Diluted earnings per share of $0.64, including
a negative $0.05 impact from certain items on page 2 of the 4Q18
earnings release
Fifth Third Bancorp (FITB):
Key Highlights(a)
Strong financial performance and
momentum
•
NIM(b) up 19 bps compared to adjusted 4Q17
•
Expenses flat compared to 4Q17
•
Adjusted PPNR(b) up 14% compared to 4Q17
•
Average loans up 3% compared to 4Q17
•
Average core deposits up 4% compared to 4Q17
Remain on-track to achieve NorthStar
targets(b)
•
ROTCE – 14.3% (adjusted 15.4%)
•
ROA – 1.25% (adjusted 1.34%)
•
Efficiency ratio – 58.8% (adjusted 56.8%)
Record 4Q18 business and credit
results
•
Record corporate banking revenue
•
Record middle market & corporate loan originations
•
~20 year low commercial criticized ratio (3.34%)
•
~20 year low NPA ratio (0.41%)
Key Financial Data $
millions for all balance sheet and income statement items
4Q18 3Q18 4Q17
Income Statement Data(a) Net income available to common
shareholders $432 $421 $504 Net interest income (U.S. GAAP)
1,081 1,043 956 Net interest income (FTE)(b) 1,085
1,047 963 Noninterest income 575 563 577 Noninterest expense 977
970 975
Per Share Data(a) Earnings per share, basic
$0.65 $0.62 $0.71 Earnings per share, diluted 0.64 0.61 0.70 Book
value per share 23.07 21.70 21.43 Tangible book value per share(b)
19.17 17.94 17.86
Balance Sheet & Credit Quality
Average portfolio loans and leases $94,757 $93,192 $92,250 Average
deposits 107,495 104,666 102,790 Net charge-off ratio(c) 0.35 %
0.30 % 0.33 % Nonperforming asset ratio(d) 0.41 0.48 0.53
Financial Ratios(a) Return on average assets 1.25 % 1.22 %
1.48 % Return on average common equity 11.8 11.4 13.3 Return on
average tangible common equity(b) 14.3 13.8 16.0 CET1
capital(e)(f)(g) 10.24 10.67 10.61 Net interest margin(b) 3.29 3.23
3.02 Efficiency(b) 58.8 60.2 63.3
Other than the Quarterly Financial Review
tables beginning on page 14 of the 4Q18 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. Effective in the fourth quarter of
2018, Fifth Third retrospectively applied a change in its
accounting policy for investments in affordable housing projects
that qualify for low-income housing tax credits (LIHTC) to all
prior period amounts presented. As a result, prior period financial
results may differ compared to previous disclosures. A summary
reconciliation of the change is provided on page 30 of the 4Q18
earnings release.
CEO Commentary
“Our fourth quarter and full year results were very strong. In
2018, we produced record results, generated profitable relationship
growth, benefited from our improved balance sheet resiliency, and
diligently managed our expenses while continuing to invest for
future growth. We returned $2 billion to our shareholders through
repurchases and dividends, including a nearly 40% increase in the
dividend by the end of the year, while maintaining very strong
capital ratios.”
“We recently received the regulatory non-objection related to
our re-submitted capital plan, including the pro forma impact of MB
Financial. We remain confident in our ability to achieve the
expected financial synergies from the pending acquisition, and we
continue to expect the transaction to close in the first quarter of
2019.”
“With the conclusion of Project NorthStar at the end of 2019,
the ongoing MB Financial integration efforts, and a clearly-defined
set of strategic priorities for the future, we remain very
confident in our ability to achieve our long-term financial targets
and outperform through the cycle.”
-Greg D. Carmichael, Chairman, President and
CEO
Effective in the fourth quarter of 2018, Fifth Third
retrospectively applied a change in its accounting policy for
investments in affordable housing projects that qualify for
low-income housing tax credits (LIHTC) to all prior period amounts
presented. As a result, prior period financial results may differ
compared to previous disclosures. A summary reconciliation of the
change is provided on page 30 of the 4Q18 earnings release.
Income Statement Highlights
($ in millions, except per share data) For the Three Months
Ended % Change December September December 2018 2018
2017 Seq Yr/Yr
Condensed Statements of
Income(a) Net interest income (NII)(b) $1,085 $1,047 $963 4 %
13 % Provision for loan and lease losses 95 86 67 10 % 42 %
Noninterest income 575 563 577 2 % - Noninterest expense 977
970 975 1 % - Income
before income taxes(b) $588 $554 $498
6 % 18 % Taxable equivalent adjustment 4 4 7 -
(43 %) Applicable income tax expense (benefit) 129
114 (36 ) 13 % NM Net income $455 $436
$527 4 % (14 %) Less: Net income attributable to noncontrolling
interests - - - NM
NM Net income attributable to Bancorp $455 $436 $527 4 % (14
%) Dividends on preferred stock 23 15 23
53 % - Net income available to common
shareholders $432 $421 $504 3 %
(14 %) Earnings per share, diluted $0.64 $0.61
$0.70 5 % (9 %)
Fifth Third Bancorp (Nasdaq: FITB) today reported fourth quarter
2018 net income of $455 million compared to net income of $527
million in the year-ago quarter. Net income available to common
shareholders was $432 million, or $0.64 per diluted share, compared
to $504 million, or $0.70 per diluted share in the year-ago
quarter. Prior quarter net income was $436 million and net income
available to common shareholders was $421 million, or $0.61 per
diluted share.
Reported full year 2018 net income was $2.2 billion, compared to
full year 2017 net income of $2.2 billion. Full year 2018 net
income available to common shareholders was $2.1 billion, or $3.06
per diluted share, compared to full year 2017 net income available
to common shareholders of $2.1 billion, or $2.81 per diluted
share.
Diluted earnings per share impact of
certain items
($ in millions, except per share data)
Merger-related expenses, after-tax(h) $ 21 GreenSky equity
securities losses, after-tax(h) $ 17 Valuation of Visa total return
swap, after-tax(h) ($6 ) After-tax impact(h) $ 32
Average diluted common shares outstanding (thousands)
662,966 Diluted earnings per share impact $ 0.05
Net Interest Income
(FTE; $ in millions)(b) For the
Three Months Ended % Change December September December 2018
2018 2017 Seq Yr/Yr
Interest
Income Interest income $ 1,397 $ 1,319 $ 1,151 6 % 21 %
Interest expense 312 272
188 15 % 66
% Net interest income (NII) $ 1,085 $
1,047 $ 963 4 % 13
%
Average Yield/Rate Analysis bps Change Yield on
interest-earning assets 4.23 % 4.07 % 3.61 % 16 62 Rate paid on
interest-bearing liabilities 1.33 % 1.20 % 0.88 % 13 45
Ratios Net interest rate spread 2.90 % 2.87 % 2.73 % 3 17
Net interest margin 3.29 % 3.23
% 3.02 % 6 27
Compared to the year-ago quarter, NII increased $122 million, or
13 percent, which was impacted by a $27 million remeasurement
related to the tax treatment of leveraged leases in the year-ago
quarter. Excluding the remeasurement, NII increased $95 million, or
10 percent, reflecting higher short-term market rates and growth in
interest-earning assets, partially offset by an increase in funding
costs. NIM increased 27 bps, which included an 8 bps impact from
the remeasurement in the year-ago quarter. Excluding the
remeasurement, NIM increased 19 bps, reflecting higher short-term
market rates and growth in interest-earning assets.
Compared to the prior quarter, NII increased $38 million, or 4
percent, reflecting growth in commercial and industrial (C&I)
loans, securities portfolio balance growth, and higher short-term
market rates. NIM increased 6 bps, primarily driven by higher
short-term market rates and growth in C&I loans.
Noninterest Income
($ in millions) For the Three Months Ended %
Change December September December 2018 2018 2017
Seq Yr/Yr
Noninterest Income Service charges
on deposits $ 135 $ 139 $ 138 (3 %) (2 %) Corporate banking revenue
130 100 77 30 % 69 % Mortgage banking net revenue 54 49 54 10 % -
Wealth and asset management revenue 109 114 106 (4 %) 3 % Card and
processing revenue 84 82 80 2 % 5 % Other noninterest income 93 86
123 8 % (24 %) Securities (losses) gains, net (32 ) (6 ) 1 433 % NM
Securities gains (losses), net - non-qualifying hedges on mortgage
servicing rights 2 (1 )
(2 ) NM NM Total noninterest
income $ 575 $ 563 $ 577
2 % -
Reported noninterest income was flat from the year-ago quarter,
and increased $12 million, or 2 percent, from the prior quarter.
The comparisons reflect the impact of certain significant items in
the table below.
Compared to the year-ago quarter, service charges on deposits
decreased $3 million, or 2 percent. Corporate banking revenue
increased $53 million, or 69 percent, which was impacted by a $25
million lease remarketing impairment in the year-ago quarter.
Excluding this impact, corporate banking revenue increased $28
million, or 27 percent, primarily driven by strong capital markets
revenue led by record M&A advisory fees as well as increased
syndication revenues. Mortgage banking net revenue was flat
primarily driven by lower negative net valuation adjustments and
higher gross mortgage servicing fees, partially offset by lower
origination fees and gains on loan sales. Mortgage originations of
$1.6 billion decreased 18 percent. Wealth and asset management
revenue increased $3 million, or 3 percent, primarily driven by
higher personal asset management revenue reflecting positive net
inflows. Card and processing revenue increased $4 million, or 5
percent, reflecting increases in credit card spend and debit
transaction volumes, partially offset by higher rewards.
Compared to the prior quarter, service charges on deposits
decreased $4 million, or 3 percent. Corporate banking revenue
increased $30 million, or 30 percent, primarily driven by increases
in M&A advisory and syndication revenues. Mortgage banking net
revenue increased $5 million, or 10 percent, primarily driven by
lower negative net valuation adjustments partially offset by lower
origination fees and gains on loan sales. Mortgage originations
decreased 16 percent. Wealth and asset management revenue decreased
$5 million, or 4 percent, primarily driven by lower institutional
trust and brokerage fees. Card and processing revenue increased $2
million, or 2 percent, reflecting increases in credit card spend
volumes, partially offset by higher rewards.
Noninterest Income excluding certain
items
($ in millions) For the
Three Months Ended % Change December
September
December 2018 2018 2017
Seq Yr/Yr
Noninterest Income excluding certain items
Noninterest income (U.S. GAAP) $575 $563 $577 Valuation of Visa
total return swap (7) 17 11 GreenSky equity securities losses 21 8
- Securities losses / (gains), net (excluding GreenSky) 11
(2) (1)
Noninterest income excluding certain items(b) $600
$586 $587 2% 2%
Compared to the year-ago quarter, noninterest income excluding
the items in the table above increased $13 million, or 2 percent.
Compared to the prior quarter, noninterest income excluding these
items increased $14 million, or 2 percent.
Other noninterest income on a reported basis in the current and
previous quarters was impacted by the Visa total return swap
valuation adjustments. Excluding this item, other noninterest
income of $86 million decreased $48 million, or 36 percent compared
to the year-ago quarter, primarily driven by a decrease in the
revenue recognized from Worldpay related to the tax receivable
agreement and a decline in equity method earnings from the
ownership interest in Worldpay. Compared to the prior quarter,
other noninterest income excluding the Visa total return swap
valuation adjustments decreased $17 million, or 17 percent,
primarily driven by lower private equity investment income,
partially offset by the revenue recognized from Worldpay related to
the tax receivable agreement.
Noninterest Expense
($ in millions) For the Three
Months Ended % Change December September December
2018 2018 2017 Seq Yr/Yr
Noninterest Expense(a) Compensation and benefits $ 506 $ 503
$ 500 1 % 1 % Net occupancy expense 73 70 74 4 % (1 %) Technology
and communications 79 71 68 11 % 16 % Equipment expense 31 31 29 -
7 % Card and processing expense 33 31 34 6 % (3 %) Other
noninterest expense 255 264
270 (3 %) (6 %) Total
noninterest expense $ 977 $ 970
$ 975 1 % -
Compared to the year-ago quarter, noninterest expense was flat,
including merger-related expenses in the current quarter. The
merger-related expenses primarily impacted other noninterest
expense, with a lesser impact on technology and communication
expense. Excluding these expenses in the current quarter, as well
as one-time employee bonuses following the recently-enacted tax
reform and a Fifth Third Foundation contribution in the year-ago
quarter, noninterest expense increased $5 million. Results
reflected an increase in compensation and benefits resulting from
an increase in incentive based payments from record commercial loan
originations and capital markets activities, and continued
technology investments, offset by the elimination of the FDIC
surcharge.
Compared to the prior quarter, noninterest expense increased $7
million, or 1 percent, reflecting merger-related expenses.
Excluding the merger-related expenses in the current quarter,
noninterest expense decreased $20 million, or 2 percent, despite
elevated incentive based payments reflecting record commercial loan
originations and capital markets activities. Results also reflect
the elimination of the FDIC surcharge and continued technology
investments.
Average Interest-Earning Assets
($ in millions) For the Three
Months Ended % Change December September December 2018
2018 2017 Seq Yr/Yr
Average
Portfolio Loans and Leases Commercial loans and leases:
Commercial and industrial loans $ 43,829 $ 42,494 $ 41,438 3 % 6 %
Commercial mortgage loans 6,864 6,635 6,751 3 % 2 % Commercial
construction loans 4,885 4,870 4,660 - 5 % Commercial leases
3,632 3,738 4,016
(3 %) (10 %) Total commercial loans and leases
$ 59,210 $ 57,737 $ 56,865 3 % 4 % Consumer loans: Residential
mortgage loans $ 15,520 $ 15,598 $ 15,590 (1 %) - Home equity 6,438
6,529 7,066 (1 %) (9 %) Automobile loans 8,970 8,969 9,175 - (2 %)
Credit card 2,373 2,299 2,202 3 % 8 % Other consumer loans
2,246 2,060 1,352
9 % 66 % Total consumer loans $ 35,547 $
35,455 $ 35,385 - - Portfolio loans and leases $ 94,757 $
93,192 $ 92,250 2 % 3 % Loans held for sale 641 785 615 (18 %) 4 %
Securities and other short-term investments 35,674
34,822 33,756
2 % 6 % Total average interest-earning assets
$ 131,072 $ 128,799 $ 126,621
2 % 4 %
Compared to the year-ago quarter, average portfolio loans and
leases increased 3 percent, primarily driven by higher C&I and
other consumer loans, partially offset by declines in home equity
loans and commercial leases. Period end portfolio loans and leases
increased 4 percent year-over-year. Compared to the prior quarter,
average portfolio loans and leases increased 2 percent, primarily
driven by higher C&I and commercial mortgage loans, partially
offset by a decline in commercial leases. Period end portfolio
loans and leases increased 2 percent from the prior quarter.
Compared to the year-ago quarter, average commercial portfolio
loans and leases increased 4 percent, primarily driven by higher
C&I loans. Compared to the prior quarter, average commercial
portfolio loans and leases increased 3 percent, primarily driven by
growth in C&I and commercial mortgage loans. Period end
commercial line utilization was 36 percent, compared to 34 percent
in the year-ago quarter and 35 percent in the prior quarter.
Compared to the year-ago quarter, average consumer portfolio
loans were flat, primarily driven by higher other consumer loans
resulting from an increase in unsecured personal loans and growth
in credit card loans, offset by declines in home equity and
automobile loans. Compared to the prior quarter, average consumer
portfolio loans were flat, as higher other consumer loans resulting
from an increase in unsecured personal loans and growth in credit
card loans were offset by declines in home equity and residential
mortgage loans.
Average securities and other short-term investments were $35.7
billion compared to $33.8 billion in the year-ago quarter and $34.8
billion in the prior quarter. Average available-for-sale debt and
other securities of $33.4 billion were up 7 percent compared to the
year-ago quarter and up 2 percent compared to the prior
quarter.
Average Deposits
($ in millions) For the Three
Months Ended % Change December September December
2018 2018 2017 Seq Yr/Yr
Average
Deposits Demand $ 31,571 $ 32,333 $ 35,519 (2 %) (11 %)
Interest checking 32,428 29,681 26,992 9 % 20 % Savings 12,933
13,231 13,593 (2 %) (5 %) Money market 22,517 21,753 20,023 4 % 12
% Foreign office(i) 272 317
323 (14 %) (16 %) Total
transaction deposits $ 99,721 $ 97,315 $ 96,450 2 % 3 % Other time
4,366 4,177
3,792 5 % 15 % Total core deposits $ 104,087 $
101,492 $ 100,242 3 % 4 % Certificates - $100,000 and over 2,662
2,596 2,429 3 % 10 % Other deposits 746
578 119 29 % 527 %
Total average deposits $ 107,495 $ 104,666
$ 102,790 3 % 5 %
Compared to the year-ago quarter, average transaction deposits
increased 3 percent and core deposits increased 4 percent.
Performance was primarily driven by higher commercial interest
checking deposits and consumer money market deposits, partially
offset by lower commercial demand deposits reflecting continued
migration from demand deposits to interest-bearing accounts.
Average commercial transaction deposits increased 4 percent and
average consumer transaction deposits increased 3 percent.
Compared to the prior quarter, average transaction deposits
increased 2 percent and core deposits increased 3 percent.
Performance continued to partially reflect migration from demand
deposits to interest-bearing accounts. Average commercial
transaction deposits increased 5 percent, and average consumer
transaction deposits were flat.
Average Wholesale Funding
($ in millions) For the Three
Months Ended % Change December September December
2018 2018 2017 Seq Yr/Yr
Average
Wholesale Funding Certificates - $100,000 and over $ 2,662 $
2,596 $ 2,429 3 % 10 % Other deposits 746 578 119 29 % 527 %
Federal funds purchased 2,254 1,987 602 13 % 274 % Other short-term
borrowings 578 1,018 2,316 (43 %) (75 %) Long-term debt
14,420 14,434
14,631 - (1 %) Total average wholesale
funding $ 20,660 $ 20,613 $
20,097 - 3 %
Compared to the year-ago quarter, average wholesale funding
increased 3 percent reflecting interest-earning asset growth over
the past year. Compared to the prior quarter, average wholesale
funding was flat reflecting higher federal funds borrowings, offset
by a decline in other short-term borrowings.
Credit Quality Summary
($ in millions) For the
Three Months Ended December September June March December 2018
2018 2018 2018 2017 Total
nonaccrual portfolio loans and leases (NPLs) $ 348 $ 403 $ 437 $
452 $ 437 Repossessed property 10 8 7 9 9 OREO 37
37 36
43 43
Total nonperforming portfolio assets (NPAs) $ 395 $ 448 $
480 $ 504 $ 489 NPL ratio(j) 0.37 % 0.43 % 0.47 % 0.49 %
0.48 % NPA ratio(d) 0.41 % 0.48 % 0.52 % 0.55 % 0.53 % Total
loans and leases 30-89 days past due (accrual) 297 270 217 299 280
Total loans and leases 90 days past due (accrual) 93 87 89 107 97
Allowance for loan and lease losses, beginning $ 1,091 $
1,077 $ 1,138 $ 1,196 $ 1,205 Total net losses charged-off (83 )
(72 ) (94 ) (81 ) (76 ) Provision for loan and lease losses
95 86
33 23
67 Allowance for loan and lease losses, ending $
1,103 $ 1,091 $ 1,077 $ 1,138 $ 1,196 Reserve for unfunded
commitments, beginning $ 129 $ 131 $ 151 $ 161 $ 157 Provision for
(benefit from) unfunded commitments 2
(2 ) (20 )
(10 ) 4 Reserve for unfunded
commitments, ending $ 131 $ 129 $ 131 $ 151 $ 161
Total allowance for credit losses $
1,234 $ 1,220 $ 1,208 $ 1,289 $ 1,357 Allowance for loan and
lease losses ratio As a percent of portfolio loans and leases 1.16
% 1.17 % 1.17 % 1.24 % 1.30 % As a percent of nonperforming
portfolio loans and leases 317 % 270 % 247 % 252 % 274 % As a
percent of nonperforming portfolio assets 279 % 243 % 224 % 226 %
245 % Total losses charged-off $ (116 ) $ (112 ) $ (118 ) $
(103 ) $ (94 ) Total recoveries of losses previously charged-off
33 40
24 22
18 Total net losses charged-off $ (83 ) $ (72
) $ (94 ) $ (81 ) $ (76 ) Net charge-off ratio (NCO
ratio)(c) 0.35 % 0.30 % 0.41 % 0.36 % 0.33 % Commercial NCO ratio
0.19 % 0.19 % 0.34 % 0.21 % 0.22 % Consumer NCO ratio
0.61 % 0.50 % 0.52 %
0.60 % 0.51 %
Compared to the year-ago quarter, NPLs decreased $89 million, or
20 percent, with the resulting NPL ratio of 0.37 percent decreasing
11 bps. NPAs decreased $94 million, or 19 percent, with the
resulting NPA ratio of 0.41 percent decreasing 12 bps. Compared to
the prior quarter, NPLs decreased $55 million, or 14 percent, with
the resulting NPL ratio decreasing 6 bps. NPAs decreased $53
million, or 12 percent, with the resulting NPA ratio decreasing 7
bps.
The provision for loan and lease losses totaled $95 million in
the current quarter compared to $67 million in the year-ago quarter
and $86 million in the prior quarter. The resulting allowance for
loan and lease loss ratio represented 1.16 percent of total
portfolio loans and leases outstanding in the current quarter,
compared with 1.30 percent in the year-ago quarter and 1.17 in the
prior quarter. The allowance for loan and lease losses represented
317 percent of nonperforming loans and leases and 279 percent of
nonperforming assets in the current quarter.
Net charge-offs totaled $83 million in the current quarter
compared to $76 million in the year-ago quarter and $72 million in
the prior quarter. The resulting NCO ratio of 0.35 percent in the
current quarter increased 2 bps compared to the year-ago quarter
and increased 5 bps compared to the prior quarter.
Capital and Liquidity Position
For the Three Months Ended December
September June March December 2018 2018 2018
2018 2017
Capital Position(a) Average total Bancorp
shareholders' equity as a percent of average assets 10.95 % 11.29 %
11.28 % 11.41 % 11.58 % Tangible equity(b) 9.63 % 9.97 % 10.19 %
9.98 % 9.79 % Tangible common equity (excluding unrealized
gains/losses)(b) 8.71 % 9.02 % 9.23 % 9.03 % 8.83 % Tangible common
equity (including unrealized gains/losses)(b) 8.64 % 8.53 % 8.88 %
8.78 % 8.88 %
Regulatory Capital and Liquidity
Ratios(g) CET1 capital(e)(f) 10.24 % 10.67 % 10.91 % 10.82 %
10.61 % Tier I risk-based capital(e)(f) 11.32 % 11.78 % 12.02 %
11.95 % 11.74 % Total risk-based capital(e)(f) 14.48 % 14.94 %
15.21 % 15.25 % 15.16 % Tier I leverage(f) 9.72 % 10.10 % 10.24 %
10.11 % 10.01 % Modified liquidity coverage ratio (LCR) 128
% 119 % 116 % 113 %
129 %
Capital ratios remained strong during the quarter. The CET1
capital ratio was 10.24 percent, the tangible common equity to
tangible assets ratio was 8.71 percent (excluding unrealized
gains/losses), and 8.64 percent (including unrealized
gains/losses). The Tier I risk-based capital ratio was 11.32
percent, the Total risk-based capital ratio was 14.48 percent, and
the Tier I leverage ratio was 9.72 percent. Current period capital
ratios were impacted by the accounting policy change related to
investments in affordable housing projects that qualify for the
LIHTC. The change in accounting policy reduced the current CET1
capital ratio by approximately 11 basis points.
During the fourth quarter of 2018, Fifth Third entered into open
market repurchase transactions of 14.9 million shares, or
approximately $400 million, of its outstanding common stock, which
settled between October 26, 2018, and November 14, 2018.
Tax Rate
The effective tax rate was 22.4 percent compared with negative
7.5 percent in the year-ago quarter and 20.7 percent in the prior
quarter. The effective tax rates in all periods were impacted by
the decision to retrospectively apply a change in accounting policy
for investments in affordable housing projects that qualify for the
LIHTC.
Other
Fifth Third announced on December 28, 2018, that the Board of
Governors of the Federal Reserve System (“the Federal Reserve”) did
not object to Fifth Third’s Resubmitted Capital Plan for potential
capital actions through June 30, 2019.
The capital actions in Fifth Third’s Resubmitted Capital Plan
through June 30, 2019 remain unchanged compared to the originally
submitted 2018 CCAR plan. The timing and amount of this activity is
subject to market conditions and applicable securities laws.
Through December 2018, Fifth Third has executed approximately $900
million of $1.81 billion in share repurchases authorized under the
2018 CCAR process. Additionally, Fifth Third continues to have the
authorization to increase the common dividend to $0.24 beginning
the second quarter of 2019.
The pending acquisition of MB Financial, Inc. is expected to
close in the first quarter of 2019, subject to regulatory approvals
and other customary closing conditions.
As of December 31, 2018, Fifth Third Bank owned approximately
10.3 million units representing a 3.3 percent interest in Worldpay
Holding, LLC, convertible into shares of Worldpay, Inc., a publicly
traded firm. Based upon Worldpay’s closing price of $76.43 on
December 31, 2018, Fifth Third’s interest in Worldpay was valued at
approximately $780 million. The difference between the market value
and the book value of Fifth Third’s interest in Worldpay’s shares
is not recognized in Fifth Third’s equity or capital.
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 February 5, 2019 by dialing 800-585-8367 for domestic
access or 404-537-3406 for international access (passcode
4692779#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of December 31, 2018, the
Company had $146 billion in assets and operates 1,121 full-service
Banking Centers, and 2,419 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 52,000 fee-free
ATMs across the United States. Fifth Third operates four main
businesses: Commercial Banking, Branch Banking, Consumer Lending,
and Wealth & Asset Management. As of December 31, 2018, Fifth
Third also had a 3.3% interest in Worldpay Holding, LLC, a
subsidiary of Worldpay, Inc. Fifth Third is among the largest money
managers in the Midwest and, as of December 31, 2018, had $356
billion in assets under care, of which it managed $37 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) Effective in the fourth quarter of 2018, Fifth Third
retrospectively applied a change in its accounting policy for
investments in affordable housing projects that qualify for
low-income housing tax credits (LIHTC) to all prior period amounts
presented. As a result, prior period financial results may differ
compared to previous disclosures. See page 30 of the 4Q18 earnings
release for the impact of the change in accounting policy. (b)
Non-GAAP measure; see discussion of non-GAAP and Reg. G
reconciliation beginning on page 26 of the 4Q18 earnings release.
(c) Net losses charged-off as a percent of average portfolio loans
and leases. (d) Nonperforming portfolio assets as a percent of
portfolio loans and leases and OREO. (e) 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. (f) Effective in the fourth quarter of 2018,
Fifth Third retrospectively applied a change in its accounting
policy for investments in affordable housing projects that qualify
for low-income housing tax credits (LIHTC). Prior period regulatory
capital ratios reflect amounts filed on the Bancorp’s FR Y-9C
filings and were not required to be restated as a result. (g)
Current period regulatory capital and liquidity ratios are
estimated. (h) Assumes a 21% tax rate. (i) Includes commercial
customer Eurodollar sweep balances for which the Bank pays rates
comparable to other commercial deposit accounts. (j) Nonperforming
portfolio loans and leases as a percent of portfolio loans and
leases and OREO.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Fifth Third Bancorp has
filed with the SEC a Registration Statement on Form S-4 that
includes the Proxy Statement of MB Financial, Inc. and a Prospectus
of Fifth Third Bancorp, as well as other relevant documents
concerning the proposed transaction. This communication does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. INVESTORS
AND STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND
THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other
filings containing information about Fifth Third Bancorp and MB
Financial, Inc., may be obtained at the SEC’s Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from Fifth Third Bancorp at ir.53.com or
from MB Financial, Inc. by accessing MB Financial, Inc.’s website
at investor.mbfinancial.com.
Copies of the Proxy Statement/Prospectus can also be obtained,
free of charge, by directing a request to Fifth Third Investor
Relations at Fifth Third Investor Relations, MD 1090QC, 38 Fountain
Square Plaza, Cincinnati, OH 45263, by calling (866) 670-0468, or
by sending an e-mail to ir@53.com or to MB Financial, Attention:
Corporate Secretary, at 6111 North River Road, Rosemont, Illinois
60018, by calling (847) 653-1992 or by sending an e-mail to
dkoros@mbfinancial.com.
Fifth Third Bancorp and certain of their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of MB Financial, Inc.
in respect of the transaction described in the Proxy
Statement/Prospectus. Information regarding Fifth Third Bancorp’s
directors and executive officers is contained in Fifth Third
Bancorp’s Annual Report on Form 10-K for the year ended
December 31, 2017 and its Proxy Statement on Schedule 14A,
dated March 6, 2018, which are filed with the SEC. Information
regarding MB Financial, Inc.’s directors and executive officers is
contained in its Proxy Statement on Schedule 14A filed with the SEC
on April 3, 2018. Additional information regarding the
interests of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the
Proxy Statement/Prospectus regarding the proposed merger. Free
copies of this document may be obtained as described in the
preceding paragraph.
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
including, but not limited to, Fifth Third Bancorp’s and MB
Financial, Inc.’s expectations or predictions of future financial
or business performance or conditions. Forward-looking statements
are typically identified by words such as “believe,” “expect,”
“anticipate,” “intend,” “target,” “estimate,” “continue,”
“positions,” “plan,” “predict,” “project,” “forecast,” “guidance,”
“goal,” “objective,” “prospects,” “possible” or “potential,” by
future conditional verbs such as “assume,” “will,” “would,”
“should,” “could” or “may”, or by variations of such words or by
similar expressions. These forward-looking statements are subject
to numerous assumptions, risks and uncertainties, which change over
time. Forward-looking statements speak only as of the date they are
made and we assume no duty to update forward-looking statements.
Actual results may differ materially from current projections.
In addition to factors previously disclosed in Fifth Third
Bancorp’s and MB Financial, Inc.’s reports filed with or furnished
to the SEC and those identified elsewhere in this communication,
the following factors, among others, could cause actual results to
differ materially from forward-looking statements or historical
performance: the ability to obtain regulatory approvals and meet
other closing conditions to the merger, including the risk that
regulatory approvals required for the merger are not obtained or
are obtained subject to conditions that are not anticipated; delay
in closing the merger; difficulties and delays in integrating the
businesses of MB Financial, Inc. or fully realizing cost savings
and other benefits; business disruption following the merger;
changes in asset quality and credit risk; the inability to sustain
revenue and earnings growth; changes in interest rates and capital
markets; inflation; customer acceptance of Fifth Third Bancorp’s
products and services; customer borrowing, repayment, investment
and deposit practices; customer disintermediation; the
introduction, withdrawal, success and timing of business
initiatives; competitive conditions; the inability to realize cost
savings or revenues or to implement integration plans and other
consequences associated with mergers, acquisitions and
divestitures; economic conditions; and the impact, extent and
timing of technological changes, capital management activities, and
other actions of the Federal Reserve Board and legislative and
regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are used
for illustrative purpose only, are not forecasts and may not
reflect actual results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190122005465/en/
Investors:Chris Doll, 513-534–2345
Media:Larry Magnesen, 513-534–8055
Fifth Third Bancorp (NASDAQ:FITB)
Historical Stock Chart
From Aug 2024 to Sep 2024
Fifth Third Bancorp (NASDAQ:FITB)
Historical Stock Chart
From Sep 2023 to Sep 2024