 | ) | ||||||||||
| Average intangible assets |
(193 | ) | (194 | ) | (208 | ) | (215 | ) | (58 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average tangible common equity, including accumulated other comprehensive income (“AOCI”) (l) |
15,499 | 15,080 | 15,148 | 14,288 | 12,954 | |||||||||||||||
| Less: Average AOCI |
(1,825 | ) | (1,416 | ) | (1,444 | ) | (619 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average tangible common equity, excluding AOCI (m) |
13,674 | 13,664 | 13,704 | 13,669 | 12,954 | |||||||||||||||
| Total Bancorp shareholders’ equity |
21,873 | 21,203 | 21,404 | 20,474 | 19,647 | |||||||||||||||
| Less: Preferred stock |
(1,770 | ) | (1,770 | ) | (1,770 | ) | (1,331 | ) | (1,331 | ) | ||||||||||
| Goodwill |
(4,261 | ) | (4,252 | ) | (4,290 | ) | (4,284 | ) | (4,321 | ) | ||||||||||
| Intangible assets |
(184 | ) | (201 | ) | (201 | ) | (215 | ) | (218 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible common equity, including AOCI (n) |
15,658 | 14,980 | 15,143 | 14,644 | 13,777 | |||||||||||||||
| Less: AOCI |
(2,477 | ) | (1,192 | ) | (1,635 | ) | (1,178 | ) | (409 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible common equity, excluding AOCI (o) |
13,181 | 13,788 | 13,508 | 13,466 | 13,368 | |||||||||||||||
| Add: Preferred stock |
1,770 | 1,770 | 1,770 | 1,331 | 1,331 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible equity (p) |
14,951 | 15,558 | 15,278 | 14,797 | 14,699 | |||||||||||||||
| Total assets |
185,391 | 169,369 | 171,079 | 168,802 | 167,853 | |||||||||||||||
| Less: Goodwill |
(4,261 | ) | (4,252 | ) | (4,290 | ) | (4,284 | ) | (4,321 | ) | ||||||||||
| Intangible assets |
(184 | ) | (201 | ) | (201 | ) | (215 | ) | (218 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible assets, including AOCI (q) |
180,946 | 164,916 | 166,588 | 164,303 | 163,314 | |||||||||||||||
| Less: AOCI, before tax |
(3,135 | ) | (1,509 | ) | (2,070 | ) | (1,491 | ) | (518 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible assets, excluding AOCI (r) |
$ | 177,811 | $ | 163,407 | $ | 164,518 | $ | 162,812 | $ | 162,796 | ||||||||||
| Common shares outstanding (s) |
711 | 709 | 719 | 731 | 739 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible equity (p) / (r) |
8.41 | % | 9.52 | % | 9.29 | % | 9.09 | % | 9.03 | % | ||||||||||
| Tangible common equity (excluding AOCI) (o) / (r) |
7.41 | % | 8.44 | % | 8.21 | % | 8.27 | % | 8.21 | % | ||||||||||
| Tangible common equity (including AOCI) (n) / (q) |
8.65 | % | 9.08 | % | 9.09 | % | 8.91 | % | 8.44 | % | ||||||||||
| Tangible book value per share (n) / (s) |
$ | 22.02 | $ | 21.13 | $ | 21.06 | $ | 20.03 | $ | 18.64 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
28
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconciliation
$ in millions
(unaudited)
| For the Three Months Ended | ||||||||||||
| March | December | March | ||||||||||
| 2020 | 2019 | 2019 | ||||||||||
| Net income (t) |
$ | 46 | $ | 734 | $ | 775 | ||||||
| Net income (annualized) (u) |
185 | 2,912 | 3,143 | |||||||||
| Adjustments (pre-tax items) |
||||||||||||
| Provision in excess of credit losses |
518 | — | — | |||||||||
| Unfavorable credit valuation adjustment (CVA) |
36 | — | — | |||||||||
| Valuation of Visa total return swap |
22 | 44 | 31 | |||||||||
| Net impairment of private equity investments |
15 | — | — | |||||||||
| Merger-related expense |
7 | 9 | 76 | |||||||||
| Fifth Third Foundation contribution |
— | 20 | — | |||||||||
| Provision impact from conversion to a national charter |
— | 9 | — | |||||||||
| Gain recognized from Worldpay TRA transaction |
— | (345 | ) | — | ||||||||
| Merger-related branch network impairment charge |
— | — | 13 | |||||||||
| GreenSky securities losses (gains) |
— | — | (9 | ) | ||||||||
| Gain on sale of Worldpay Shares |
— | — | (562 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Adjustments, after-tax (v)(a) |
461 | (202 | ) | (341 | ) | |||||||
| Adjustments (tax related items) |
||||||||||||
| Acquisition impact on state deferred taxes |
— | — | 9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Adjustments, tax related (w) |
— | — | 9 | |||||||||
| Noninterest income (x) |
671 | 1,035 | 1,101 | |||||||||
| Valuation of Visa total return swap |
22 | 44 | 31 | |||||||||
| Net impairment of private equity investments |
15 | — | — | |||||||||
| Gain recognized from Worldpay TRA transaction |
— | (345 | ) | — | ||||||||
| Merger-related branch network impairment charge |
— | — | 13 | |||||||||
| GreenSky securities losses (gains) |
— | — | (9 | ) | ||||||||
| Gain on sale of Worldpay Shares |
— | — | (562 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Adjusted noninterest income (y) |
708 | 734 | 574 | |||||||||
| Noninterest expense (z) |
1,200 | 1,160 | 1,097 | |||||||||
| Merger-related expense |
(7 | ) | (9 | ) | (76 | ) | ||||||
| Unfavorable credit valuation adjustment (CVA) |
(36 | ) | — | — | ||||||||
| Fifth Third Foundation contribution |
— | (20 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Adjusted noninterest expense (aa) |
1,157 | 1,131 | 1,021 | |||||||||
| Intangible amortization expense |
13 | 14 | 3 | |||||||||
|
|
|
|
|
|
|
|||||||
| Adjusted noninterest expense excluding intangible amortization expense (ab) |
1,144 | 1,117 | 1,018 | |||||||||
| Adjusted net income (t) + (v) + (w) |
507 | 532 | 443 | |||||||||
| Adjusted net income (annualized) (ac) |
2,039 | 2,111 | 1,797 | |||||||||
| Adjusted tangible net income available to common shareholders (j) + (v) + (w) |
500 | 510 | 430 | |||||||||
| Adjusted tangible net income available to common shareholders (annualized) (ad) |
2,011 | 2,023 | 1,744 | |||||||||
| Average assets (ae) |
$ | 171,871 | $ | 169,327 | $ | 148,968 | ||||||
|
|
|
|
|
|
|
|||||||
| Return on average tangible common equity (k) / (l) |
1.0 | % | 18.7 | % | 23.9 | % | ||||||
| Adjusted return on average tangible common equity, including AOCI (ad) / (l) |
13.0 | % | 13.4 | % | 13.5 | % | ||||||
| Adjusted return on average tangible common equity, excluding AOCI (ad) / (m) |
14.7 | % | 14.8 | % | 13.5 | % | ||||||
|
|
|
|
|
|
|
|||||||
| Return on average assets (u) / (ae) |
0.11 | % | 1.72 | % | 2.11 | % | ||||||
|
|
|
|
|
|
|
|||||||
| Adjusted return on average assets (ac) / (ae) |
1.19 | % | 1.25 | % | 1.21 | % | ||||||
| Efficiency ratio (z) / [(a) + (x)] |
63.0 | % | 51.2 | % | 50.2 | % | ||||||
| Adjusted efficiency ratio (ab) / [(d) + (y)] |
59.4 | % | 57.3 | % | 61.4 | % | ||||||
| Total revenue (FTE) (a) + (x) |
$ | 1,904 | $ | 2,267 | $ | 2,187 | ||||||
| Pre-provision net revenue (PPNR) (a) + (x) - (z) |
$ | 704 | $ | 1,107 | $ | 1,090 | ||||||
| Adjusted pre-provision net revenue (PPNR) (d) + (y) - (ab) |
$ | 781 | $ | 831 | $ | 641 | ||||||
|
|
|
|
|
|
|
|||||||
| (a) | Assumes a 23% tax rate, except for merger-related expenses impacted by certain non-deductible items. |
29
Fifth Third Bancorp and Subsidiaries
Segment Presentation
$ in millions
(unaudited)
| For the three months ended March 31, 2020 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
| Net interest income (FTE)(a) |
$ | 511 | $ | 505 | $ | 89 | $ | 37 | $ | 91 | $ | 1,233 | ||||||||||||
| Provision for credit losses |
(45 | ) | (62 | ) | (13 | ) | (1 | ) | (519 | ) | (640 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net interest income after provision for credit losses |
466 | 443 | 76 | 36 | (428 | ) | 593 | |||||||||||||||||
| Noninterest income |
287 | 198 | 124 | 135 | (73 | ) | 671 | |||||||||||||||||
| Noninterest expense |
(480 | ) | (488 | ) | (122 | ) | (143 | ) | 33 | (1,200 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) before income taxes |
273 | 153 | 78 | 28 | (468 | ) | 64 | |||||||||||||||||
| Applicable income tax (expense) benefit(a) |
(49 | ) | (32 | ) | (17 | ) | (6 | ) | 86 | (18 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) |
224 | 121 | 61 | 22 | (382 | ) | 46 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the three months ended December 31, 2019 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
| Net interest income (FTE)(a) |
$ | 603 | $ | 569 | $ | 91 | $ | 41 | ($ | 72 | ) | $ | 1,232 | |||||||||||
| Provision for credit losses |
(83 | ) | (60 | ) | (15 | ) | — | (4 | ) | (162 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net interest income after provision for credit losses |
520 | 509 | 76 | 41 | (76 | ) | 1,070 | |||||||||||||||||
| Noninterest income |
324 | 214 | 74 | 129 | 294 | 1,035 | ||||||||||||||||||
| Noninterest expense |
(422 | ) | (485 | ) | (123 | ) | (131 | ) | 1 | (1,160 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income before income taxes |
422 | 238 | 27 | 39 | 219 | 945 | ||||||||||||||||||
| Applicable income tax expense(a) |
(81 | ) | (50 | ) | (6 | ) | (8 | ) | (66 | ) | (211 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income |
341 | 188 | 21 | 31 | 153 | 734 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the three months ended September 30, 2019 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
| Net interest income (FTE)(a) |
$ | 627 | $ | 598 | $ | 88 | $ | 44 | ($ | 111 | ) | $ | 1,246 | |||||||||||
| Provision for credit losses |
(54 | ) | (58 | ) | (14 | ) | — | (8 | ) | (134 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net interest income after provision for credit losses |
573 | 540 | 74 | 44 | (119 | ) | 1,112 | |||||||||||||||||
| Noninterest income |
335 | 204 | 96 | 125 | (20 | ) | 740 | |||||||||||||||||
| Noninterest expense |
(425 | ) | (469 | ) | (114 | ) | (129 | ) | (22 | ) | (1,159 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) before income taxes |
483 | 275 | 56 | 40 | (161 | ) | 693 | |||||||||||||||||
| Applicable income tax (expense) benefit(a) |
(90 | ) | (58 | ) | (12 | ) | (8 | ) | 24 | (144 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) |
393 | 217 | 44 | 32 | (137 | ) | 549 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the three months ended June 30, 2019 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
| Net interest income (FTE)(a) |
$ | 634 | $ | 620 | $ | 83 | $ | 48 | ($ | 135 | ) | $ | 1,250 | |||||||||||
| (Provision for) benefit from credit losses |
(25 | ) | (55 | ) | (7 | ) | — | 2 | (85 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net interest income after provision for credit losses |
609 | 565 | 76 | 48 | (133 | ) | 1,165 | |||||||||||||||||
| Noninterest income |
301 | 202 | 67 | 118 | (28 | ) | 660 | |||||||||||||||||
| Noninterest expense |
(420 | ) | (467 | ) | (118 | ) | (135 | ) | (103 | ) | (1,243 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) before income taxes |
490 | 300 | 25 | 31 | (264 | ) | 582 | |||||||||||||||||
| Applicable income tax (expense) benefit(a) |
(95 | ) | (63 | ) | (5 | ) | (7 | ) | 41 | (129 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) |
395 | 237 | 20 | 24 | (223 | ) | 453 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the three months ended March 31, 2019 |
Commercial Banking |
Branch Banking(b) |
Consumer Lending(c) |
Wealth and Asset Management |
Other/ Eliminations |
Total | ||||||||||||||||||
| Net interest income (FTE)(a) |
$ | 513 | $ | 584 | $ | 63 | $ | 49 | ($ | 123 | ) | $ | 1,086 | |||||||||||
| Provision for credit losses |
(20 | ) | (52 | ) | (13 | ) | — | (5 | ) | (90 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net interest income after provision for credit losses |
493 | 532 | 50 | 49 | (128 | ) | 996 | |||||||||||||||||
| Noninterest income |
227 | 183 | 61 | 114 | 516 | 1,101 | ||||||||||||||||||
| Noninterest expense |
(356 | ) | (440 | ) | (101 | ) | (130 | ) | (70 | ) | (1,097 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income before income taxes |
364 | 275 | 10 | 33 | 318 | 1,000 | ||||||||||||||||||
| Applicable income tax expense(a) |
(70 | ) | (58 | ) | (2 | ) | (7 | ) | (88 | ) | (225 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income |
294 | 217 | 8 | 26 | 230 | 775 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (a) | Includes taxable equivalent adjustments of $4 million, $4 million, $4 million, $5 million and $4 million for the three months ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively. |
| (b) | Branch Banking provides a full range of deposit and loan and lease products to individuals and small businesses through full-service banking centers. |
| (c) | Consumer Lending includes the Bancorp’s residential mortgage, home equity, automobile and other indirect lending activities. |
30
Fifth Third Bancorp 1Q20 Earnings Presentation April 21, 2020 Refer to earnings release dated April 21, 2020 for further information. Exhibit 99.2
Cautionary statement This presentation 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 Third’s 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 Third’s capital plan; (21) regulation of Fifth Third’s 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 Third’s 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 Third’s 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 Third’s 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. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. In this presentation, we may sometimes provide non-GAAP financial information. Please note that although non-GAAP financial measures provide useful insight to analysts, investors and regulators, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures. We provide a discussion of non-GAAP measures and reconciliations to the most directly comparable GAAP measures in later slides in this presentation, as well as on pages 27 through 29 of our 1Q20 earnings release. Management does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of the Bancorp's control or cannot be reasonably predicted. For the same reasons, the Bancorp's management is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
Making a difference during the pandemic Up to $1,000 special payment to banking center, operations and call center employees providing essential banking services Established social distancing across our facilities Installed protective shields at all Bank Mart locations Enhanced cleaning procedures at our branches and offices ~11,000 employees working remotely (95% remote ex. front-line retail customer service) Employees Consumers Businesses Communities ~10 thousand loans under the Paycheck Protection Program providing $3.4 billion for businesses with over 300,000 employees Leveraging strength of our balance sheet for commercial customers to draw down on ~$8 billion of existing lines of credit Temporarily increasing SBA Express program maximum to $1 million (from $350,000) Payment Deferral Program Fee Waiver Program Small Business Association Disaster Assistance $8.75 million philanthropic commitment to help address the effects of the COVID-19 pandemic, including: $3.25 million for COVID-19 response needs in our regions $5.5 million in Strengthening our Communities Fund grants to support long-term sustainability of our economy Leading regional task force to address COVID-19 issues in the community 99% of 1,123 banking centers remain open for business, in addition to ~53,000 fee-free ATMs Executed >96 thousand fee waivers and loan hardship deferrals, representing $1.5 billion in Fifth Third balances and an additional $6 billion in the mortgage servicing portfolio: ~49 thousand for up to 90-day deferrals for credit card, vehicle, and personal loan/line of credits ~34 thousand for up to 180-day payment forbearance ~13 thousand deposit fee waivers No reporting payment deferrals to credit bureaus Temporary suspension of vehicle repossessions and home foreclosures Our bankers have personally connected with 2 million customers since the start of the COVID-19 pandemic
Supporting customers, communities, and employees during the pandemic Maintained robust capital and liquidity levels Net interest income, NIM, noninterest income, and expense performance in-line with or better than prior guidance NCO ratio consistent with previous expectations Growth in the allowance for credit losses reflects adoption of CECL2 and the impact of COVID-19 1Q20 highlights Reported1 1Reported ROTCE, NIM, pre-provision net revenue, and efficiency ratio are non-GAAP measures: all adjusted figures are non-GAAP measures; see reconciliation on pages 26 and 27 of this presentation and the use of non-GAAP measures on pages 27-29 of the earnings release; 2Refers to current expected credit losses (CECL) methodology implemented as part of Bancorp’s adoption of ASU 2016-13. Adjusted1 ROA Efficiency ratio ROTCE 1.19% 14.7% NIM 3.24% 3.28% 0.11% 1.0% 59.4% 63.0% ROE 9.9% 0.6% excl. AOCI excl. PAA excl. PAA & CDI PPNR $781MM $704MM EPS $0.68 $0.04 up 22% YoY
Commercial Average balance sheet Securities1 and short-term investments Loan & lease balances Core deposit balances Securities1 Short-term investments Commercial Consumer Total IB core deposit rate Note: Totals shown above may not foot due to rounding 1Available-for-sale debt and other securities at amortized cost; previous disclosures included available-for-sale equity securities which are disclosed separately in the financial results; See forward looking statements on page 2 Consumer Total loan yield Taxable securities yield Total average balance; $ billions Loan & lease balances exclude HFS
Net interest income1 1Q20 vs. 1Q19 1Q20 vs. 4Q19 Adjusted NII1 up $132 million, or 12%; Adjusted NIM1 down 4 bps Primary NII drivers: Increase in interest-earning assets including the impact from MB Financial Favorable impact of previously executed cash flow hedges Partially offset by the declining rate environment Adjusted NII1 up $3 million; Adjusted NIM1 up 2 bps Primary NII drivers: Loan growth Favorable impact of previously executed cash flow hedges Benefit of elevated short-term LIBOR rates on yields relative to funding costs Partially offset by seasonably strong securities portfolio income in the prior quarter as well as the impact of a lower day count 1Results are on a fully-taxable equivalent basis; non-GAAP measure: see reconciliation on pages 26 and 27 of this presentation and use of non-GAAP measures on pages 27-29 of the earnings release; See forward-looking statements on page 2 Total net interest income; $ millions Adjusted NII (excl. PAA) NII 3.28% 3.22% 3.24% Adjusted NIM (excl. PAA)
Adjusted noninterest income (excl. securities (gains)/losses)1 Noninterest income Adjusted noninterest income1 up $8 million, or 1% Primary drivers: Mortgage banking revenue (up 64%) Wealth and asset management revenue (up 4%) Leasing business revenue (up 3%) Partially offset by lower card and processing revenue (down 9%) 1Non-GAAP measure: see reconciliation on pages 26 and 27 of this presentation and use of non-GAAP measures on pages 27-29 of the earnings release; See forward-looking statements on page 2 Total noninterest income; $ millions Noninterest income Adjusted noninterest income1 up $165 million, or 29%, including the impact of MB Financial Primary drivers: Mortgage banking revenue (up 114%) Leasing business revenue (up 128%; primarily from MB) Wealth and asset management revenue (up 20%) Commercial banking revenue (up 20%) 1Q20 vs. 1Q19 1Q20 vs. 4Q19
Adjusted noninterest expense (excl. intangible amortization) 1 Noninterest expense Adjusted noninterest expense1 up $27 million, or 2% Primary drivers: Seasonally higher compensation and benefits (up 12%), including $3 million of special payments provided to employees providing essential banking services through the COVID-19 pandemic Partially offset by lower marketing expense (down 30%) and lower technology and communications expense (down 9%) Total noninterest expense; $ millions Adjusted noninterest expense1 up $126 million, or 12%, reflecting the impact of MB Financial Primary drivers: Compensation and benefits (up 12%) Technology investments (up 25%) Leasing business expense (offset in leasing business revenue) Noninterest expense 1Excluding intangible amortization is a non-GAAP measure: see reconciliation on pages 26 and 27 of this presentation and use of non-GAAP measures on pages 27-29 of the earnings release; See forward-looking statements on page 2 1Q20 vs. 1Q19 1Q20 vs. 4Q19
COVID-19 high impact industries $8.7 billion C&I and Leasing portfolios (7.3% of total) $5.3BN I 4.5% of total 19% in leveraged portfolio 75% shared national credits 71% utilization Totals represent percentage of Fifth Third’s total loans & leases of $119.7 billion; leveraged: loans corresponding to commitments >$5M with leverage >3x senior debt, 4x total debt (with limited industry variations) Leisure & Recreation $1.9BN I 1.6% of total 4% in leveraged portfolio 89% shared national credits 64% utilization Retail (non-essential) $1.0BN I 0.8% of total 19% in leveraged portfolio 37% shared national credits 60% utilization Healthcare Facilities $0.5BN I 0.4% of total 2% in leveraged portfolio 89% shared national credits 80% utilization Travel $5.3 billion CRE portfolio (4.4% of total) $2.1BN I 1.7% of total Leisure & Recreation $1.6BN I 1.3% of total Retail (non-essential) $1.6BN I 1.4% of total Healthcare Facilities Primarily malls and lifestyle centers Underlying real estate loans primarily with restaurants and casinos Primarily passenger water and air Primarily elective and private practices, and nursing homes Primarily clothing, electronics, furniture and general & specialty merchandise stores Primarily casinos ($2.0BN), restaurants ($1.9BN), sports ($0.5BN), fitness ($0.4BN) and hotels ($0.3BN) Ongoing portfolio surveillance $14.0 billion outstanding balances in COVID-19 high impact industries (11.7% of total) Underlying real estate loans primarily with elective and private practices, and nursing homes Centralized team managing commercial client modifications Cross functional teams assessing credit in real time Created a credit advisory forum based on industry/risk type, led by industry and product experts to assess long term viability of borrower (including risk mitigation, client relief, or risk rating designation) Credit principles: disciplined client selection, favoring large borrowers who have diverse revenue streams, multiple sources of repayment, and a track record of resilience through the cycle Geographically diversified portfolios, favoring large borrowers with a track record of resilience; 75% of C&I portfolio is in shared national credits
Oil & gas portfolio remains well positioned Oil & Gas Balance Mix Meaningful improvements from last cycle which had already exhibited strong performance Fifth Third RBL client cash flow leverage 2015 1Q20 Portfolio is less levered and more hedged than before the last downturn $24MM total energy portfolio losses from 2015-2016 downturn RBL clients are well-hedged against lower commodity prices; By year-end, clients hedged more than 50%: 2020: ~80%; 2021: ~30% Deliberately underweight in OFS which we believe will exhibit higher losses in a down cycle 44% 18% 79% 7% 4.7x 2.2x Fifth Third RBL balance % Fifth Third OFS balance % RBL Oil & Gas Production $2.8BN I 2.3% of total loans 65% utilization Oil / Gas Mix 56% / 44% Reserve-Based Structure 95% Midstream Refining Oilfield Services (OFS) $0.4BN I 0.3% of total loans 28% utilization Midstream Oil / Gas Mix 63% / 37% Asset-Based Structure 10% $0.2BN I 0.2% of total loans 79% utilization Asset-Based Structure 63% Totals represent percentage of Fifth Third’s total loans & leases of $119.7 billion; Hedge information based on proved developed producing (PDP) reserves
Consumer portfolios are well positioned Residential mortgage 14% 758 Home equity Indirect secured Credit card Other consumer Portfolio WA FICO % of Total Loans Predominantly GreenSky 5% 761 10% 752 2% 736 2% 759 Strong credit quality throughout the consumer portfolio, focused on prime and super prime borrowers ~90% of total consumer portfolio is secured ~85% of real estate portfolio is in 1st lien position ~10% of mortgage hardship forbearance requests have LTVs >80%2 Predominantly auto 74% Portfolio WA LTV at Orig. 70% 93% NA NA Totals represent percentage of Fifth Third’s total loans & leases of $119.7 billion; 1FICO distributions at origination exclude certain acquired mortgages and home equity loans as well as $100 million from credit card loans on book primarily ~15+ years, and $500 million from consumer loans associated with private wealth clients. 2hardship requests excluding those with government guarantees or mortgage insurance, and which consider the most recently-updated loan appraisal. 56% 18% 22% 4% Consumer portfolio FICO score distribution1 755 WA FICO for total consumer portfolio
Credit quality overview 1Excludes HFS loans Nonperforming assets1 (NPAs) Net charge-offs (NCOs) ACL as % of portfolio loans and leases NPA ratio of 0.60% down 2 bps from prior quarter NCO ratio consistent with previous expectations ACL represents: 363% of NPLs, and 331% of NPAs 76% of 2018 supervisory DFAST Adverse losses 44% of 2018 supervisory DFAST Severe losses 50% of 2019 company run DFAST Severe losses 54% of 2020 company run DFAST Severe losses Provision 525% of NCOs Incurred Loss Method CECL
Current expected credit losses (CECL) implementation Allowance for loan & lease losses Commercial and industrial loans Commercial mortgage loans Commercial construction loans Commercial leases Total commercial Residential mortgage Home equity loans Indirect secured consumer loans Credit card loans Other consumer loans Total consumer Allowance for lease losses 50 19 790 81 41 59 187 44 412 1,202 144 $1,346 Reserve for unfunded commitments Allowance for credit losses 97 624 0.98% 0.56% 1.13% 0.48% 0.67% 0.51% 7.39% 1.62% 1.04% 1.10% 1.23% 1.23% 0.88% Amount % of portfolio loans & leases 53 46 1,313 259 219 129 306 122 1,035 2,348 169 $2,517 237 977 0.97% 1.47% 1.68% 1.55% 3.67% 1.07% 12.66% 4.19% 2.58% 1.99% 2.13% 1.68% 2.12% Allocation of allowance by product $s in millions 4Q19 (Incurred) 1Q20 (CECL) Allowance for credit losses increased $1.171BN, reflecting the CECL adoption ($653MM Day 1 reserve build), worsening economic outlook due to COVID-19, the impact of lower oil prices, and loan growth Amount % of portfolio loans & leases
Heavily core funded with ~89% loan-to-core deposit ratio, remaining at the best level in ~15+ years Over $80 billion of available liquidity sources $4.1B in Holding Company cash, currently sufficient to satisfy all fixed obligations in a stressed environment for ~26 months (debt maturities, common and preferred dividends, interest, and other expenses) without accessing capital markets, relying on dividends from subsidiaries or any other actions Strong capital and liquidity position 1Current period regulatory capital ratio is estimated Common Equity Tier 1 ratio (Basel III)1 Liquidity Position Fed Reserves Unpledged Investment Securities Available FHLB Borrowing Capacity Current Fed Discount Window Availability Total $s in billions; as of 3/31/2020 ~$6 ~$29 ~$11 ~$35 ~$81 Liquidity Sources 30 bps (13 bps) (18 bps) (38 bps) CET1 ratio remained strong; largest drivers of sequential change: +30 bps from earnings ex. provision (38) bps from RWA, primarily C&I line draws (18) bps from provision build $0.27 common dividend had ~(13) bps impact Share repurchases suspended (no 1Q20 repurchases) Expect to maintain dividends unless economic outlook significantly deteriorates from here $2.5 billion in AOCI not included in regulatory capital
Current expectations Second quarter 2020 compared to first quarter 2020 1Non-GAAP measure: see forward-looking statements on page 2 of this presentation regarding forward-looking non-GAAP measures and use of non-GAAP measures on pages 27-29 of the earnings release. (average balances, incl. HFS) As of April 21, 2020; please see cautionary statement on page 2 Due to the current economic uncertainty, we are withdrawing the Company’s financial outlook for the full-year 2020 that was issued on January 22, 2020 NII (FTE)1 Loans & leases Up high-single to low-double digits Relatively stable Noninterest income1 Down high-single to low-double digits Noninterest expense1 Down high-single to low-double digits (excluding PAA) (1Q20 baseline: $1.217BN) (1Q20 baseline: $708MM) (excl. merger-related and CDI expenses; 1Q20 baseline: $1.144BN) Net charge-off ratio 45 to 50 bps range Effective tax rate ~22% range
Remain well-positioned to navigate the uncertain economic environment Resilient Balance Sheet Proactive Management Diversified Revenue Mix 1 2 3
Appendix
100% Fix | 0% Variable 71% Fix | 29% Variable Balance sheet positioning Investment portfolio $19.3B fixed | $58.8B variable 1,2,3 Commercial loans1,2,3 Consumer loans1 Long-term debt4 $31.1B fixed | $10.5B variable 1 $12.3B fix | $3.9B variable 4 1ML based: 60%6 3ML based: 7%6 Prime based: 7%6 Other based: 2%6,9 Weighted avg. life: 1.4 years 1ML based: 1%7 12ML based: 2%7 Prime based: 18%7 Weighted avg. life: 2.8 years Data as of 03/31/20; 1Includes HFS Loans & Leases; 2Fifth Third had $8.0B of variable loans classified as fixed given the 1ML receive-fix swaps outstanding against C&I loans; 3Excludes forward starting swaps; 4Fifth Third had $1.46B 3ML receive-fix swaps and $1.25B 1ML receive-fix swaps outstanding against long-term debt, which are being included in floating, long-term debt with swaps outstanding reflected at fair value; 5Effective duration of the taxable available for sale portfolio; 6As a percent of total commercial; 7As a percent of total consumer; 8As a percent of total long-term debt; 9Includes 12ML, 6ML, and Fed Funds based loans 1ML based: 8%8 3ML based: 16%8 Weighted avg. life: 4.12 years C&I 23% Fix | 77% Variable Coml. mortgage 22% Fix | 78% Variable Coml. lease 100% Fix | 0% Variable Resi mtg.& construction 87% Fix | 13% Variable Auto/Indirect 100% Fix | 0% Variable Home equity 10% Fix | 90% Variable Senior debt 73% Fix | 27% Variable Sub debt 78% Fix | 22% Variable Auto securiz. proceeds 97% Fix | 3% Variable Coml. construction 0% Fix | 100% Variable Credit card 23% Fix | 77% Variable Other 68% Fix | 32% Variable Other 82% Fix | 18% Variable 60% allocation to bullet/ locked-out cash flow securities Yield: 3.13% Effective duration of 4.75 Net unrealized pre-tax gain: $2.2B 99% AFS Level 1 100% Fix | 0% Variable Level 2A Non-HQLA/ Other Information above incorporates $8B in C&I receive fixed swaps and ~$3B in LTD received fixed swaps In addition, $3B fixed rate floors of 2.25% are not incorporated above
Interest rate risk management Estimated NII sensitivity profile and ALCO policy limits Estimated NII sensitivity with deposit beta changes Estimated NII sensitivity with demand deposit balance changes 1 Effective duration of the taxable available for sale portfolio; 2Re-pricing percentage or “beta” is the estimated change in yield over 12 months as a result of a shock or ramp 100 bps parallel shift in the yield curve, Note: data as of 03/31/20; actual results may vary from these simulated results due to differences between forecasted and actual balance sheet composition, timing, magnitude, and frequency of interest rate changes, as well as other changes in market conditions and management strategies. NII is asset sensitive over the next 12-24 months to rising rates. As of March 31, 2020, 58% of loans were variable rate net of existing swaps (75% of total commercial; 25% of total consumer) Investment portfolio effective duration of 4.71 Short-term borrowings represent approximately 24% of total wholesale funding, or 4% of total funding Approximately $13 billion in non-core funding matures beyond one year Interest rate sensitivity tables leverage the following deposit assumptions: Beta on all interest-bearing deposit and sweep balances: 71% up and 42% down2 No modeled re-pricing lag on deposits Utilizes forecasted balance sheet with $750MM DDA runoff and growth (per 100 bps rate movement) assumed in up rate and down rate scenarios, respectively Weighted interest-bearing deposit floor of 8 bps
NPL rollforward1 1Loan balances exclude nonaccrual loans HFS Commercial Consumer Total NPL $ millions $ millions $ millions
Balance and credit loss trends1 Commercial & industrial Residential mortgage Commercial mortgage Home equity Indirect secured consumer loans Average portfolio balance NCOs as a % of average portfolio loans 1All balances are in billions Commercial construction
Expected impacts of MB purchase accounting1 2Q20 ($ in millions) Reflects purchase accounting impacts exclusively related to the MB Financial acquisition Projected purchase accounting accretion from the non-PCI loan portfolio represents scheduled amortization, and does not include impact of any accelerated payoffs $38 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 1See forward-looking statements on page 2 of this presentation.
Strong liquidity profile $ millions – excl. Retail Brokered & Institutional CDs Unsecured debt maturities Heavily core funded Holding company: Holding Company cash as of March 31, 2020: $4.1B Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~26 months (debt maturities, common and preferred dividends, interest, and other expenses) without accessing capital markets, relying on dividends from subsidiaries or any other actions The Holding Company did not issue any long-term debt in 1Q20 Bank entity: The Bank issued $650MM of three-year and $600MM of seven-year senior notes in 1Q20 Available and contingent borrowing capacity (1Q20): FHLB ~$10.6B available, ~$14.2B total Federal Reserve ~$35.6B 2020 funding plans In 2020, Fifth Third expects to issue sufficient long-term debt to maintain its current ratings under the Moody’s LGF methodology As of 3/31/2020 $2,150 $3,150 $650
Mortgage banking results $ millions Mortgage banking net revenue $ billions Mortgage originations and gain-on-sale margin1 1Gain-on-sale margin represents gains on all loans originated for sale Mortgage banking revenue increased $64 million from year-ago quarter and $47 million from prior quarter $4B in originations, up 145% compared to the year-ago quarter and up 6% from prior quarter; 28% purchase volume 1Q20 mortgage banking drivers: Origination fees and gain on sale revenue up $32MM sequentially Gain on sale margin up 67 bps sequentially $3MM securities gain compared to $1MM securities loss in the prior quarter (not included in mortgage banking) Originations HFS Originations HFI Margin Origination fees and gains on loan sale Gross servicing fees Net MSR valuation
1Q20 adjustments and notable items Adjusted EPS of $0.681 1Q20 reported EPS of $0.04 included a negative $0.55 impact from: $518 million pre-tax (~$399 million after-tax2) provision in excess of net charge-offs Also included a negative $0.09 impact from the following notable items: $36 million pre-tax (~$28 million after-tax2) negative credit valuation adjustment (CVA) within other noninterest expense $22 million pre-tax (~$17 million after-tax2) charge related to the valuation of the Visa total return swap $15 million pre-tax (~$12 million after-tax2) net impairment on private equity investments $7 million pre-tax (~$5 million after-tax2) merger charges 1Average diluted common shares outstanding (thousands); 720,363; 2Assumes a 23% tax rate; : all adjusted figures are non-GAAP measures; see reconciliation on pages 26 and 27 of this presentation and the use of non-GAAP measures on pages 27-29 of the earnings release;
Regulation G non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation $ and shares in millions March December September June March (unaudited) 2020 2019 2019 2019 2019 Net income (U.S. GAAP) (a) $46 $734 $549 $453 $775 Net income (U.S. GAAP) (annualized) (b) $185 $2,912 $2,178 $1,817 $3,143 Net income available to common shareholders (U.S. GAAP) (c) $29 $701 $530 $427 $760 Add: Intangible amortization, net of tax 10 11 11 11 2 Tangible net income available to common shareholders (d) $39 $712 $541 $438 $762 Tangible net income available to common shareholders (annualized) (e) $157 $2,825 $2,146 $1,757 $3,090 Net income available to common shareholders (annualized) (f) $117 $2,781 $2,103 $1,713 $3,082 Average Bancorp shareholders' equity (U.S. GAAP) (g) $21,713 $21,304 $21,087 $20,135 $17,025 Less: Average preferred stock (h) (1,770) (1,770) (1,445) (1,331) (1,331) Average goodwill (4,251) (4,260) (4,286) (4,301) (2,682) Average intangible assets and other servicing rights (193) (194) (208) (215) (58) Average tangible common equity (i) $15,499 $15,080 $15,148 $14,288 $12,954 Less: average accumulated other comprehensive income ("AOCI") (1,825) (1,416) (1,444) (619) - Average tangible common equity, excluding AOCI (j) $13,674 $13,664 $13,704 $13,669 $12,954 Adjustments (pre-tax items) CECL reserve build 518 - - - - Valuation of Visa total return swap 22 44 11 22 31 GreenSky securities losses (gains) - - - - (9) Provision impact from conversion to a national charter - 9 - - - Private equity write-down 15 - - - - Merger-related expense 7 9 28 109 76 Contribution for Fifth Third Foundation - 20 - - - Gain recognized from Worldpay TRA transaction - (345) - - - Unfavorable credit calculation adjustment (CVA) 36 - - - - Merger-related branch network impairment charge - - - - 13 Gain on sale of Vantiv/Worldpay shares - - - - (562) Adjustments - after-tax 1 (k) 461 ($202) $30 101 ($341) Adjustments - tax-related Acquisition impact on state deferred taxes - - - - 9 Adjustments - tax-related (l) - - - - 9 Adjusted net income [(a) + (k) + (l)] $507 $532 $579 $554 $443 Adjusted net income (annualized) (m) $2,039 $2,111 $2,297 $2,222 $1,797 Adjusted net income available to common shareholders [(c) + (k) + (l)] $490 $499 $560 $528 $428 Adjusted net income available to common shareholders (annualized) (n) $1,971 $1,980 $2,222 $2,118 $1,736 Adjusted tangible net income available to common shareholders [(d) + (k) + (l)] $500 $510 $571 $539 $430 Adjusted tangible net income available to common shareholders (annualized) (o) $2,011 $2,023 $2,265 $2,162 $1,744 Average assets (p) $171,871 $169,327 $169,585 $167,578 $148,968 Metrics: Return on assets (b) / (p) 0.11% 1.72% 1.28% 1.08% 2.11% Adjusted return on assets (m) / (p) 1.19% 1.25% 1.35% 1.33% 1.21% Return on average common equity (f) / [(g) + (h)] 0.6% 14.2% 10.7% 9.1% 19.6% Adjusted return on average common equity (n) / [(g) + (h)] 9.9% 10.1% 11.3% 11.3% 11.1% Return on average tangible common equity (e) / (i) 1.0% 18.7% 14.2% 12.3% 23.9% Adjusted return on average tangible common equity (o) / (i) 13.0% 13.4% 15.0% 15.1% 13.5% Adjusted return on average tangible common equity, excluding AOCI (o) / (j) 14.7% 14.8% 16.5% 15.8% 13.5% For the Three Months Ended See pages 27-29 of the earnings release for a discussion on the use of non-GAAP financial measures; 1Pre-tax items: for all periods assume a 23% tax rate, except for 1Q19 non-deductible merger-related items
Regulation G non-GAAP reconciliation See pages 27-29 of the earnings release for a discussion on the use of non-GAAP financial measures