Reported diluted earnings per share of
$0.71
Reported results included a negative $0.04
impact from certain items on page 2 of the 3Q19 earnings release
including merger-related expenses
Fifth Third Bancorp (FITB):
Key Highlights
- Achieved previously stated 4Q19 financial targets sooner than
expected
Reported
Adjusted(1)
ROTCE(a)
14.2%
16.5%
ROA
1.28%
1.35%
Efficiency(a)
58.4%
56.7%
- Revenue and expense performance exceeded July expectations
- Record capital markets revenue
- Strong commercial loan production, up 15% vs. 3Q18 and up 26%
vs. 2Q19
- Effectively managed interest bearing core deposit costs (down 2
bps vs. 2Q19) while continuing to grow average core deposits (up 2%
vs. 2Q19)
- Remain on-track to achieve MB expense savings by 1Q20 ($255
million pre-tax); expect to achieve ~80% of run-rate savings by
year-end
- Continue to realize desired MB employee and client
outcomes
Key Financial Data
$ millions for all balance sheet and
income statement items
3Q19
2Q19
3Q18
Income Statement Data
Net income available to common
shareholders
$530
$427
$421
Net interest income (U.S. GAAP)
1,242
1,245
1,043
Net interest income (FTE)(a)
1,246
1,250
1,047
Noninterest income
740
660
563
Noninterest expense
1,159
1,243
972
Per Share Data
Earnings per share, basic
$0.72
$0.57
$0.62
Earnings per share, diluted
0.71
0.57
0.61
Book value per share
27.32
26.17
21.70
Tangible book value per share(a)
21.06
20.03
17.94
Balance Sheet & Credit
Quality
Average portfolio loans and leases
$109,541
$110,095
$93,192
Average deposits
125,206
124,345
104,666
Net charge-off ratio(b)
0.36
%
0.29
%
0.30
%
Nonperforming asset ratio(c)
0.47
0.51
0.48
Financial Ratios
Return on average assets
1.28
%
1.08
%
1.22
%
Return on average common equity
10.7
9.1
11.4
Return on average tangible common
equity(a)
14.2
12.3
13.8
CET1 capital(d)(e)
9.56
9.57
10.67
Net interest margin(a)
3.32
3.37
3.23
Efficiency(a)
58.4
65.1
60.4
Other than the Quarterly Financial Review
tables beginning on page 13 of the 3Q19 earnings release,
commentary is on a fully taxable-equivalent (FTE) basis unless
otherwise noted. Consistent with SEC guidance in Industry Guide 3
that contemplates the calculation of tax-exempt income on a
taxable-equivalent basis, net interest income, net interest margin,
net interest rate spread, total revenue and the efficiency ratio
are provided on an FTE basis. (1)Adjusted return metrics are
non-GAAP measures; see discussion on non-GAAP and Reg. G
reconciliation beginning on page 26; ROTCE excludes accumulated
other comprehensive income (“AOCI”).
CEO Commentary
“Our strong third quarter results reflect the ongoing discipline
throughout the bank and the strength of our diversified revenue
streams. We generated very strong fee revenue, including a record
in capital markets, while tightly managing our expenses. In
addition, we generated strong core deposit growth while lowering
deposit costs. As a result, our key financial metrics met or
exceeded our year-end targets.
During the quarter, we were again able to deliver the financial
outcomes as we had expected associated with the MB Financial
acquisition, and remain on-track to achieve the previously-stated
expense and revenue synergy targets. We remain pleased with the low
client attrition rates, and employee attrition continues to track
our original deal expectations.
Our clearly defined strategic growth priorities, proactive
balance sheet management, and continued discipline throughout the
bank position us well into next year and beyond. We remain
cognizant of the dynamic macroeconomic and interest rate
environment, and continue to focus on through-the-cycle
outperformance to create long-term shareholder value.”
-Greg D. Carmichael, Chairman,
President and CEO
Income Statement Highlights
($ in millions, except per share
data)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Condensed Statements of Income
Net interest income (NII)(a)
$
1,246
$
1,250
$
1,047
-
19
%
Provision for credit losses
134
85
84
58
%
60
%
Noninterest income
740
660
563
12
%
31
%
Noninterest expense
1,159
1,243
972
(7
%)
19
%
Income before income taxes(a)
$
693
$
582
$
554
19
%
25
%
Taxable equivalent adjustment
4
5
4
(20
%)
-
Applicable income tax expense
140
124
114
13
%
23
%
Net income
$
549
$
453
$
436
21
%
26
%
Less: Net income attributable to
noncontrolling interests
-
-
-
NM
NM
Net income attributable to Bancorp
$
549
$
453
$
436
21
%
26
%
Dividends on preferred stock
19
26
15
(27
%)
27
%
Net income available to common
shareholders
$
530
$
427
$
421
24
%
26
%
Earnings per share, diluted
$
0.71
$
0.57
$
0.61
25
%
16
%
Fifth Third Bancorp (Nasdaq: FITB) today reported third quarter
2019 net income of $549 million compared to net income of $436
million in the year-ago quarter. Net income available to common
shareholders was $530 million, or $0.71 per diluted share, compared
to $421 million, or $0.61 per diluted share in the year-ago
quarter. Prior quarter net income was $453 million and net income
available to common shareholders was $427 million, or $0.57 per
diluted share.
Diluted earnings per share impact of
certain items
(after-tax impacts(f); $ in millions,
except per share data)
Merger-related expenses
($22)
Valuation of Visa total return swap
($8)
After-tax impact(f) of certain items
($30)
Average diluted common shares outstanding
(thousands)
736,086
Diluted earnings per share impact
($0.04)
Net Interest Income
(FTE; $ in millions)(a)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Interest Income
Interest income
$
1,629
$
1,641
$
1,319
(1
%)
24
%
Interest expense
383
391
272
(2
%)
41
%
Net interest income (NII)
$
1,246
$
1,250
$
1,047
-
19
%
Adjusted NII(a)
$
1,218
$
1,232
$
1,047
(1
%)
16
%
Average Yield/Rate Analysis
bps Change
Yield on interest-earning assets
4.34
%
4.42
%
4.07
%
(8
)
27
Rate paid on interest-bearing
liabilities
1.41
%
1.47
%
1.20
%
(6
)
21
Ratios
Net interest rate spread
2.93
%
2.95
%
2.87
%
(2
)
6
Net interest margin (NIM)
3.32
%
3.37
%
3.23
%
(5
)
9
Adjusted NIM(a)
3.25
%
3.32
%
3.23
%
(7
)
2
Compared to the year-ago quarter, reported NII increased $199
million, or 19%. Excluding purchase accounting accretion of $28
million in the third quarter of 2019, adjusted NII increased $171
million, or 16%, reflecting an increase in interest earning assets,
including the impact from the MB Financial acquisition. Compared to
the year-ago quarter, reported NIM increased 9 bps, or 2 bps
excluding purchase accounting accretion.
Compared to the prior quarter, reported NII decreased $4
million. Excluding purchase accounting accretion, adjusted NII
decreased $14 million, or 1%, primarily reflecting lower short-term
market rates and a decline in commercial & industrial (C&I)
loans, partially offset by growth in the indirect secured consumer
portfolio (predominantly indirect automobile) and lower deposit
costs. Compared to the prior quarter, reported NIM decreased 5 bps.
Excluding purchase accounting accretion, adjusted NIM decreased 7
bps, primarily reflecting lower short-term market rates, increased
deposit balances resulting in elevated cash levels and higher day
count, partially offset by continued improvement in indirect
secured consumer yields (predominantly indirect automobile).
Noninterest Income
($ in millions)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Noninterest Income
Service charges on deposits
$
143
$
143
$
139
-
3
%
Corporate banking revenue
168
137
100
23
%
68
%
Mortgage banking net revenue
95
63
49
51
%
94
%
Wealth and asset management revenue
124
122
114
2
%
9
%
Card and processing revenue
94
92
82
2
%
15
%
Other noninterest income
111
93
86
19
%
29
%
Securities gains (losses), net
5
8
(6
)
(38
%)
NM
Securities gains (losses), net -
non-qualifying
hedges on mortgage servicing rights
-
2
(1
)
(100
%)
NM
Total noninterest income
$
740
$
660
$
563
12
%
31
%
Reported noninterest income increased $177 million, or 31%, from
the year-ago quarter, and increased $80 million, or 12%, from the
prior quarter. The reported results reflect the impact of certain
items in the table below, in both the prior quarter and the
year-ago quarter.
Noninterest Income excluding certain
items
($ in millions)
For the Three Months Ended
September
June
September
2019
2019
2018
Noninterest Income excluding certain
items
Noninterest income (U.S. GAAP)
$
740
$
660
$
563
Valuation of Visa total return swap
11
22
17
GreenSky equity securities losses
-
-
8
Securities (gains), net (excluding
GreenSky)
(5
)
(8
)
(2
)
Noninterest income excluding certain
items(a)
$
746
$
674
$
586
Compared to the year-ago quarter, noninterest income excluding
the items in the preceding table increased $160 million, or 27%.
Compared to the prior quarter, noninterest income excluding the
items in the preceding table increased $72 million, or 11%.
Compared to the year-ago quarter, service charges on deposits
increased $4 million, or 3%, primarily driven by higher commercial
deposit fees, partially offset by lower consumer deposit fees.
Corporate banking revenue increased $68 million, or 68%, primarily
driven by lease-related services revenue resulting from the MB
Financial acquisition, as well as increases in lease remarketing
revenue, corporate bond fees, and M&A advisory revenue.
Mortgage banking net revenue increased $46 million, or 94%,
primarily driven by higher mortgage originations of $3.4 billion,
an increase of 81%. Wealth and asset management revenue increased
$10 million, or 9%, primarily driven by higher personal asset
management revenue.
Compared to the prior quarter, service charges on deposits were
flat, as higher consumer deposit fees were offset by lower
commercial deposit fees. Corporate banking revenue increased $31
million, or 23%, primarily driven by an increase in lease
remarketing revenue, M&A advisory revenue, and corporate bond
fees. Mortgage banking net revenue increased $32 million, or 51%,
primarily driven by an improved gain on sale margin and a 17%
increase in origination volumes. Wealth and asset management
revenue increased $2 million, or 2%, primarily driven by higher
personal asset management revenue and brokerage fees.
Other noninterest income results on a reported basis in the
current and previous quarters were impacted by the Visa total
return swap valuation adjustments. Excluding this item, other
noninterest income of $122 million increased $19 million, or 18%,
compared to the year-ago quarter, primarily driven by other
noninterest income from MB Financial. Compared to the prior
quarter, other noninterest income excluding this item increased $7
million, or 6%, reflecting higher private equity investment
income.
Noninterest Expense
($ in millions)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Noninterest Expense
Compensation and benefits
$
584
$
641
$
503
(9
%)
16
%
Net occupancy expense
84
88
70
(5
%)
20
%
Technology and communications
100
136
71
(26
%)
41
%
Equipment expense
33
33
31
-
6
%
Card and processing expense
33
34
31
(3
%)
6
%
Intangible amortization expense
14
14
2
-
NM
Other noninterest expense
311
297
264
5
%
18
%
Total noninterest expense
$
1,159
$
1,243
$
972
(7
%)
19
%
Impacts of Merger-Related
Expenses
($ in millions)
For the Three Months Ended
September
June
September
2019
2019
2018
Merger-Related Expenses
Compensation and benefits
$
14
$
41
$
-
Net occupancy expense
3
6
-
Technology and communications
8
49
-
Equipment expense
-
1
-
Card and processing expense
-
1
-
Intangible amortization expense
-
-
-
Other noninterest expense
3
11
1
Total merger-related expenses
$
28
$
109
$
1
Noninterest Expense excluding
Merger-Related Expenses(a)
($ in millions)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Noninterest Expense excluding
Merger-Related Expenses
Compensation and benefits
$
570
$
600
$
503
(5
%)
13
%
Net occupancy expense
81
82
70
(1
%)
16
%
Technology and communications
92
87
71
6
%
30
%
Equipment expense
33
32
31
3
%
6
%
Card and processing expense
33
33
31
-
6
%
Intangible amortization expense
14
14
2
-
NM
Other noninterest expense
308
286
263
8
%
17
%
Total noninterest expense excluding
merger-related expenses
$
1,131
$
1,134
$
971
-
16
%
Compared to the year-ago quarter, reported noninterest expense
increased $187 million, or 19%, impacted by the expenses associated
with the MB Financial acquisition. Excluding the merger-related
expenses and the intangible amortization expense noted in the table
above, noninterest expense increased $148 million, or 15%,
reflecting the ongoing expenses from the MB Financial acquisition,
including elevated other noninterest expense associated with
operating lease expense, as well as continued technology
investments. The growth was partially offset by the elimination of
the FDIC surcharge.
Compared to the prior quarter, reported noninterest expense
decreased $84 million, or 7%, and was impacted by lower
merger-related expenses, partially offset by elevated other
noninterest expense. Excluding the merger-related expenses and the
aforementioned intangible amortization expense, noninterest expense
decreased $3 million, driven by lower compensation and benefits
partially offset by higher other noninterest expense.
Average Interest-Earning Assets
($ in millions)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Average Portfolio Loans and
Leases
Commercial loans and leases:
Commercial and industrial loans
$
51,241
$
52,078
$
42,494
(2
%)
21
%
Commercial mortgage loans
10,692
10,632
6,635
1
%
61
%
Commercial construction loans
5,267
5,248
4,870
-
8
%
Commercial leases
3,562
3,809
3,738
(6
%)
(5
%)
Total commercial loans and leases
$
70,762
$
71,767
$
57,737
(1
%)
23
%
Consumer loans:
Residential mortgage loans
$
16,736
$
16,804
$
15,598
-
7
%
Home equity
6,267
6,376
6,529
(2
%)
(4
%)
Indirect secured consumer loans
10,707
10,190
8,969
5
%
19
%
Credit card
2,448
2,408
2,299
2
%
6
%
Other consumer loans
2,621
2,550
2,060
3
%
27
%
Total consumer loans
$
38,779
$
38,328
$
35,455
1
%
9
%
Total average portfolio loans and
leases
$
109,541
$
110,095
$
93,192
(1
%)
18
%
Average Loans and Leases Held for
Sale
Commercial loans and leases held for
sale
$
127
$
113
$
157
12
%
(19
%)
Consumer loans held for sale
998
785
628
27
%
59
%
Total average loans and leases held for
sale
$
1,125
$
898
$
785
25
%
43
%
Securities and other short-term
investments
$
38,188
$
37,797
$
34,822
1
%
10
%
Total average interest-earning assets
$
148,854
$
148,790
$
128,799
-
16
%
Compared to the year-ago quarter, average total portfolio loans
and leases increased 18%, reflecting the impact of the MB Financial
acquisition. Average commercial portfolio loans and leases
increased 23%, 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 9%, reflecting the impact of MB
Financial as well as growth in indirect secured consumer loans and
other consumer loans.
Compared to the prior quarter, average total portfolio loans and
leases decreased 1%, primarily driven by a decline in C&I loans
and commercial leases, partially offset by an increase in indirect
secured consumer loans. Average commercial portfolio loans and
leases decreased 1%, primarily driven by a decline in C&I loans
and commercial leases. Average consumer portfolio loans increased
1%, reflecting growth in indirect secured consumer loans and other
consumer loans, partially offset by a decline in home equity
loans.
Period end commercial line utilization was 36%, compared to 35%
in the year-ago quarter and 37% in the prior quarter.
Average securities and other short-term investments were $38.2
billion compared to $34.8 billion in the year-ago quarter and $37.8
billion in the prior quarter. Average available-for-sale debt and
other securities of $34.8 billion increased 7% compared to the
year-ago quarter and remained flat compared to the prior
quarter.
Average Deposits
($ in millions)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Average Deposits
Demand
$
35,223
$
35,818
$
32,333
(2
%)
9
%
Interest checking
37,729
36,514
29,681
3
%
27
%
Savings
14,405
14,418
13,231
-
9
%
Money market
26,962
25,934
21,753
4
%
24
%
Foreign office(g)
222
163
317
36
%
(30
%)
Total transaction deposits
$
114,541
$
112,847
$
97,315
2
%
18
%
Other time
5,823
5,678
4,177
3
%
39
%
Total core deposits
$
120,364
$
118,525
$
101,492
2
%
19
%
Certificates - $100,000 and over
4,795
5,780
2,596
(17
%)
85
%
Other deposits
47
40
578
18
%
(92
%)
Total average deposits
$
125,206
$
124,345
$
104,666
1
%
20
%
Compared to the year-ago quarter, average core deposits
increased 19%, reflecting the impact of the MB Financial
acquisition. Average core deposit growth was driven by an increase
in interest checking, money market, and demand deposits. The
increases were partially offset by lower foreign office deposits.
Average commercial transaction deposits increased 26% and average
consumer transaction deposits increased 11%.
Compared to the prior quarter, average core deposits increased
2%, primarily driven by higher interest checking and money market
deposits, partially offset by a decline in demand deposits. Average
demand deposits represented 29% of total core deposits in the third
quarter of 2019, down from 30% in the prior quarter. Average
commercial transaction deposits increased 4%, and average consumer
transaction deposits decreased 1%.
Average Wholesale Funding
($ in millions)
For the Three Months Ended
% Change
September
June
September
2019
2019
2018
Seq
Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over
$
4,795
$
5,780
$
2,596
(17
%)
85
%
Other deposits
47
40
578
18
%
(92
%)
Federal funds purchased
739
1,151
1,987
(36
%)
(63
%)
Other short-term borrowings
1,278
1,119
1,018
14
%
26
%
Long-term debt
15,633
15,543
14,434
1
%
8
%
Total average wholesale funding
$
22,492
$
23,633
$
20,613
(5
%)
9
%
Compared to the year-ago quarter, average wholesale funding
increased 9% driven by growth in jumbo CD balances and long-term
debt balances associated with the acquisition of MB Financial,
partially offset by a decrease in federal funds borrowings.
Compared to the prior quarter, average wholesale funding decreased
5% reflecting a decrease in jumbo CD balances and federal funds
borrowings, partially offset by an increase in other short-term
debt.
Credit Quality Summary
($ in millions)
For the Three Months Ended
September
June
March
December
September
2019
2019
2019
2018
2018
Total nonaccrual portfolio loans and
leases (NPLs)
$
482
$
521
$
450
$
348
$
403
Repossessed property
9
8
11
10
8
OREO
28
31
37
37
37
Total nonperforming portfolio assets
(NPAs)
$
519
$
560
$
498
$
395
$
448
NPL ratio(h)
0.44
%
0.48
%
0.41
%
0.37
%
0.43
%
NPA ratio(c)
0.47
%
0.51
%
0.45
%
0.41
%
0.48
%
Total loans and leases 30-89 days past due
(accrual)
402
383
322
297
270
Total loans and leases 90 days past due
(accrual)
132
128
132
93
87
Allowance for loan and lease losses,
beginning
$
1,115
$
1,115
$
1,103
$
1,091
$
1,077
Total net losses charged-off
(99
)
(78
)
(77
)
(83
)
(72
)
Provision for loan and lease losses
127
78
89
95
86
Allowance for loan and lease losses,
ending
$
1,143
$
1,115
$
1,115
$
1,103
$
1,091
Reserve for unfunded commitments,
beginning
$
147
$
133
$
131
$
129
$
131
Reserve for acquired commitments
-
7
1
-
-
Provision for (benefit from) the reserve
for unfunded commitments
7
7
1
2
(2
)
Reserve for unfunded commitments,
ending
$
154
$
147
$
133
$
131
$
129
Total allowance for credit losses
$
1,297
$
1,262
$
1,248
$
1,234
$
1,220
Allowance for loan and lease losses
ratios
As a percent of portfolio loans and
leases
1.04
%
1.02
%
1.02
%
1.16
%
1.17
%
As a percent of nonperforming portfolio
loans and leases
237
%
214
%
248
%
317
%
270
%
As a percent of nonperforming portfolio
assets
221
%
199
%
224
%
279
%
243
%
Total losses charged-off
$
(130
)
$
(119
)
$
(108
)
$
(116
)
$
(112
)
Total recoveries of losses previously
charged-off
31
41
31
33
40
Total net losses charged-off
$
(99
)
$
(78
)
$
(77
)
$
(83
)
$
(72
)
Net charge-off ratio (NCO ratio)(b)
0.36
%
0.29
%
0.32
%
0.35
%
0.30
%
Commercial NCO ratio
0.18
%
0.13
%
0.11
%
0.19
%
0.19
%
Consumer NCO ratio
0.68
%
0.59
%
0.68
%
0.61
%
0.50
%
Compared to the year-ago quarter, NPLs increased $79 million, or
20%, with the resulting NPL ratio of 0.44% increasing 1 bp. NPAs
increased $71 million, or 16%, with the resulting NPA ratio of
0.47% decreasing 1 bp. Compared to the prior quarter, NPLs
decreased $39 million, or 7%, with the resulting NPL ratio
decreasing 4 bps. NPAs decreased $41 million, or 7%, with the
resulting NPA ratio decreasing 4 bps.
The provision for loan and lease losses totaled $127 million in
the current quarter compared to $86 million in the year-ago quarter
and $78 million in the prior quarter. The resulting allowance for
loan and lease losses ratio represented 1.04% of total portfolio
loans and leases outstanding in the current quarter, compared with
1.17% in the year-ago quarter and 1.02% in the prior quarter. The
allowance for loan and lease losses represented 237% of
nonperforming portfolio loans and leases and 221% of nonperforming
portfolio assets in the current quarter.
Net charge-offs totaled $99 million in the current quarter
compared to $72 million in the year-ago quarter and $78 million in
the prior quarter. The resulting NCO ratio of 0.36% in the current
quarter increased 6 bps compared to the year-ago quarter and
increased 7 bps compared to the prior quarter.
Capital and Liquidity Position
For the Three Months Ended
September
June
March
December
September
2019
2019
2019
2018
2018
Capital Position
Average total Bancorp shareholders' equity
as a percent of average assets
12.43
%
12.02
%
11.43
%
10.95
%
11.29
%
Tangible equity(a)
9.29
%
9.09
%
9.03
%
9.63
%
9.97
%
Tangible common equity (excluding
AOCI)(a)
8.21
%
8.27
%
8.21
%
8.71
%
9.02
%
Tangible common equity (including
AOCI)(a)
9.09
%
8.91
%
8.44
%
8.64
%
8.53
%
Regulatory Capital and Liquidity
Ratios(e)
CET1 capital(d)
9.56
%
9.57
%
9.60
%
10.24
%
10.67
%
Tier I risk-based capital(d)
10.81
%
10.62
%
10.67
%
11.32
%
11.78
%
Total risk-based capital(d)
13.69
%
13.53
%
13.57
%
14.48
%
14.94
%
Tier I leverage
9.36
%
9.24
%
10.32
%
9.72
%
10.10
%
Modified liquidity coverage ratio
(LCR)
116
%
119
%
113
%
128
%
119
%
Capital ratios remained strong during the quarter. The CET1
capital ratio was 9.56%, the tangible common equity to tangible
assets ratio was 8.21% excluding AOCI, and 9.09% including AOCI.
The Tier I risk-based capital ratio was 10.81%, the Total
risk-based capital ratio was 13.69%, and the Tier I leverage ratio
was 9.36%.
Fifth Third completed multiple share repurchases during the
quarter totaling $350 million, including approximately $50 million
of its outstanding common stock (approximately 1.7 million shares)
through the open market, which settled between July 31, 2019 and
August 1, 2019. Below is a summary of the remaining share
repurchases.
- On August 7, 2019, Fifth Third initially settled a share
repurchase agreement whereby Fifth Third would purchase $100
million of its outstanding stock. The initial settlement reduced
third quarter common shares outstanding by 3.1 million shares. On
August 16, 2019, Fifth Third settled the forward contract, which
resulted in an additional 0.7 million shares repurchased in
connection with the completion of this agreement.
- On August 9, 2019, Fifth Third initially settled a share
repurchase agreement whereby Fifth Third would purchase $200
million of its outstanding stock in two $100 million tranches. The
initial settlement reduced third quarter common shares outstanding
by 6.4 million shares. On August 28, 2019, Fifth Third settled both
tranches from the forward contract. An additional 1.5 million
shares were repurchased in connection with the completion of this
agreement.
Based on the transactions noted above, common shares outstanding
decreased by approximately 13.4 million shares, or 1.8%, in the
third quarter of 2019 from the second quarter of 2019.
Fifth Third issued $250 million of 4.95% fixed rate
non-cumulative perpetual preferred stock (Series K preferred stock)
for net proceeds of $242 million on September 17, 2019.
Tax Rate
The effective tax rate was 20.2% compared with 20.7% in the
year-ago quarter and 21.5% in the prior quarter. The current
quarter tax rate was impacted by a $7 million tax benefit
associated with certain commercial lease terminations.
Other
On September 10, 2019, Fifth Third Bank received approval from
the Office of the Comptroller of the Currency (“OCC”) to convert
from an Ohio state-chartered bank to a national bank.
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 November 5, 2019 by dialing 800-585-8367 for domestic
access or 404-537-3406 for international access (passcode
7285218#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of September 30, 2019, the
Company had $171 billion in assets and operates 1,143 full-service
Banking Centers, and 2,487 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 September 30, 2019, had
$397 billion in assets under care, of which it managed $46 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 26 of the
3Q19 earnings release.
(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
and liquidity ratios are estimated.
(f)
Assumes a 23% tax rate, except
for merger-related expenses which were impacted by certain
non-deductible items.
(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.
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 Quarterly Reports on Form 10-Q. When
considering these forward-looking statements, you should keep in
mind these risks and uncertainties, as well as any cautionary
statements we may make. Moreover, you should treat these statements
as speaking only as of the date they are made and based only on
information then actually known to us. 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) deteriorating
credit quality; (2) loan concentration by location or industry of
borrowers or collateral; (3) problems encountered by other
financial institutions; (4) inadequate sources of funding or
liquidity; (5) unfavorable actions of rating agencies; (6)
inability to maintain or grow deposits; (7) limitations on the
ability to receive dividends from subsidiaries; (8) cyber-security
risks; (9) Fifth Third’s ability to secure confidential information
and deliver products and services through the use of computer
systems and telecommunications networks; (10) failures by
third-party service providers; (11) inability to manage strategic
initiatives and/or organizational changes; (12) inability to
implement technology system enhancements; (13) failure of internal
controls and other risk management systems; (14) losses related to
fraud, theft or violence; (15) inability to attract and retain
skilled personnel; (16) adverse impacts of government regulation;
(17) governmental or regulatory changes or other actions; (18)
failures to meet applicable capital requirements; (19) regulatory
objections to Fifth Third’s capital plan; (20) regulation of Fifth
Third’s derivatives activities; (21) deposit insurance premiums;
(22) assessments for the orderly liquidation fund; (23) replacement
of LIBOR; (24) weakness in the national or local economies; (25)
global political and economic uncertainty or negative actions; (26)
changes in interest rates; (27) changes and trends in capital
markets; (28) fluctuation of Fifth Third’s stock price; (29)
volatility in mortgage banking revenue; (30) litigation,
investigations, and enforcement proceedings by governmental
authorities; (31) breaches of contractual covenants,
representations and warranties; (32) competition and changes in the
financial services industry; (33) changing retail distribution
strategies, customer preferences and behavior; (34) risks relating
to Fifth Third’s ability to realize anticipated benefits of the
merger with MB Financial, Inc.; (35) difficulties in identifying,
acquiring or integrating suitable strategic partnerships,
investments or acquisitions; (36) potential dilution from future
acquisitions; (37) loss of income and/or difficulties encountered
in the sale and separation of businesses, investments or other
assets; (38) results of investments or acquired entities; (39)
changes in accounting standards or interpretation or declines in
the value of Fifth Third’s goodwill or other intangible assets;
(40) inaccuracies or other failures from the use of models; (41)
effects of critical accounting policies and judgments or the use of
inaccurate estimates; (42) weather-related events or other natural
disasters; and (43) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191022005268/en/
Investor contact: Chris Doll (513) 534–2345 Media contact: Gary
Rhodes (513) 534–4225
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