Fourth quarter earnings per share $0.43, up 30 percent from fourth
quarter 2011
Fifth Third Bancorp (Nasdaq: FITB) today reported full year 2012 net
income of $1.6 billion, up 22 percent from net income of $1.3 billion in
2011. After preferred dividends, 2012 net income available to common
shareholders was $1.5 billion, or $1.66 per diluted share, up 41 percent
compared with 2011 net income available to common shareholders of $1.1
billion, or $1.18 per diluted share.
Fourth quarter 2012 net income was $399 million, an increase of 10
percent from net income of $363 million in the third quarter of 2012 and
27 percent from net income of $314 million in the fourth quarter of
2011. After preferred dividends, net income available to common
shareholders was $390 million, or $0.43 per diluted share, in the fourth
quarter of 2012, compared with $354 million, or $0.38 per diluted share,
in the third quarter of 2012, and $305 million, or $0.33 per diluted
share, in the fourth quarter of 2011. Earnings per diluted share
increased 13 percent from the third quarter of 2012 and 30 percent from
the fourth quarter of 2011.
Fourth quarter 2012 noninterest income included a $157 million gain on
the sale of Vantiv shares; a $19 million negative valuation adjustment
on the Vantiv warrant; and a $15 million charge related to the valuation
of the Visa total return swap. Net gains on investment securities were
$2 million. Fourth quarter noninterest expense included $134 million of
debt extinguishment costs associated with the termination of Federal
Home Loan Bank (FHLB) debt and $13 million in charges to increase
litigation reserves. Results also included an additional $29 million of
charges to increase the mortgage representation and warranty reserve due
to new Freddie Mac guidance for potential 2004-2006 repurchase claims.
Fourth quarter 2012 taxes were reduced by approximately $10 million due
to the termination of certain leases.
Third quarter 2012 noninterest income included a $16 million negative
valuation adjustment on the Vantiv warrant; $13 million in gains
recognized on the sale of certain Fifth Third funds; and a $1 million
reduction related to the valuation of the Visa total return swap. Net
gains on investment securities were $2 million. Third quarter
noninterest expense included $26 million of debt extinguishment costs
associated with the redemption of Fifth Third Capital Trust V and Fifth
Third Capital Trust VI trust preferred securities (TruPS), a $5 million
benefit from the sale of affordable housing investments, $5 million in
charges to increase litigation reserves, and $2 million of expenses
associated with the sale of certain Fifth Third funds. Results also
included an additional $24 million of charges associated with the
increase of the mortgage representation and warranty reserve. Fourth
quarter 2011 results included a $54 million pre-tax charge to
noninterest income related to the valuation of the Visa total return
swap and $10 million in charges to increase litigation reserves,
primarily reserves associated with bankcard association membership.
Fourth quarter 2011 results also included $10 million in positive
valuation adjustments on Vantiv puts and warrants and investment
securities gains of $5 million.
Earnings Highlights
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Earnings ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Bancorp
|
|
$399
|
|
$363
|
|
$385
|
|
$430
|
|
$314
|
|
10%
|
|
27%
|
|
Net income available to common shareholders
|
|
$390
|
|
$354
|
|
$376
|
|
$421
|
|
$305
|
|
10%
|
|
28%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
|
0.44
|
|
0.39
|
|
0.41
|
|
0.46
|
|
0.33
|
|
13%
|
|
33%
|
|
Earnings per share, diluted
|
|
0.43
|
|
0.38
|
|
0.40
|
|
0.45
|
|
0.33
|
|
13%
|
|
30%
|
|
Cash dividends per common share
|
|
0.10
|
|
0.10
|
|
0.08
|
|
0.08
|
|
0.08
|
|
-
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
1.33%
|
|
1.23%
|
|
1.32%
|
|
1.49%
|
|
1.08%
|
|
8%
|
|
23%
|
|
Return on average common equity
|
|
11.5
|
|
10.4
|
|
11.4
|
|
13.1
|
|
9.5
|
|
11%
|
|
21%
|
|
Return on average tangible common equity
|
|
14.1
|
|
12.8
|
|
14.1
|
|
16.2
|
|
11.9
|
|
10%
|
|
19%
|
|
Tier I capital
|
|
10.65
|
|
10.85
|
|
12.31
|
|
12.20
|
|
11.91
|
|
(2%)
|
|
(11%)
|
|
Tier I common equity
|
|
9.51
|
|
9.67
|
|
9.77
|
|
9.64
|
|
9.35
|
|
(2%)
|
|
2%
|
|
Net interest margin (a)
|
|
3.49
|
|
3.56
|
|
3.56
|
|
3.61
|
|
3.67
|
|
(2%)
|
|
(5%)
|
|
Efficiency (a)
|
|
65.2
|
|
63.7
|
|
59.4
|
|
58.3
|
|
67.5
|
|
2%
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (in thousands)
|
|
882,152
|
|
897,467
|
|
918,913
|
|
920,056
|
|
919,804
|
|
(2%)
|
|
(4%)
|
|
Average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
884,676
|
|
904,475
|
|
913,541
|
|
915,226
|
|
914,997
|
|
(2%)
|
|
(3%)
|
|
Diluted
|
|
925,585
|
|
944,821
|
|
954,622
|
|
957,416
|
|
956,349
|
|
(2%)
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Presented on a fully taxable equivalent basis
|
|
|
The percentages in all of the tables in this earning release are
calculated on actual dollar amounts rather than the rounded dollar
amounts.
|
“Strong fourth quarter earnings of $399 million were highlighted by
quality loan production, fee income growth, and credit improvement,”
said Kevin Kabat, CEO of Fifth Third Bancorp. “Every caption in fee
income was up for the quarter, including mortgage banking revenue up 29
percent and corporate banking revenue up 13 percent sequentially. Net
interest income was consistent with third quarter results and stronger
than expected.
“These quarterly results capped a solidly profitable year in which Fifth
Third generated the second highest level of net income in our Company’s
history and pre-provision net revenue of $2.5 billion. Loans increased
nearly $5 billion on an end of period basis. We produced double-digit
growth in commercial and industrial loans and residential mortgage loan
originations due to higher demand and low interest rates. Average core
deposits increased 5 percent with a continued favorable mix shift to
lower cost deposits.
“Credit trends continued to be favorable, with full year net charge-offs
down 40 percent from 2011 and nonperforming assets declining 29 percent,
both the lowest levels reported since 2007. At year end, total
delinquencies were at their lowest level since the second quarter of
2004. The improvement in credit trends resulted in a $400 million
reduction in loan loss reserves during the year, although reserve levels
and coverage ratios remain strong at 2.16 percent of loans and 180
percent of nonperforming portfolio loans.
“Pursuant to our capital plan, we increased the return of capital to
shareholders in 2012, with our recent increase of the quarterly common
stock dividend to $0.10 per share and common stock repurchases of
approximately $650 million during the year, including $175 million
related to Vantiv gains. Despite these actions, our strong common equity
capital ratios increased for the year. Our capital plan included the
potential repurchase of an additional $125 million in the first quarter
of 2013. Given our capacity for internal capital generation, we would
expect to continue to return capital to shareholders in a responsible
manner, absent unforeseen developments.”
Income Statement Highlights
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Condensed Statements of Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable equivalent)
|
|
$903
|
|
$907
|
|
$899
|
|
$903
|
|
$920
|
|
-
|
|
(2%)
|
|
Provision for loan and lease losses
|
|
76
|
|
65
|
|
71
|
|
91
|
|
55
|
|
17%
|
|
38%
|
|
Total noninterest income
|
|
880
|
|
671
|
|
678
|
|
769
|
|
550
|
|
31%
|
|
60%
|
|
Total noninterest expense
|
|
1,163
|
|
1,006
|
|
937
|
|
973
|
|
993
|
|
16%
|
|
17%
|
|
Income before income taxes (taxable equivalent)
|
|
544
|
|
507
|
|
569
|
|
608
|
|
422
|
|
7%
|
|
29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment
|
|
4
|
|
4
|
|
4
|
|
5
|
|
4
|
|
-
|
|
-
|
|
Applicable income taxes
|
|
144
|
|
139
|
|
180
|
|
173
|
|
104
|
|
4%
|
|
38%
|
|
Net income
|
|
396
|
|
364
|
|
385
|
|
430
|
|
314
|
|
9%
|
|
26%
|
|
Less: Net income attributable to noncontrolling interest
|
|
(3)
|
|
1
|
|
-
|
|
-
|
|
-
|
|
NM
|
|
NM
|
|
Net income attributable to Bancorp
|
|
399
|
|
363
|
|
385
|
|
430
|
|
314
|
|
10%
|
|
27%
|
|
Dividends on preferred stock
|
|
9
|
|
9
|
|
9
|
|
9
|
|
9
|
|
-
|
|
-
|
|
Net income available to common shareholders
|
|
390
|
|
354
|
|
376
|
|
421
|
|
305
|
|
10%
|
|
28%
|
|
Earnings per share, diluted
|
|
$0.43
|
|
$0.38
|
|
$0.40
|
|
$0.45
|
|
$0.33
|
|
13%
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Interest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income (taxable equivalent)
|
|
$1,020
|
|
$1,027
|
|
$1,031
|
|
$1,045
|
|
$1,061
|
|
(1%)
|
|
(4%)
|
|
Total interest expense
|
|
117
|
|
120
|
|
132
|
|
142
|
|
141
|
|
(3%)
|
|
(17%)
|
|
Net interest income (taxable equivalent)
|
|
$903
|
|
$907
|
|
$899
|
|
$903
|
|
$920
|
|
-
|
|
(2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest-earning assets (taxable equivalent)
|
|
3.94%
|
|
4.03%
|
|
4.08%
|
|
4.18%
|
|
4.23%
|
|
(2%)
|
|
(7%)
|
|
Yield on interest-bearing liabilities
|
|
0.65%
|
|
0.67%
|
|
0.73%
|
|
0.79%
|
|
0.79%
|
|
(3%)
|
|
(18%)
|
|
Net interest rate spread (taxable equivalent)
|
|
3.29%
|
|
3.36%
|
|
3.35%
|
|
3.39%
|
|
3.44%
|
|
(2%)
|
|
(4%)
|
|
Net interest margin (taxable equivalent)
|
|
3.49%
|
|
3.56%
|
|
3.56%
|
|
3.61%
|
|
3.67%
|
|
(2%)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, including held for sale
|
|
$86,180
|
|
$84,829
|
|
$84,508
|
|
$83,757
|
|
$82,278
|
|
2%
|
|
5%
|
|
Total securities and other short-term investments
|
|
16,765
|
|
16,588
|
|
17,168
|
|
16,735
|
|
17,243
|
|
1%
|
|
(3%)
|
|
Total interest-earning assets
|
|
102,945
|
|
101,417
|
|
101,676
|
|
100,492
|
|
99,521
|
|
2%
|
|
3%
|
|
Total interest-bearing liabilities
|
|
71,420
|
|
72,026
|
|
73,162
|
|
72,219
|
|
71,467
|
|
(1%)
|
|
-
|
|
Bancorp shareholders' equity
|
|
13,855
|
|
13,887
|
|
13,628
|
|
13,366
|
|
13,147
|
|
-
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income of $903 million on a fully taxable equivalent basis
decreased $4 million from the third quarter. The decline in net interest
income was driven by the effect of approximately $10 million in
non-recurring benefits recorded in the third quarter. Otherwise, net
interest income benefited from a decline in interest expense driven by
higher demand deposit balances and continued runoff in consumer CD
balances; a $2 million reduction in long-term debt expense due to the
FHLB debt termination in December; and a $5 million reduction in
long-term debt expense due to the full quarter impact of the TruPS
redemption in the third quarter. The benefit of net loan growth on
interest income was offset by a decline in interest income attributable
to loan repricing, primarily in the C&I, auto, and residential mortgage
portfolios, as well as lower reinvestment rates on the securities
portfolio.
The net interest margin was 3.49 percent, a decrease of 7 bps from 3.56
percent in the previous quarter. The decline in net interest margin was
driven by the 4 bps benefit in the third quarter from non-recurring
items described above as well as lower loan and securities yields. The
margin otherwise benefited by 2 bps from the full quarter impact of the
TruPS redemption in the third quarter and 1 bp from the FHLB debt
termination in December.
Compared with the fourth quarter of 2011, net interest income decreased
$17 million and the net interest margin decreased 18 bps, driven by
lower asset yields partially offset by higher average loan balances,
run-off in higher-priced CDs and mix shift to lower cost deposit
products.
Securities
Average securities and other short-term investments were $16.8 billion
in the fourth quarter of 2012 compared with $16.6 billion in the
previous quarter and $17.2 billion in the fourth quarter of 2011. The
sequential increase in average balances was related to the
pre-investment in the third quarter of anticipated fourth quarter cash
flows. The year-over-year decline was due to the timing of reinvestment
in portfolio cash flows during 2011 as well as lower cash balances held
at the Federal Reserve.
Loans
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Average Portfolio Loans and Leases ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$34,301
|
|
$33,111
|
|
$32,734
|
|
$31,371
|
|
$29,891
|
|
4%
|
|
15%
|
|
Commercial mortgage
|
|
9,193
|
|
9,567
|
|
9,810
|
|
10,007
|
|
10,262
|
|
(4%)
|
|
(10%)
|
|
Commercial construction
|
|
686
|
|
742
|
|
873
|
|
992
|
|
1,132
|
|
(8%)
|
|
(39%)
|
|
Commercial leases
|
|
3,509
|
|
3,481
|
|
3,469
|
|
3,543
|
|
3,351
|
|
1%
|
|
5%
|
|
Subtotal - commercial loans and leases
|
|
47,689
|
|
46,901
|
|
46,886
|
|
45,913
|
|
44,636
|
|
2%
|
|
7%
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
11,846
|
|
11,578
|
|
11,274
|
|
10,828
|
|
10,464
|
|
2%
|
|
13%
|
|
Home equity
|
|
10,129
|
|
10,312
|
|
10,430
|
|
10,606
|
|
10,810
|
|
(2%)
|
|
(6%)
|
|
Automobile loans
|
|
11,944
|
|
11,812
|
|
11,755
|
|
11,882
|
|
11,696
|
|
1%
|
|
2%
|
|
Credit card
|
|
2,029
|
|
1,971
|
|
1,915
|
|
1,926
|
|
1,906
|
|
3%
|
|
6%
|
|
Other consumer loans and leases
|
|
306
|
|
314
|
|
326
|
|
345
|
|
402
|
|
(3%)
|
|
(24%)
|
|
Subtotal - consumer loans and leases
|
|
36,254
|
|
35,987
|
|
35,700
|
|
35,587
|
|
35,278
|
|
1%
|
|
3%
|
|
Total average loans and leases (excluding held for sale)
|
|
$83,943
|
|
$82,888
|
|
$82,586
|
|
$81,500
|
|
$79,914
|
|
1%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans held for sale
|
|
2,237
|
|
1,941
|
|
1,920
|
|
2,257
|
|
2,364
|
|
15%
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loan and lease balances (excluding loans held-for-sale)
increased $1.1 billion, or 1 percent, sequentially and increased $4.0
billion, or 5 percent, from the fourth quarter of 2011. Period end loan
and lease balances (excluding loans held-for-sale) increased $2.7
billion, or 3 percent, sequentially and $4.8 billion, or 6 percent, from
a year ago.
Average commercial portfolio loan and lease balances were up $788
million, or 2 percent, sequentially and increased $3.1 billion, or 7
percent, from the fourth quarter of 2011. Average C&I loans increased 4
percent sequentially and 15 percent compared with the fourth quarter of
2011. Average commercial mortgage and commercial construction loan
balances combined declined 4 percent sequentially and 13 percent from
the same period the previous year. Commercial line usage, on an
end of period basis, was 31 percent of committed lines in the fourth
quarter of 2012 compared with 32 percent in the third quarter of 2012
and 32 percent in the fourth quarter of 2011.
Average consumer portfolio loan and lease balances increased $267
million, or 1 percent, sequentially and $976 million, or 3 percent, from
the fourth quarter of 2011. Average residential mortgage loans increased
2 percent sequentially, reflecting strong originations due to continued
refinancing activity associated with historically low interest rates as
well as the continued retention of certain shorter term residential
mortgage loans. Compared with the fourth quarter of 2011, average
residential mortgage loans increased 13 percent and reflected the
retention of these shorter term residential mortgage loans. Home equity
loan balances declined 2 percent sequentially and 6 percent
year-over-year due to lower demand and production. Average auto loans
increased 1 percent sequentially and increased 2 percent year-over-year.
Average loans held-for-sale balance fluctuations were primarily driven
by changes in residential mortgage held-for-sale balances. Average loans
held-for-sale balances of $2.2 billion increased $296 million
sequentially and decreased $127 million compared with the fourth quarter
of 2011, and period end loans held-for-sale of $2.9 billion increased
$1.1 billion from the previous quarter and decreased $15 million from
the fourth quarter of 2011.
Deposits
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Average Deposits ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
$29,223
|
|
$27,127
|
|
$26,351
|
|
$26,063
|
|
$26,069
|
|
8%
|
|
12%
|
|
Interest checking
|
|
23,556
|
|
22,967
|
|
23,548
|
|
22,308
|
|
19,263
|
|
3%
|
|
22%
|
|
Savings
|
|
20,216
|
|
21,283
|
|
22,143
|
|
21,944
|
|
21,715
|
|
(5%)
|
|
(7%)
|
|
Money market
|
|
6,026
|
|
4,776
|
|
4,258
|
|
4,543
|
|
5,255
|
|
26%
|
|
15%
|
|
Foreign office (a)
|
|
1,174
|
|
1,345
|
|
1,321
|
|
2,277
|
|
3,325
|
|
(13%)
|
|
(65%)
|
|
Subtotal - Transaction deposits
|
|
80,195
|
|
77,498
|
|
77,621
|
|
77,135
|
|
75,627
|
|
3%
|
|
6%
|
|
Other time
|
|
4,094
|
|
4,224
|
|
4,359
|
|
4,551
|
|
4,960
|
|
(3%)
|
|
(17%)
|
|
Subtotal - Core deposits
|
|
84,289
|
|
81,722
|
|
81,980
|
|
81,686
|
|
80,587
|
|
3%
|
|
5%
|
|
Certificates - $100,000 and over
|
|
3,084
|
|
3,016
|
|
3,130
|
|
3,178
|
|
3,085
|
|
2%
|
|
-
|
|
Other
|
|
32
|
|
32
|
|
23
|
|
19
|
|
16
|
|
(2%)
|
|
94%
|
|
Total deposits
|
|
$87,405
|
|
$84,770
|
|
$85,133
|
|
$84,883
|
|
$83,688
|
|
3%
|
|
4%
|
|
(a) Includes commercial customer Eurodollar sweep balances for
which the Bancorp pays rates comparable to other commercial
deposit accounts.
|
|
|
Average core deposits increased $2.6 billion, or 3 percent, sequentially
and increased $3.7 billion, or 5 percent, from the fourth quarter of
2011. Average transaction deposits, which are included in core deposits,
increased $2.7 billion, or 3 percent, from the third quarter of 2012
primarily driven by higher demand deposits, money market, and interest
checking balances, partially offset by lower savings balances.
Year-over-year transaction deposits increased $4.6 billion, or 6
percent, driven by higher interest checking, demand deposits, and money
market balances, partially offset by lower foreign office and savings
balances. Other time deposits, primarily CDs, decreased 3 percent
sequentially and 17 percent compared with the fourth quarter of 2011.
Commercial average transaction deposits increased 5 percent sequentially
and 8 percent from the previous year. Sequential performance reflected
higher demand deposits and money market balances. Year-over-year growth
was primarily driven by higher inflows to interest checking and demand
deposit account balances, partially offset by lower foreign office
balances. Average public funds balances were $5.0 billion compared with
$5.1 billion in the third quarter of 2012 and $5.6 billion in the fourth
quarter of 2011.
Consumer average transaction deposits increased 2 percent sequentially
and increased 4 percent from the fourth quarter of 2011. The sequential
increase reflected higher money market, demand deposits, and interest
checking balances, which were partially offset by lower savings
balances. Year-over-year growth was primarily driven by increased
interest checking and demand deposit balances partially offset by lower
savings balances. Consumer CDs included in core deposits declined 3
percent sequentially, driven by customer reluctance to purchase CDs
given the current low rate environment, and declined 17 percent
year-over-year driven by maturities of higher-rate CDs.
Noninterest Income
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Income ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits
|
|
$134
|
|
$128
|
|
$130
|
|
$129
|
|
$136
|
|
5%
|
|
(1%)
|
|
Corporate banking revenue
|
|
114
|
|
101
|
|
102
|
|
97
|
|
82
|
|
13%
|
|
38%
|
|
Mortgage banking net revenue
|
|
258
|
|
200
|
|
183
|
|
204
|
|
156
|
|
29%
|
|
65%
|
|
Investment advisory revenue
|
|
93
|
|
92
|
|
93
|
|
96
|
|
90
|
|
1%
|
|
3%
|
|
Card and processing revenue
|
|
66
|
|
65
|
|
64
|
|
59
|
|
60
|
|
2%
|
|
10%
|
|
Other noninterest income
|
|
215
|
|
78
|
|
103
|
|
175
|
|
24
|
|
NM
|
|
NM
|
|
Securities gains, net
|
|
2
|
|
2
|
|
3
|
|
9
|
|
5
|
|
-
|
|
(60%)
|
|
Securities gains (losses), net - non-qualifying hedges on mortgage
servicing rights
|
|
(2)
|
|
5
|
|
-
|
|
-
|
|
(3)
|
|
NM
|
|
NM
|
|
Total noninterest income
|
|
$880
|
|
$671
|
|
$678
|
|
$769
|
|
$550
|
|
31%
|
|
60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM: Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income of $880 million increased $209 million sequentially,
or 31 percent, and increased $330 million, or 60 percent, compared with
prior year results. The sequential and year-over-year increases were
both driven by a $157 million gain from the sale of Vantiv shares and
higher mortgage banking and corporate banking revenue.
Fourth quarter 2012 noninterest income results included a $19 million
negative valuation adjustment on the Vantiv warrant, compared with a $16
million negative valuation adjustment in the third quarter of 2012 and a
$10 million positive valuation adjustment on the Vantiv warrant and put
instruments in the fourth quarter of 2011. Current quarter’s results
also included a $15 million charge related to the valuation of the total
return swap entered into as part of the 2009 sale of Visa, Inc. Class B
shares. Negative valuation adjustments on this swap were $1 million in
the third quarter of 2012 and $54 million in the fourth quarter of 2011.
Third quarter 2012 results also included $13 million in gains recognized
on the sale of certain Fifth Third funds. Excluding these items, the
gain from the sale of Vantiv shares, and investment securities gains in
all periods, noninterest income of $755 million increased $82 million,
or 12 percent, from the previous quarter and increased $166 million, or
28 percent, from the fourth quarter of 2011.
Service charges on deposits of $134 million increased 5 percent from the
third quarter and decreased 1 percent compared with the same quarter
last year. Retail service charges grew 10 percent sequentially largely
due to a seasonal increase in consumer overdrafts as well as the initial
benefit of the transition to our new and simplified deposit product
offerings. Compared with the fourth quarter of 2011, retail service
charges decreased 11 percent primarily due to changes in our overdraft
policies during 2012. Commercial service charges increased 2 percent
sequentially and 6 percent from a year ago primarily as a result of
higher treasury management fees.
Corporate banking revenue of $114 million increased 13 percent from the
third quarter of 2012 driven by higher syndication fees, business
lending fees, and derivative fees, which benefited from higher activity
in anticipation of changes to tax rules. Corporate banking revenue
increased 38 percent from the same period last year driven by increased
syndication fees and business lending fees as a result our investments
in our capital markets and treasury management capabilities, which are
creating more lead opportunities and increased production.
Mortgage banking net revenue was $258 million in the fourth quarter of
2012, a 29 percent increase from the third quarter of 2012 and a 65
percent increase from the fourth quarter of 2011. Fourth quarter 2012
originations were $7.0 billion, compared with $5.8 billion in the
previous quarter and $7.1 billion in the fourth quarter of 2011. Fourth
quarter 2012 originations resulted in gains of $239 million on mortgages
sold, reflecting higher mortgage sales revenue partially offset by lower
gain on sale margins. This compares with gains of $226 million during
the previous quarter and $152 million during the fourth quarter of 2011.
Mortgage servicing fees this quarter were $64 million, compared with $62
million in the previous quarter and $58 million in the fourth quarter of
2011. Mortgage banking net revenue is also affected by net servicing
asset value adjustments, which include mortgage servicing rights (MSR)
amortization and MSR valuation adjustments (including mark-to-market
adjustments on free-standing derivatives used to economically hedge the
MSR portfolio). These net servicing asset valuation adjustments were
negative $45 million in the fourth quarter of 2012 (reflecting MSR
amortization of $52 million and MSR valuation adjustments of positive $7
million); negative $88 million in the third quarter of 2012 (MSR
amortization of $48 million and MSR valuation adjustments of negative
$40 million); and negative $54 million in the fourth quarter of 2011
(MSR amortization of $47 million and MSR valuation adjustments of
negative $7 million). The mortgage servicing asset, net of the valuation
reserve, was $697 million at quarter end on a servicing portfolio of $62
billion.
Net losses on securities held as non-qualifying hedges for the MSR
portfolio were $2 million in the fourth quarter of 2012, compared with
net gains of $5 million in the third quarter of 2012 and net losses of
$3 million in the fourth quarter of 2011.
Investment advisory revenue of $93 million increased 1 percent
sequentially and increased 3 percent year–over-year, reflecting higher
private client services and institutional trust fees, which benefited
from improvement in equity and bond market values, partially offset by
lower mutual fund fees largely due to the sale of certain Fifth Third
funds in the third quarter of 2012.
Card and processing revenue was $66 million in the fourth quarter of
2012, an increase of 2 percent sequentially and 10 percent from the
fourth quarter of 2011, reflecting higher transaction volumes, higher
levels of consumer spending, and new products.
Other noninterest income totaled $215 million in the fourth quarter of
2012, compared with $78 million in the previous quarter and $24 million
in the fourth quarter of 2011. The growth sequentially and from the
fourth quarter of 2011 was primarily driven by the $157 million gain on
the sale of Vantiv shares. Other noninterest income includes effects of
the valuation of the Vantiv warrant and changes in income related to the
valuation of the Visa total return swap. For quarters ending December
31, 2012, September 30, 2012, and December 31, 2011, the impact of
warrant and put option valuation adjustments were negative $19 million,
negative $16 million, and positive $10 million, respectively, and
reductions in income related to the Visa total return swap were $15
million, $1 million, and $54 million, respectively. Third quarter 2012
results also included $13 million in gains recognized on the sale of
certain Fifth Third funds. Excluding the items detailed above, other
noninterest income of $92 million increased approximately $10 million
from the previous quarter and increased approximately $24 million from
the fourth quarter of 2011.
Net credit-related costs recognized in other noninterest income were $13
million in the fourth quarter of 2012 versus $14 million last quarter
and $33 million in the fourth quarter of 2011. Fourth quarter 2012
results included $4 million of net gains on sales of commercial loans
held-for-sale and $3 million of fair value charges on commercial loans
held-for-sale, as well as $10 million of losses on other real estate
owned (OREO). Third quarter 2012 results included $2 million of net
gains on sales of commercial loans held-for-sale and $3 million of fair
value charges on commercial loans held-for-sale, as well as $11 million
of losses on OREO. Fourth quarter 2011 results included $9 million of
net gains on sales of commercial loans held-for-sale, $18 million of
fair value charges on commercial loans held-for-sale, and $22 million of
losses on OREO.
Net gains on investment securities were $2 million in the fourth quarter
of 2012, compared with investment securities gains of $2 million in the
previous quarter and $5 million in the fourth quarter of 2011.
Noninterest Expense
|
|
|
For the Three Months Ended
|
|
% Change
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Seq
|
|
Yr/Yr
|
|
Noninterest Expense ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and incentives
|
|
$416
|
|
$399
|
|
$393
|
|
$399
|
|
$393
|
|
4%
|
|
6%
|
|
Employee benefits
|
|
96
|
|
79
|
|
84
|
|
112
|
|
84
|
|
22%
|
|
15%
|
|
Net occupancy expense
|
|
76
|
|
76
|
|
74
|
|
77
|
|
79
|
|
-
|
|
(3%)
|
|
Technology and communications
|
|
52
|
|
49
|
|
48
|
|
47
|
|
48
|
|
6%
|
|
10%
|
|
Equipment expense
|
|
27
|
|
28
|
|
27
|
|
27
|
|
27
|
|
(2%)
|
|
(1%)
|
|
Card and processing expense
|
|
31
|
|
30
|
|
30
|
|
30
|
|
28
|
|
5%
|
|
10%
|
|
Other noninterest expense
|
|
465
|
|
345
|
|
281
|
|
281
|
|
334
|
|
35%
|
|
39%
|
|
Total noninterest expense
|
|
$1,163
|
|
$1,006
|
|
$937
|
|
$973
|
|
$993
|
|
16%
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense of $1.2 billion increased 16 percent from the third
quarter of 2012 and increased 17 percent from the fourth quarter of
2011. Fourth quarter 2012 expenses included $134 million of debt
extinguishment costs associated with the termination of $1 billion of
FHLB debt; $26 million of additional expenses associated with the
increase in the representation and warranty reserve; and $13 million in
charges to increase litigation reserves. Third quarter 2012 expenses
included $26 million of debt extinguishment costs associated with the
redemption of Capital Trust V and Capital Trust VI TruPS; $22 million of
additional expenses associated with the increase in the mortgage
representation and warranty reserve; $5 million in charges to increase
litigation reserves; a $5 million benefit from the sale of affordable
housing investments; and $2 million of costs associated with the sale of
certain Fifth Third funds. Fourth quarter 2011 expenses included $10
million in charges to increase litigation reserves, primarily related to
bankcard association membership. Excluding these items, noninterest
expense of $990 million increased $34 million, or 4 percent, compared
with the third quarter of 2012 and increased $7 million, or 1 percent,
compared with the fourth quarter of 2011. The increase in both periods
was largely due to higher compensation-related expenses, primarily
performance incentives, driven by strong mortgage originations and
commercial and corporate banking results. In addition, the sequential
comparison was affected by $6 million of annual pension settlement
expense in the fourth quarter.
Credit costs related to problem assets recorded as noninterest expense
totaled $68 million in the fourth quarter of 2012, compared with $59
million in the third quarter of 2012 and $44 million in the fourth
quarter of 2011. Fourth quarter credit-related expenses included
provisioning for mortgage repurchases of $44 million, compared with $36
million in the third quarter and $18 million a year ago. (Realized
mortgage repurchase losses were $15 million in the fourth quarter of
2012, compared with $15 million last quarter and $17 million in the
fourth quarter of 2011.) The increase in mortgage representation and
warranty expense was primarily due to an increase in the reserve as a
result of additional information obtained from Freddie Mac regarding
changes to their selection criteria for future mortgage repurchases and
file requests, which now includes 2004 through 2006 vintages. As such,
we were able to better estimate the losses that are probable on loans
sold to Freddie Mac with representation and warranty provisions.
(Freddie Mac loans represent approximately 56 percent of Fifth Third’s
mortgage servicing portfolio.) Provision for unfunded commitments was an
expense of $3 million in the current quarter, compared with a benefit of
$2 million last quarter and a benefit of $6 million a year ago.
Derivative valuation adjustments related to customer credit risk were
positive $2 million, $2 million, and $5 million for this quarter, last
quarter and the year ago quarter, respectively. OREO expense was $5
million this quarter, compared with $6 million last quarter and $8
million a year ago. Other problem asset-related expenses were $19
million in the fourth quarter, compared with $21 million the previous
quarter and $28 million in the same period last year.
Credit Quality
|
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Total net losses charged off ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
($36)
|
|
($29)
|
|
($46)
|
|
($54)
|
|
($62)
|
|
Commercial mortgage loans
|
|
(17)
|
|
(28)
|
|
(25)
|
|
(30)
|
|
(47)
|
|
Commercial construction loans
|
|
(4)
|
|
(4)
|
|
-
|
|
(18)
|
|
(4)
|
|
Commercial leases
|
|
1
|
|
(1)
|
|
(7)
|
|
-
|
|
-
|
|
Residential mortgage loans
|
|
(23)
|
|
(26)
|
|
(36)
|
|
(37)
|
|
(36)
|
|
Home equity
|
|
(34)
|
|
(37)
|
|
(39)
|
|
(46)
|
|
(50)
|
|
Automobile loans
|
|
(9)
|
|
(7)
|
|
(7)
|
|
(9)
|
|
(13)
|
|
Credit card
|
|
(19)
|
|
(18)
|
|
(18)
|
|
(20)
|
|
(21)
|
|
Other consumer loans and leases
|
|
(6)
|
|
(6)
|
|
(3)
|
|
(6)
|
|
(6)
|
|
Total net losses charged off
|
|
(147)
|
|
(156)
|
|
(181)
|
|
(220)
|
|
(239)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses
|
|
(177)
|
|
(188)
|
|
(219)
|
|
(253)
|
|
(280)
|
|
Total recoveries
|
|
30
|
|
32
|
|
38
|
|
33
|
|
41
|
|
Total net losses charged off
|
|
($147)
|
|
($156)
|
|
($181)
|
|
($220)
|
|
($239)
|
|
Ratios (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
Net losses charged off as a percent of average loans and leases
(excluding held for sale)
|
|
0.70%
|
|
0.75%
|
|
0.88%
|
|
1.08%
|
|
1.19%
|
|
Commercial
|
|
0.46%
|
|
0.53%
|
|
0.67%
|
|
0.89%
|
|
1.00%
|
|
Consumer
|
|
1.01%
|
|
1.04%
|
|
1.15%
|
|
1.34%
|
|
1.43%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs were $147 million in the fourth quarter of 2012, or 70
bps of average loans on an annualized basis, the lowest level since the
third quarter of 2007. Net charge-offs declined 6 percent compared with
third quarter 2012 net charge-offs of $156 million, and declined 38
percent versus fourth quarter 2011 net charge-offs of $239 million.
Commercial net charge-offs were $56 million, or 46 bps, down $6 million
compared with $62 million, or 53 bps, in the third quarter driven by
declines in commercial mortgage net charge-offs. Commercial net
charge-offs were at the lowest level since the third quarter of 2007.
Commercial mortgage net charge-offs were $17 million, down $11 million
from $28 million in the previous quarter. C&I net charge-offs totaled
$36 million, compared with net losses of $29 million in the previous
quarter. Commercial construction net charge-offs were $4 million in the
fourth quarter, or flat compared with the prior quarter. The homebuilder
/ developer portfolio now totals $318 million, down from a peak of $3.3
billion in the second quarter of 2008. We recorded no material net
charge-offs on these loans in the fourth quarter of 2012. This lending
was suspended in 2007 and originations remain extremely limited.
Consumer net charge-offs were $91 million, or 101 bps, down $3 million
sequentially. Net charge-offs on residential mortgage loans in the
portfolio were $23 million, down $3 million from the previous quarter.
Home equity net charge-offs were $34 million, down $3 million from the
third quarter. Net charge-offs on brokered home equity loans represented
35 percent of fourth quarter home equity losses; such loans are 14
percent of the total home equity portfolio. The home equity portfolio
included $1.3 billion of brokered loans, down from a peak of $2.6
billion in 2007; originations of these loans were discontinued in 2007.
Net charge-offs in the auto portfolio of $9 million increased $2 million
compared with the prior quarter. Net charge-offs on consumer credit card
loans were $19 million, up $1 million from third quarter. Net
charge-offs in other consumer loans were $6 million, or flat compared
with the previous quarter.
|
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Allowance for Credit Losses ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning
|
|
$1,925
|
|
$2,016
|
|
$2,126
|
|
$2,255
|
|
$2,439
|
|
Total net losses charged off
|
|
(147)
|
|
(156)
|
|
(181)
|
|
(220)
|
|
(239)
|
|
Provision for loan and lease losses
|
|
76
|
|
65
|
|
71
|
|
91
|
|
55
|
|
Allowance for loan and lease losses, ending
|
|
1,854
|
|
1,925
|
|
2,016
|
|
2,126
|
|
2,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for unfunded commitments, beginning
|
|
176
|
|
178
|
|
179
|
|
181
|
|
187
|
|
Provision for unfunded commitments
|
|
3
|
|
(2)
|
|
(1)
|
|
(2)
|
|
(6)
|
|
Reserve for unfunded commitments, ending
|
|
179
|
|
176
|
|
178
|
|
179
|
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses
|
|
1,854
|
|
1,925
|
|
2,016
|
|
2,126
|
|
2,255
|
|
Reserve for unfunded commitments
|
|
179
|
|
176
|
|
178
|
|
179
|
|
181
|
|
Total allowance for credit losses
|
|
$2,033
|
|
$2,101
|
|
$2,194
|
|
$2,305
|
|
$2,436
|
|
Allowance for loan and lease losses ratio
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of loans and leases
|
|
2.16%
|
|
2.32%
|
|
2.45%
|
|
2.59%
|
|
2.78%
|
|
As a percent of nonperforming loans and leases (a)
|
|
180%
|
|
167%
|
|
150%
|
|
157%
|
|
157%
|
|
As a percent of nonperforming assets (a)
|
|
144%
|
|
133%
|
|
125%
|
|
127%
|
|
124%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes non accrual loans and leases in loans held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses totaled $76 million in the fourth
quarter of 2012, up $11 million from the third quarter of 2012 and up
$21 million from the fourth quarter of 2011. The allowance for loan and
lease losses declined $71 million sequentially reflecting continued
improvement in credit trends. This allowance represented 2.16 percent of
total loans and leases outstanding as of quarter end, compared with 2.32
percent last quarter, and represented 180 percent of nonperforming loans
and leases, 144 percent of nonperforming assets, and 317 percent of
fourth quarter annualized net charge-offs.
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
Nonperforming Assets and Delinquent Loans ($ in millions)
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Nonaccrual portfolio loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans
|
|
$234
|
|
$309
|
|
$377
|
|
$358
|
|
$408
|
|
Commercial mortgage loans
|
|
215
|
|
263
|
|
357
|
|
347
|
|
358
|
|
Commercial construction loans
|
|
70
|
|
76
|
|
99
|
|
118
|
|
123
|
|
Commercial leases
|
|
1
|
|
5
|
|
3
|
|
8
|
|
9
|
|
Residential mortgage loans
|
|
114
|
|
126
|
|
135
|
|
135
|
|
134
|
|
Home equity
|
|
30
|
|
29
|
|
30
|
|
26
|
|
25
|
|
Automobile loans
|
|
-
|
|
-
|
|
1
|
|
1
|
|
-
|
|
Other consumer loans and leases
|
|
1
|
|
-
|
|
-
|
|
1
|
|
1
|
|
Total nonaccrual loans and leases
|
|
$665
|
|
$808
|
|
$1,002
|
|
$994
|
|
$1,058
|
|
Restructured loans and leases - commercial (nonaccrual)
|
|
177
|
|
153
|
|
147
|
|
157
|
|
160
|
|
Restructured loans and leases - consumer (nonaccrual)
|
|
187
|
|
192
|
|
193
|
|
201
|
|
220
|
|
Total nonperforming loans and leases
|
|
$1,029
|
|
$1,153
|
|
$1,342
|
|
$1,352
|
|
$1,438
|
|
Repossessed personal property
|
|
8
|
|
10
|
|
9
|
|
8
|
|
14
|
|
Other real estate owned (a)
|
|
249
|
|
283
|
|
268
|
|
313
|
|
364
|
|
Total nonperforming assets (b)
|
|
$1,286
|
|
$1,446
|
|
$1,619
|
|
$1,673
|
|
$1,816
|
|
Nonaccrual loans held for sale
|
|
25
|
|
38
|
|
55
|
|
110
|
|
131
|
|
Restructured loans - commercial (nonaccrual) held for sale
|
|
4
|
|
5
|
|
5
|
|
7
|
|
7
|
|
Total nonperforming assets including loans held for sale
|
|
$1,315
|
|
$1,489
|
|
$1,679
|
|
$1,790
|
|
$1,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructured Consumer loans and leases (accrual)
|
|
$1,655
|
|
$1,641
|
|
$1,634
|
|
$1,624
|
|
$1,612
|
|
Restructured Commercial loans and leases (accrual)
|
|
$431
|
|
$442
|
|
$455
|
|
$481
|
|
$390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases 90 days past due
|
|
$195
|
|
$201
|
|
$203
|
|
$216
|
|
$200
|
|
Nonperforming loans and leases as a percent of portfolio loans,
leases and other assets, including other real estate owned (b)
|
|
1.19%
|
|
1.38%
|
|
1.62%
|
|
1.64%
|
|
1.76%
|
|
Nonperforming assets as a percent of portfolio loans, leases and
other assets, including other real estate owned (b)
|
|
1.49%
|
|
1.73%
|
|
1.96%
|
|
2.03%
|
|
2.23%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes government insured advances.
|
|
|
|
|
|
|
|
|
|
|
|
(b) Does not include nonaccrual loans held-for-sale.
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets, including loans held-for-sale, were $1.3
billion, a decline of $174 million, or 12 percent, from the previous
quarter. Nonperforming assets held-for-investment (NPAs) were $1.3
billion or 1.49 percent of total loans, leases and OREO, and decreased
$160 million, or 11 percent, from the previous quarter. Nonperforming
loans held-for-investment (NPLs) at quarter end were $1.0 billion or
1.19 percent of total loans, leases and OREO, and decreased $124
million, or 11 percent, from the previous quarter.
Commercial portfolio NPAs were $883 million, or 1.78 percent of
commercial loans, leases and OREO, and decreased $134 million, or 13
percent, from the third quarter. Commercial portfolio NPLs were $697
million, or 1.41 percent of commercial loans and leases, and decreased
$109 million from last quarter driven by declines in C&I and commercial
mortgage NPLs. C&I portfolio NPAs of $352 million decreased $55 million
from the previous quarter. Commercial mortgage portfolio NPAs were $434
million, down $55 million from the prior quarter. Commercial
construction portfolio NPAs were $88 million, a decline of $23 million
from the previous quarter. Commercial real estate loans in Michigan and
Florida represented 46 percent of commercial real estate NPAs and 37
percent of our total commercial real estate portfolio. Within the
overall commercial loan portfolio, residential real estate builder and
developer portfolio NPAs of $88 million declined $16 million from the
third quarter, of which $26 million were commercial construction assets,
$51 million were commercial mortgage assets and $11 million were C&I
assets. Commercial portfolio NPAs included $177 million of nonaccrual
troubled debt restructurings (TDRs), compared with $153 million last
quarter.
Consumer portfolio NPAs of $403 million, or 1.10 percent of consumer
loans, leases and OREO, decreased $26 million from the third quarter.
Consumer portfolio NPLs were $332 million, or 0.91 percent of consumer
loans and leases and decreased $15 million from last quarter. Of
consumer NPAs, $352 million were in residential real estate portfolios.
Residential mortgage NPAs were $290 million, $28 million lower than last
quarter, with Florida representing 47 percent of residential mortgage
NPAs and 14 percent of total residential mortgage loans. Home equity
NPAs of $62 million were flat compared with last quarter. Credit card
NPAs were also flat compared to the previous quarter at $39 million.
Consumer nonaccrual TDRs were $187 million in the fourth quarter of
2012, compared with $192 million in the third quarter 2012.
Fourth quarter OREO balances included in portfolio NPA balances
described above were $249 million, down $34 million from the third
quarter, and included $186 million in commercial OREO and $63 million in
consumer OREO. Repossessed personal property of $8 million consisted
largely of autos.
Loans still accruing over 90 days past due were $195 million, down $6
million, or 3 percent, from the third quarter of 2012. Commercial
balances 90 days past due of $24 million were up $1 million
sequentially. Consumer balances 90 days past due of $171 million were
down $7 million from the previous quarter. Loans 30-89 days past due of
$330 million decreased $15 million, or 4 percent, from the previous
quarter. Commercial balances 30-89 days past due of $17 million were
down $7 million sequentially driven by increased payoffs, paydowns, and
renewals and consumer balances 30-89 days past due of $313 million
decreased $8 million from the third quarter, reflecting declines in
mortgage.
Commercial nonaccrual loans held-for-sale were $29 million, compared
with $43 million at the end of the third quarter. During the quarter,
$11 million of nonaccrual held-for-sale loans were sold; no nonaccrual
commercial loans from the portfolio were transferred to loans
held-for-sale, and $1 million of loans from loans held-for-sale were
transferred to OREO. Negative valuation adjustments of $3 million were
recorded on held-for-sale loans and net gains of $4 million were
recorded on loans that were sold or settled during the quarter.
Capital Position
|
|
|
For the Three Months Ended
|
|
|
|
December
|
|
September
|
|
June
|
|
March
|
|
December
|
|
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
2011
|
|
Capital Position
|
|
|
|
|
|
|
|
|
|
|
|
Average shareholders' equity to average assets
|
|
11.65%
|
|
11.82%
|
|
11.58%
|
|
11.49%
|
|
11.41%
|
|
Tangible equity (a)
|
|
9.17%
|
|
9.45%
|
|
9.50%
|
|
9.37%
|
|
9.03%
|
|
Tangible common equity (excluding unrealized gains/losses) (a)
|
|
8.83%
|
|
9.10%
|
|
9.15%
|
|
9.02%
|
|
8.68%
|
|
Tangible common equity (including unrealized gains/losses) (a)
|
|
9.10%
|
|
9.45%
|
|
9.49%
|
|
9.37%
|
|
9.04%
|
|
Tangible common equity as a percent of risk-weighted assets
(excluding unrealized gains/losses) (a) (b)
|
|
9.57%
|
|
9.74%
|
|
9.84%
|
|
9.71%
|
|
9.41%
|
|
Regulatory capital ratios: (c)
|
|
|
|
|
|
|
|
|
|
|
|
Tier I capital
|
|
10.65%
|
|
10.85%
|
|
12.31%
|
|
12.20%
|
|
11.91%
|
|
Total risk-based capital
|
|
14.42%
|
|
14.76%
|
|
16.24%
|
|
16.07%
|
|
16.09%
|
|
Tier I leverage
|
|
10.05%
|
|
10.09%
|
|
11.39%
|
|
11.31%
|
|
11.10%
|
|
Tier I common equity (a)
|
|
9.51%
|
|
9.67%
|
|
9.77%
|
|
9.64%
|
|
9.35%
|
|
Book value per share
|
|
15.10
|
|
14.84
|
|
14.56
|
|
14.30
|
|
13.92
|
|
Tangible book value per share (a)
|
|
12.33
|
|
12.12
|
|
11.89
|
|
11.64
|
|
11.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The tangible equity, tangible common equity, tier I common
equity and tangible book value per share ratios, while not required
by accounting principles generally accepted in the United States of
America (U.S. GAAP), are considered to be critical metrics with
which to analyze banks. The ratios have been included herein to
facilitate a greater understanding of the Bancorp's capital
structure and financial condition. See the Regulation G Non-GAAP
Reconciliation table for a reconciliation of these ratios to U.S.
GAAP.
|
|
|
|
(b) Under the banking agencies risk-based capital guidelines, assets
and credit equivalent amounts of derivatives and off-balance sheet
exposures are assigned to broad risk categories. The aggregate
dollar amount in each risk category is multiplied by the associated
risk weight of the category. The resulting weighted values are added
together resulting in the Bancorp's total risk weighted assets.
|
|
|
|
(c) Current period regulatory capital data ratios are estimated.
|
|
|
Capital ratios remained strong, reflecting growth in retained earnings
and included the impact of share repurchase activity during the quarter.
Compared with the prior quarter, the Tier 1 common equity ratio*
decreased 16 bps to 9.51 percent. The tangible common equity to tangible
assets ratio* was 8.83 percent (excluding unrealized gains/losses) and
9.10 percent (including unrealized gains/losses). The Tier 1 capital
ratio decreased 20 bps to 10.65 percent. The Total capital ratio
decreased 34 bps to 14.42 percent and the Leverage ratio decreased 4 bps
to 10.05 percent. The Tier 1 common capital ratio was reduced during the
quarter by approximately 20 bps due to the repurchase of $225 million in
common shares.
Book value per share at December 31, 2012 was $15.10 and tangible book
value per share* was $12.33, compared with September 30, 2012 book value
per share of $14.84 and tangible book value per share of $12.12.
As previously announced, Fifth Third entered into a share repurchase
agreement with a counterparty on November 6, 2012, whereby Fifth Third
would purchase approximately $125 million of its outstanding common
stock. For the quarter, this transaction reduced Fifth Third’s share
count by 7.7 million shares on the initial transaction date, which had a
4 million impact on average share count. Fifth Third expects the
settlement of the forward contract to occur on or before February 7,
2013.
In addition, Fifth Third entered into another share repurchase agreement
with a counterparty on December 14, 2012, whereby Fifth Third would
purchase approximately $100 million of its outstanding common stock. For
the quarter, this transaction reduced Fifth Third’s share count by 6.3
million shares on the initial transaction date, which had a 1 million
impact on average share count. Fifth Third expects the settlement of the
forward contract to occur on or before March 14, 2013. Our annual
capital plan included a remaining $125 million in additional potential
repurchases through March 31, 2013.
U.S. banking regulators recently proposed new capital rules for U.S.
banks as well as changes to risk-weightings for assets, which implement
portions of rules proposed by international banking regulators known as
Basel III and Basel II. Fifth Third would be subject to the proposed
“standardized approach” for risk-weightings of assets and would be
subject to the Market Risk Rule for trading assets and liabilities.
These proposals were presented for public comment, which regulators are
currently studying. We continue to evaluate these proposals and their
potential impact. Our current estimate of the pro-forma fully phased in
Tier I common equity ratio at December 31, 2012 under the proposed
capital rules is approximately 8.8%** compared with 9.5%* as calculated
under the existing Basel I capital framework. The primary drivers of the
change from the existing Basel I capital framework to the Basel III
proposal are an increase in Tier I common equity of approximately 40 bps
(primarily from the inclusion of AOCI) which would be more than offset
by the impact of increases in risk-weighted assets (primarily from 1-4
family senior and junior lien residential mortgages and commitments with
an original maturity of one year or less). The pro forma Tier I common
equity ratio exceeds the proposed minimum Tier I common equity ratio of
7% comprised of a minimum of 4.5% plus a capital conservation buffer of
2.5%. The pro forma Tier I common equity ratio does not include the
effect of any mitigating actions the Bancorp may undertake to offset the
impact of any final capital rules. As noted, the proposed rules remain
subject to public comment, interpretation, and change.
Under the Dodd-Frank Act financial reform legislation, TruPS were to be
phased out of Tier 1 capital over three years beginning in 2013. The new
regulations proposed by U.S. banking regulators also propose to cease
Tier 1 capital treatment for outstanding TruPS, with a similar phasing
period. Fifth Third’s Tier 1 and Total capital levels at December 31,
2012 included $810 million of TruPS, or 0.8 percent of risk weighted
assets. We will continue to evaluate the role of these types of
securities in our capital structure, based on regulatory developments.
To the extent these types of securities remain outstanding during and
after the phase-in period they would be expected to continue to be
included in Total capital, subject to final rule-making for U.S. capital
standards. We expect to manage our capital structure over time –
including the components represented by common equity and non-common
equity – to adapt to and reflect the effect of legislation, changes in
U.S. bank capital regulations that reflect international capital rules
developments, regulatory expectations, and our goals for capital levels
and capital composition as appropriate given any changes in rules.
Fifth Third is one of 31 large U.S. Bank Holding Companies (BHCs)
subject to the Federal Reserve’s (FRB) Capital Plans Rule which was
issued November 9, 2012. Under this rule, we are required to submit our
annual capital plan to the Federal Reserve, for its objection or
non-objection. Fifth Third submitted its 2013 capital plan on January 7,
2013, as required. The plan included those capital actions Fifth Third
intends to pursue or contemplate during the period covered by the FRB’s
response, which is the second quarter of 2013 through the first quarter
of 2014. Our plan for the covered period included the possibility that
we would increase our common dividend, consistent with the FRB’s 30
percent payout ratio guidance and conduct common share repurchases at
levels consistent with the pace of recent activity, which would be
expected to maintain common equity capital levels in the current range.
Any such actions would be based on the FRB’s non-objection,
environmental conditions, earnings results, our capital position, and
other factors, as well as approval by the Fifth Third Board of
Directors, at the time. The Federal Reserve has indicated to the BHCs
that it will issue its response on or before March 31, 2013.
* Non-GAAP measure; see Reg. G reconciliation on page 34 in Exhibit
99.1 of 8-k filing dated 1/17/13.
** The pro forma Tier I common equity ratio is management’s estimate
based upon its current interpretation of the three draft Federal
Register notices proposing enhancements to regulatory capital
requirements published in June 2012. The actual impact to the Bancorp’s
Tier I common equity ratio may change significantly due to further
clarification of the agencies proposals or revisions to the agencies
final rules, which remain subject to public comment.
Tax Rate
The effective tax rate was 26.8 percent this quarter compared with 27.7
percent in the third quarter, due to a benefit of approximately $10
million related to the termination of certain leases.
Other
Fifth Third Bank owns 70.2 million units representing a 33 percent
interest in Vantiv Holding, LLC. Based upon Vantiv’s closing price of
$20.42 on December 31, 2012, our interest in Vantiv was valued at
approximately $1.4 billion. Next month in our 10-K, we will update our
disclosure of the carrying value of our interest in Vantiv stock which
was approximately $651 million as of September 30, 2012. The difference
between the market value and our book value is not recognized in Fifth
Third’s equity or capital. Additionally, Fifth Third has a warrant to
purchase additional shares in Vantiv which is carried as a derivative
asset at a fair value of $177 million.
Conference Call
Fifth Third will host a conference call to discuss these financial
results at 9:30 a.m. (Eastern Time) today. This conference call will be
webcast live by Thomson Financial and may be accessed through the Fifth
Third Investor Relations website at www.53.com
(click on “About Fifth Third” then “Investor Relations”). The webcast
also is being distributed over Thomson Financial’s Investor Distribution
Network to both institutional and individual investors. Individual
investors can listen to the call through Thomson Financial’s individual
investor center at www.earnings.com
or by visiting any of the investor sites in Thomson Financial’s
Individual Investor Network. Institutional investors can access the call
via Thomson Financial’s password-protected event management site,
StreetEvents (www.streetevents.com).
Those unable to listen to the live webcast may access a webcast replay
through the Fifth Third Investor Relations website at the same web
address. Additionally, a telephone replay of the conference call will be
available beginning approximately two hours after the conference call
until Thursday, January 31 by dialing 800-585-8367 for domestic access
and 404-537-3406 for international access (passcode 79425141#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of December 31, 2012, the Company
had $122 billion in assets and operated 15 affiliates with 1,325
full-service Banking Centers, including 106 Bank Mart® locations open
seven days a week inside select grocery stores and 2,415 ATMs in Ohio,
Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West
Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth
Third operates four main businesses: Commercial Banking, Branch Banking,
Consumer Lending, and Investment Advisors. Fifth Third also has a 33%
interest in Vantiv Holding, LLC. Fifth Third is among the largest money
managers in the Midwest and, as of December 31, 2012, had $308 billion
in assets under care, of which it managed $27 billion for individuals,
corporations and not-for-profit organizations. Investor
information and press
releases can be viewed at www.53.com.
Fifth Third’s common stock is traded on the NASDAQ® National Global
Select Market under the symbol “FITB.”
Forward-Looking Statements
This news 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,” “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. When
considering these forward-looking statements, you should keep in mind
these risks and uncertainties, as well as any cautionary statements we
may make. Moreover, you should treat these statements as speaking only
as of the date they are made and based only on information then actually
known to us.
There are a number of important factors that could cause future
results to differ materially from historical performance and these
forward-looking statements. Factors that might cause such a difference
include, but are not limited to: (1) general economic conditions and
weakening in the economy, specifically the real estate market, either
nationally or in the states in which Fifth Third, one or more acquired
entities and/or the combined company do business, are less favorable
than expected; (2) deteriorating credit quality; (3) political
developments, wars or other hostilities may disrupt or increase
volatility in securities markets or other economic conditions;
(4) changes in the interest rate environment reduce interest margins;
(5) prepayment speeds, loan origination and sale volumes, charge-offs
and loan loss provisions; (6) Fifth Third’s ability to maintain required
capital levels and adequate sources of funding and liquidity;
(7) maintaining capital requirements may limit Fifth Third’s operations
and potential growth; (8) changes and trends in capital markets;
(9) problems encountered by larger or similar financial institutions may
adversely affect the banking industry and/or Fifth Third;
(10) competitive pressures among depository institutions increase
significantly; (11) effects of critical accounting policies and
judgments; (12) changes in accounting policies or procedures as may be
required by the Financial Accounting Standards Board (FASB) or other
regulatory agencies; (13) legislative or regulatory changes or actions,
or significant litigation, adversely affect Fifth Third, one or more
acquired entities and/or the combined company or the businesses in which
Fifth Third, one or more acquired entities and/or the combined company
are engaged, including the Dodd-Frank Wall Street Reform and Consumer
Protection Act; (14) ability to maintain favorable ratings from rating
agencies; (15) fluctuation of Fifth Third’s stock price; (16) ability to
attract and retain key personnel; (17) ability to receive dividends from
its subsidiaries; (18) potentially dilutive effect of future
acquisitions on current shareholders’ ownership of Fifth Third;
(19) effects of accounting or financial results of one or more acquired
entities; (20) difficulties from the separation of or the results of
operations of Vantiv, LLC from Fifth Third; (21) loss of income from any
sale or potential sale of businesses that could have an adverse effect
on Fifth Third’s earnings and future growth; (22) ability to secure
confidential information and deliver products and services through the
use of computer systems and telecommunications networks; and (23) the
impact of reputational risk created by these developments on such
matters as business generation and retention, funding and liquidity.
You should refer to our periodic and current reports filed with the
Securities and Exchange Commission, or “SEC,” for further information on
other factors, which could cause actual results to be significantly
different from those expressed or implied by these forward-looking
statements.
