Fifth Third Announces First Quarter 2021 Results
Reported diluted earnings per share of $0.93
Key Financial Data | Key Highlights | |||||||||||||||||||||||||
$ millions for all balance sheet and income statement items | ||||||||||||||||||||||||||
1Q21 | 4Q20 | 1Q20 | •Returned $180 million to shareholders through repurchases; capacity to repurchase up to $347 million in 2Q21 •ROTCE(a) of 16.8%; adjusted ROTCE(a) of 19.8% excl. AOCI improved 150 bps sequentially •Produced record commercial banking revenue •Generated consumer household growth of 3% compared to 1Q20 •Historically low NCO ratio reflecting improvements in commercial and consumer •Benefit to credit losses and resulting reserve coverage reflects improved macroeconomic environment and strong credit results; NPA ratio improved 7 bps sequentially •NII(a) down 1%; reported NIM(a) increased 4 bps, with ~4 bps decline in underlying NIM excl. excess cash and all PPP impacts(f) •Named one of the "World's Most Ethical Companies" by Ethisphere •Exceeded five-year commitment to low-and-moderate income communities by more than $9 billion | |||||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||||||||
Net income available to common shareholders | $674 | $569 | $29 | |||||||||||||||||||||||
Net interest income (U.S. GAAP) | 1,176 | 1,182 | 1,229 | |||||||||||||||||||||||
Net interest income (FTE)(a) | 1,179 | 1,185 | 1,233 | |||||||||||||||||||||||
Noninterest income | 749 | 787 | 671 | |||||||||||||||||||||||
Noninterest expense | 1,215 | 1,236 | 1,200 | |||||||||||||||||||||||
Per Share Data | ||||||||||||||||||||||||||
Earnings per share, basic | $0.94 | $0.79 | $0.04 | |||||||||||||||||||||||
Earnings per share, diluted | 0.93 | 0.78 | 0.04 | |||||||||||||||||||||||
Book value per share | 28.78 | 29.46 | 28.26 | |||||||||||||||||||||||
Tangible book value per share(a) | 22.60 | 23.28 | 22.02 | |||||||||||||||||||||||
Balance Sheet & Credit Quality | ||||||||||||||||||||||||||
Average portfolio loans and leases | $108,956 | $109,360 | $110,779 | |||||||||||||||||||||||
Average deposits | 158,888 | 158,626 | 126,789 | |||||||||||||||||||||||
Net charge-off ratio(b) | 0.27 | % | 0.43 | % | 0.44 | % | ||||||||||||||||||||
Nonperforming asset ratio(c) | 0.72 | 0.79 | 0.60 | |||||||||||||||||||||||
Financial Ratios | ||||||||||||||||||||||||||
Return on average assets | 1.38 | % | 1.18 | % | 0.11 | % | ||||||||||||||||||||
Return on average common equity | 13.1 | 10.8 | 0.6 | |||||||||||||||||||||||
Return on average tangible common equity(a) | 16.8 | 13.9 | 1.0 | |||||||||||||||||||||||
CET1 capital(d)(e) | 10.46 | 10.34 | 9.37 | |||||||||||||||||||||||
Net interest margin(a) | 2.62 | 2.58 | 3.28 | |||||||||||||||||||||||
Efficiency(a) | 63.0 | 62.7 | 63.0 | |||||||||||||||||||||||
Other than the Quarterly Financial Review tables beginning on page 13, 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 |
"Fifth Third’s quarterly financial performance was once again strong, reflecting record commercial banking revenue, continued momentum generating household growth, a strong underlying net interest margin, and historically low net charge-offs with improvements in both commercial and consumer portfolios.
Our credit results continue to demonstrate the strength of our balance sheet, as we have maintained our disciplined client selection, adhered to our conservative underwriting, and continued to manage our balance sheet exposures with a focus on a long-term performance horizon. I am optimistic that we will continue to benefit from an improving economic environment, including higher interest rates, as well as a more vibrant economy over the next year within most of our commercial franchise and throughout our retail footprint.
Despite the overall economic recovery over the past several quarters, I recognize that not everyone in our society has benefited from it. This is why I am very proud that, in addition to producing strong financial results, we have also continued to take deliberate actions to improve the lives of our customers and the well-being of our communities. I am particularly pleased that we exceeded our five-year community commitment to invest in low-and-moderate income communities by more than $9 billion.
We were honored to be named one of the world’s most ethical companies by Ethisphere, reflecting our strong corporate culture, compliance program, and ESG actions. We are guided by our core values to work as one bank, be respectful, take accountability, and always act with integrity. We remain committed to generating sustainable long-term value for shareholders and anticipate that we will continue improving our relative performance as a top performing regional bank."
-Greg D. Carmichael, Chairman and CEO
Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed Loyd (513) 534-6397 April 20, 2021
Income Statement Highlights | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
March | December | March | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Income | ||||||||||||||||||||||||||||||||||||||||||||
Net interest income (NII)(a) | $1,179 | $1,185 | $1,233 | (1)% | (4)% | |||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for credit losses | (173) | (13) | 640 | NM | NM | |||||||||||||||||||||||||||||||||||||||
Noninterest income | 749 | 787 | 671 | (5)% | 12% | |||||||||||||||||||||||||||||||||||||||
Noninterest expense | 1,215 | 1,236 | 1,200 | (2)% | 1% | |||||||||||||||||||||||||||||||||||||||
Income before income taxes(a) | $886 | $749 | $64 | 18% | NM | |||||||||||||||||||||||||||||||||||||||
Taxable equivalent adjustment | $3 | $3 | $4 | — | (25)% | |||||||||||||||||||||||||||||||||||||||
Applicable income tax expense | 189 | 142 | 14 | 33% | NM | |||||||||||||||||||||||||||||||||||||||
Net income | $694 | $604 | $46 | 15% | NM | |||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | 20 | 35 | 17 | (43)% | 18% | |||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders | $674 | $569 | $29 | 18% | NM | |||||||||||||||||||||||||||||||||||||||
Earnings per share, diluted | $0.93 | $0.78 | $0.04 | 19% | NM | |||||||||||||||||||||||||||||||||||||||
Fifth Third Bancorp (NASDAQ®: FITB) today reported first quarter 2021 net income of $694 million compared to net income of $604 million in the prior quarter and $46 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $674 million, or $0.93 per diluted share, compared to $569 million, or $0.78 per diluted share, in the prior quarter and $29 million, or $0.04 per diluted share, in the year-ago quarter.
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Net Interest Income | ||||||||||||||||||||||||||||||||||||||||||||
(FTE; $ in millions)(a) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
March | December | March | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Interest Income | ||||||||||||||||||||||||||||||||||||||||||||
Interest income | $1,305 | $1,318 | $1,529 | (1)% | (15)% | |||||||||||||||||||||||||||||||||||||||
Interest expense | 126 | 133 | 296 | (5)% | (57)% | |||||||||||||||||||||||||||||||||||||||
Net interest income (NII) | $1,179 | $1,185 | $1,233 | (1)% | (4)% | |||||||||||||||||||||||||||||||||||||||
Average Yield/Rate Analysis | bps Change | |||||||||||||||||||||||||||||||||||||||||||
Yield on interest-earning assets | 2.90 | % | 2.87 | % | 4.07 | % | 3 | (117) | ||||||||||||||||||||||||||||||||||||
Rate paid on interest-bearing liabilities | 0.44 | % | 0.45 | % | 1.09 | % | (1) | (65) | ||||||||||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||||||||||||||
Net interest rate spread | 2.46 | % | 2.42 | % | 2.98 | % | 4 | (52) | ||||||||||||||||||||||||||||||||||||
Net interest margin (NIM) | 2.62 | % | 2.58 | % | 3.28 | % | 4 | (66) | ||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, NII decreased $6 million, or 1%, primarily due to lower day count and a reduction in prepayment penalties received in the investment portfolio, partially offset by the impact of loan purchases of government guaranteed GNMA loan buyouts associated with CARES Act forbearance plans from a third party ($2.1 billion in December 2020 and $0.6 billion in March 2021), as well as approximately $12 million in incremental PPP fees reflecting loan forgiveness. Compared to the prior quarter, NIM increased 4 bps reflecting a decline in excess liquidity, an increase in PPP fees, and the impact of day count, partially offset by the reduction in investment portfolio prepayment penalties received relative to the prior quarter. First quarter 2021 NIM was negatively impacted by approximately 48 bps due to the impacts of PPP and excess liquidity relative to historical balances, compared to 56 bps in the prior quarter.
Compared to the year-ago quarter, NII decreased $54 million, or 4%, primarily reflecting lower market rates and lower commercial loan balances, partially offset by lower deposit costs, the favorable impact of previously executed cash flow hedges, and interest income from PPP loans. Compared to the year-ago quarter, NIM decreased 66 bps, primarily reflecting the impact of excess liquidity, lower market rates, and lower commercial loan balances, partially offset by lower deposit costs.
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Noninterest Income | |||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | |||||||||||||||||||||||||||||||||
March | December | March | |||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | |||||||||||||||||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||||||||||||
Service charges on deposits | $144 | $146 | $148 | (1)% | (3)% | ||||||||||||||||||||||||||||||
Commercial banking revenue | 153 | 141 | 124 | 9% | 23% | ||||||||||||||||||||||||||||||
Mortgage banking net revenue | 85 | 25 | 120 | 240% | (29)% | ||||||||||||||||||||||||||||||
Wealth and asset management revenue | 143 | 133 | 134 | 8% | 7% | ||||||||||||||||||||||||||||||
Card and processing revenue | 94 | 92 | 86 | 2% | 9% | ||||||||||||||||||||||||||||||
Leasing business revenue | 87 | 69 | 73 | 26% | 19% | ||||||||||||||||||||||||||||||
Other noninterest income | 42 | 168 | 7 | (75)% | 500% | ||||||||||||||||||||||||||||||
Securities gains (losses), net | 3 | 14 | (24) | (79)% | NM | ||||||||||||||||||||||||||||||
Securities (losses) gains, net - non-qualifying hedges | |||||||||||||||||||||||||||||||||||
on mortgage servicing rights | (2) | (1) | 3 | 100% | NM | ||||||||||||||||||||||||||||||
Total noninterest income | $749 | $787 | $671 | (5)% | 12% | ||||||||||||||||||||||||||||||
Reported noninterest income decreased $38 million, or 5%, from the prior quarter, and increased $78 million, or 12%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below, including securities gains and losses, which included approximately $4 million attributable to mark-to-market impacts related to non-qualified deferred compensation assets in the current quarter.
Noninterest Income excluding certain items | |||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | ||||||||||||||||||||||||||||
March | December | March | |||||||||||||||||||||||||||
2021 | 2020 | 2020 | |||||||||||||||||||||||||||
Noninterest Income excluding certain items | |||||||||||||||||||||||||||||
Noninterest income (U.S. GAAP) | $749 | $787 | $671 | ||||||||||||||||||||||||||
Valuation of Visa total return swap | 13 | 30 | 22 | ||||||||||||||||||||||||||
Net business dispositions charge | — | 11 | — | ||||||||||||||||||||||||||
Net impairment of private equity investments | — | — | 15 | ||||||||||||||||||||||||||
Securities (gains) losses, net | (3) | (14) | 24 | ||||||||||||||||||||||||||
Noninterest income excluding certain items(a) | $759 | $814 | $732 | ||||||||||||||||||||||||||
Compared to the prior quarter, noninterest income excluding certain items decreased $55 million, or 7%. Compared to the year-ago quarter, noninterest income excluding certain items increased $27 million, or 4%.
Compared to the prior quarter, service charges on deposits decreased $2 million, or 1%, as a decrease in consumer deposit fees was partially offset by an increase in commercial deposit fees. Commercial banking revenue increased $12 million, or 9%, primarily driven by strong debt capital markets revenue combined with increased equity capital markets revenue, partially offset by lower M&A advisory revenue. Mortgage banking net revenue increased $60 million, or 240%, reflecting a $42 million increase in origination fees and gains on loan sales reflecting increased origination volumes and a $31 million improvement from MSR net valuation adjustments. This was partially offset by lower servicing revenue and elevated MSR asset decay. Current quarter mortgage originations of $4.7 billion increased 19% compared to the prior quarter. Wealth and asset management revenue increased $10 million, or 8%, driven by seasonally strong tax-related private client service revenue and higher personal asset management revenue reflecting market improvements. Card and processing revenue increased $2 million, or 2%, primarily driven by higher debit interchange and lower rewards, partially offset by a decrease in credit spend volume. Leasing business revenue increased $18 million, or 26%, primarily driven by strong lease syndication revenue, partially offset by lower income related to operating leases. Other noninterest income results were impacted by both the recognition of tax receivable agreement revenue of $74 million as well as private equity income in the prior quarter.
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Compared to the year-ago quarter, service charges on deposits decreased $4 million, or 3%, as a decline in consumer deposit fees was partially offset by an increase in commercial deposit fees. Commercial banking revenue increased $29 million, or 23%, reflecting an increase in debt capital markets revenue, loan syndication revenue, and M&A advisory revenue, partially offset by lower financial risk management revenue. Mortgage banking net revenue decreased $35 million, or 29%, primarily driven by elevated MSR asset decay and lower servicing revenue, partially offset by an increase in mortgage origination fees and gain on loan sales. Wealth and asset management revenue increased $9 million, or 7%, primarily driven by higher personal asset management revenue and brokerage fees. Card and processing revenue increased by $8 million, or 9%, primarily reflecting higher consumer card spend and transaction volumes combined with lower rewards. Leasing business revenue increased $14 million, or 19%, primarily reflecting strong lease syndication revenue, partially offset by lower income related to operating leases.
Noninterest Expense | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
March | December | March | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||||||||||||||||||
Compensation and benefits | $706 | $679 | $647 | 4% | 9% | |||||||||||||||||||||||||||||||||||||||
Net occupancy expense | 79 | 98 | 82 | (19)% | (4)% | |||||||||||||||||||||||||||||||||||||||
Technology and communications | 93 | 90 | 93 | 3% | — | |||||||||||||||||||||||||||||||||||||||
Equipment expense | 34 | 34 | 32 | — | 6% | |||||||||||||||||||||||||||||||||||||||
Card and processing expense | 30 | 31 | 31 | (3)% | (3)% | |||||||||||||||||||||||||||||||||||||||
Leasing business expense | 35 | 37 | 35 | (5)% | — | |||||||||||||||||||||||||||||||||||||||
Marketing expense | 23 | 30 | 31 | (23)% | (26)% | |||||||||||||||||||||||||||||||||||||||
Other noninterest expense | 215 | 237 | 249 | (9)% | (14)% | |||||||||||||||||||||||||||||||||||||||
Total noninterest expense | $1,215 | $1,236 | $1,200 | (2)% | 1% | |||||||||||||||||||||||||||||||||||||||
Reported noninterest expense decreased $21 million, or 2%, from the prior quarter, and increased $15 million, or 1%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below.
Noninterest Expense excluding certain items | |||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | ||||||||||||||||||||||||||||
March | December | March | |||||||||||||||||||||||||||
2021 | 2020 | 2020 | |||||||||||||||||||||||||||
Noninterest Expense excluding certain items | |||||||||||||||||||||||||||||
Noninterest expense (U.S. GAAP) | $1,215 | $1,236 | $1,200 | ||||||||||||||||||||||||||
Fifth Third Foundation contribution | — | (25) | — | ||||||||||||||||||||||||||
Branch and non-branch real estate charges | — | (21) | — | ||||||||||||||||||||||||||
Business acquisition and merger-related charges | — | (16) | (7) | ||||||||||||||||||||||||||
Noninterest expense excluding certain items(a) | $1,215 | $1,174 | $1,193 |
Compared to the prior quarter, noninterest expense excluding certain items increased $41 million, or 3%, primarily due to a seasonal increase in compensation and benefits expense as well as expenses linked to strong business performance, partially offset by lower other noninterest expense, net occupancy expense, and the mark-to-market impacts of approximately $7 million in non-qualified deferred compensation expense in the current quarter compared to a $19 million expense in the prior quarter. Compared to the year-ago quarter, noninterest expense excluding certain items increased $22 million, or 2%, primarily reflecting an increase in compensation and benefits expense, the unfavorable impact of $33 million from non-qualified deferred expenses compared to the year-ago quarter and servicing expense associated with recently-purchased consumer loans, partially offset by lower other noninterest expense (reflecting a $36 million unfavorable credit valuation adjustment in the year-ago quarter) and lower marketing expense.
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Average Interest-Earning Assets | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
March | December | March | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Average Portfolio Loans and Leases | ||||||||||||||||||||||||||||||||||||||||||||
Commercial loans and leases: | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial loans | $49,629 | $50,385 | $51,586 | (2)% | (4)% | |||||||||||||||||||||||||||||||||||||||
Commercial mortgage loans | 10,532 | 10,727 | 11,019 | (2)% | (4)% | |||||||||||||||||||||||||||||||||||||||
Commercial construction loans | 6,039 | 5,820 | 5,132 | 4% | 18% | |||||||||||||||||||||||||||||||||||||||
Commercial leases | 3,114 | 2,932 | 3,201 | 6% | (3)% | |||||||||||||||||||||||||||||||||||||||
Total commercial loans and leases | $69,314 | $69,864 | $70,938 | (1)% | (2)% | |||||||||||||||||||||||||||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage loans | $15,803 | $16,016 | $16,732 | (1)% | (6)% | |||||||||||||||||||||||||||||||||||||||
Home equity | 5,009 | 5,315 | 6,006 | (6)% | (17)% | |||||||||||||||||||||||||||||||||||||||
Indirect secured consumer loans | 13,955 | 13,272 | 11,809 | 5% | 18% | |||||||||||||||||||||||||||||||||||||||
Credit card | 1,879 | 2,042 | 2,498 | (8)% | (25)% | |||||||||||||||||||||||||||||||||||||||
Other consumer loans | 2,996 | 2,851 | 2,796 | 5% | 7% | |||||||||||||||||||||||||||||||||||||||
Total consumer loans | $39,642 | $39,496 | $39,841 | — | — | |||||||||||||||||||||||||||||||||||||||
Total average portfolio loans and leases | $108,956 | $109,360 | $110,779 | — | (2)% | |||||||||||||||||||||||||||||||||||||||
Average Loans and Leases Held for Sale | ||||||||||||||||||||||||||||||||||||||||||||
Commercial loans and leases held for sale | $104 | $56 | $108 | 86% | (4)% | |||||||||||||||||||||||||||||||||||||||
Consumer loans held for sale | 4,641 | 2,048 | 1,293 | 127% | 259% | |||||||||||||||||||||||||||||||||||||||
Total average loans and leases held for sale | $4,745 | $2,104 | $1,401 | 126% | 239% | |||||||||||||||||||||||||||||||||||||||
Securities (taxable and tax-exempt) | $36,297 | $35,965 | $36,135 | 1% | — | |||||||||||||||||||||||||||||||||||||||
Other short-term investments | 32,717 | 34,989 | 2,898 | (6)% | NM | |||||||||||||||||||||||||||||||||||||||
Total average interest-earning assets | $182,715 | $182,418 | $151,213 | — | 21% | |||||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, total average portfolio loans and leases were flat, as an increase in indirect secured consumer loans was offset by a decrease in C&I balances. Average commercial portfolio loans and leases decreased 1%, reflecting lower C&I revolving line of credit utilization and term loan balances, partially offset by growth in commercial construction balances reflecting drawdowns on previous commitments. Average consumer portfolio loans were flat, as higher indirect secured consumer loans were offset by lower home equity and residential mortgage balances.
Compared to the year-ago quarter, total average portfolio loans and leases decreased 2% reflecting lower C&I revolving line of credit utilization and term loan balances, as well as declines in home equity and residential mortgage loans, partially offset by increases from PPP loans, indirect secured consumer loans, and commercial construction loans. Average commercial portfolio loans and leases decreased 2% due to a decline in C&I loan balances reflecting lower revolving line of credit utilization and lower commercial mortgage loans, partially offset by growth from PPP loans and commercial construction loans. Average consumer portfolio loans were flat, as higher indirect secured consumer loans were offset by lower residential mortgage, home equity, and credit card balances.
Average other short-term investments (including interest-bearing cash) of $33 billion in the current quarter decreased $2 billion compared to the prior quarter and increased $30 billion compared to the year-ago quarter. The increase relative to the year-ago quarter reflected average core deposit growth of 27% compared to average total loan growth of 1%.
Total period-end commercial portfolio loans and leases of $69 billion were flat from the prior quarter as higher PPP, commercial construction, and commercial lease balances were offset by lower C&I revolving line of credit utilization and term loan balances reflecting elevated paydowns. Compared to the year-ago quarter, total period-end commercial portfolio loans decreased $9 billion, or 11%, reflecting lower C&I revolving line of credit utilization. Period-end commercial revolving line utilization was 31%, compared to 32% in the prior quarter and 47% in the year-ago quarter. Period-end consumer
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portfolio loans were stable compared to the prior quarter, as continued growth in indirect secured consumer loans was partially offset by declines in home equity and credit card balances. Period-end consumer loans held for sale increased $0.9 billion sequentially, primarily attributable to the purchase of approximately $0.6 billion in government guaranteed loans related to GNMA early buyouts associated with CARES Act forbearance plans.
Average Deposits | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
March | December | March | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Average Deposits | ||||||||||||||||||||||||||||||||||||||||||||
Demand | $58,586 | $56,365 | $35,765 | 4% | 64% | |||||||||||||||||||||||||||||||||||||||
Interest checking | 45,568 | 47,664 | 40,298 | (4)% | 13% | |||||||||||||||||||||||||||||||||||||||
Savings | 18,951 | 17,658 | 14,715 | 7% | 29% | |||||||||||||||||||||||||||||||||||||||
Money market | 30,601 | 31,205 | 27,109 | (2)% | 13% | |||||||||||||||||||||||||||||||||||||||
Foreign office(g) | 128 | 161 | 209 | (20)% | (39)% | |||||||||||||||||||||||||||||||||||||||
Total transaction deposits | $153,834 | $153,053 | $118,096 | 1% | 30% | |||||||||||||||||||||||||||||||||||||||
Other time | 3,045 | 3,273 | 5,081 | (7)% | (40)% | |||||||||||||||||||||||||||||||||||||||
Total core deposits | $156,879 | $156,326 | $123,177 | — | 27% | |||||||||||||||||||||||||||||||||||||||
Certificates - $100,000 and over | 2,009 | 2,300 | 3,355 | (13)% | (40)% | |||||||||||||||||||||||||||||||||||||||
Other deposits | — | — | 257 | NM | (100)% | |||||||||||||||||||||||||||||||||||||||
Total average deposits | $158,888 | $158,626 | $126,789 | — | 25% | |||||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, average core deposits were flat, as increases in demand and savings deposits were offset by decreases in interest checking, money market, and other time deposits. Average demand deposits represented 37% of total core deposits in the current quarter compared to 36% in the prior quarter. Average commercial transaction deposits decreased 4% primarily reflecting seasonality, and average consumer transaction deposits increased 5% partially impacted by fiscal stimulus.
Compared to the year-ago quarter, average core deposits increased 27%, reflecting double-digit growth in all deposit captions except other time and foreign office deposits. Average commercial transaction deposits increased 42% and average consumer transaction deposits increased 20%.
The period end portfolio loan-to-core deposit ratio was 68% in the current quarter, compared to 69% in the prior quarter and 89% in the year-ago quarter. Excluding the impact of PPP loans, the period end portfolio loan-to-core deposit ratio was 64% in the current quarter, compared to 66% in the prior quarter.
Average Wholesale Funding | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | For the Three Months Ended | % Change | ||||||||||||||||||||||||||||||||||||||||||
March | December | March | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | ||||||||||||||||||||||||||||||||||||||||
Average Wholesale Funding | ||||||||||||||||||||||||||||||||||||||||||||
Certificates - $100,000 and over | $2,009 | $2,300 | $3,355 | (13)% | (40)% | |||||||||||||||||||||||||||||||||||||||
Other deposits | — | — | 257 | NM | (100)% | |||||||||||||||||||||||||||||||||||||||
Federal funds purchased | 324 | 307 | 654 | 6% | (50)% | |||||||||||||||||||||||||||||||||||||||
Other short-term borrowings | 1,209 | 1,091 | 1,750 | 11% | (31)% | |||||||||||||||||||||||||||||||||||||||
Long-term debt | 14,849 | 15,018 | 15,816 | (1)% | (6)% | |||||||||||||||||||||||||||||||||||||||
Total average wholesale funding | $18,391 | $18,716 | $21,832 | (2)% | (16)% | |||||||||||||||||||||||||||||||||||||||
Compared to the prior quarter, average wholesale funding decreased 2%, driven by lower jumbo CD balances and long-term debt outstanding, partially offset by an increase in other short-term borrowings (reflecting commercial client sweep accounts). Compared to the year-ago quarter, average wholesale funding decreased 16%, reflecting decreases in jumbo CD balances, long-term debt, and other short-term borrowings.
7
Credit Quality Summary | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | As of and For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||
March | December | September | June | March | ||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||||||||||||||||||
Total nonaccrual portfolio loans and leases (NPLs) | $741 | $834 | $891 | $700 | $647 | |||||||||||||||||||||||||||||||||||||||
Repossessed property | 7 | 9 | 7 | 4 | 10 | |||||||||||||||||||||||||||||||||||||||
OREO | 35 | 21 | 33 | 43 | 52 | |||||||||||||||||||||||||||||||||||||||
Total nonperforming portfolio loans and leases and OREO (NPAs) | $783 | $864 | $931 | $747 | $709 | |||||||||||||||||||||||||||||||||||||||
NPL ratio(h) | 0.68 | % | 0.77 | % | 0.80 | % | 0.61 | % | 0.55 | % | ||||||||||||||||||||||||||||||||||
NPA ratio(c) | 0.72 | % | 0.79 | % | 0.84 | % | 0.65 | % | 0.60 | % | ||||||||||||||||||||||||||||||||||
Total loans and leases 30-89 days past due (accrual) | $305 | $357 | $323 | $381 | $409 | |||||||||||||||||||||||||||||||||||||||
Total loans and leases 90 days past due (accrual) | 124 | 163 | 139 | 136 | 151 | |||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses (ALLL), beginning | $2,453 | $2,574 | $2,696 | $2,348 | $1,202 | |||||||||||||||||||||||||||||||||||||||
Impact of CECL adoption | — | — | — | — | 643 | |||||||||||||||||||||||||||||||||||||||
Total net losses charged-off | (71) | (118) | (101) | (130) | (122) | |||||||||||||||||||||||||||||||||||||||
(Benefit from) provision for loan and lease losses | (174) | (3) | (21) | 478 | 625 | |||||||||||||||||||||||||||||||||||||||
ALLL, ending | $2,208 | $2,453 | $2,574 | $2,696 | $2,348 | |||||||||||||||||||||||||||||||||||||||
Reserve for unfunded commitments, beginning | $172 | $182 | $176 | $169 | $144 | |||||||||||||||||||||||||||||||||||||||
Impact of CECL adoption | — | — | — | — | 10 | |||||||||||||||||||||||||||||||||||||||
Provision for (benefit from) the reserve for unfunded commitments | 1 | (10) | 6 | 7 | 15 | |||||||||||||||||||||||||||||||||||||||
Reserve for unfunded commitments, ending | $173 | $172 | $182 | $176 | $169 | |||||||||||||||||||||||||||||||||||||||
Total allowance for credit losses (ACL) | $2,381 | $2,625 | $2,756 | $2,872 | $2,517 | |||||||||||||||||||||||||||||||||||||||
ACL ratios: | ||||||||||||||||||||||||||||||||||||||||||||
As a % of portfolio loans and leases | 2.19 | % | 2.41 | % | 2.49 | % | 2.50 | % | 2.13 | % | ||||||||||||||||||||||||||||||||||
As a % of nonperforming portfolio loans and leases | 321 | % | 315 | % | 309 | % | 410 | % | 389 | % | ||||||||||||||||||||||||||||||||||
As a % of nonperforming portfolio assets | 304 | % | 304 | % | 296 | % | 385 | % | 355 | % | ||||||||||||||||||||||||||||||||||
ALLL as a % of portfolio loans and leases | 2.03 | % | 2.25 | % | 2.32 | % | 2.34 | % | 1.99 | % | ||||||||||||||||||||||||||||||||||
Total losses charged-off | $(109) | $(154) | $(135) | $(163) | $(159) | |||||||||||||||||||||||||||||||||||||||
Total recoveries of losses previously charged-off | 38 | 36 | 34 | 33 | 37 | |||||||||||||||||||||||||||||||||||||||
Total net losses charged-off | $(71) | $(118) | $(101) | $(130) | $(122) | |||||||||||||||||||||||||||||||||||||||
Net charge-off ratio (NCO ratio)(b) | 0.27 | % | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | ||||||||||||||||||||||||||||||||||
Commercial NCO ratio | 0.17 | % | 0.40 | % | 0.33 | % | 0.40 | % | 0.32 | % | ||||||||||||||||||||||||||||||||||
Consumer NCO ratio | 0.43 | % | 0.47 | % | 0.40 | % | 0.52 | % | 0.66 | % | ||||||||||||||||||||||||||||||||||
Nonperforming portfolio loans and leases were $741 million in the current quarter, with the resulting NPL ratio of 0.68%. Compared to the prior quarter, NPLs decreased $93 million with the NPL ratio decreasing 9 bps. Compared to the year-ago quarter, NPLs increased $94 million with the NPL ratio increasing 13 bps.
Nonperforming portfolio assets were $783 million in the current quarter, with the resulting NPA ratio of 0.72%. Compared to the prior quarter, NPAs decreased $81 million with the NPA ratio decreasing 7 bps. Compared to the year-ago quarter, NPAs increased $74 million with the NPA ratio increasing 12 bps.
8
The benefit from credit losses totaled $173 million in the current quarter. The allowance for credit loss ratio represented 2.19% of total portfolio loans and leases in the current quarter, compared with 2.41% in the prior quarter and 2.13% in the year-ago quarter. In the current quarter, the allowance for credit losses represented 321% of nonperforming portfolio loans and leases and 304% of nonperforming portfolio assets. The allowance for loan and lease losses ratio represented 2.03% of total portfolio loans and leases in the current quarter.
Net charge-offs were $71 million in the current quarter, with the resulting NCO ratio of 0.27%. Compared to the prior quarter, net charge-offs decreased $47 million and the NCO ratio decreased 16 bps. Compared to the year-ago quarter, net charge-offs decreased $51 million and the NCO ratio decreased 17 bps.
Capital Position | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of and For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
March | December | September | June | March | ||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital Position | ||||||||||||||||||||||||||||||||||||||||||||||||||
Average total Bancorp shareholders' equity as a % of average assets | 11.26 | % | 11.34 | % | 11.33% | 11.30% | 12.63 | % | ||||||||||||||||||||||||||||||||||||||||||
Tangible equity(a) | 8.20 | % | 8.18 | % | 8.09% | 7.68% | 8.41 | % | ||||||||||||||||||||||||||||||||||||||||||
Tangible common equity (excluding AOCI)(a) | 7.14 | % | 7.11 | % | 6.99% | 6.77% | 7.41 | % | ||||||||||||||||||||||||||||||||||||||||||
Tangible common equity (including AOCI)(a) | 7.95 | % | 8.29 | % | 8.31% | 8.13% | 8.65 | % | ||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Ratios(e) | ||||||||||||||||||||||||||||||||||||||||||||||||||
CET1 capital(d) | 10.46 | % | 10.34 | % | 10.14% | 9.72% | 9.37 | % | ||||||||||||||||||||||||||||||||||||||||||
Tier I risk-based capital(d) | 11.94 | % | 11.83 | % | 11.64% | 10.96% | 10.56 | % | ||||||||||||||||||||||||||||||||||||||||||
Total risk-based capital(d) | 14.80 | % | 15.08 | % | 14.93% | 14.24% | 13.59 | % | ||||||||||||||||||||||||||||||||||||||||||
Tier I leverage | 8.62 | % | 8.49 | % | 8.37% | 8.16% | 9.37 | % | ||||||||||||||||||||||||||||||||||||||||||
Capital ratios remained strong this quarter. The CET1 capital ratio was 10.46%, the tangible common equity to tangible assets ratio was 7.14% excluding AOCI, and 7.95% including AOCI. The Tier I risk-based capital ratio was 11.94%, the Total risk-based capital ratio was 14.80%, and the Tier I leverage ratio was 8.62%. 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 January 26, 2021, Fifth Third initially settled an accelerated share repurchase agreement whereby Fifth Third would purchase $180 million of its outstanding stock. The initial settlement reduced first quarter common shares outstanding by 4.9 million shares. On March 31, 2021, the final settlement occurred in connection with the completion of this agreement, which resulted in an additional 0.4 million shares being repurchased by Fifth Third.
On March 25, 2021, the Federal Reserve announced that the temporary restrictions on capital distributions, which limited common dividends and share repurchases to the average net income over the prior four quarters, will end after June 30, 2021 for banks not participating in the 2021 annual supervisory stress tests, including Fifth Third.
9
Tax Rate
The effective tax rate was 21.4% compared with 19.1% in the prior quarter and 22.6% in the year-ago quarter. The tax rate in the current quarter reflected a $14 million tax benefit primarily related to share-based compensation. The tax rate in the prior quarter reflected favorable state tax adjustments of $13 million.
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, which will be available for 30 days.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. As of March 31, 2021, the Company had $207 billion in assets and operates 1,098 full-service Banking Centers, and 2,383 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 53,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2021, had $464 billion in assets under care, of which it managed $58 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 reconciliation beginning on page 25.
(b)Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis.
(c)Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO.
(d)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(e)Current period regulatory capital ratios are estimated.
(f)First quarter 2021 underlying NIM calculated by reducing average interest-earning assets approximately $30.2 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $5.2 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $53 million), resulting in an underlying NIM of approximately 3.10%; Fourth quarter 2020 underlying NIM calculated by reducing average interest-earning assets approximately $32.5 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $5.1 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $41 million), resulting in an underlying NIM of approximately 3.14%.
(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.
10
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, capital actions 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, misappropriation 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 (including pandemics); (43) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity; and (44) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases.
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.
# # #
11
Quarterly Financial Review for March 31, 2021
Table of Contents
Financial Highlights | 13-14 | ||||||||||
Consolidated Statements of Income | 15-16 | ||||||||||
Consolidated Balance Sheets | 17-18 | ||||||||||
Consolidated Statements of Changes in Equity | 19 | ||||||||||
Average Balance Sheet and Yield Analysis | 20 | ||||||||||
Summary of Loans and Leases | 21 | ||||||||||
Regulatory Capital | 22 | ||||||||||
Summary of Credit Loss Experience | 23 | ||||||||||
Asset Quality | 24 | ||||||||||
Non-GAAP Reconciliation | 25-27 | ||||||||||
Segment Presentation | 28 | ||||||||||
12
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||||||||
Financial Highlights | % / bps | ||||||||||||||||||||||||||||
$ in millions, except per share data | For the Three Months Ended | Change | |||||||||||||||||||||||||||
(unaudited) | March | December | March | ||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | |||||||||||||||||||||||||
Income Statement Data | |||||||||||||||||||||||||||||
Net interest income | $1,176 | $1,182 | $1,229 | (1%) | (4%) | ||||||||||||||||||||||||
Net interest income (FTE)(a) | 1,179 | 1,185 | 1,233 | (1%) | (4%) | ||||||||||||||||||||||||
Noninterest income | 749 | 787 | 671 | (5%) | 12% | ||||||||||||||||||||||||
Total revenue (FTE)(a) | 1,928 | 1,972 | 1,904 | (2%) | 1% | ||||||||||||||||||||||||
(Benefit from) provision for credit losses | (173) | (13) | 640 | NM | NM | ||||||||||||||||||||||||
Noninterest expense | 1,215 | 1,236 | 1,200 | (2%) | 1% | ||||||||||||||||||||||||
Net income | 694 | 604 | 46 | 15% | NM | ||||||||||||||||||||||||
Net income available to common shareholders | 674 | 569 | 29 | 18% | NM | ||||||||||||||||||||||||
Earnings Per Share Data | |||||||||||||||||||||||||||||
Net income allocated to common shareholders | $672 | $567 | $28 | 19% | NM | ||||||||||||||||||||||||
Average common shares outstanding (in thousands): | |||||||||||||||||||||||||||||
Basic | 714,433 | 715,482 | 713,556 | — | — | ||||||||||||||||||||||||
Diluted | 723,425 | 722,096 | 720,363 | — | — | ||||||||||||||||||||||||
Earnings per share, basic | $0.94 | $0.79 | $0.04 | 19% | NM | ||||||||||||||||||||||||
Earnings per share, diluted | 0.93 | 0.78 | 0.04 | 19% | NM | ||||||||||||||||||||||||
Common Share Data | |||||||||||||||||||||||||||||
Cash dividends per common share | $0.27 | $0.27 | $0.27 | — | — | ||||||||||||||||||||||||
Book value per share | 28.78 | 29.46 | 28.26 | (2%) | 2% | ||||||||||||||||||||||||
Market value per share | 37.45 | 27.57 | 14.85 | 36% | 152% | ||||||||||||||||||||||||
Common shares outstanding (in thousands) | 711,596 | 712,760 | 711,306 | — | — | ||||||||||||||||||||||||
Market capitalization | $26,649 | $19,651 | $10,563 | 36% | 152% | ||||||||||||||||||||||||
Financial Ratios | |||||||||||||||||||||||||||||
Return on average assets | 1.38 | % | 1.18 | % | 0.11 | % | 20 | 127 | |||||||||||||||||||||
Return on average common equity | 13.1 | % | 10.8 | % | 0.6 | % | 230 | 1,250 | |||||||||||||||||||||
Return on average tangible common equity(a) | 16.8 | % | 13.9 | % | 1.0 | % | 290 | 1,580 | |||||||||||||||||||||
Noninterest income as a percent of total revenue(a) | 39 | % | 40 | % | 35 | % | (100) | 400 | |||||||||||||||||||||
Dividend payout | 28.7 | % | 34.2 | % | 675.0 | % | (550) | NM | |||||||||||||||||||||
Average total Bancorp shareholders' equity as a percent of average assets | 11.26 | % | 11.34 | % | 12.63 | % | (8) | (137) | |||||||||||||||||||||
Tangible common equity(a) | 7.14 | % | 7.11 | % | 7.41 | % | 3 | (27) | |||||||||||||||||||||
Net interest margin (FTE)(a) | 2.62 | % | 2.58 | % | 3.28 | % | 4 | (66) | |||||||||||||||||||||
Efficiency (FTE)(a) | 63.0 | % | 62.7 | % | 63.0 | % | 30 | — | |||||||||||||||||||||
Effective tax rate | 21.4 | % | 19.1 | % | 22.6 | % | 230 | (120) | |||||||||||||||||||||
Credit Quality | |||||||||||||||||||||||||||||
Net losses charged-off | $71 | $118 | $122 | (40 | %) | (42 | %) | ||||||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.27 | % | 0.43 | % | 0.44 | % | (16) | (17) | |||||||||||||||||||||
ALLL as a percent of portfolio loans and leases | 2.03 | % | 2.25 | % | 1.99 | % | (22) | 4 | |||||||||||||||||||||
ACL as a percent of portfolio loans and leases(g) | 2.19 | % | 2.41 | % | 2.13 | % | (22) | 6 | |||||||||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO | 0.72 | % | 0.79 | % | 0.60 | % | (7) | 12 | |||||||||||||||||||||
Average Balances | |||||||||||||||||||||||||||||
Loans and leases, including held for sale | $113,701 | $111,464 | $112,180 | 2% | 1% | ||||||||||||||||||||||||
Securities and other short-term investments | 69,014 | 70,954 | 39,033 | (3%) | 77% | ||||||||||||||||||||||||
Assets | 203,836 | 203,930 | 171,871 | — | 19% | ||||||||||||||||||||||||
Transaction deposits(b) | 153,834 | 153,053 | 118,096 | 1% | 30% | ||||||||||||||||||||||||
Core deposits(c) | 156,879 | 156,326 | 123,177 | — | 27% | ||||||||||||||||||||||||
Wholesale funding(d) | 18,391 | 18,716 | 21,832 | (2%) | (16%) | ||||||||||||||||||||||||
Bancorp shareholders' equity | 22,952 | 23,126 | 21,713 | (1%) | 6% | ||||||||||||||||||||||||
Regulatory Capital Ratios(e) | |||||||||||||||||||||||||||||
CET1 capital(f) | 10.46 | % | 10.34 | % | 9.37 | % | 12 | 109 | |||||||||||||||||||||
Tier I risk-based capital(f) | 11.94 | % | 11.83 | % | 10.56 | % | 11 | 138 | |||||||||||||||||||||
Total risk-based capital(f) | 14.80 | % | 15.08 | % | 13.59 | % | (28) | 121 | |||||||||||||||||||||
Tier I leverage | 8.62 | % | 8.49 | % | 9.37 | % | 13 | (75) | |||||||||||||||||||||
Operations | |||||||||||||||||||||||||||||
Banking centers | 1,098 | 1,134 | 1,123 | (3%) | (2%) | ||||||||||||||||||||||||
ATMs | 2,383 | 2,397 | 2,464 | (1%) | (3%) | ||||||||||||||||||||||||
Full-time equivalent employees | 19,819 | 19,872 | 20,182 | — | (2%) |
(a)Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 25.
(b)Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.
(c)Includes transaction deposits plus other time deposits.
(d)Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt.
(e)Current period regulatory capital ratios are estimates.
(f)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(g)The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments.
13
Fifth Third Bancorp and Subsidiaries | ||||||||||||||||||||
Financial Highlights | ||||||||||||||||||||
$ in millions, except per share data | For the Three Months Ended | |||||||||||||||||||
(unaudited) | March | December | September | June | March | |||||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Net interest income | $1,176 | $1,182 | $1,170 | $1,200 | $1,229 | |||||||||||||||
Net interest income (FTE)(a) | 1,179 | 1,185 | 1,173 | 1,203 | 1,233 | |||||||||||||||
Noninterest income | 749 | 787 | 722 | 650 | 671 | |||||||||||||||
Total revenue (FTE)(a) | 1,928 | 1,972 | 1,895 | 1,853 | 1,904 | |||||||||||||||
(Benefit from) provision for credit losses | (173) | (13) | (15) | 485 | 640 | |||||||||||||||
Noninterest expense | 1,215 | 1,236 | 1,161 | 1,121 | 1,200 | |||||||||||||||
Net income | 694 | 604 | 581 | 195 | 46 | |||||||||||||||
Net income available to common shareholders | 674 | 569 | 562 | 163 | 29 | |||||||||||||||
Earnings Per Share Data | ||||||||||||||||||||
Net income allocated to common shareholders | $672 | $567 | $560 | $162 | $28 | |||||||||||||||
Average common shares outstanding (in thousands): | ||||||||||||||||||||
Basic | 714,433 | 715,482 | 715,102 | 714,767 | 713,556 | |||||||||||||||
Diluted | 723,425 | 722,096 | 718,894 | 717,572 | 720,363 | |||||||||||||||
Earnings per share, basic | $0.94 | $0.79 | $0.78 | $0.23 | $0.04 | |||||||||||||||
Earnings per share, diluted | 0.93 | 0.78 | 0.78 | 0.23 | 0.04 | |||||||||||||||
Common Share Data | ||||||||||||||||||||
Cash dividends per common share | $0.27 | $0.27 | $0.27 | $0.27 | $0.27 | |||||||||||||||
Book value per share | 28.78 | 29.46 | 29.25 | 28.88 | 28.26 | |||||||||||||||
Market value per share | 37.45 | 27.57 | 21.32 | 19.28 | 14.85 | |||||||||||||||
Common shares outstanding (in thousands) | 711,596 | 712,760 | 712,328 | 712,202 | 711,306 | |||||||||||||||
Market capitalization | $26,649 | $19,651 | $15,187 | $13,731 | $10,563 | |||||||||||||||
Financial Ratios | ||||||||||||||||||||
Return on average assets | 1.38 | % | 1.18 | % | 1.14 | % | 0.40 | % | 0.11 | % | ||||||||||
Return on average common equity | 13.1 | % | 10.8 | % | 10.7 | % | 3.2 | % | 0.6 | % | ||||||||||
Return on average tangible common equity(a) | 16.8 | % | 13.9 | % | 13.8 | % | 4.3 | % | 1.0 | % | ||||||||||
Noninterest income as a percent of total revenue(a) | 39 | % | 40 | % | 38 | % | 35 | % | 35 | % | ||||||||||
Dividend payout | 28.7 | % | 34.2 | % | 34.6 | % | 117.4 | % | 675.0 | % | ||||||||||
Average total Bancorp shareholders' equity as a percent of average assets | 11.26 | % | 11.34 | % | 11.33 | % | 11.30 | % | 12.63 | % | ||||||||||
Tangible common equity(a) | 7.14 | % | 7.11 | % | 6.99 | % | 6.77 | % | 7.41 | % | ||||||||||
Net interest margin (FTE)(a) | 2.62 | % | 2.58 | % | 2.58 | % | 2.75 | % | 3.28 | % | ||||||||||
Efficiency (FTE)(a) | 63.0 | % | 62.7 | % | 61.3 | % | 60.5 | % | 63.0 | % | ||||||||||
Effective tax rate | 21.4 | % | 19.1 | % | 22.1 | % | 19.9 | % | 22.6 | % | ||||||||||
Credit Quality | ||||||||||||||||||||
Net losses charged-off | $71 | $118 | $101 | $130 | $122 | |||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.27 | % | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | ||||||||||
ALLL as a percent of portfolio loans and leases | 2.03 | % | 2.25 | % | 2.32 | % | 2.34 | % | 1.99 | % | ||||||||||
ACL as a percent of portfolio loans and leases(g) | 2.19 | % | 2.41 | % | 2.49 | % | 2.50 | % | 2.13 | % | ||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO | 0.72 | % | 0.79 | % | 0.84 | % | 0.65 | % | 0.60 | % | ||||||||||
Average Balances | ||||||||||||||||||||
Loans and leases, including held for sale | $113,701 | $111,464 | $114,613 | $119,418 | $112,180 | |||||||||||||||
Securities and other short-term investments | 69,014 | 70,954 | 66,091 | 56,806 | 39,033 | |||||||||||||||
Assets | 203,836 | 203,930 | 202,533 | 198,387 | 171,871 | |||||||||||||||
Transaction deposits(b) | 153,834 | 153,053 | 148,567 | 142,079 | 118,096 | |||||||||||||||
Core deposits(c) | 156,879 | 156,326 | 152,278 | 146,500 | 123,177 | |||||||||||||||
Wholesale funding(d) | 18,391 | 18,716 | 21,762 | 23,739 | 21,832 | |||||||||||||||
Bancorp shareholders' equity | 22,952 | 23,126 | 22,952 | 22,421 | 21,713 | |||||||||||||||
Regulatory Capital Ratios(e) | ||||||||||||||||||||
CET1 capital(f) | 10.46 | % | 10.34 | % | 10.14 | % | 9.72 | % | 9.37 | % | ||||||||||
Tier I risk-based capital(f) | 11.94 | % | 11.83 | % | 11.64 | % | 10.96 | % | 10.56 | % | ||||||||||
Total risk-based capital(f) | 14.80 | % | 15.08 | % | 14.93 | % | 14.24 | % | 13.59 | % | ||||||||||
Tier I leverage | 8.62 | % | 8.49 | % | 8.37 | % | 8.16 | % | 9.37 | % | ||||||||||
Operations | ||||||||||||||||||||
Banking centers | 1,098 | 1,134 | 1,122 | 1,122 | 1,123 | |||||||||||||||
ATMs | 2,383 | 2,397 | 2,414 | 2,456 | 2,464 | |||||||||||||||
Full-time equivalent employees | 19,819 | 19,872 | 20,283 | 20,340 | 20,182 |
(a)Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 25.
(b)Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.
(c)Includes transaction deposits plus other time deposits.
(d)Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt.
(e)Current period regulatory capital ratios are estimates.
(f)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(g)The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments.
14
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||||||||||||||
$ in millions | For the Three Months Ended | % Change | |||||||||||||||||||||||||||
(unaudited) | March | December | March | ||||||||||||||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | |||||||||||||||||||||||||
Interest Income | |||||||||||||||||||||||||||||
Interest and fees on loans and leases | $1,030 | $1,028 | $1,235 | — | (17%) | ||||||||||||||||||||||||
Interest on securities | 264 | 278 | 283 | (5%) | (7%) | ||||||||||||||||||||||||
Interest on other short-term investments | 8 | 9 | 7 | (11%) | 14% | ||||||||||||||||||||||||
Total interest income | 1,302 | 1,315 | 1,525 | (1%) | (15%) | ||||||||||||||||||||||||
Interest Expense | |||||||||||||||||||||||||||||
Interest on deposits | 21 | 27 | 166 | (22%) | (87%) | ||||||||||||||||||||||||
Interest on federal funds purchased | — | — | 2 | NM | (100%) | ||||||||||||||||||||||||
Interest on other short-term borrowings | 1 | 1 | 6 | — | (83%) | ||||||||||||||||||||||||
Interest on long-term debt | 104 | 105 | 122 | (1%) | (15%) | ||||||||||||||||||||||||
Total interest expense | 126 | 133 | 296 | (5%) | (57%) | ||||||||||||||||||||||||
Net Interest Income | 1,176 | 1,182 | 1,229 | (1%) | (4%) | ||||||||||||||||||||||||
(Benefit from) provision for credit losses | (173) | (13) | 640 | NM | NM | ||||||||||||||||||||||||
Net Interest Income After Provision for Credit Losses | 1,349 | 1,195 | 589 | 13% | 129% | ||||||||||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||||||
Service charges on deposits | 144 | 146 | 148 | (1%) | (3%) | ||||||||||||||||||||||||
Commercial banking revenue | 153 | 141 | 124 | 9% | 23% | ||||||||||||||||||||||||
Mortgage banking net revenue | 85 | 25 | 120 | 240% | (29%) | ||||||||||||||||||||||||
Wealth and asset management revenue | 143 | 133 | 134 | 8% | 7% | ||||||||||||||||||||||||
Card and processing revenue | 94 | 92 | 86 | 2% | 9% | ||||||||||||||||||||||||
Leasing business revenue | 87 | 69 | 73 | 26% | 19% | ||||||||||||||||||||||||
Other noninterest income | 42 | 168 | 7 | (75%) | 500% | ||||||||||||||||||||||||
Securities gains (losses), net | 3 | 14 | (24) | (79%) | NM | ||||||||||||||||||||||||
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights | (2) | (1) | 3 | 100% | NM | ||||||||||||||||||||||||
Total noninterest income | 749 | 787 | 671 | (5%) | 12% | ||||||||||||||||||||||||
Noninterest Expense | |||||||||||||||||||||||||||||
Compensation and benefits | 706 | 679 | 647 | 4% | 9% | ||||||||||||||||||||||||
Net occupancy expense | 79 | 98 | 82 | (19%) | (4%) | ||||||||||||||||||||||||
Technology and communications | 93 | 90 | 93 | 3% | — | ||||||||||||||||||||||||
Equipment expense | 34 | 34 | 32 | — | 6% | ||||||||||||||||||||||||
Card and processing expense | 30 | 31 | 31 | (3%) | (3%) | ||||||||||||||||||||||||
Leasing business expense | 35 | 37 | 35 | (5%) | — | ||||||||||||||||||||||||
Marketing expense | 23 | 30 | 31 | (23%) | (26%) | ||||||||||||||||||||||||
Other noninterest expense | 215 | 237 | 249 | (9%) | (14%) | ||||||||||||||||||||||||
Total noninterest expense | 1,215 | 1,236 | 1,200 | (2%) | 1% | ||||||||||||||||||||||||
Income Before Income Taxes | 883 | 746 | 60 | 18% | NM | ||||||||||||||||||||||||
Applicable income tax expense | 189 | 142 | 14 | 33% | NM | ||||||||||||||||||||||||
Net Income | 694 | 604 | 46 | 15% | NM | ||||||||||||||||||||||||
Dividends on preferred stock | 20 | 35 | 17 | (43%) | 18% | ||||||||||||||||||||||||
Net Income Available to Common Shareholders | $674 | $569 | $29 | 18% | NM |
15
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||
(unaudited) | March | December | September | June | March | ||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||
Interest Income | |||||||||||||||||
Interest and fees on loans and leases | $1,030 | $1,028 | $1,047 | $1,115 | $1,235 | ||||||||||||
Interest on securities | 264 | 278 | 274 | 283 | 283 | ||||||||||||
Interest on other short-term investments | 8 | 9 | 8 | 5 | 7 | ||||||||||||
Total interest income | 1,302 | 1,315 | 1,329 | 1,403 | 1,525 | ||||||||||||
Interest Expense | |||||||||||||||||
Interest on deposits | 21 | 27 | 46 | 83 | 166 | ||||||||||||
Interest on federal funds purchased | — | — | — | — | 2 | ||||||||||||
Interest on other short-term borrowings | 1 | 1 | 5 | 2 | 6 | ||||||||||||
Interest on long-term debt | 104 | 105 | 108 | 118 | 122 | ||||||||||||
Total interest expense | 126 | 133 | 159 | 203 | 296 | ||||||||||||
Net Interest Income | 1,176 | 1,182 | 1,170 | 1,200 | 1,229 | ||||||||||||
(Benefit from) provision for credit losses | (173) | (13) | (15) | 485 | 640 | ||||||||||||
Net Interest Income After Provision for Credit Losses | 1,349 | 1,195 | 1,185 | 715 | 589 | ||||||||||||
Noninterest Income | |||||||||||||||||
Service charges on deposits | 144 | 146 | 144 | 122 | 148 | ||||||||||||
Commercial banking revenue | 153 | 141 | 125 | 137 | 124 | ||||||||||||
Mortgage banking net revenue | 85 | 25 | 76 | 99 | 120 | ||||||||||||
Wealth and asset management revenue | 143 | 133 | 132 | 120 | 134 | ||||||||||||
Card and processing revenue | 94 | 92 | 92 | 82 | 86 | ||||||||||||
Leasing business revenue | 87 | 69 | 77 | 57 | 73 | ||||||||||||
Other noninterest income | 42 | 168 | 26 | 12 | 7 | ||||||||||||
Securities gains (losses), net | 3 | 14 | 51 | 21 | (24) | ||||||||||||
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights | (2) | (1) | (1) | — | 3 | ||||||||||||
Total noninterest income | 749 | 787 | 722 | 650 | 671 | ||||||||||||
Noninterest Expense | |||||||||||||||||
Compensation and benefits | 706 | 679 | 637 | 627 | 647 | ||||||||||||
Net occupancy expense | 79 | 98 | 90 | 82 | 82 | ||||||||||||
Technology and communications | 93 | 90 | 89 | 90 | 93 | ||||||||||||
Equipment expense | 34 | 34 | 33 | 32 | 32 | ||||||||||||
Card and processing expense | 30 | 31 | 29 | 29 | 31 | ||||||||||||
Leasing business expense | 35 | 37 | 35 | 33 | 35 | ||||||||||||
Marketing expense | 23 | 30 | 23 | 20 | 31 | ||||||||||||
Other noninterest expense | 215 | 237 | 225 | 208 | 249 | ||||||||||||
Total noninterest expense | 1,215 | 1,236 | 1,161 | 1,121 | 1,200 | ||||||||||||
Income Before Income Taxes | 883 | 746 | 746 | 244 | 60 | ||||||||||||
Applicable income tax expense | 189 | 142 | 165 | 49 | 14 | ||||||||||||
Net Income | 694 | 604 | 581 | 195 | 46 | ||||||||||||
Dividends on preferred stock | 20 | 35 | 19 | 32 | 17 | ||||||||||||
Net Income Available to Common Shareholders | $674 | $569 | $562 | $163 | $29 |
16
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||
$ in millions, except per share data | As of | % Change | |||||||||||||||
(unaudited) | March | December | March | ||||||||||||||
2021 | 2020 | 2020 | Seq | Yr/Yr | |||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $3,122 | $3,147 | $3,282 | (1%) | (5%) | ||||||||||||
Other short-term investments | 34,187 | 33,399 | 6,319 | 2% | 441% | ||||||||||||
Available-for-sale debt and other securities(a) | 37,595 | 37,513 | 38,645 | — | (3%) | ||||||||||||
Held-to-maturity securities(b) | 10 | 11 | 17 | (9%) | (41%) | ||||||||||||
Trading debt securities | 728 | 560 | 433 | 30% | 68% | ||||||||||||
Equity securities | 315 | 313 | 459 | 1% | (31%) | ||||||||||||
Loans and leases held for sale | 5,477 | 4,741 | 1,630 | 16% | 236% | ||||||||||||
Portfolio loans and leases: | |||||||||||||||||
Commercial and industrial loans | 49,094 | 49,665 | 58,250 | (1%) | (16%) | ||||||||||||
Commercial mortgage loans | 10,481 | 10,602 | 11,160 | (1%) | (6%) | ||||||||||||
Commercial construction loans | 6,198 | 5,815 | 5,462 | 7% | 13% | ||||||||||||
Commercial leases | 3,255 | 2,915 | 3,123 | 12% | 4% | ||||||||||||
Total commercial loans and leases | 69,028 | 68,997 | 77,995 | — | (11%) | ||||||||||||
Residential mortgage loans | 15,776 | 15,928 | 16,701 | (1%) | (6%) | ||||||||||||
Home equity | 4,815 | 5,183 | 5,963 | (7%) | (19%) | ||||||||||||
Indirect secured consumer loans | 14,336 | 13,653 | 12,050 | 5% | 19% | ||||||||||||
Credit card | 1,810 | 2,007 | 2,417 | (10%) | (25%) | ||||||||||||
Other consumer loans | 3,090 | 3,014 | 2,911 | 3% | 6% | ||||||||||||
Total consumer loans | 39,827 | 39,785 | 40,042 | — | (1%) | ||||||||||||
Portfolio loans and leases | 108,855 | 108,782 | 118,037 | — | (8%) | ||||||||||||
Allowance for loan and lease losses | (2,208) | (2,453) | (2,348) | (10%) | (6%) | ||||||||||||
Portfolio loans and leases, net | 106,647 | 106,329 | 115,689 | — | (8%) | ||||||||||||
Bank premises and equipment | 2,072 | 2,088 | 2,009 | (1%) | 3% | ||||||||||||
Operating lease equipment | 718 | 777 | 819 | (8%) | (12%) | ||||||||||||
Goodwill | 4,259 | 4,258 | 4,261 | — | — | ||||||||||||
Intangible assets | 127 | 139 | 184 | (9%) | (31%) | ||||||||||||
Servicing rights | 784 | 656 | 685 | 20% | 14% | ||||||||||||
Other assets | 10,858 | 10,749 | 10,959 | 1% | (1%) | ||||||||||||
Total Assets | $206,899 | $204,680 | $185,391 | 1% | 12% | ||||||||||||
Liabilities | |||||||||||||||||
Deposits: | |||||||||||||||||
Demand | $61,363 | $57,711 | $39,533 | 6% | 55% | ||||||||||||
Interest checking | 45,582 | 47,270 | 44,520 | (4%) | 2% | ||||||||||||
Savings | 20,162 | 18,258 | 15,557 | 10% | 30% | ||||||||||||
Money market | 30,630 | 30,650 | 27,775 | — | 10% | ||||||||||||
Foreign office | 113 | 143 | 177 | (21%) | (36%) | ||||||||||||
Other time | 2,759 | 3,023 | 4,683 | (9%) | (41%) | ||||||||||||
Certificates $100,000 and over | 1,784 | 2,026 | 2,816 | (12%) | (37%) | ||||||||||||
Total deposits | 162,393 | 159,081 | 135,061 | 2% | 20% | ||||||||||||
Federal funds purchased | 302 | 300 | 1,625 | 1% | (81%) | ||||||||||||
Other short-term borrowings | 1,106 | 1,192 | 4,542 | (7%) | (76%) | ||||||||||||
Accrued taxes, interest and expenses | 1,879 | 2,614 | 2,432 | (28%) | (23%) | ||||||||||||
Other liabilities | 3,881 | 3,409 | 3,576 | 14% | 9% | ||||||||||||
Long-term debt | 14,743 | 14,973 | 16,282 | (2%) | (9%) | ||||||||||||
Total Liabilities | 184,304 | 181,569 | 163,518 | 2% | 13% | ||||||||||||
Equity | |||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | — | — | ||||||||||||
Preferred stock | 2,116 | 2,116 | 1,770 | — | 20% | ||||||||||||
Capital surplus | 3,592 | 3,635 | 3,597 | (1%) | — | ||||||||||||
Retained earnings | 18,863 | 18,384 | 17,677 | 3% | 7% | ||||||||||||
Accumulated other comprehensive income | 1,792 | 2,601 | 2,477 | (31%) | (28%) | ||||||||||||
Treasury stock | (5,819) | (5,676) | (5,699) | 3% | 2% | ||||||||||||
Total Equity | 22,595 | 23,111 | 21,873 | (2%) | 3% | ||||||||||||
Total Liabilities and Equity | $206,899 | $204,680 | $185,391 | 1% | 12% | ||||||||||||
(a) Amortized cost | $35,963 | $34,982 | $36,428 | 3% | (1%) | ||||||||||||
(b) Market values | 10 | 11 | 17 | (9%) | (41%) | ||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | |||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | — | — | ||||||||||||
Outstanding, excluding treasury | 711,596 | 712,760 | 711,306 | — | — | ||||||||||||
Treasury | 212,297 | 211,132 | 212,586 | 1 | % | — |
17
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||
$ in millions, except per share data | As of | ||||||||||||||||
(unaudited) | March | December | September | June | March | ||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $3,122 | $3,147 | $2,996 | $3,221 | $3,282 | ||||||||||||
Other short-term investments | 34,187 | 33,399 | 31,285 | 28,243 | 6,319 | ||||||||||||
Available-for-sale debt and other securities(a) | 37,595 | 37,513 | 37,425 | 38,599 | 38,645 | ||||||||||||
Held-to-maturity securities(b) | 10 | 11 | 15 | 16 | 17 | ||||||||||||
Trading debt securities | 728 | 560 | 704 | 526 | 433 | ||||||||||||
Equity securities | 315 | 313 | 277 | 273 | 459 | ||||||||||||
Loans and leases held for sale | 5,477 | 4,741 | 2,323 | 912 | 1,630 | ||||||||||||
Portfolio loans and leases: | |||||||||||||||||
Commercial and industrial loans | 49,094 | 49,665 | 51,695 | 55,661 | 58,250 | ||||||||||||
Commercial mortgage loans | 10,481 | 10,602 | 10,878 | 11,233 | 11,160 | ||||||||||||
Commercial construction loans | 6,198 | 5,815 | 5,656 | 5,479 | 5,462 | ||||||||||||
Commercial leases | 3,255 | 2,915 | 3,021 | 3,061 | 3,123 | ||||||||||||
Total commercial loans and leases | 69,028 | 68,997 | 71,250 | 75,434 | 77,995 | ||||||||||||
Residential mortgage loans | 15,776 | 15,928 | 16,158 | 16,457 | 16,701 | ||||||||||||
Home equity | 4,815 | 5,183 | 5,455 | 5,681 | 5,963 | ||||||||||||
Indirect secured consumer loans | 14,336 | 13,653 | 12,925 | 12,395 | 12,050 | ||||||||||||
Credit card | 1,810 | 2,007 | 2,087 | 2,211 | 2,417 | ||||||||||||
Other consumer loans | 3,090 | 3,014 | 2,856 | 2,875 | 2,911 | ||||||||||||
Total consumer loans | 39,827 | 39,785 | 39,481 | 39,619 | 40,042 | ||||||||||||
Portfolio loans and leases | 108,855 | 108,782 | 110,731 | 115,053 | 118,037 | ||||||||||||
Allowance for loan and lease losses | (2,208) | (2,453) | (2,574) | (2,696) | (2,348) | ||||||||||||
Portfolio loans and leases, net | 106,647 | 106,329 | 108,157 | 112,357 | 115,689 | ||||||||||||
Bank premises and equipment | 2,072 | 2,088 | 2,090 | 2,053 | 2,009 | ||||||||||||
Operating lease equipment | 718 | 777 | 818 | 809 | 819 | ||||||||||||
Goodwill | 4,259 | 4,258 | 4,261 | 4,261 | 4,261 | ||||||||||||
Intangible assets | 127 | 139 | 157 | 171 | 184 | ||||||||||||
Servicing rights | 784 | 656 | 660 | 676 | 685 | ||||||||||||
Other assets | 10,858 | 10,749 | 10,828 | 10,789 | 10,959 | ||||||||||||
Total Assets | $206,899 | $204,680 | $201,996 | $202,906 | $185,391 | ||||||||||||
Liabilities | |||||||||||||||||
Deposits: | |||||||||||||||||
Demand | $61,363 | $57,711 | $51,896 | $49,359 | $39,533 | ||||||||||||
Interest checking | 45,582 | 47,270 | 49,566 | 51,586 | 44,520 | ||||||||||||
Savings | 20,162 | 18,258 | 17,221 | 16,896 | 15,557 | ||||||||||||
Money market | 30,630 | 30,650 | 31,192 | 30,881 | 27,775 | ||||||||||||
Foreign office | 113 | 143 | 160 | 191 | 177 | ||||||||||||
Other time | 2,759 | 3,023 | 3,337 | 3,913 | 4,683 | ||||||||||||
Certificates $100,000 and over | 1,784 | 2,026 | 3,311 | 4,120 | 2,816 | ||||||||||||
Total deposits | 162,393 | 159,081 | 156,683 | 156,946 | 135,061 | ||||||||||||
Federal funds purchased | 302 | 300 | 251 | 262 | 1,625 | ||||||||||||
Other short-term borrowings | 1,106 | 1,192 | 1,196 | 1,285 | 4,542 | ||||||||||||
Accrued taxes, interest and expenses | 1,879 | 2,614 | 2,500 | 2,582 | 2,432 | ||||||||||||
Other liabilities | 3,881 | 3,409 | 3,292 | 3,169 | 3,576 | ||||||||||||
Long-term debt | 14,743 | 14,973 | 15,123 | 16,327 | 16,282 | ||||||||||||
Total Liabilities | 184,304 | 181,569 | 179,045 | 180,571 | 163,518 | ||||||||||||
Equity | |||||||||||||||||
Common stock(c) | 2,051 | 2,051 | 2,051 | 2,051 | 2,051 | ||||||||||||
Preferred stock | 2,116 | 2,116 | 2,116 | 1,770 | 1,770 | ||||||||||||
Capital surplus | 3,592 | 3,635 | 3,624 | 3,603 | 3,597 | ||||||||||||
Retained earnings | 18,863 | 18,384 | 18,010 | 17,643 | 17,677 | ||||||||||||
Accumulated other comprehensive income | 1,792 | 2,601 | 2,831 | 2,951 | 2,477 | ||||||||||||
Treasury stock | (5,819) | (5,676) | (5,681) | (5,683) | (5,699) | ||||||||||||
Total Equity | 22,595 | 23,111 | 22,951 | 22,335 | 21,873 | ||||||||||||
Total Liabilities and Equity | $206,899 | $204,680 | $201,996 | $202,906 | $185,391 | ||||||||||||
(a) Amortized cost | $35,963 | $34,982 | $34,693 | $35,780 | $36,428 | ||||||||||||
(b) Market values | 10 | 11 | 15 | 16 | 17 | ||||||||||||
(c) Common shares, stated value $2.22 per share (in thousands): | |||||||||||||||||
Authorized | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | ||||||||||||
Outstanding, excluding treasury | 711,596 | 712,760 | 712,328 | 712,202 | 711,306 | ||||||||||||
Treasury | 212,297 | 211,132 | 211,565 | 211,690 | 212,586 |
18
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Consolidated Statements of Changes in Equity | |||||||||||||||||||||||
$ in millions | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||||||
March | March | ||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Total Equity, Beginning | $23,111 | $21,203 | |||||||||||||||||||||
Net income | 694 | 46 | |||||||||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||
Change in unrealized (losses) gains: | |||||||||||||||||||||||
Available-for-sale debt securities | (689) | 882 | |||||||||||||||||||||
Qualifying cash flow hedges | (121) | 402 | |||||||||||||||||||||
Change in accumulated other comprehensive income related to employee benefit plans | 1 | 1 | |||||||||||||||||||||
Comprehensive (loss) income | (115) | 1,331 | |||||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||
Common stock | (195) | (195) | |||||||||||||||||||||
Preferred stock | (20) | (17) | |||||||||||||||||||||
Impact of stock transactions under stock compensation plans, net | (6) | 23 | |||||||||||||||||||||
Shares acquired for treasury | (180) | — | |||||||||||||||||||||
Impact of cumulative effect of change in accounting principles | — | (472) | |||||||||||||||||||||
Total Equity, Ending | $22,595 | $21,873 | |||||||||||||||||||||
19
Fifth Third Bancorp and Subsidiaries | ||||||||||||||||||||||||||
Average Balance Sheet and Yield/Rate Analysis | For the Three Months Ended | |||||||||||||||||||||||||
$ in millions | March | December | March | |||||||||||||||||||||||
(unaudited) | 2021 | 2020 | 2020 | |||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||
Balance | Yield/Rate | Balance | Yield/Rate | Balance | Yield/Rate | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||
Loans and leases: | ||||||||||||||||||||||||||
Commercial and industrial loans(a) | $49,715 | 3.60 | % | $50,437 | 3.50 | % | $51,693 | 4.25 | % | |||||||||||||||||
Commercial mortgage loans(a) | 10,534 | 3.06 | % | 10,731 | 3.17 | % | 11,020 | 4.44 | % | |||||||||||||||||
Commercial construction loans(a) | 6,039 | 3.20 | % | 5,820 | 3.19 | % | 5,132 | 4.82 | % | |||||||||||||||||
Commercial leases(a) | 3,130 | 3.17 | % | 2,932 | 3.33 | % | 3,201 | 3.46 | % | |||||||||||||||||
Total commercial loans and leases | 69,418 | 3.46 | % | 69,920 | 3.42 | % | 71,046 | 4.28 | % | |||||||||||||||||
Residential mortgage loans | 20,444 | 3.36 | % | 18,065 | 3.33 | % | 18,024 | 3.63 | % | |||||||||||||||||
Home equity | 5,009 | 3.58 | % | 5,315 | 3.64 | % | 6,006 | 4.71 | % | |||||||||||||||||
Indirect secured consumer loans | 13,955 | 3.58 | % | 13,272 | 3.70 | % | 11,809 | 4.09 | % | |||||||||||||||||
Credit card | 1,879 | 12.36 | % | 2,042 | 11.75 | % | 2,498 | 12.13 | % | |||||||||||||||||
Other consumer loans | 2,996 | 6.12 | % | 2,850 | 6.38 | % | 2,797 | 7.71 | % | |||||||||||||||||
Total consumer loans | 44,283 | 4.02 | % | 41,544 | 4.11 | % | 41,134 | 4.71 | % | |||||||||||||||||
Total loans and leases | 113,701 | 3.68 | % | 111,464 | 3.68 | % | 112,180 | 4.44 | % | |||||||||||||||||
Securities: | ||||||||||||||||||||||||||
Taxable securities | 35,764 | 2.97 | % | 35,506 | 3.10 | % | 35,973 | 3.15 | % | |||||||||||||||||
Tax exempt securities(a) | 533 | 2.26 | % | 459 | 2.21 | % | 162 | 3.04 | % | |||||||||||||||||
Other short-term investments | 32,717 | 0.10 | % | 34,989 | 0.10 | % | 2,898 | 0.97 | % | |||||||||||||||||
Total interest-earning assets | 182,715 | 2.90 | % | 182,418 | 2.87 | % | 151,213 | 4.07 | % | |||||||||||||||||
Cash and due from banks | 2,991 | 2,969 | 2,880 | |||||||||||||||||||||||
Other assets | 20,580 | 21,116 | 19,623 | |||||||||||||||||||||||
Allowance for loan and lease losses | (2,450) | (2,573) | (1,845) | |||||||||||||||||||||||
Total Assets | $203,836 | $203,930 | $171,871 | |||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Interest checking deposits | $45,568 | 0.07 | % | $47,664 | 0.08 | % | $40,298 | 0.75 | % | |||||||||||||||||
Savings deposits | 18,951 | 0.03 | % | 17,658 | 0.03 | % | 14,715 | 0.13 | % | |||||||||||||||||
Money market deposits | 30,601 | 0.05 | % | 31,205 | 0.06 | % | 27,109 | 0.72 | % | |||||||||||||||||
Foreign office deposits | 128 | 0.05 | % | 161 | 0.07 | % | 209 | 0.57 | % | |||||||||||||||||
Other time deposits | 3,045 | 0.44 | % | 3,273 | 0.58 | % | 5,081 | 1.56 | % | |||||||||||||||||
Total interest-bearing core deposits | 98,293 | 0.06 | % | 99,961 | 0.08 | % | 87,412 | 0.68 | % | |||||||||||||||||
Certificates $100,000 and over | 2,009 | 1.08 | % | 2,300 | 1.17 | % | 3,355 | 2.09 | % | |||||||||||||||||
Other deposits | — | — | — | — | 257 | 0.85 | % | |||||||||||||||||||
Federal funds purchased | 324 | 0.13 | % | 307 | 0.18 | % | 654 | 1.13 | % | |||||||||||||||||
Other short-term borrowings | 1,209 | 0.24 | % | 1,091 | 0.35 | % | 1,750 | 1.32 | % | |||||||||||||||||
Long-term debt | 14,849 | 2.83 | % | 15,018 | 2.76 | % | 15,816 | 3.12 | % | |||||||||||||||||
Total interest-bearing liabilities | 116,684 | 0.44 | % | 118,677 | 0.45 | % | 109,244 | 1.09 | % | |||||||||||||||||
Demand deposits | 58,586 | 56,365 | 35,765 | |||||||||||||||||||||||
Other liabilities | 5,614 | 5,762 | 5,149 | |||||||||||||||||||||||
Total Liabilities | 180,884 | 180,804 | 150,158 | |||||||||||||||||||||||
Total Equity | 22,952 | 23,126 | 21,713 | |||||||||||||||||||||||
Total Liabilities and Equity | $203,836 | $203,930 | $171,871 | |||||||||||||||||||||||
Ratios: | ||||||||||||||||||||||||||
Net interest margin (FTE)(b) | 2.62 | % | 2.58 | % | 3.28 | % | ||||||||||||||||||||
Net interest rate spread (FTE)(b) | 2.46 | % | 2.42 | % | 2.98 | % | ||||||||||||||||||||
Interest-bearing liabilities to interest-earning assets | 63.86 | % | 65.06 | % | 72.24 | % | ||||||||||||||||||||
(a) Average Yield/Rate of these assets are presented on an FTE basis. | ||||||||||||||||||||||||||
(b) Non-GAAP measure; see discussion and reconciliation of non-GAAP measures beginning on page 25. |
20
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Summary of Loans and Leases | |||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||
(unaudited) | March | December | September | June | March | ||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||
Average Portfolio Loans and Leases | |||||||||||||||||
Commercial loans and leases: | |||||||||||||||||
Commercial and industrial loans | $49,629 | $50,385 | $54,004 | $59,040 | $51,586 | ||||||||||||
Commercial mortgage loans | 10,532 | 10,727 | 11,069 | 11,222 | 11,019 | ||||||||||||
Commercial construction loans | 6,039 | 5,820 | 5,534 | 5,548 | 5,132 | ||||||||||||
Commercial leases | 3,114 | 2,932 | 2,966 | 3,056 | 3,201 | ||||||||||||
Total commercial loans and leases | 69,314 | 69,864 | 73,573 | 78,866 | 70,938 | ||||||||||||
Consumer loans: | |||||||||||||||||
Residential mortgage loans | 15,803 | 16,016 | 16,618 | 16,561 | 16,732 | ||||||||||||
Home equity | 5,009 | 5,315 | 5,581 | 5,820 | 6,006 | ||||||||||||
Indirect secured consumer loans | 13,955 | 13,272 | 12,599 | 12,124 | 11,809 | ||||||||||||
Credit card | 1,879 | 2,042 | 2,134 | 2,248 | 2,498 | ||||||||||||
Other consumer loans | 2,996 | 2,851 | 2,857 | 2,887 | 2,796 | ||||||||||||
Total consumer loans | 39,642 | 39,496 | 39,789 | 39,640 | 39,841 | ||||||||||||
Total average portfolio loans and leases | $108,956 | $109,360 | $113,362 | $118,506 | $110,779 | ||||||||||||
Average Loans and Leases Held for Sale | |||||||||||||||||
Average commercial loans and leases held for sale | $104 | $56 | $55 | $68 | $108 | ||||||||||||
Average consumer loans held for sale | 4,641 | 2,048 | 1,196 | 844 | 1,293 | ||||||||||||
Average loans and leases held for sale | $4,745 | $2,104 | $1,251 | $912 | $1,401 | ||||||||||||
End of Period Portfolio Loans and Leases | |||||||||||||||||
Commercial loans and leases: | |||||||||||||||||
Commercial and industrial loans | $49,094 | $49,665 | $51,695 | $55,661 | $58,250 | ||||||||||||
Commercial mortgage loans | 10,481 | 10,602 | 10,878 | 11,233 | 11,160 | ||||||||||||
Commercial construction loans | 6,198 | 5,815 | 5,656 | 5,479 | 5,462 | ||||||||||||
Commercial leases | 3,255 | 2,915 | 3,021 | 3,061 | 3,123 | ||||||||||||
Total commercial loans and leases | 69,028 | 68,997 | 71,250 | 75,434 | 77,995 | ||||||||||||
Consumer loans: | |||||||||||||||||
Residential mortgage loans | 15,776 | 15,928 | 16,158 | 16,457 | 16,701 | ||||||||||||
Home equity | 4,815 | 5,183 | 5,455 | 5,681 | 5,963 | ||||||||||||
Indirect secured consumer loans | 14,336 | 13,653 | 12,925 | 12,395 | 12,050 | ||||||||||||
Credit card | 1,810 | 2,007 | 2,087 | 2,211 | 2,417 | ||||||||||||
Other consumer loans | 3,090 | 3,014 | 2,856 | 2,875 | 2,911 | ||||||||||||
Total consumer loans | 39,827 | 39,785 | 39,481 | 39,619 | 40,042 | ||||||||||||
Total portfolio loans and leases | $108,855 | $108,782 | $110,731 | $115,053 | $118,037 | ||||||||||||
End of Period Loans and Leases Held for Sale | |||||||||||||||||
Commercial loans and leases held for sale | $80 | $276 | $59 | $72 | $65 | ||||||||||||
Consumer loans held for sale | 5,397 | 4,465 | 2,264 | 840 | 1,565 | ||||||||||||
Loans and leases held for sale | $5,477 | $4,741 | $2,323 | $912 | $1,630 | ||||||||||||
Operating lease equipment | $718 | $777 | $818 | $809 | $819 | ||||||||||||
Loans and Leases Serviced for Others(a) | |||||||||||||||||
Commercial and industrial loans | $1,011 | $979 | $903 | $967 | $947 | ||||||||||||
Commercial mortgage loans | 639 | 653 | 585 | 592 | 545 | ||||||||||||
Commercial construction loans | 592 | 601 | 623 | 536 | 462 | ||||||||||||
Commercial leases | 547 | 569 | 584 | 582 | 302 | ||||||||||||
Residential mortgage loans | 65,922 | 68,800 | 73,521 | 78,804 | 81,901 | ||||||||||||
Other consumer loans | 50 | 50 | 50 | 50 | 50 | ||||||||||||
Total loans and leases serviced for others | 68,761 | 71,652 | 76,266 | 81,531 | 84,207 | ||||||||||||
Total loans and leases serviced | $183,811 | $185,952 | $190,138 | $198,305 | $204,693 | ||||||||||||
(a) Fifth Third sells certain loans and leases and obtains servicing responsibilities. |
21
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Regulatory Capital | |||||||||||||||||||||||
$ in millions | As of | ||||||||||||||||||||||
(unaudited) | March | December | September | June | March | ||||||||||||||||||
2021(a) | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Regulatory Capital | |||||||||||||||||||||||
CET1 capital | $14,930 | $14,682 | $14,307 | $13,935 | $13,840 | ||||||||||||||||||
Additional tier I capital | 2,116 | 2,115 | 2,115 | 1,769 | 1,769 | ||||||||||||||||||
Tier I capital | 17,046 | 16,797 | 16,422 | 15,704 | 15,609 | ||||||||||||||||||
Tier II capital | 4,077 | 4,615 | 4,645 | 4,703 | 4,472 | ||||||||||||||||||
Total regulatory capital | $21,123 | $21,412 | $21,067 | $20,407 | $20,081 | ||||||||||||||||||
Risk-weighted assets(b) | $142,758 | $141,974 | $141,083 | $143,322 | $147,756 | ||||||||||||||||||
Ratios | |||||||||||||||||||||||
Average total Bancorp shareholders' equity as a percent of average assets | 11.26 | % | 11.34 | % | 11.33 | % | 11.30 | % | 12.63 | % | |||||||||||||
Regulatory Capital Ratios | |||||||||||||||||||||||
Fifth Third Bancorp | |||||||||||||||||||||||
CET1 capital(b) | 10.46 | % | 10.34 | % | 10.14 | % | 9.72 | % | 9.37 | % | |||||||||||||
Tier I risk-based capital(b) | 11.94 | % | 11.83 | % | 11.64 | % | 10.96 | % | 10.56 | % | |||||||||||||
Total risk-based capital(b) | 14.80 | % | 15.08 | % | 14.93 | % | 14.24 | % | 13.59 | % | |||||||||||||
Tier I leverage | 8.62 | % | 8.49 | % | 8.37 | % | 8.16 | % | 9.37 | % | |||||||||||||
Fifth Third Bank | |||||||||||||||||||||||
Tier I risk-based capital(b) | 12.70 | % | 12.28 | % | 12.25 | % | 11.76 | % | 11.36 | % | |||||||||||||
Total risk-based capital(b) | 14.41 | % | 14.17 | % | 14.14 | % | 13.65 | % | 13.17 | % | |||||||||||||
Tier I leverage | 9.19 | % | 8.85 | % | 8.85 | % | 8.80 | % | 10.16 | % |
(a)Current period regulatory capital data and ratios are estimated.
(b)Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
22
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||
Summary of Credit Loss Experience | |||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||
(unaudited) | March | December | September | June | March | ||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||
Average portfolio loans and leases: | |||||||||||||||||
Commercial and industrial loans | $49,629 | $50,385 | $54,004 | $59,040 | $51,586 | ||||||||||||
Commercial mortgage loans | 10,532 | 10,727 | 11,069 | 11,222 | 11,019 | ||||||||||||
Commercial construction loans | 6,039 | 5,820 | 5,534 | 5,548 | 5,132 | ||||||||||||
Commercial leases | 3,114 | 2,932 | 2,966 | 3,056 | 3,201 | ||||||||||||
Total commercial loans and leases | 69,314 | 69,864 | 73,573 | 78,866 | 70,938 | ||||||||||||
Residential mortgage loans | 15,803 | 16,016 | 16,618 | 16,561 | 16,732 | ||||||||||||
Home equity | 5,009 | 5,315 | 5,581 | 5,820 | 6,006 | ||||||||||||
Indirect secured consumer loans | 13,955 | 13,272 | 12,599 | 12,124 | 11,809 | ||||||||||||
Credit card | 1,879 | 2,042 | 2,134 | 2,248 | 2,498 | ||||||||||||
Other consumer loans | 2,996 | 2,851 | 2,857 | 2,887 | 2,796 | ||||||||||||
Total consumer loans | 39,642 | 39,496 | 39,789 | 39,640 | 39,841 | ||||||||||||
Total average portfolio loans and leases | $108,956 | $109,360 | $113,362 | $118,506 | $110,779 | ||||||||||||
Losses charged-off: | |||||||||||||||||
Commercial and industrial loans | ($32) | ($44) | ($45) | ($68) | ($54) | ||||||||||||
Commercial mortgage loans | (3) | (31) | (11) | (2) | (2) | ||||||||||||
Commercial leases | — | — | (10) | (11) | (5) | ||||||||||||
Total commercial loans and leases | (35) | (75) | (66) | (81) | (61) | ||||||||||||
Residential mortgage loans | (1) | (4) | (1) | (2) | (2) | ||||||||||||
Home equity | (3) | (3) | (4) | (3) | (5) | ||||||||||||
Indirect secured consumer loans | (18) | (19) | (11) | (15) | (21) | ||||||||||||
Credit card | (31) | (31) | (34) | (40) | (42) | ||||||||||||
Other consumer loans | (21) | (22) | (19) | (22) | (28) | ||||||||||||
Total consumer loans | (74) | (79) | (69) | (82) | (98) | ||||||||||||
Total losses charged-off | ($109) | ($154) | ($135) | ($163) | ($159) | ||||||||||||
Recoveries of losses previously charged-off: | |||||||||||||||||
Commercial and industrial loans | $5 | $3 | $3 | $3 | $4 | ||||||||||||
Commercial mortgage loans | 1 | 1 | — | — | — | ||||||||||||
Commercial leases | 1 | 1 | 2 | — | — | ||||||||||||
Total commercial loans and leases | 7 | 5 | 5 | 3 | 4 | ||||||||||||
Residential mortgage loans | 1 | 2 | 2 | 1 | 1 | ||||||||||||
Home equity | 3 | 3 | 3 | 2 | 2 | ||||||||||||
Indirect secured consumer loans | 9 | 10 | 8 | 8 | 9 | ||||||||||||
Credit card | 6 | 6 | 5 | 6 | 6 | ||||||||||||
Other consumer loans | 12 | 10 | 11 | 13 | 15 | ||||||||||||
Total consumer loans | 31 | 31 | 29 | 30 | 33 | ||||||||||||
Total recoveries of losses previously charged-off | $38 | $36 | $34 | $33 | $37 | ||||||||||||
Net losses charged-off: | |||||||||||||||||
Commercial and industrial loans | ($27) | ($41) | ($42) | ($65) | ($50) | ||||||||||||
Commercial mortgage loans | (2) | (30) | (11) | (2) | (2) | ||||||||||||
Commercial leases | 1 | 1 | (8) | (11) | (5) | ||||||||||||
Total commercial loans and leases | (28) | (70) | (61) | (78) | (57) | ||||||||||||
Residential mortgage loans | — | (2) | 1 | (1) | (1) | ||||||||||||
Home equity | — | — | (1) | (1) | (3) | ||||||||||||
Indirect secured consumer loans | (9) | (9) | (3) | (7) | (12) | ||||||||||||
Credit card | (25) | (25) | (29) | (34) | (36) | ||||||||||||
Other consumer loans | (9) | (12) | (8) | (9) | (13) | ||||||||||||
Total consumer loans | (43) | (48) | (40) | (52) | (65) | ||||||||||||
Total net losses charged-off | ($71) | ($118) | ($101) | ($130) | ($122) | ||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized): | |||||||||||||||||
Commercial and industrial loans | 0.22 | % | 0.33 | % | 0.31 | % | 0.45 | % | 0.39 | % | |||||||
Commercial mortgage loans | 0.09 | % | 1.13 | % | 0.39 | % | 0.07 | % | 0.06 | % | |||||||
Commercial leases | (0.09 | %) | (0.15 | %) | 1.09 | % | 1.47 | % | 0.60 | % | |||||||
Total commercial loans and leases | 0.17 | % | 0.40 | % | 0.33 | % | 0.40 | % | 0.32 | % | |||||||
Residential mortgage loans | (0.01 | %) | 0.04 | % | (0.02 | %) | 0.02 | % | 0.02 | % | |||||||
Home equity | 0.01 | % | — | 0.07 | % | 0.07 | % | 0.17 | % | ||||||||
Indirect secured consumer loans | 0.25 | % | 0.28 | % | 0.11 | % | 0.24 | % | 0.43 | % | |||||||
Credit card | 5.50 | % | 4.95 | % | 5.44 | % | 6.17 | % | 5.87 | % | |||||||
Other consumer loans | 1.17 | % | 1.50 | % | 1.05 | % | 1.17 | % | 1.87 | % | |||||||
Total consumer loans | 0.43 | % | 0.47 | % | 0.40 | % | 0.52 | % | 0.66 | % | |||||||
Total net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.27 | % | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % |
23
Fifth Third Bancorp and Subsidiaries | ||||||||||||||||||||
Asset Quality | ||||||||||||||||||||
$ in millions | For the Three Months Ended | |||||||||||||||||||
(unaudited) | March | December | September | June | March | |||||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||
Allowance for Credit Losses | ||||||||||||||||||||
Allowance for loan and lease losses, beginning | $2,453 | $2,574 | $2,696 | $2,348 | $1,202 | |||||||||||||||
Impact of CECL adoption | — | — | — | — | 643 | |||||||||||||||
Total net losses charged-off | (71) | (118) | (101) | (130) | (122) | |||||||||||||||
(Benefit from) provision for loan and lease losses | (174) | (3) | (21) | 478 | 625 | |||||||||||||||
Allowance for loan and lease losses, ending | $2,208 | $2,453 | $2,574 | $2,696 | $2,348 | |||||||||||||||
Reserve for unfunded commitments, beginning | $172 | $182 | $176 | $169 | $144 | |||||||||||||||
Impact of CECL adoption | — | — | — | — | 10 | |||||||||||||||
Provision for (benefit from) the reserve for unfunded commitments | 1 | (10) | 6 | 7 | 15 | |||||||||||||||
Reserve for unfunded commitments, ending | $173 | $172 | $182 | $176 | $169 | |||||||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan and lease losses | $2,208 | $2,453 | $2,574 | $2,696 | $2,348 | |||||||||||||||
Reserve for unfunded commitments | 173 | 172 | 182 | 176 | 169 | |||||||||||||||
Total allowance for credit losses | $2,381 | $2,625 | $2,756 | $2,872 | $2,517 | |||||||||||||||
As of | ||||||||||||||||||||
March | December | September | June | March | ||||||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||
Nonperforming Assets and Delinquent Loans | ||||||||||||||||||||
Nonaccrual portfolio loans and leases: | ||||||||||||||||||||
Commercial and industrial loans | $197 | $230 | $266 | $94 | $100 | |||||||||||||||
Commercial mortgage loans | 50 | 82 | 99 | 89 | 83 | |||||||||||||||
Commercial construction loans | 1 | — | — | — | 1 | |||||||||||||||
Commercial leases | 6 | 7 | 16 | 22 | 18 | |||||||||||||||
Residential mortgage loans | 22 | 25 | 30 | 14 | 12 | |||||||||||||||
Home equity | 55 | 52 | 50 | 52 | 54 | |||||||||||||||
Indirect secured consumer loans | 6 | 9 | 8 | 5 | 1 | |||||||||||||||
Other consumer loans | 2 | 2 | 3 | 2 | 2 | |||||||||||||||
Total nonaccrual portfolio loans and leases (excludes restructured loans) | 339 | 407 | 472 | 278 | 271 | |||||||||||||||
Nonaccrual restructured portfolio commercial loans and leases | 255 | 319 | 307 | 282 | 243 | |||||||||||||||
Nonaccrual restructured portfolio consumer loans and leases(c) | 147 | 108 | 112 | 140 | 133 | |||||||||||||||
Total nonaccrual portfolio loans and leases | 741 | 834 | 891 | 700 | 647 | |||||||||||||||
Repossessed property | 7 | 9 | 7 | 4 | 10 | |||||||||||||||
OREO | 35 | 21 | 33 | 43 | 52 | |||||||||||||||
Total nonperforming portfolio loans and leases and OREO | 783 | 864 | 931 | 747 | 709 | |||||||||||||||
Nonaccrual loans held for sale | 2 | 5 | 10 | 1 | — | |||||||||||||||
Nonaccrual restructured loans held for sale | 20 | 1 | 1 | 1 | 1 | |||||||||||||||
Total nonperforming assets | $805 | $870 | $942 | $749 | $710 | |||||||||||||||
Restructured portfolio consumer loans and leases (accrual) | $768 | $796 | $818 | $963 | $976 | |||||||||||||||
Restructured portfolio commercial loans and leases (accrual) | $81 | $92 | $123 | $119 | $63 | |||||||||||||||
Loans and leases 90 days past due (accrual): | ||||||||||||||||||||
Commercial and industrial loans | $8 | $39 | $4 | $10 | $13 | |||||||||||||||
Commercial mortgage loans | 7 | 8 | 26 | 23 | 20 | |||||||||||||||
Commercial construction loans | 1 | — | — | — | — | |||||||||||||||
Commercial leases | — | 1 | 2 | — | 10 | |||||||||||||||
Total commercial loans and leases | 16 | 48 | 32 | 33 | 43 | |||||||||||||||
Residential mortgage loans(c) | 73 | 70 | 67 | 54 | 54 | |||||||||||||||
Home equity | 1 | 2 | 2 | — | — | |||||||||||||||
Indirect secured consumer loans | 8 | 10 | 10 | 12 | 11 | |||||||||||||||
Credit card | 25 | 31 | 27 | 36 | 42 | |||||||||||||||
Other consumer loans | 1 | 2 | 1 | 1 | 1 | |||||||||||||||
Total consumer loans | 108 | 115 | 107 | 103 | 108 | |||||||||||||||
Total loans and leases 90 days past due (accrual)(b) | $124 | $163 | $139 | $136 | $151 | |||||||||||||||
Ratios | ||||||||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases (annualized) | 0.27 | % | 0.43 | % | 0.35 | % | 0.44 | % | 0.44 | % | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
As a percent of portfolio loans and leases | 2.19 | % | 2.41 | % | 2.49 | % | 2.50 | % | 2.13 | % | ||||||||||
As a percent of nonperforming portfolio loans and leases(a) | 321 | % | 315 | % | 309 | % | 410 | % | 389 | % | ||||||||||
As a percent of nonperforming portfolio assets(a) | 304 | % | 304 | % | 296 | % | 385 | % | 355 | % | ||||||||||
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(a) | 0.68 | % | 0.77 | % | 0.80 | % | 0.61 | % | 0.55 | % | ||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(a) | 0.72 | % | 0.79 | % | 0.84 | % | 0.65 | % | 0.60 | % | ||||||||||
Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property | 0.70 | % | 0.77 | % | 0.83 | % | 0.65 | % | 0.59 | % | ||||||||||
(a) Excludes nonaccrual loans held for sale. | ||||||||||||||||||||
(b) Excludes loans held for sale. | ||||||||||||||||||||
(c) Excludes government guaranteed residential mortgage loans. |
24
Use of Non-GAAP Financial Measures
In addition to GAAP measures, management considers various non-GAAP measures when evaluating the performance of the business, including: “net interest income (FTE),” “interest income (FTE),” “net interest margin (FTE),” “net interest rate spread (FTE),” “income before income taxes (FTE),” “tangible net income available to common shareholders,” “average tangible common equity,” “return on average tangible common equity,” “tangible common equity (excluding AOCI),” “tangible common equity (including AOCI),” “tangible equity,” “tangible book value per share,” “adjusted noninterest income,” “noninterest income excluding certain items,” “adjusted noninterest expense,” “noninterest expense excluding certain items,” “pre-provision net revenue,” “adjusted efficiency ratio,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” “adjusted return on average tangible common equity, excluding accumulated other comprehensive income,” “adjusted net interest margin,” “adjusted pre-provision net revenue,” “adjusted return on average assets,” “efficiency ratio (FTE),” “total revenue (FTE),” "noninterest income as a percent of total revenue", and certain ratios derived from these measures. The Bancorp believes these non-GAAP measures provide useful information to investors because these are among the measures used by the Fifth Third management team to evaluate operating performance and to make day-to-day operating decisions.
The FTE basis adjusts for the tax-favored status of income from certain loans and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income and net interest margin as it provides a relevant comparison between taxable and non-taxable amounts.
The Bancorp believes tangible net income available to common shareholders, average tangible common equity, tangible common equity (excluding AOCI), tangible common equity (including AOCI), tangible equity, tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of the business without the impacts of intangible items, whether acquired or created internally, in a manner comparable to other companies in the industry who present similar measures.
The Bancorp believes noninterest income, noninterest expense, net interest income, net interest margin, pre-provision net revenue, efficiency ratio, noninterest income as a percent of total revenue, return on average common equity, return on average tangible common equity, and return on average assets are important measures that adjust for significant, unusual, or large transactions that may occur in a reporting period which management does not consider indicative of ongoing financial performance and enhances comparability of results with prior periods.
The Bancorp believes noninterest income excluding certain items and noninterest expense excluding certain items are important measures that adjust for certain components that are prone to significant period-to-period changes in order to facilitate the explanation of variances in the noninterest income and noninterest expense line items.
Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding AOCI), in addition to capital ratios defined by U.S. banking agencies. These calculations are intended to complement the capital ratios defined by U.S. banking agencies for both absolute and comparative purposes. These ratios are not formally defined by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to be non-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding AOCI on certain assets and liabilities enables investors and others to assess the Bancorp’s use of equity without the effects of changes in AOCI, some of which are uncertain; providing the tangible common equity ratio including AOCI enables investors and others to assess the Bancorp’s use of equity if components of AOCI, such as unrealized gains or losses, were to be monetized.
Please note that although non-GAAP financial measures provide useful insight, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures.
Please see reconciliations of all historical non-GAAP measures used in this release to the most directly comparable GAAP measures, beginning on the following page.
25
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Non-GAAP Reconciliation | |||||||||||||||||||||||
$ and shares in millions | As of and For the Three Months Ended | ||||||||||||||||||||||
(unaudited) | March | December | September | June | March | ||||||||||||||||||
2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Net interest income | $1,176 | $1,182 | $1,170 | $1,200 | $1,229 | ||||||||||||||||||
Add: Taxable equivalent adjustment | 3 | 3 | 3 | 3 | 4 | ||||||||||||||||||
Net interest income (FTE) (a) | 1,179 | 1,185 | 1,173 | 1,203 | 1,233 | ||||||||||||||||||
Net interest income (annualized) (b) | 4,769 | 4,702 | 4,655 | 4,826 | 4,943 | ||||||||||||||||||
Net interest income (FTE) (annualized) (c) | 4,782 | 4,714 | 4,667 | 4,838 | 4,959 | ||||||||||||||||||
Interest income | 1,302 | 1,315 | 1,329 | 1,403 | 1,525 | ||||||||||||||||||
Add: Taxable equivalent adjustment | 3 | 3 | 3 | 3 | 4 | ||||||||||||||||||
Interest income (FTE) | 1,305 | 1,318 | 1,332 | 1,406 | 1,529 | ||||||||||||||||||
Interest income (FTE) (annualized) (d) | 5,293 | 5,243 | 5,299 | 5,655 | 6,150 | ||||||||||||||||||
Interest expense (annualized) (e) | 511 | 529 | 633 | 816 | 1,191 | ||||||||||||||||||
Average interest-earning assets (f) | 182,715 | 182,418 | 180,704 | 176,224 | 151,213 | ||||||||||||||||||
Average interest-bearing liabilities (g) | 116,684 | 118,677 | 123,626 | 124,478 | 109,244 | ||||||||||||||||||
Net interest margin (b) / (f) | 2.61 | % | 2.58 | % | 2.58 | % | 2.74 | % | 3.27 | % | |||||||||||||
Net interest margin (FTE) (c) / (f) | 2.62 | % | 2.58 | % | 2.58 | % | 2.75 | % | 3.28 | % | |||||||||||||
Net interest rate spread (FTE) (d) / (f) - (e) / (g) | 2.46 | % | 2.42 | % | 2.42 | % | 2.55 | % | 2.98 | % | |||||||||||||
Income before income taxes | $883 | $746 | $746 | $244 | $60 | ||||||||||||||||||
Add: Taxable equivalent adjustment | 3 | 3 | 3 | 3 | 4 | ||||||||||||||||||
Income before income taxes (FTE) | $886 | $749 | $749 | $247 | $64 | ||||||||||||||||||
Net income available to common shareholders | $674 | $569 | $562 | $163 | $29 | ||||||||||||||||||
Add: Intangible amortization, net of tax | 9 | 9 | 9 | 9 | 10 | ||||||||||||||||||
Tangible net income available to common shareholders (h) | 683 | 578 | 571 | 172 | 39 | ||||||||||||||||||
Tangible net income available to common shareholders (annualized) (i) | 2,770 | 2,299 | 2,272 | 692 | 157 | ||||||||||||||||||
Average Bancorp shareholders' equity | 22,952 | 23,126 | 22,952 | 22,421 | 21,713 | ||||||||||||||||||
Less: | Average preferred stock | (2,116) | (2,116) | (2,007) | (1,770) | (1,770) | |||||||||||||||||
Average goodwill | (4,259) | (4,261) | (4,261) | (4,261) | (4,251) | ||||||||||||||||||
Average intangible assets | (133) | (151) | (164) | (178) | (193) | ||||||||||||||||||
Average tangible common equity, including AOCI (j) | 16,444 | 16,598 | 16,520 | 16,212 | 15,499 | ||||||||||||||||||
Less: | Average AOCI | (2,231) | (2,623) | (2,919) | (2,702) | (1,825) | |||||||||||||||||
Average tangible common equity, excluding AOCI (k) | 14,213 | 13,975 | 13,601 | 13,510 | 13,674 | ||||||||||||||||||
Total Bancorp shareholders' equity | 22,595 | 23,111 | 22,951 | 22,335 | 21,873 | ||||||||||||||||||
Less: | Preferred stock | (2,116) | (2,116) | (2,116) | (1,770) | (1,770) | |||||||||||||||||
Goodwill | (4,259) | (4,258) | (4,261) | (4,261) | (4,261) | ||||||||||||||||||
Intangible assets | (127) | (139) | (157) | (171) | (184) | ||||||||||||||||||
Tangible common equity, including AOCI (l) | 16,093 | 16,598 | 16,417 | 16,133 | 15,658 | ||||||||||||||||||
Less: | AOCI | (1,792) | (2,601) | (2,831) | (2,951) | (2,477) | |||||||||||||||||
Tangible common equity, excluding AOCI (m) | 14,301 | 13,997 | 13,586 | 13,182 | 13,181 | ||||||||||||||||||
Add: | Preferred stock | 2,116 | 2,116 | 2,116 | 1,770 | 1,770 | |||||||||||||||||
Tangible equity (n) | 16,417 | 16,113 | 15,702 | 14,952 | 14,951 | ||||||||||||||||||
Total assets | 206,899 | 204,680 | 201,996 | 202,906 | 185,391 | ||||||||||||||||||
Less: | Goodwill | (4,259) | (4,258) | (4,261) | (4,261) | (4,261) | |||||||||||||||||
Intangible assets | (127) | (139) | (157) | (171) | (184) | ||||||||||||||||||
Tangible assets, including AOCI (o) | 202,513 | 200,283 | 197,578 | 198,474 | 180,946 | ||||||||||||||||||
Less: | AOCI, before tax | (2,268) | (3,292) | (3,584) | (3,735) | (3,135) | |||||||||||||||||
Tangible assets, excluding AOCI (p) | $200,245 | $196,991 | $193,994 | $194,739 | $177,811 | ||||||||||||||||||
Common shares outstanding (q) | 712 | 713 | 712 | 712 | 711 | ||||||||||||||||||
Tangible equity (n) / (p) | 8.20 | % | 8.18 | % | 8.09 | % | 7.68 | % | 8.41 | % | |||||||||||||
Tangible common equity (excluding AOCI) (m) / (p) | 7.14 | % | 7.11 | % | 6.99 | % | 6.77 | % | 7.41 | % | |||||||||||||
Tangible common equity (including AOCI) (l) / (o) | 7.95 | % | 8.29 | % | 8.31 | % | 8.13 | % | 8.65 | % | |||||||||||||
Tangible book value per share (l) / (q) | $22.60 | $23.28 | $23.06 | $22.66 | $22.02 |
26
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Non-GAAP Reconciliation | |||||||||||||||||||||||
$ in millions | For the Three Months Ended | ||||||||||||||||||||||
(unaudited) | March | December | March | ||||||||||||||||||||
2021 | 2020 | 2020 | |||||||||||||||||||||
Net income (r) | $694 | $604 | $46 | ||||||||||||||||||||
Net income (annualized) (s) | 2,815 | 2,403 | 185 | ||||||||||||||||||||
Adjustments (pre-tax items)(a) | |||||||||||||||||||||||
Valuation of Visa total return swap | 13 | 30 | 22 | ||||||||||||||||||||
Net business acquisition, disposition, and merger-related charges | - | 27 | 7 | ||||||||||||||||||||
Fifth Third Foundation contribution | - | 25 | - | ||||||||||||||||||||
Branch and non-branch real estate charges | - | 21 | - | ||||||||||||||||||||
Net impairment of private equity investments | - | - | 15 | ||||||||||||||||||||
Adjustments, after-tax (t)(a) | 10 | 79 | 34 | ||||||||||||||||||||
Adjustments (tax related items) | |||||||||||||||||||||||
State tax adjustments | - | (13) | - | ||||||||||||||||||||
Adjustments (tax related items) (u) | - | (13) | - | ||||||||||||||||||||
Noninterest income (v) | 749 | 787 | 671 | ||||||||||||||||||||
Valuation of Visa total return swap | 13 | 30 | 22 | ||||||||||||||||||||
Net business disposition charges | - | 11 | - | ||||||||||||||||||||
Net impairment of private equity investments | - | - | 15 | ||||||||||||||||||||
Adjusted noninterest income (w) | 762 | 828 | 708 | ||||||||||||||||||||
Noninterest expense (x) | 1,215 | 1,236 | 1,200 | ||||||||||||||||||||
Fifth Third Foundation contribution | - | (25) | - | ||||||||||||||||||||
Branch and non-branch real estate charges | - | (21) | - | ||||||||||||||||||||
Business acquisition and merger-related charges | - | (16) | (7) | ||||||||||||||||||||
Adjusted noninterest expense (y) | 1,215 | 1,174 | 1,193 | ||||||||||||||||||||
Adjusted net income (r) + (t) + (u) | 704 | 670 | 80 | ||||||||||||||||||||
Adjusted net income (annualized) (z) | 2,855 | 2,665 | 322 | ||||||||||||||||||||
Adjusted tangible net income available to common shareholders (h) + (t) + (u) | 693 | 644 | 73 | ||||||||||||||||||||
Adjusted tangible net income available to common shareholders (annualized) (aa) | 2,811 | 2,562 | 294 | ||||||||||||||||||||
Average assets (ab) | $203,836 | $203,930 | $171,871 | ||||||||||||||||||||
Return on average tangible common equity (i) / (j) | 16.8 | % | 13.9 | % | 1.0 | % | |||||||||||||||||
Return on average tangible common equity excluding AOCI (i) / (k) | 19.5 | % | 16.5 | % | 1.1 | % | |||||||||||||||||
Adjusted return on average tangible common equity, including AOCI (aa) / (j) | 17.1 | % | 15.4 | % | 1.9 | % | |||||||||||||||||
Adjusted return on average tangible common equity, excluding AOCI (aa) / (k) | 19.8 | % | 18.3 | % | 2.2 | % | |||||||||||||||||
Return on average assets (s) / (ab) | 1.38 | % | 1.18 | % | 0.11 | % | |||||||||||||||||
Adjusted return on average assets (z) / (ab) | 1.40 | % | 1.31 | % | 0.19 | % | |||||||||||||||||
Efficiency ratio (x) / [(a) + (v)] | 63.0 | % | 62.7 | % | 63.0 | % | |||||||||||||||||
Adjusted efficiency ratio (y) / [(a) + (w)] | 62.6 | % | 58.3 | % | 61.5 | % | |||||||||||||||||
Total revenue (FTE) (a) + (v) | $1,928 | $1,972 | $1,904 | ||||||||||||||||||||
Pre-provision net revenue (PPNR) (a) + (v) - (x) | $713 | $736 | $704 | ||||||||||||||||||||
Adjusted pre-provision net revenue (PPNR) (a) + (w) - (y) | $726 | $839 | $748 | ||||||||||||||||||||
(a) Assumes a 23% tax rate | |||||||||||||||||||||||
27
Fifth Third Bancorp and Subsidiaries | |||||||||||||||||||||||
Segment Presentation | |||||||||||||||||||||||
$ in millions | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
For the three months ended March 31, 2021 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $367 | $295 | $128 | $21 | $368 | $1,179 | |||||||||||||||||
Benefit from (provision for) credit losses | 76 | (41) | (8) | 1 | 145 | 173 | |||||||||||||||||
Net interest income after benefit from (provision for) credit losses | 443 | 254 | 120 | 22 | 513 | 1,352 | |||||||||||||||||
Noninterest income | 361 | 204 | 82 | 138 | (36) | 749 | |||||||||||||||||
Noninterest expense | (420) | (489) | (161) | (135) | (10) | (1,215) | |||||||||||||||||
Income (loss) before income taxes | 384 | (31) | 41 | 25 | 467 | 886 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (72) | 7 | (9) | (5) | (113) | (192) | |||||||||||||||||
Net income (loss) | $312 | $(24) | $32 | $20 | $354 | $694 | |||||||||||||||||
For the three months ended December 31, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $397 | $293 | $102 | $23 | $370 | $1,185 | |||||||||||||||||
Benefit from (provision for) credit losses | (212) | (49) | (9) | (2) | 285 | 13 | |||||||||||||||||
Net interest income after benefit from (provision for) credit losses | 185 | 244 | 93 | 21 | 655 | 1,198 | |||||||||||||||||
Noninterest income | 404 | 196 | 22 | 136 | 29 | 787 | |||||||||||||||||
Noninterest expense | (427) | (471) | (135) | (131) | (72) | (1,236) | |||||||||||||||||
Income (loss) before income taxes | 162 | (31) | (20) | 26 | 612 | 749 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (24) | 6 | 4 | (5) | (126) | (145) | |||||||||||||||||
Net income (loss) | $138 | $(25) | $(16) | $21 | $486 | $604 | |||||||||||||||||
For the three months ended September 30, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $435 | $355 | $98 | $28 | $257 | $1,173 | |||||||||||||||||
Benefit from (provision for) credit losses | (337) | (68) | (2) | — | 422 | 15 | |||||||||||||||||
Net interest income after benefit from (provision for) credit losses | 98 | 287 | 96 | 28 | 679 | 1,188 | |||||||||||||||||
Noninterest income | 318 | 192 | 73 | 132 | 7 | 722 | |||||||||||||||||
Noninterest expense | (411) | (460) | (137) | (133) | (20) | (1,161) | |||||||||||||||||
Income before income taxes | 5 | 19 | 32 | 27 | 666 | 749 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | 7 | (4) | (7) | (6) | (158) | (168) | |||||||||||||||||
Net income | $12 | $15 | $25 | $21 | $508 | $581 | |||||||||||||||||
For the three months ended June 30, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $573 | $513 | $92 | $51 | $(26) | $1,203 | |||||||||||||||||
(Provision for) benefit from credit losses | (457) | (52) | (10) | 1 | 33 | (485) | |||||||||||||||||
Net interest income after (provision for) benefit from credit losses | 116 | 461 | 82 | 52 | 7 | 718 | |||||||||||||||||
Noninterest income | 294 | 167 | 98 | 121 | (30) | 650 | |||||||||||||||||
Noninterest expense | (405) | (454) | (120) | (122) | (20) | (1,121) | |||||||||||||||||
Income (loss) before income taxes | 5 | 174 | 60 | 51 | (43) | 247 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | 7 | (36) | (12) | (11) | — | (52) | |||||||||||||||||
Net income (loss) | $12 | $138 | $48 | $40 | $(43) | $195 | |||||||||||||||||
For the three months ended March 31, 2020 | Commercial Banking | Branch Banking(b) | Consumer Lending(c) | Wealth and Asset Management | Other/ Eliminations | Total | |||||||||||||||||
Net interest income (FTE)(a) | $511 | $505 | $89 | $37 | $91 | $1,233 | |||||||||||||||||
Provision for credit losses | (45) | (62) | (13) | (1) | (519) | (640) | |||||||||||||||||
Net interest income after provision for credit losses | 466 | 443 | 76 | 36 | (428) | 593 | |||||||||||||||||
Noninterest income | 287 | 198 | 124 | 135 | (73) | 671 | |||||||||||||||||
Noninterest expense | (480) | (488) | (122) | (143) | 33 | (1,200) | |||||||||||||||||
Income (loss) before income taxes | 273 | 153 | 78 | 28 | (468) | 64 | |||||||||||||||||
Applicable income tax (expense) benefit(a) | (49) | (32) | (17) | (6) | 86 | (18) | |||||||||||||||||
Net income (loss) | $224 | $121 | $61 | $22 | $(382) | $46 | |||||||||||||||||
(a) Includes taxable equivalent adjustments of $3 million, $3 million, $3 million, $3 million and $4 million for the three months ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively. | |||||||||||||||||||||||
(b) Branch Banking provides a full range of deposit and loan and lease products to individuals and small businesses through full-service banking centers. | |||||||||||||||||||||||
(c) Consumer Lending includes the Bancorp's residential mortgage, home equity, automobile and other indirect lending activities. |
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