Reported diluted earnings per share of
$0.78
Reported results included a negative $0.07
impact from certain items on page 2 of the earnings release
Fifth Third Bancorp (FITB):
Key Highlights
- Very strong reported and adjusted return metrics, reflecting
strong operating results
- Credit losses well below previous expectations with a NCO ratio
of 0.35%, the lowest level since 2Q19
- PPNR(a) exceeded previous guidance, led by strong fees and
better-than-expected NII performance (interest-bearing core deposit
costs down 14 bps, more than previous guidance)
- 3Q20 NIM was negatively impacted ~48 bps due to excess
liquidity and Paycheck Protection Program (PPP) loans
- Strong balance sheet; CET1 ratio of 10.14% well above target
range, with record balance sheet liquidity
- Grew tangible book value per share for six consecutive
quarters
Key Financial Data
$ millions for all balance sheet and
income statement items
3Q20
2Q20
3Q19
Income Statement Data
Net income available to common
shareholders
$562
$163
$530
Net interest income (U.S. GAAP)
1,170
1,200
1,242
Net interest income (FTE)(a)
1,173
1,203
1,246
Noninterest income
722
650
740
Noninterest expense
1,161
1,121
1,159
Per Share Data
Earnings per share, basic
$0.78
$0.23
$0.72
Earnings per share, diluted
0.78
0.23
0.71
Book value per share
29.25
28.88
27.32
Tangible book value per share(a)
23.06
22.66
21.06
Balance Sheet & Credit
Quality
Average portfolio loans and leases
$113,362
$118,506
$109,541
Average deposits
155,911
150,598
125,206
Net charge-off ratio(b)
0.35
%
0.44
%
0.36
%
Nonperforming asset ratio(c)
0.84
0.65
0.47
Financial Ratios
Return on average assets
1.14
%
0.40
%
1.28
%
Return on average common equity
10.7
3.2
10.7
Return on average tangible common
equity(a)
13.8
4.3
14.2
CET1 capital(d)(e)
10.14
9.72
9.56
Net interest margin(a)
2.58
2.75
3.32
Efficiency(a)
61.3
60.5
58.4
Other than the Quarterly Financial Review
tables beginning on page 13 of the 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.
CEO Commentary
"Our third quarter results were very strong despite the
challenging operating dynamics. We remain intently focused on
taking appropriate actions for our customers, our employees, and
our communities during these uncertain times. I am very proud of
the way our employees have responded to support our customers and
each other.
Our financial performance once again highlighted the strength of
our franchise and our ability to navigate the current environment.
Our already strong capital and liquidity levels further improved
this quarter, and our credit performance was better than previous
expectations, indicative of our balance sheet strength which will
serve us well throughout this challenging environment.
We have consistently communicated our through-the-cycle
principles of disciplined client selection, conservative
underwriting, and an overall balance sheet management approach
focused on long-term performance. We have also executed numerous
strategic actions over the last several years in anticipation of an
eventual downturn in the economy.
Given the anticipated revenue headwinds, we are very focused on
optimizing our expense base to maintain healthy levels of returns.
To that end, we took proactive measures during the quarter to
ensure Fifth Third continues to generate sustainable, long-term
value for shareholders. We continue to believe we are
well-positioned to emerge from the pandemic as a top performing
regional bank."
-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
2020
2020
2019
Seq
Yr/Yr
Condensed Statements of Income
Net interest income (NII)(a)
$1,173
$1,203
$1,246
(2)%
(6)%
(Benefit from) provision for credit
losses
(15)
485
134
NM
NM
Noninterest income
722
650
740
11%
(2)%
Noninterest expense
1,161
1,121
1,159
4%
—
Income before income taxes(a)
$749
$247
$693
203%
8%
Taxable equivalent adjustment
$3
$3
$4
—
(25)%
Applicable income tax expense
165
49
140
237%
18%
Net income
$581
$195
$549
198%
6%
Dividends on preferred stock
19
32
19
(41)%
—
Net income available to common
shareholders
$562
$163
$530
245%
6%
Earnings per share, diluted
$0.78
$0.23
$0.71
239%
10%
Fifth Third Bancorp (NASDAQ®: FITB) today reported third quarter
2020 net income of $581 million compared to net income of $195
million in the prior quarter and $549 million in the year-ago
quarter. Net income available to common shareholders in the current
quarter was $562 million, or $0.78 per diluted share, compared to
$163 million, or $0.23 per diluted share, in the prior quarter and
$530 million, or $0.71 per diluted share, in the year-ago
quarter.
Diluted earnings per share impact of
certain items - 3Q20
(after-tax impacts(f); $ in millions,
except per share data)
Valuation of Visa total return swap within
other noninterest income
$(17)
Restructuring charges:
Severance expense within compensation and
benefits expense
(15)
Branch and non-branch real estate charges
within other noninterest income
(8)
Rent impairment charges within net
occupancy expense
(7)
COVID-19-related expenses(g)
(4)
After-tax impact(f) of certain items
$(51)
Diluted earnings per share impact of
certain items
$(0.07)
Diluted earnings per share impact reflect
718.894 million average diluted shares outstanding
Net Interest Income
(FTE; $ in millions)(a)
For the Three Months Ended
% Change
September
June
September
2020
2020
2019
Seq
Yr/Yr
Interest Income
Interest income
$1,332
$1,406
$1,629
(5)%
(18)%
Interest expense
159
203
383
(22)%
(58)%
Net interest income (NII)
$1,173
$1,203
$1,246
(2)%
(6)%
Adjusted NII(a)
$1,160
$1,188
$1,218
(2)%
(5)%
Average Yield/Rate Analysis
bps Change
Yield on interest-earning assets
2.93
%
3.21
%
4.34
%
(28)
(141)
Rate paid on interest-bearing
liabilities
0.51
%
0.66
%
1.41
%
(15)
(90)
Ratios
Net interest rate spread
2.42
%
2.55
%
2.93
%
(13)
(51)
Net interest margin (NIM)
2.58
%
2.75
%
3.32
%
(17)
(74)
Adjusted NIM(a)
2.55
%
2.71
%
3.25
%
(16)
(70)
Compared to the prior quarter, reported NII decreased $30
million, or 2%. Excluding purchase accounting accretion of $13
million in the current quarter and $15 million in the prior
quarter, adjusted NII decreased $28 million, or 2%. The decrease
was primarily attributable to a decline in commercial and
industrial (C&I) loans and the impact of lower market rates.
These impacts were partially offset by the actions taken to reduce
deposit costs, the full-quarter impact of PPP loans, the favorable
impact of previously executed cash flow hedges, and day count.
Compared to the prior quarter, reported and adjusted NIM decreased
17 bps and 16 bps, respectively, driven by the unfavorable impacts
from elevated cash balances (approximately 15 bps drag on NIM
compared to the prior quarter), lower market rates, and lower
C&I loan balances, partially offset by benefits from lower
deposit costs and previously executed cash flow hedges. NIM was
negatively impacted approximately 48 bps due to PPP loans and
excess liquidity compared to historical balances.
Compared to the year-ago quarter, reported NII decreased $73
million, or 6%. Excluding purchase accounting accretion, adjusted
NII decreased $58 million, or 5%, primarily reflecting lower market
rates and lower commercial loan balances, partially offset by
reduced deposit costs and the favorable impact of previously
executed cash flow hedges, as well as growth in both the indirect
secured consumer (predominantly indirect automobile) and
lower-yielding PPP portfolios. Compared to the year-ago quarter,
reported NIM decreased 74 bps. Adjusted NIM, which excludes
purchase accounting accretion, decreased 70 bps, primarily
reflecting the impact of elevated cash balances and lower market
rates, partially offset by benefits from lower deposit costs and
previously executed cash flow hedges.
Noninterest Income
($ in millions)
For the Three Months Ended
% Change
September
June
September
2020
2020
2019
Seq
Yr/Yr
Noninterest Income
Service charges on deposits
$144
$122
$143
18%
1%
Commercial banking revenue
125
137
123
(9)%
2%
Mortgage banking net revenue
76
99
95
(23)%
(20)%
Wealth and asset management revenue
132
120
124
10%
6%
Card and processing revenue
92
82
94
12%
(2)%
Leasing business revenue
77
57
92
35%
(16)%
Other noninterest income
26
12
64
117%
(59)%
Securities gains, net
51
21
5
143%
920%
Securities losses, net - non-qualifying
hedges
on mortgage servicing rights
(1)
—
—
NM
NM
Total noninterest income
$722
$650
$740
11%
(2)%
Reported noninterest income increased $72 million, or 11%, from
the prior quarter, and decreased $18 million, or 2%, from the
year-ago quarter. The reported results reflect the impact of
certain items in the table below. Reported results in the current
quarter include securities gains, including approximately $5
million attributable to mark-to-market impacts related to
non-qualified deferred compensation assets, which were offset in
noninterest expense, resulting in an immaterial impact to pre-tax
income.
Noninterest Income excluding certain
items
($ in millions)
For the Three Months Ended
September
June
September
2020
2020
2019
Noninterest Income excluding certain
items
Noninterest income (U.S. GAAP)
$722
$650
$740
Valuation of Visa total return swap
22
29
11
Branch and non-branch real estate
charges
10
12
—
Securities gains, net
(51)
(21)
(5)
Noninterest income excluding certain
items(a)
$703
$670
$746
Compared to the prior quarter, noninterest income excluding
certain items increased $33 million, or 5%. Compared to the
year-ago quarter, noninterest income excluding certain items
decreased $43 million, or 6%.
Compared to the prior quarter, service charges on deposits
increased $22 million, or 18%, with improving commercial deposit
fees reflecting a partial normalization of treasury management
service volumes and lower earnings credits, as well as elevated
consumer deposit fees compared to the prior quarter which included
hardship-related fee waivers. Commercial banking revenue decreased
$12 million, or 9%, primarily reflecting a decrease from the record
high capital markets revenue in the prior quarter. Mortgage banking
net revenue decreased $23 million, or 23%, primarily driven by an
unfavorable MSR net valuation adjustment and an increase in MSR
decay resulting from higher prepayment speeds. Current quarter
mortgage originations of $4.5 billion increased 32% compared to the
prior quarter. Wealth and asset management revenue increased $12
million, or 10%, primarily driven by higher personal asset
management revenue and brokerage fees. Card and processing revenue
increased $10 million, or 12%, reflecting increases in credit and
debit transaction volumes. Leasing business revenue increased $20
million, or 35%, primarily driven by an increase in business
solutions revenue.
Compared to the year-ago quarter, service charges on deposits
increased $1 million, or 1%, as increased commercial deposit fees
were partially offset by a decline in consumer deposit fees.
Commercial banking revenue increased $2 million, or 2%, reflecting
increases in both debt and equity capital markets revenue,
partially offset by lower M&A advisory fees and financial risk
management revenue. Mortgage banking net revenue decreased $19
million, or 20%, primarily driven by an unfavorable MSR net
valuation adjustment and an increase in MSR decay resulting from
higher prepayment speeds, partially offset by improved gain on sale
margin and higher mortgage originations. Wealth and asset
management revenue increased $8 million, or 6%, primarily driven by
higher personal asset management revenue and brokerage fees. Card
and processing revenue decreased by $2 million, or 2%, primarily
reflecting lower commercial card transaction volumes, partially
offset by elevated debit transaction volumes and lower rewards.
Leasing business revenue decreased $15 million, or 16% primarily
reflecting lower lease remarketing revenue.
Noninterest Expense
($ in millions)
For the Three Months Ended
% Change
September
June
September
2020
2020
2019
Seq
Yr/Yr
Noninterest Expense
Compensation and benefits
$637
$627
$584
2%
9%
Net occupancy expense
90
82
84
10%
7%
Technology and communications
89
90
100
(1)%
(11)%
Equipment expense
33
32
33
3%
—
Card and processing expense
29
29
33
—
(12)%
Leasing business expense
35
33
40
6%
(13)%
Marketing expense
23
20
40
15%
(43)%
Intangible amortization expense
12
12
14
—
(14)%
Other noninterest expense
213
196
231
9%
(8)%
Total noninterest expense
$1,161
$1,121
$1,159
4%
—
Reported noninterest expense increased $40 million, or 4%, from
the prior quarter, and increased $2 million from the year-ago
quarter. The reported results reflect the impact of certain items
in the table below.
Noninterest Expense excluding certain
items
($ in millions)
For the Three Months Ended
September
June
September
2020
2020
2019
Noninterest Expense excluding certain
items
Noninterest expense (U.S. GAAP)
$1,161
$1,121
$1,159
Restructuring severance expense
(19)
—
—
Intangible amortization expense
(12)
(12)
(14)
Rent impairment charges
(9)
—
—
COVID-19 related expenses(g)
(5)
(12)
—
Merger-related expenses
—
(9)
(28)
FHLB debt extinguishment charge
—
(6)
—
Noninterest expense excluding certain
items(a)
$1,116
$1,082
$1,117
Compared to the prior quarter, noninterest expense excluding
certain items increased $34 million, or 3%, primarily reflecting an
increase in other noninterest expense and marketing expense,
partially offset by lower compensation and benefits expense (which
included approximately $7 million in non-qualified deferred
compensation expense in the current quarter compared to a $22
million expense in the prior quarter). Compared to the year-ago
quarter, noninterest expense excluding certain items decreased $1
million, primarily reflecting lower marketing expense and other
noninterest expense, partially offset by an increase in
compensation and benefits expense.
Average Interest-Earning Assets
($ in millions)
For the Three Months Ended
% Change
September
June
September
2020
2020
2019
Seq
Yr/Yr
Average Portfolio Loans and
Leases
Commercial loans and leases:
Commercial and industrial loans
$54,004
$59,040
$51,241
(9)%
5%
Commercial mortgage loans
11,069
11,222
10,692
(1)%
4%
Commercial construction loans
5,534
5,548
5,267
—
5%
Commercial leases
2,966
3,056
3,562
(3)%
(17)%
Total commercial loans and leases
$73,573
$78,866
$70,762
(7)%
4%
Consumer loans:
Residential mortgage loans
$16,618
$16,561
$16,736
—
(1)%
Home equity
5,581
5,820
6,267
(4)%
(11)%
Indirect secured consumer loans
12,599
12,124
10,707
4%
18%
Credit card
2,134
2,248
2,448
(5)%
(13)%
Other consumer loans
2,857
2,887
2,621
(1)%
9%
Total consumer loans
$39,789
$39,640
$38,779
—
3%
Total average portfolio loans and
leases
$113,362
$118,506
$109,541
(4)%
3%
Average Loans and Leases Held for
Sale
Commercial loans and leases held for
sale
$55
$68
$127
(19)%
(57)%
Consumer loans held for sale
1,196
844
998
42%
20%
Total average loans and leases held for
sale
$1,251
$912
$1,125
37%
11%
Securities and other short-term
investments
$66,091
$56,806
$38,188
16%
73%
Total average interest-earning assets
$180,704
$176,224
$148,854
3%
21%
Compared to the prior quarter, total average portfolio loans and
leases decreased 4%, primarily driven by a decline in C&I
loans, partially offset by an increase in indirect secured consumer
loans (predominantly indirect automobile). Average commercial
portfolio loans and leases decreased 7%, reflecting lower C&I
revolving line of credit utilization and a decline in commercial
mortgage loans, partially offset by the full-quarter impact of PPP
loans. Average consumer portfolio loans were flat, as higher
indirect secured consumer loans were offset by lower home equity
and credit card balances.
Compared to the year-ago quarter, total average portfolio loans
and leases increased 3%, reflecting growth in C&I loans as well
as continued growth in indirect secured consumer loans. Average
commercial portfolio loans and leases increased 4%, reflecting
elevated C&I balances predominantly from PPP loans and growth
in commercial mortgage loans, partially offset by the expected
decline in commercial leases. Average consumer portfolio loans
increased 3%, as higher indirect secured consumer loans were
partially offset by lower home equity and credit card balances.
Total period-end commercial portfolio loans and leases of $71
billion (including $5.2 billion in PPP loan balances) decreased $4
billion, or 6%, from the prior quarter, and increased $1 billion,
or 1%, from the year-ago quarter. The sequential decline reflected
lower revolving line utilization throughout the current quarter.
Period-end commercial revolving line utilization was 33%, compared
to 38% in the prior quarter and 36% in the year-ago quarter.
Average available-for-sale debt and other securities of $35.4
billion (amortized cost) decreased 2% compared to the prior quarter
and increased 2% compared to the year-ago quarter. Average other
short-term investments (which includes interest-bearing cash) of
$29.8 billion increased $10 billion compared to the prior quarter
and increased $27.3 billion compared to the year-ago quarter.
Average Deposits
($ in millions)
For the Three Months Ended
% Change
September
June
September
2020
2020
2019
Seq
Yr/Yr
Average Deposits
Demand
$50,414
$45,761
$35,223
10%
43%
Interest checking
49,800
49,760
37,729
—
32%
Savings
17,013
16,354
14,405
4%
18%
Money market
31,151
30,022
26,962
4%
16%
Foreign office(h)
189
182
222
4%
(15)%
Total transaction deposits
$148,567
$142,079
$114,541
5%
30%
Other time
3,711
4,421
5,823
(16)%
(36)%
Total core deposits
$152,278
$146,500
$120,364
4%
27%
Certificates - $100,000 and over
3,633
4,067
4,795
(11)%
(24)%
Other deposits
—
31
47
(100)%
(100)%
Total average deposits
$155,911
$150,598
$125,206
4%
25%
Compared to the prior quarter, average core deposits increased
4%, with growth in all deposit captions except other time deposits.
Average demand deposits represented 33% of total core deposits in
the current quarter compared to 31% in the prior quarter. Average
commercial transaction deposits increased 6% and average consumer
transaction deposits increased 3%.
Compared to the year-ago quarter, average core deposits
increased 27%, reflecting double-digit growth in all deposit
captions except other time and foreign office deposits. Average
commercial transaction deposits increased 47% and average consumer
transaction deposits increased 14%.
The period end loan-to-core deposit ratio was 72% in the current
quarter, compared to 75% in the prior quarter and 91% in the
year-ago quarter. Excluding PPP loans, the period end loan-to-core
deposit ratio was 69% in the current quarter, compared to 72% in
the prior quarter.
Average Wholesale Funding
($ in millions)
For the Three Months Ended
% Change
September
June
September
2020
2020
2019
Seq
Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over
$3,633
$4,067
$4,795
(11)%
(24)%
Other deposits
—
31
47
(100)%
(100)%
Federal funds purchased
273
309
739
(12)%
(63)%
Other short-term borrowings
1,626
2,377
1,278
(32)%
27%
Long-term debt
16,230
16,955
15,633
(4)%
4%
Total average wholesale funding
$21,762
$23,739
$22,492
(8)%
(3)%
Compared to the prior quarter, average wholesale funding
decreased 8%, driven by a reduction in other short-term borrowings
reflecting lower FHLB advances, lower jumbo CD balances, as well as
the full-quarter impact of a debt redemption that occurred at the
end of the second quarter. Compared to the year-ago quarter,
average wholesale funding decreased 3%, reflecting decreases in
jumbo CD balances, federal funds borrowings and other deposits,
partially offset by increases in long-term debt and other
short-term borrowings.
Credit Quality Summary
($ in millions)
As of and For the Three Months
Ended
September
June
March
December
September
2020
2020
2020
2019
2019
Total nonaccrual portfolio loans and
leases (NPLs)
$891
$700
$647
$618
$482
Repossessed property
7
4
10
10
9
OREO
33
43
52
52
28
Total nonperforming portfolio loans and
leases and OREO (NPAs)
$931
$747
$709
$680
$519
NPL ratio(i)
0.80
%
0.61
%
0.55
%
0.56
%
0.44
%
NPA ratio(c)
0.84
%
0.65
%
0.60
%
0.62
%
0.47
%
Total loans and leases 30-89 days past due
(accrual)
$323
$381
$409
$364
$402
Total loans and leases 90 days past due
(accrual)
139
136
151
130
132
Allowance for loan and lease losses
(ALLL), beginning
$2,696
$2,348
$1,202
$1,143
$1,115
Impact of CECL adoption
—
—
643
—
—
Total net losses charged-off
(101)
(130)
(122)
(113)
(99)
(Benefit from) provision for loan and
lease losses
(21)
478
625
172
127
ALLL, ending
$2,574
$2,696
$2,348
$1,202
$1,143
Reserve for unfunded commitments,
beginning
$176
$169
$144
$154
$147
Impact of CECL adoption
—
—
10
—
—
Provision for (benefit from) the reserve
for unfunded commitments
6
7
15
(10)
7
Reserve for unfunded commitments,
ending
$182
$176
$169
$144
$154
Total allowance for credit losses
(ACL)
$2,756
$2,872
$2,517
$1,346
$1,297
ACL ratios:
As a % of portfolio loans and leases
2.49
%
2.50
%
2.13
%
1.23
%
1.19
%
As a % of nonperforming portfolio loans
and leases
309
%
410
%
389
%
218
%
269
%
As a % of nonperforming portfolio
assets
296
%
385
%
355
%
198
%
250
%
ALLL as a % of portfolio loans and
leases
2.32
%
2.34
%
1.99
%
1.10
%
1.04
%
Total losses charged-off
$(135)
$(163)
$(159)
$(152)
$(130)
Total recoveries of losses previously
charged-off
34
33
37
39
31
Total net losses charged-off
$(101)
$(130)
$(122)
$(113)
$(99)
Net charge-off ratio (NCO ratio)(b)
0.35
%
0.44
%
0.44
%
0.41
%
0.36
%
Commercial NCO ratio
0.33
%
0.40
%
0.32
%
0.20
%
0.18
%
Consumer NCO ratio
0.40
%
0.52
%
0.66
%
0.78
%
0.68
%
Nonperforming portfolio loans and leases were $891 million in
the current quarter, with the resulting NPL ratio of 0.80%.
Compared to the prior quarter, NPLs increased $191 million with the
NPL ratio increasing 19 bps. Compared to the year-ago quarter, NPLs
increased $409 million with the NPL ratio increasing 36 bps.
Nonperforming portfolio assets were $931 million in the current
quarter, with the resulting NPA ratio of 0.84%. Compared to the
prior quarter, NPAs increased $184 million with the NPA ratio
increasing 19 bps. Compared to the year-ago quarter, NPAs increased
$412 million with the NPA ratio increasing 37 bps.
The benefit from credit losses totaled $15 million in the
current quarter. The allowance for credit loss ratio represented
2.49% of total portfolio loans and leases in the current quarter,
compared with 2.50% in the prior quarter and 1.19% in the year-ago
quarter (under the incurred loss methodology). In the current
quarter, the allowance for credit losses represented 309% of
nonperforming portfolio loans and leases and 296% of nonperforming
portfolio assets. The allowance for loan and lease losses ratio
represented 2.32% of total portfolio loans and leases in the
current quarter.
Net charge-offs were $101 million in the current quarter, with
the resulting NCO ratio of 0.35%. Compared to the prior quarter,
net charge-offs decreased $29 million and the NCO ratio decreased 9
bps. Compared to the year-ago quarter, net charge-offs increased $2
million and the NCO ratio decreased 1 bp.
Capital Position
As of and For the Three Months
Ended
September
June
March
December
September
2020
2020
2020
2019
2019
Capital Position
Average total Bancorp shareholders' equity
as a % of average assets
11.33
%
11.30
%
12.63%
12.58%
12.43%
Tangible equity(a)
8.09
%
7.68
%
8.41%
9.52%
9.29%
Tangible common equity (excluding
AOCI)(a)
6.99
%
6.77
%
7.41%
8.44%
8.21%
Tangible common equity (including
AOCI)(a)
8.31
%
8.13
%
8.65%
9.08%
9.09%
Regulatory Capital Ratios(e)
CET1 capital(d)
10.14
%
9.72
%
9.37%
9.75%
9.56%
Tier I risk-based capital(d)
11.64
%
10.96
%
10.56%
10.99%
10.81%
Total risk-based capital(d)
14.93
%
14.24
%
13.59%
13.84%
13.68%
Tier I leverage
8.37
%
8.16
%
9.37%
9.54%
9.36%
Capital ratios remained strong and grew during the quarter. The
CET1 capital ratio was 10.14%, the tangible common equity to
tangible assets ratio was 6.99% excluding AOCI, and 8.31% including
AOCI. The Tier I risk-based capital ratio was 11.64%, the Total
risk-based capital ratio was 14.93%, and the Tier I leverage ratio
was 8.37%. Certain capital ratios, including the Tier I leverage
ratio, continued to be impacted by the increase in assets since the
onset of the pandemic, predominantly from growth in 0%
risk-weighted assets resulting from an increase in interest-bearing
cash as well as PPP loans.
On September 17, 2020, the Federal Reserve released its
hypothetical scenarios for its second round of stress tests under
the Comprehensive Capital Analysis and Review (CCAR) process due to
continued uncertainty from COVID-19. Fifth Third will be
resubmitting its own base and stress scenario projections to the
Federal Reserve by November 2, 2020. Additionally, on September 30,
2020, the Federal Reserve announced it has extended for an
additional quarter several measures to ensure that large banks such
as Fifth Third maintain a high level of capital resilience,
including prohibiting share repurchases through at least the fourth
quarter of 2020, as well as capping dividend payments tied to a
formula based on recent income.
Tax Rate
The effective tax rate was 22.1% compared with 19.9% in the
prior quarter and 20.2% in the year-ago quarter.
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.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio, and the indirect parent company
of Fifth Third Bank, National Association, a federally chartered
institution. As of September 30, 2020, the Company had $202 billion
in assets and operates 1,122 full-service Banking Centers, and
2,414 Fifth Third branded ATMs in Ohio, Kentucky, Indiana,
Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia,
North Carolina and South 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. Fifth Third is among the largest
money managers in the Midwest and, as of September 30, 2020, had
$422 billion in assets under care, of which it managed $53 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
- Non-GAAP measure; see discussion of non-GAAP and Reg. G
reconciliation beginning on page 26 of the earnings release.
- Net losses charged-off as a percent of average portfolio loans
and leases.
- Nonperforming portfolio assets as a percent of portfolio loans
and leases and OREO.
- 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.
- Current period regulatory capital ratios are estimated.
- Assumes a 23% tax rate.
- COVID-19 related expenses include incremental costs incurred
for enhanced cleaning measures, personal protective equipment,
one-time employee bonuses (entirely in 2Q20), and other supplies in
response to the COVID-19 pandemic
- Includes commercial customer Eurodollar sweep balances for
which the Bank pays rates comparable to other commercial deposit
accounts.
- 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 filings with the U.S. Securities and
Exchange Commission (“SEC”). When considering these forward-looking
statements, you should keep in mind these risks and uncertainties,
as well as any cautionary statements we may make. Moreover, you
should treat these statements as speaking only as of the date they
are made and based only on information then actually known to us.
We undertake no obligation to release revisions to these
forward-looking statements or reflect events or circumstances after
the date of this document.
There are a number of important factors that could cause future
results to differ materially from historical performance and these
forward-looking statements. Factors that might cause such a
difference include, but are not limited to: (1) effects of the
global COVID-19 pandemic; (2) deteriorating credit quality; (3)
loan concentration by location or industry of borrowers or
collateral; (4) problems encountered by other financial
institutions; (5) inadequate sources of funding or liquidity; (6)
unfavorable actions of rating agencies; (7) inability to maintain
or grow deposits; (8) limitations on the ability to receive
dividends from subsidiaries; (9) cyber-security risks; (10) Fifth
Third’s ability to secure confidential information and deliver
products and services through the use of computer systems and
telecommunications networks; (11) failures by third-party service
providers; (12) inability to manage strategic initiatives and/or
organizational changes; (13) inability to implement technology
system enhancements; (14) failure of internal controls and other
risk management systems; (15) losses related to fraud, theft or
violence; (16) inability to attract and retain skilled personnel;
(17) adverse impacts of government regulation; (18) governmental or
regulatory changes or other actions; (19) failures to meet
applicable capital requirements; (20) regulatory objections to
Fifth Third’s capital plan; (21) regulation of Fifth Third’s
derivatives activities; (22) deposit insurance premiums; (23)
assessments for the orderly liquidation fund; (24) replacement of
LIBOR; (25) weakness in the national or local economies; (26)
global political and economic uncertainty or negative actions; (27)
changes in interest rates; (28) changes and trends in capital
markets; (29) fluctuation of Fifth Third’s stock price; (30)
volatility in mortgage banking revenue; (31) litigation,
investigations, and enforcement proceedings by governmental
authorities; (32) breaches of contractual covenants,
representations and warranties; (33) competition and changes in the
financial services industry; (34) changing retail distribution
strategies, customer preferences and behavior; (35) 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, other natural
disasters, or health emergencies; 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/20201022005298/en/
Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed
Loyd (513) 534-6397
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