Fifth Third Bancorp (Nasdaq: FITB) today reported third quarter 2014 net income of $340 million versus net income of $439 million in the second quarter of 2014 and $421 million in the third quarter of 2013. After preferred dividends, net income available to common shareholders was $328 million, or $0.39 per diluted share, in the third quarter of 2014, compared with $416 million, or $0.49 per diluted share, in the second quarter of 2014, and $421 million, or $0.47 per diluted share, in the third quarter of 2013.
Third quarter 2014 included:
Income
- ($53 million) negative valuation adjustment on the Vantiv warrant
- ($3 million) charge related to the valuation of the total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares
Expenses
- ($4 million) in litigation reserve charges
Second quarter 2014 included:
Income
- $125 million gain on the sale of Vantiv shares
- $63 million positive valuation adjustment on the Vantiv warrant
- ($17 million) negative valuation adjustments for land upon which the Bancorp no longer expects to build branches
- ($16 million) charge related to the valuation of the total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares
- ($12 million) negative impact to equity method income from the Bancorp’s interest in Vantiv related to certain charges recognized by Vantiv as a result of their acquisition of Mercury Payment Systems
Expenses
- ($61 million) in litigation reserve charges
Third quarter 2013 included:
Income
- $85 million gain on the sale of Vantiv shares
- $6 million positive valuation adjustment on the Vantiv warrant
- ($2 million) charge related to the valuation of the total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares
Expenses
- ($30 million) in litigation reserve charges
Earnings Highlights | |||||||||||||||||||||||||||||
For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | |||||||||||||||||||||||
Earnings ($ in millions) | |||||||||||||||||||||||||||||
Net income attributable to Bancorp | $ | 340 | $ | 439 | $ | 318 | $ | 402 | $ | 421 | (22 | %) | (19 | %) | |||||||||||||||
Net income available to common shareholders | $ | 328 | $ | 416 | $ | 309 | $ | 383 | $ | 421 | (21 | %) | (22 | %) | |||||||||||||||
Common Share Data | |||||||||||||||||||||||||||||
Earnings per share, basic | 0.39 | 0.49 | 0.36 | 0.44 | 0.47 | (20 | %) | (17 | %) | ||||||||||||||||||||
Earnings per share, diluted | 0.39 | 0.49 | 0.36 | 0.43 | 0.47 | (20 | %) | (17 | %) | ||||||||||||||||||||
Cash dividends per common share | 0.13 | 0.13 | 0.12 | 0.12 | 0.12 | - | 8 | % | |||||||||||||||||||||
Financial Ratios | |||||||||||||||||||||||||||||
Return on average assets | 1.02 | % | 1.34 | % | 1.00 | % | 1.24 | % | 1.35 | % | (24 | %) | (25 | %) | |||||||||||||||
Return on average common equity | 9.2 | 11.9 | 9.0 | 10.8 | 12.1 | (23 | %) | (24 | %) | ||||||||||||||||||||
Return on average tangible common equity(b) | 11.1 | 14.4 | 11.0 | 13.1 | 14.7 | (23 | %) | (24 | %) | ||||||||||||||||||||
Tier I risk-based capital | 10.83 | 10.80 | 10.45 | 10.43 | 11.21 | - | (3 | %) | |||||||||||||||||||||
Tier I common equity(b) | 9.64 | 9.61 | 9.51 | 9.45 | 9.95 | - | (3 | %) | |||||||||||||||||||||
Net interest margin(a) | 3.10 | 3.15 | 3.22 | 3.21 | 3.31 | (2 | %) | (6 | %) | ||||||||||||||||||||
Efficiency(a) | 62.1 | 58.2 | 64.9 | 61.5 | 59.2 | 7 | % | 5 | % | ||||||||||||||||||||
Common shares outstanding (in thousands) | 834,262 | 844,489 | 847,569 | 855,306 | 887,030 | (1 | %) | (6 | %) | ||||||||||||||||||||
Average common shares outstanding (in thousands): | |||||||||||||||||||||||||||||
Basic | 829,392 | 838,492 | 845,860 | 868,077 | 880,183 | (1 | %) | (6 | %) | ||||||||||||||||||||
Diluted | 838,324 | 848,245 | 857,924 | 877,511 | 888,111 | (1 | %) | (6 | %) |
(a) | Presented on a fully taxable equivalent basis. | |
(b) | The tangible common equity and tier 1 common equity ratios, while not required by accounting principles generally accepted in the United States of America (U.S. GAAP), are considered to be critical metrics with which to analyze banks. The ratios have been included herein to facilitate a greater understanding of the Bancorp's capital structure and financial condition. See the Regulation G Non-GAAP Reconciliation table for a reconciliation of these ratios to U.S. GAAP. | |
The percentages in all of the tables in this earning release are calculated on actual dollar amounts and not the rounded dollar amounts. | ||
NM: Not meaningful. | ||
“We were pleased with our operating results in the third quarter that were characterized by strong expense discipline as we endured the effects of the continued low interest rate environment,” said Kevin Kabat, CEO of Fifth Third Bancorp.
“Success in these volatile markets continues to come from managing expenses and growing current earnings while avoiding exposures that do not generate appropriate returns for the risks taken. On all of those fronts, we are doing an exceptional job and creating long term shareholder value. Despite significant elevated competition from banks and non-banks alike, our loan production during the quarter was healthy and within our profitability targets. Deposit growth continues to be very strong as we view the strength of our deposit franchise as the driving force for profitable balance sheet growth in the coming years.
“Fee income results for the quarter were highlighted by categories that exhibit less volatility, like card and processing revenue up 9 percent, investment advisory fees up 6 percent, and service charges on deposits up 4 percent year-over-year. We continue to see the benefits of our focus on building complete customer relationships largely driven from the changes to our deposit account structure undertaken in the past couple of years.
“During the quarter, we entered into an agreement to repurchase $225 million of common shares, which includes a portion of the gains realized from our sale of Vantiv shares last quarter. For the quarter, we maintained strong capital ratios as our Tier I common equity ratio* was 9.6 percent, and 9.4 percent as estimated pro forma under the Basel III rules. We continue to balance the environment for growth with prudent returns of capital to our shareholders in line with our capital management objectives.”
* Non-GAAP measure; see Reg. G reconciliation on page 33 in Exhibit 99.1 of 8-k filing dated 10/16/14.
Income Statement Highlights | ||||||||||||||||||||||||||||
For the Three Months Ended | % Change | |||||||||||||||||||||||||||
September | June | March | December | September | ||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | ||||||||||||||||||||||
Condensed Statements of Income ($ in millions) | ||||||||||||||||||||||||||||
Net interest income (taxable equivalent) | $ | 908 | $ | 905 | $ | 898 | $ | 905 | $ | 898 | - | 1 | % | |||||||||||||||
Provision for loan and lease losses | 71 | 76 | 69 | 53 | 51 | (7 | %) | 40 | % | |||||||||||||||||||
Total noninterest income | 520 | 736 | 564 | 703 | 721 | (29 | %) | (28 | %) | |||||||||||||||||||
Total noninterest expense | 888 | 954 | 950 | 989 | 959 | (7 | %) | (7 | %) | |||||||||||||||||||
Income before income taxes (taxable equivalent) | 469 | 611 | 443 | 566 | 609 | (23 | %) | (23 | %) | |||||||||||||||||||
Taxable equivalent adjustment | 5 | 5 | 5 | 5 | 5 | 13 | % | 7 | % | |||||||||||||||||||
Applicable income taxes | 124 | 167 | 119 | 159 | 183 | (26 | %) | (32 | %) | |||||||||||||||||||
Net income | 340 | 439 | 319 | 402 | 421 | (22 | %) | (19 | %) | |||||||||||||||||||
Less: Net income attributable to noncontrolling interests | - |
| - |
| 1 | - |
| - |
| (4 | %) | - | ||||||||||||||||
Net income attributable to Bancorp | 340 | 439 | 318 | 402 | 421 | (22 | %) | (19 | %) | |||||||||||||||||||
Dividends on preferred stock | 12 | 23 | 9 | 19 | - | (47 | %) | - | ||||||||||||||||||||
Net income available to common shareholders | 328 | 416 | 309 | 383 | 421 | (21 | %) | (22 | %) | |||||||||||||||||||
Earnings per share, diluted | $ | 0.39 | $ | 0.49 | $ | 0.36 | $ | 0.43 | $ | 0.47 | (20 | %) | (17 | %) | ||||||||||||||
Net Interest Income | |||||||||||||||||||||||||||||
For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | |||||||||||||||||||||||
Interest Income ($ in millions) | |||||||||||||||||||||||||||||
Total interest income (taxable equivalent) | $ | 1,023 | $ | 1,013 | $ | 998 | $ | 1,007 | $ | 997 | 1 | % | 3 | % | |||||||||||||||
Total interest expense | 115 | 108 | 100 | 102 | 99 | 6 | % | 16 | % | ||||||||||||||||||||
Net interest income (taxable equivalent) | $ | 908 | $ | 905 | $ | 898 | $ | 905 | $ | 898 | - | 1 | % | ||||||||||||||||
Average Yield | |||||||||||||||||||||||||||||
Yield on interest-earning assets (taxable equivalent) | 3.49 | % | 3.53 | % | 3.58 | % | 3.57 | % | 3.68 | % | (1 | %) | (5 | %) | |||||||||||||||
Rate paid on interest-bearing liabilities | 0.56 | % | 0.54 | % | 0.51 | % | 0.52 | % | 0.54 | % | 5 | % | 5 | % | |||||||||||||||
Net interest rate spread (taxable equivalent) | 2.93 | % | 2.99 | % | 3.07 | % | 3.05 | % | 3.14 | % | (2 | %) | (7 | %) | |||||||||||||||
Net interest margin (taxable equivalent) | 3.10 | % | 3.15 | % | 3.22 | % | 3.21 | % | 3.31 | % | (2 | %) | (6 | %) | |||||||||||||||
Average Balances ($ in millions) | |||||||||||||||||||||||||||||
Loans and leases, including held for sale | $ | 91,428 | $ | 91,241 | $ | 90,238 | $ | 88,865 | $ | 89,154 | - | 3 | % | ||||||||||||||||
Total securities and other short-term investments | 24,927 | 23,940 | 22,940 | 23,043 | 18,528 | 4 | % | 35 | % | ||||||||||||||||||||
Total interest-earning assets | 116,355 | 115,181 | 113,178 | 111,908 | 107,682 | 1 | % | 8 | % | ||||||||||||||||||||
Total interest-bearing liabilities | 81,157 | 80,770 | 79,130 | 77,573 | 73,190 | - | 11 | % | |||||||||||||||||||||
Bancorp shareholders' equity | 15,486 | 15,157 | 14,862 | 14,757 | 14,440 | 2 | % | 7 | % | ||||||||||||||||||||
Net interest income of $908 million on a fully taxable equivalent basis increased $3 million from the second quarter driven by higher average investment securities balances, an additional day in the third quarter, and loan growth. These benefits were partially offset by the effects of loan repricing and higher interest expense associated with debt issuances in the second and third quarters of 2014.
The net interest margin was 3.10 percent, a decrease of 5 bps from the previous quarter primarily due to the effects of loan repricing and debt issuances. Additionally, day count negatively impacted the net interest margin by 1 bp.
Compared with the third quarter of 2013, net interest income increased $10 million and the net interest margin decreased 21 bps. The increase in net interest income was driven by higher balances and yields on investment securities as well as higher loan balances partially offset by the effect of loan repricing and higher interest expense resulting from increased long-term debt balances. The decline in the net interest margin was primarily driven by the impact of loan repricing.
Securities
Average securities and other short-term investments were $24.9 billion in the third quarter of 2014 compared with $23.9 billion in the previous quarter and $18.5 billion in the third quarter of 2013. Average securities of $22.6 billion increased $886 million from the prior quarter reflecting purchases of securities, primarily in the second quarter. Other short-term investments average balances of $2.3 billion increased $101 million sequentially while end of period balances increased $1.3 billion reflecting higher cash balances held at the Federal Reserve.
Loans | |||||||||||||||||||||||||||||
For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | |||||||||||||||||||||||
Average Portfolio Loans and Leases ($ in millions) |
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Commercial: | |||||||||||||||||||||||||||||
Commercial and industrial loans | $ | 41,477 |
| $ | 41,374 |
| $ | 40,377 |
| $ | 38,835 |
| $ | 38,133 |
| - | 9 | % | |||||||||||
Commercial mortgage loans | 7,633 | 7,885 | 7,981 | 8,047 | 8,273 | (3 | %) | (8 | %) | ||||||||||||||||||||
Commercial construction loans | 1,563 | 1,362 | 1,116 | 952 | 793 | 15 | % | 97 | % | ||||||||||||||||||||
Commercial leases | 3,571 | 3,555 | 3,607 | 3,578 | 3,572 | - | - | ||||||||||||||||||||||
Subtotal - commercial loans and leases | 54,244 | 54,176 | 53,081 | 51,412 | 50,771 | - | 7 | % | |||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||
Residential mortgage loans | 12,785 | 12,611 | 12,659 | 12,609 | 12,486 | 1 | % | 2 | % | ||||||||||||||||||||
Home equity | 9,009 | 9,101 | 9,194 | 9,296 | 9,432 | (1 | %) | (4 | %) | ||||||||||||||||||||
Automobile loans | 12,105 | 12,070 | 12,023 | 12,019 | 12,083 | - | - | ||||||||||||||||||||||
Credit card | 2,295 | 2,232 | 2,230 | 2,202 | 2,140 | 3 | % | 7 | % | ||||||||||||||||||||
Other consumer loans and leases | 361 | 359 | 343 | 357 | 360 | 1 | % | - | |||||||||||||||||||||
Subtotal - consumer loans and leases | 36,555 | 36,373 | 36,449 | 36,483 | 36,501 | 1 | % | - | |||||||||||||||||||||
Total average loans and leases (excluding held for sale) | $ | 90,799 | $ | 90,549 | $ | 89,530 | $ | 87,895 | $ | 87,272 | - | 4 | % | ||||||||||||||||
Average loans held for sale | 629 | 692 | 708 | 970 | 1,882 | (9 | %) | (67 | %) | ||||||||||||||||||||
Average loan and lease balances (excluding loans held-for-sale) increased $250 million sequentially and increased $3.5 billion, or 4 percent, from the third quarter of 2013. The sequential increase in average loans and leases was primarily driven by growth in commercial construction, residential mortgage, and commercial and industrial (C&I) loans. Sequential growth was partially offset by declines in commercial mortgage and home equity loans. Period end loans and leases (excluding loans held-for-sale) of $90.6 billion increased $140 million sequentially and $3.4 billion, or 4 percent, from a year ago.
Average commercial portfolio loan and lease balances were flat sequentially and increased $3.5 billion, or 7 percent, from the third quarter of 2013. Average C&I loans increased $103 million from the prior quarter and $3.3 billion from the third quarter of 2013. Within commercial real estate, average commercial mortgage balances continued to decline and average commercial construction balances increased for the seventh consecutive quarter. Commercial line usage, on an end of period basis, was 32 percent of committed lines in the third quarter of 2014 compared with 32 percent in the second quarter of 2014 and 30 percent in the third quarter of 2013.
Average consumer portfolio loan and lease balances increased $182 million, or 1 percent, sequentially and were flat year-over-year. Average residential mortgage loans increased 1 percent sequentially and increased 2 percent from a year ago. On a sequential basis, average credit card loans increased 3 percent while average home equity loans declined 1 percent. Compared with the third quarter of 2013, average credit card loans increased 7 percent while average home equity loans declined 4 percent.
Average loans held-for-sale balances of $629 million decreased $63 million sequentially and $1.3 billion compared with the third quarter of 2013. Period end loans held-for-sale of $641 million decreased $41 million from the previous quarter and $689 million from the third quarter of 2013 reflecting lower residential mortgage held-for-sale balances.
Deposits | |||||||||||||||||||||||||||||
For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | |||||||||||||||||||||||
Average Deposits ($ in millions) | |||||||||||||||||||||||||||||
Demand | $ | 31,790 | $ | 31,275 | $ | 30,626 | $ | 30,765 | $ | 30,655 | 2 | % | 4 | % | |||||||||||||||
Interest checking | 24,926 | 25,222 | 25,911 | 24,650 | 23,116 | (1 | %) | 8 | % | ||||||||||||||||||||
Savings | 15,759 | 16,509 | 16,903 | 17,323 | 18,026 | (5 | %) | (13 | %) | ||||||||||||||||||||
Money market | 15,222 | 13,942 | 12,439 | 11,285 | 9,693 | 9 | % | 57 | % | ||||||||||||||||||||
Foreign office(a) | 1,663 | 2,200 | 2,017 | 1,717 | 1,755 | (24 | %) | (5 | %) | ||||||||||||||||||||
Subtotal - Transaction deposits | 89,360 | 89,148 | 87,896 | 85,740 | 83,245 | - | 7 | % | |||||||||||||||||||||
Other time | 3,800 | 3,693 | 3,616 | 3,529 | 3,676 | 3 | % | 3 | % | ||||||||||||||||||||
Subtotal - Core deposits | 93,160 | 92,841 | 91,512 | 89,269 | 86,921 | - | 7 | % | |||||||||||||||||||||
Certificates - $100,000 and over | 3,339 | 3,840 | 5,576 | 7,456 | 7,315 | (13 | %) | (54 | %) | ||||||||||||||||||||
Other | - | - | - | - | 17 | NM | (99 | %) | |||||||||||||||||||||
Total deposits | $ | 96,499 | $ | 96,681 | $ | 97,088 | $ | 96,725 | $ | 94,253 | - | 2 | % |
(a) | Includes commercial customer Eurodollar sweep balances for which the Bancorp pays rates comparable to other commercial deposit accounts. | |
Average core deposits increased $319 million sequentially and increased $6.2 billion, or 7 percent, from the third quarter of 2013. Average transaction deposits increased $212 million from the second quarter of 2014 primarily driven by higher money market account and demand deposit balances, partially offset by lower savings, foreign office, and interest checking balances. Year-over-year transaction deposits increased $6.1 billion, or 7 percent, driven by higher money market account, interest checking, and demand deposit balances, partially offset by lower savings balances. Other time deposits increased 3 percent sequentially and 3 percent compared with the third quarter of 2013.
Average commercial transaction deposits increased 1 percent sequentially and 10 percent from the previous year. Sequential performance reflected higher demand deposit and money market account balances, partially offset by lower foreign office and interest checking balances and year-over-year growth reflected higher demand deposit and interest checking balances as customers are holding higher balances.
Average consumer transaction deposits were flat sequentially and increased 5 percent from the third quarter of 2013. The sequential performance reflected lower savings, demand deposit, and interest checking balances partially offset by higher money market account balances reflecting our efforts to attract money market account balances. Year-over-year growth was driven by increased money market account and interest checking balances partially offset by lower savings and demand deposit balances.
Wholesale Funding | |||||||||||||||||||||||||||||
For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | |||||||||||||||||||||||
Average Wholesale Funding ($ in millions) | |||||||||||||||||||||||||||||
Certificates - $100,000 and over | $ | 3,339 | $ | 3,840 | $ | 5,576 | $ | 7,456 | $ | 7,315 | (13 | %) | (54 | %) | |||||||||||||||
Other deposits | - | - | - | - | 17 | NM | (99 | %) | |||||||||||||||||||||
Federal funds purchased | 520 | 606 | 547 | 301 | 464 | (14 | %) | 12 | % | ||||||||||||||||||||
Other short-term borrowings | 1,973 | 2,234 | 1,808 | 2,177 | 1,675 | (12 | %) | 18 | % | ||||||||||||||||||||
Long-term debt | 13,955 | 12,524 | 10,313 | 9,135 | 7,453 | 11 | % | 87 | % | ||||||||||||||||||||
Total wholesale funding | $ | 19,787 | $ | 19,204 | $ | 18,244 | $ | 19,069 | $ | 16,924 | 3 | % | 17 | % | |||||||||||||||
Average wholesale funding of $19.8 billion increased $583 million, or 3 percent, sequentially and $2.9 billion, or 17 percent, compared with the third quarter of 2013. The sequential increase was driven by an increase in long-term debt, partially offset by a decrease in certificates $100,000 and over. Average other short-term borrowings decreased $261 million from the prior quarter primarily due to a decrease in FHLB borrowings. The year-over-year increase reflected an increase in long-term debt, partially offset by a decrease in certificates $100,000 and over. Average long-term debt balances reflected the issuance of $850 million of bank senior debt in the third quarter of 2014, as well as the full quarter impact of $1.5 billion of bank senior debt issued in the second quarter of 2014 and the full quarter impact of a $1.5 billion on-balance sheet auto securitization executed in the second quarter of 2014.
Noninterest Income | |||||||||||||||||||||||||||||
For the Three Months Ended | % Change | ||||||||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | |||||||||||||||||||||||
Noninterest Income ($ in millions) | |||||||||||||||||||||||||||||
Service charges on deposits | $ | 145 |
| $ | 139 |
| $ | 133 |
| $ | 142 |
| $ | 140 |
| 4 | % | 4 | % | ||||||||||
Corporate banking revenue | 100 | 107 | 104 | 94 | 102 | (7 | %) | (2 | %) | ||||||||||||||||||||
Mortgage banking net revenue | 61 | 78 | 109 | 126 | 121 | (21 | %) | (49 | %) | ||||||||||||||||||||
Investment advisory revenue | 103 | 102 | 102 | 98 | 97 | 1 | % | 6 | % | ||||||||||||||||||||
Card and processing revenue | 75 | 76 | 68 | 71 | 69 | (1 | %) | 9 | % | ||||||||||||||||||||
Other noninterest income | 33 | 226 | 41 | 170 | 185 | (86 | %) | (82 | %) | ||||||||||||||||||||
Securities gains, net | 3 | 8 | 7 | 2 | 2 | (57 | %) | 40 | % | ||||||||||||||||||||
Securities gains, net - non-qualifying | |||||||||||||||||||||||||||||
hedges on mortgage servicing rights | - | - | - | - | 5 | - | (100 | %) | |||||||||||||||||||||
Total noninterest income | $ | 520 | $ | 736 | $ | 564 | $ | 703 | $ | 721 | (29 | %) | (28 | %) | |||||||||||||||
Noninterest income of $520 million decreased $216 million sequentially and decreased $201 million compared with prior year results. These comparisons reflect the impacts described below.
For the quarters ending September 30, 2014, June 30, 2014, and September 30, 2013, the impacts of Vantiv warrant valuation adjustments were negative $53 million, positive $63 million, and positive $6 million, respectively. Quarterly results also included charges related to the valuation of the total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares. Valuation adjustments on this swap were a negative $3 million, negative $16 million, and negative $2 million in the third quarter of 2014, the second quarter of 2014, and the third quarter of 2013, respectively. Second quarter 2014 results included a $125 million gain on sale of Vantiv shares, a $17 million negative valuation adjustment for land upon which the Bancorp no longer expects to build branches, and a $12 million negative impact to equity method income from the Bancorp’s interest in Vantiv related to certain charges recognized by Vantiv as a result of their acquisition of Mercury Payment Systems. Third quarter 2013 results also included an $85 million gain on the sale of Vantiv shares. Excluding these items and net securities gains in all periods, noninterest income of $573 million decreased $12 million, or 2 percent, from the previous quarter and decreased $57 million, or 9 percent, from the third quarter of 2013. The sequential and year-over-year decline was primarily due to lower mortgage banking net revenue.
Service charges on deposits of $145 million increased 4 percent from the second quarter and 4 percent compared with the same quarter last year. Sequential growth was due to a 9 percent increase in retail service charges due to seasonality and higher overdraft occurrences as well as a 2 percent increase in commercial service charges. The year-over-year increase was driven by an increase in commercial service charges of 5 percent related to new products and new clients and a 1 percent increase in retail service charges due to higher overdraft occurrences.
Corporate banking revenue of $100 million decreased 7 percent from the second quarter of 2014 and 2 percent from the third quarter last year. The sequential decrease was due to lower syndication fees and business lending fees, partially offset by an increase in foreign exchange fees. The year-over-year decrease was driven by lower business lending fees, syndication fees, and interest rate derivatives fees, partially offset by an increase in foreign exchange fees, institutional sales revenue, and letter of credit fees.
Mortgage banking net revenue was $61 million in the third quarter of 2014, a 21 percent decrease from the second quarter of 2014 and a 49 percent decrease from the third quarter of 2013. Third quarter 2014 originations were $2.1 billion, compared with $2.0 billion in the previous quarter and $4.8 billion in the third quarter of 2013. Third quarter 2014 originations resulted in gains of $34 million on mortgages sold, compared with gains of $42 million during the previous quarter and $74 million during the third quarter of 2013. The sequential decrease was driven by lower gain on sale margins as well as increased retention of certain mortgage production, which are generally shorter term or adjustable rate. The decrease from the prior year reflected lower production, including Fifth Third’s exit from the broker channel, partially offset by higher gain on sale margins. Mortgage servicing fees were $61 million this quarter, $62 million in the second quarter of 2014, and $63 million in the third quarter of 2013. Mortgage banking net revenue is also affected by net servicing asset valuation adjustments, which include mortgage servicing rights (MSR) amortization and MSR valuation adjustments (including mark-to-market adjustments on free-standing derivatives used to economically hedge the MSR portfolio). These net servicing asset valuation adjustments were negative $34 million in the third quarter of 2014 (reflecting MSR amortization of $33 million and MSR valuation adjustments of negative $1 million); negative $26 million in the second quarter of 2014 (MSR amortization of $32 million and MSR valuation adjustments of positive $6 million); and negative $16 million in the third quarter of 2013 (MSR amortization of $39 million and MSR valuation adjustments of positive $23 million). The mortgage servicing asset, net of the valuation reserve, was $933 million at quarter-end on a servicing portfolio of $67 billion.
Investment advisory revenue of $103 million increased 1 percent from the second quarter and 6 percent year-over-year. Sequential and year-over-year comparisons reflected an increase in personal asset management fees primarily related to market-related growth as well as increases in securities and brokerage fees.
Card and processing revenue of $75 million in the third quarter of 2014 decreased 1 percent sequentially and increased 9 percent from the third quarter of 2013. The year-over-year increase reflects an increase in the number of actively used cards, an increase in customer spend volume, and higher processing fees related to additional ATM locations.
Other noninterest income totaled $33 million in the third quarter of 2014, compared with $226 million in the previous quarter and $185 million in the third quarter of 2013. As previously described, the results included the impact of gains on sales of Vantiv shares, Vantiv warrant valuation adjustments, charges related to the valuation of the Visa total return swap, a valuation adjustment for certain land parcels, and a negative impact to equity method income from the Bancorp’s interest in Vantiv related to certain charges recognized by Vantiv as a result of their acquisition of Mercury Payment Systems. Excluding these items, other noninterest income of $89 million increased approximately $6 million, or 7 percent, from the second quarter of 2014 primarily related to an improvement in net credit related costs and decreased approximately $7 million, or 7 percent, from the third quarter of 2013.
Net gains on investment securities were $3 million in the third quarter of 2014, compared with $8 million in the previous quarter and $2 million in the third quarter of 2013.
Noninterest Expense | ||||||||||||||||||||||||
For the Three Months Ended | % Change | |||||||||||||||||||||||
September | June | March | December | September | ||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | Seq | Yr/Yr | ||||||||||||||||||
Noninterest Expense ($ in millions) | ||||||||||||||||||||||||
Salaries, wages and incentives | $ | 357 | $ | 368 | $ | 359 | $ | 388 | $ | 389 | (3 | %) | (8 | %) | ||||||||||
Employee benefits | 75 | 79 | 101 | 78 | 83 | (5 | %) | (9 | %) | |||||||||||||||
Net occupancy expense | 78 | 79 | 80 | 77 | 75 | (1 | %) | 4 | % | |||||||||||||||
Technology and communications | 53 | 52 | 53 | 53 | 52 | 3 | % | 2 | % | |||||||||||||||
Equipment expense | 30 | 30 | 30 | 29 | 29 | 1 | % | 4 | % | |||||||||||||||
Card and processing expense | 37 | 37 | 31 | 37 | 33 | - | 12 | % | ||||||||||||||||
Other noninterest expense | 258 | 309 | 296 | 327 | 298 | (17 | %) | (13 | %) | |||||||||||||||
Total noninterest expense | $ | 888 | $ | 954 | $ | 950 | $ | 989 | $ | 959 | (7 | %) | (7 | %) | ||||||||||
Noninterest expense of $888 million declined 7 percent compared with both the second quarter of 2014 and the third quarter of 2013.
Third quarter 2014 expenses included $4 million in charges to litigation reserves compared with $61 million in the second quarter of 2014 and $30 million in the third quarter of 2013. Third quarter of 2013 also included $5 million in large bank assessments for 2012 and 2013 initiated by regulators under the Dodd-Frank Act. Excluding these items, noninterest expense of $884 million was down $9 million, or 1 percent, sequentially and decreased $40 million, or 4 percent, year-over-year. The sequential and year-over-year decline reflected lower compensation-related expense and benefits expense, primarily due to changes in our mortgage and retail staffing.
Credit Quality | ||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||
September | June | March | December | September | ||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | ||||||||||||||
Total net losses charged off ($ in millions) | ||||||||||||||||||
Commercial and industrial loans | ($50 | ) | ($31 | ) | ($97 | ) | ($66 | ) | ($44 | ) | ||||||||
Commercial mortgage loans | (5 | ) | (9 | ) | (3 | ) | (8 | ) | (2 | ) | ||||||||
Commercial construction loans | - | (8 | ) | (5 | ) | (4 | ) | 2 | ||||||||||
Commercial leases | - | - | - | - | - | |||||||||||||
Residential mortgage loans | (9 | ) | (8 | ) | (15 | ) | (13 | ) | (12 | ) | ||||||||
Home equity | (14 | ) | (18 | ) | (16 | ) | (26 | ) | (19 | ) | ||||||||
Automobile loans | (7 | ) | (5 | ) | (8 | ) | (6 | ) | (6 | ) | ||||||||
Credit card | (23 | ) | (21 | ) | (19 | ) | (21 | ) | (19 | ) | ||||||||
Other consumer loans and leases | (7 | ) | (1 | ) | (5 | ) | (4 | ) | (9 | ) | ||||||||
Total net losses charged off | (115 | ) | (101 | ) | (168 | ) | (148 | ) | (109 | ) | ||||||||
Total losses | (146 | ) | (127 | ) | (190 | ) | (183 | ) | (141 | ) | ||||||||
Total recoveries | 31 | 26 | 22 | 35 | 32 | |||||||||||||
Total net losses charged off | ($115 | ) | ($101 | ) | ($168 | ) | ($148 | ) | ($109 | ) | ||||||||
Ratios (annualized) | ||||||||||||||||||
Net losses charged off as a percent of average loans and leases | ||||||||||||||||||
(excluding held for sale) | 0.50 | % | 0.45 | % | 0.76 | % | 0.67 | % | 0.49 | % | ||||||||
Commercial | 0.40 | % | 0.35 | % | 0.79 | % | 0.60 | % | 0.35 | % | ||||||||
Consumer | 0.66 | % | 0.60 | % | 0.72 | % | 0.76 | % | 0.70 | % | ||||||||
Net charge-offs were $115 million, or 50 bps, of average loans on an annualized basis, in the third quarter of 2014 compared with net charge-offs of $101 million, or 45 bps, in the second quarter of 2014 and $109 million, or 49 bps, in the third quarter of 2013.
Commercial net charge-offs were $55 million, or 40 bps, up $7 million sequentially. C&I net charge-offs of $50 million increased $19 million from the previous quarter and commercial real estate net charge-offs decreased $12 million from $17 million in the previous quarter.
Consumer net charge-offs were $60 million, or 66 bps, up $7 million sequentially. Net charge-offs on residential mortgage loans in the portfolio were $9 million, up $1 million from the previous quarter. Home equity net charge-offs were $14 million, down $4 million from the second quarter of 2014, and net charge-offs in the auto portfolio of $7 million were up $2 million compared with the prior quarter. Net charge-offs on consumer credit card loans were $23 million, up $2 million from the second quarter. Net charge-offs on other consumer loans were $7 million, up $6 million compared with the previous quarter.
For the Three Months Ended | |||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | |||||||||||||||||||
Allowance for Credit Losses ($ in millions) | |||||||||||||||||||||||
Allowance for loan and lease losses, beginning | $ | 1,458 | $ | 1,483 | $ | 1,582 | $ | 1,677 | $ | 1,735 | |||||||||||||
Total net losses charged off | (115 | ) | (101 | ) | (168 | ) | (148 | ) | (109 | ) | |||||||||||||
Provision for loan and lease losses | 71 | 76 | 69 | 53 | 51 | ||||||||||||||||||
Allowance for loan and lease losses, ending | 1,414 | 1,458 | 1,483 | 1,582 | 1,677 | ||||||||||||||||||
Reserve for unfunded commitments, beginning | 142 | 153 | 162 | 167 | 166 | ||||||||||||||||||
Provision (benefit) for unfunded commitments | (8 | ) | (11 | ) | (9 | ) | (5 | ) | 1 | ||||||||||||||
Reserve for unfunded commitments, ending | 134 | 142 | 153 | 162 | 167 | ||||||||||||||||||
Components of allowance for credit losses: | |||||||||||||||||||||||
Allowance for loan and lease losses | 1,414 | 1,458 | 1,483 | 1,582 | 1,677 | ||||||||||||||||||
Reserve for unfunded commitments | 134 | 142 | 153 | 162 | 167 | ||||||||||||||||||
Total allowance for credit losses | $ | 1,548 | $ | 1,600 | $ | 1,636 | $ | 1,744 | $ | 1,844 | |||||||||||||
Allowance for loan and lease losses ratio | |||||||||||||||||||||||
As a percent of loans and leases | 1.56 | % | 1.61 | % | 1.65 | % | 1.79 | % | 1.92 | % | |||||||||||||
As a percent of nonperforming loans and leases(a) | 228 | % | 228 | % | 202 | % | 211 | % | 218 | % | |||||||||||||
As a percent of nonperforming assets(a) | 178 | % | 175 | % | 157 | % | 161 | % | 165 | % | |||||||||||||
(a) Excludes nonaccrual loans and leases in loans held for sale. | |||||||||||||||||||||||
Provision for loan and lease losses totaled $71 million in the third quarter of 2014, down $5 million from the second quarter of 2014 and up $20 million from the third quarter of 2013. The allowance for loan and lease losses declined $44 million sequentially reflecting the portfolio’s overall risk profile and charges to the allowance. The allowance represented 1.56 percent of total loans and leases outstanding as of quarter end, compared with 1.61 percent last quarter, and represented 228 percent of nonperforming loans and leases, and 178 percent of nonperforming assets.
As of | |||||||||||||||||||||||
September | June | March | December | September | |||||||||||||||||||
Nonperforming Assets and Delinquent Loans ($ in millions) | 2014 | 2014 | 2014 | 2013 | 2013 | ||||||||||||||||||
Nonaccrual portfolio loans and leases: | |||||||||||||||||||||||
Commercial and industrial loans | $ | 102 | $ | 103 | $ | 153 | $ | 127 | $ | 146 | |||||||||||||
Commercial mortgage loans | 77 | 86 | 96 | 90 | 106 | ||||||||||||||||||
Commercial construction loans | 2 | 3 | 3 | 10 | 27 | ||||||||||||||||||
Commercial leases | 3 | 2 | 3 | 3 | 1 | ||||||||||||||||||
Residential mortgage loans | 52 | 56 | 68 | 83 | 83 | ||||||||||||||||||
Home equity | 69 | 73 | 75 | 74 | 28 | ||||||||||||||||||
Automobile loans | - | - | - | - | - | ||||||||||||||||||
Other consumer loans and leases | - | - | - | - | - | ||||||||||||||||||
Total nonaccrual loans and leases (excludes restructured loans) | $ | 305 | $ | 323 | $ | 398 | $ | 387 | $ | 391 | |||||||||||||
Restructured loans - commercial (nonaccrual)(c) | 201 | 202 | 209 | 228 | 241 | ||||||||||||||||||
Restructured loans - consumer (nonaccrual) | 114 | 115 | 126 | 136 | 138 | ||||||||||||||||||
Total nonaccrual portfolio loans and leases | $ | 620 | $ | 640 | $ | 733 | $ | 751 | $ | 770 | |||||||||||||
Repossessed personal property | 19 | 18 | 6 | 7 | 7 | ||||||||||||||||||
Other real estate owned(a) | 157 | 174 | 207 | 222 | 237 | ||||||||||||||||||
Total nonperforming assets(b) | $ | 796 | $ | 832 | $ | 946 | $ | 980 | $ | 1,014 | |||||||||||||
Nonaccrual loans held for sale | 4 | 5 | 3 | 6 | 11 | ||||||||||||||||||
Restructured loans - commercial (nonaccrual) held for sale | 3 | - | - | - | - | ||||||||||||||||||
Total nonperforming assets including loans held for sale | $ | 803 | $ | 837 | $ | 949 | $ | 986 | $ | 1,025 | |||||||||||||
Restructured Consumer loans and leases (accrual) | $ | 1,610 | $ | 1,623 | $ | 1,682 | $ | 1,685 | $ | 1,694 | |||||||||||||
Restructured Commercial loans and leases (accrual)(c) | $ | 885 | $ | 914 | $ | 847 | $ | 869 | $ | 499 | |||||||||||||
Total loans and leases 90 days past due | $ | 87 | $ | 94 | $ | 94 | $ | 103 | $ | 156 | |||||||||||||
Nonperforming loans and leases as a percent of portfolio loans, | |||||||||||||||||||||||
leases and other assets, including other real estate owned(b) | 0.68 | % | 0.70 | % | 0.82 | % | 0.84 | % | 0.88 | % | |||||||||||||
Nonperforming assets as a percent of portfolio loans, leases | |||||||||||||||||||||||
and other assets, including other real estate owned(b) | 0.88 | % | 0.92 | % | 1.05 | % | 1.10 | % | 1.16 | % |
(a) | Excludes government insured advances. | |
(b) | Does not include nonaccrual loans held for sale. | |
(c) | Excludes $20.9 million of restructured nonaccrual loans and $7.6 million of restructured accruing loans as of June 30, 2014, March 31, 2014 and December 31, 2013 and excludes $21.5 million of restructured nonaccrual loans and $7.6 million of restructured accruing loans as of September 30, 2013 and June 30, 2013 associated with a consolidated variable interest entity in which the Bancorp has no continuing credit risk. | |
Total nonperforming assets, including loans held-for-sale, were $803 million, a decline of $34 million, or 4 percent, from the previous quarter. Nonperforming loans (NPLs) at quarter-end were $620 million or 0.68 percent of total loans, leases and OREO, and decreased $20 million, or 3 percent, from the previous quarter.
Commercial NPAs were $487 million, or 0.90 percent of commercial loans, leases and OREO, and decreased $25 million, or 5 percent, from the second quarter. Commercial NPLs were $385 million, or 0.71 percent of commercial loans and leases, and decreased $11 million from last quarter. C&I NPAs of $278 million increased $13 million from the prior quarter. Commercial mortgage NPAs were $186 million, down $26 million from the previous quarter. Commercial construction NPAs were $19 million, a decrease of $12 million from the previous quarter. Commercial lease NPAs were $4 million, flat from the previous quarter. Commercial NPAs included $201 million of nonaccrual troubled debt restructurings (TDRs), compared with $202 million last quarter.
Consumer NPAs of $309 million, or 0.84 percent of consumer loans, leases and OREO, decreased $11 million from the second quarter. Consumer NPLs were $235 million, or 0.64 percent of consumer loans and leases and decreased $9 million from last quarter. Residential mortgage NPAs were $164 million, $8 million lower than last quarter. Home equity NPAs of $101 million decreased $9 million sequentially and credit card NPAs of $37 million were up $5 million compared with the previous quarter. Consumer nonaccrual TDRs were $114 million in the third quarter of 2014, compared with $115 million in the second quarter of 2014.
Third quarter OREO balances included in NPA balances were $157 million, down $17 million from the second quarter, and included $90 million in commercial OREO and $67 million in consumer OREO. Repossessed personal property of $19 million increased $1 million from the prior quarter.
Loans over 90 days past due and still accruing were $87 million, down $7 million from the second quarter of 2014. Commercial balances over 90 days past due were $1 million compared with an immaterial amount in the prior quarter, and consumer balances 90 days past due of $86 million were down $8 million from the previous quarter. Loans 30-89 days past due of $279 million were up $36 million from the previous quarter. Commercial balances 30-89 days past due of $17 million were up $6 million sequentially and consumer balances 30-89 days past due of $262 million increased $30 million from the second quarter. The above delinquencies figures exclude nonaccruals described previously.
Capital Position | ||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||
September | June | March | December | September | ||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | ||||||||||||||
Capital Position | ||||||||||||||||||
Average shareholders' equity to average assets | 11.71 | % | 11.57 | % | 11.53 | % | 11.51 | % | 11.71 | % | ||||||||
Tangible equity(a) | 9.65 | % | 9.77 | % | 9.61 | % | 9.44 | % | 9.75 | % | ||||||||
Tangible common equity (excluding unrealized gains/losses)(a) | 8.64 | % | 8.74 | % | 8.79 | % | 8.63 | % | 9.27 | % | ||||||||
Tangible common equity (including unrealized gains/losses)(a) | 8.84 | % | 9.00 | % | 8.93 | % | 8.69 | % | 9.42 | % | ||||||||
Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses)(a)(b) | 9.70 | % | 9.67 | % | 9.57 | % | 9.52 | % | 10.01 | % | ||||||||
Regulatory capital ratios:(c) | ||||||||||||||||||
Tier I risk-based capital | 10.83 | % | 10.80 | % | 10.45 | % | 10.43 | % | 11.21 | % | ||||||||
Total risk-based capital | 14.34 | % | 14.30 | % | 14.02 | % | 14.17 | % | 14.43 | % | ||||||||
Tier I leverage | 9.82 | % | 9.86 | % | 9.71 | % | 9.70 | % | 10.64 | % | ||||||||
Tier I common equity(a) | 9.64 | % | 9.61 | % | 9.51 | % | 9.45 | % | 9.95 | % | ||||||||
Book value per share | 16.87 | 16.74 | 16.27 | 15.85 | 15.84 | |||||||||||||
Tangible book value per share(a) | 13.95 | 13.86 | 13.40 | 13.00 | 13.09 |
(a) | The tangible equity, tangible common equity, tier I common equity and tangible book value per share ratios, while not required by accounting principles generally accepted in the United States of America (U.S. GAAP), are considered to be critical metrics with which to analyze banks. The ratios have been included herein to facilitate a greater understanding of the Bancorp's capital structure and financial condition. See the Regulation G Non-GAAP Reconciliation table for a reconciliation of these ratios to U.S. GAAP. | |
(b) | Under the banking agencies risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together resulting in the Bancorp's total risk weighted assets. | |
(c) | Current period regulatory capital data ratios are estimated. | |
Capital ratios remained strong during the quarter, reflecting growth in retained earnings, the payment of preferred dividends, and share repurchase activity. Compared with the prior quarter, the Tier 1 common equity ratio* of 9.64 percent increased 3 bps. The tangible common equity to tangible assets ratio* was 8.64 percent (excluding unrealized gains/losses) and 8.84 percent (including unrealized gains/losses). The Tier 1 risk-based capital ratio increased 3 bps to 10.83 percent. The total risk-based capital ratio increased 4 bps to 14.34 percent and the Leverage ratio decreased 4 bps to 9.82 percent.
Our current estimate of the pro-forma fully phased in Tier I common equity ratio at September 30, 2014 under the final capital rule, assuming the Company elected to maintain the current treatment of AOCI components in capital, would be approximately 9.4 percent**. This would compare with 9.6 percent* as calculated under the currently prevailing Basel I capital framework. Were Fifth Third to make the election to include AOCI components in capital, the September 30, 2014 pro forma Basel III Tier 1 common ratio would be increased by approximately 25 bps. Fifth Third’s pro forma Tier 1 common equity ratio exceeds the minimum buffered Tier 1 common equity ratio of 7 percent, comprising a minimum of 4.5 percent plus a capital conservation buffer of 2.5 percent. The pro forma Tier 1 common equity ratio does not include the effect of any mitigating actions the Bancorp may undertake to offset any impact of the final capital rules.
Book value per share at September 30, 2014 was $16.87 and tangible book value per share* was $13.95, compared with the June 30, 2014 book value per share of $16.74 and tangible book value per share of $13.86.
As previously announced, Fifth Third entered into a share repurchase agreement with a counterparty on July 21, 2014, whereby Fifth Third would purchase approximately $225 million of its outstanding common stock. This transaction reduced Fifth Third’s third quarter share count by 9.35 million shares on July 24, 2014. Settlement of the forward contract related to this agreement occurred on October 14, 2014 and an additional 1.90 million shares were repurchased upon completion of the agreement. In addition, the settlement of the forward contract related to the April 28, 2014, $150 million share repurchase agreement occurred on July 21, 2014. An additional 1.02 million shares were repurchased upon completion of the agreement. In total, the incremental impact to the average diluted share count in the third quarter of 2014 due to these two transactions was approximately 9.86 million shares.
* Non-GAAP measure; see Reg. G reconciliation on page 33 in Exhibit
99.1 of 8-k filing dated 10/16/14.
** Capital ratios
estimated; presented under current U.S. capital regulations. The pro
forma Basel III Tier I common equity ratio is management’s estimate
based upon its current interpretation of the Basel III Final Rule
approved in July 2013.
Tax Rate
The effective tax rate was 26.7 percent this quarter compared with 27.6 percent in the second quarter of 2014 and 30.3 percent in the third quarter of 2013.
Other
Fifth Third Bank owns 43 million units representing a 22.8 percent interest in Vantiv Holding, LLC, convertible into shares of Vantiv, Inc., a publicly traded firm (NYSE: VNTV). Based upon Vantiv’s closing price of $30.90 on September 30, 2014, our interest in Vantiv was valued at approximately $1.3 billion. Next month in our 10-Q, we will update our disclosure of the carrying value of our interest in Vantiv stock, which was $384 million as of June 30, 2014. The difference between the market value and the book value of Fifth Third’s interest in Vantiv’s shares is not recognized in Fifth Third’s equity or capital. Additionally, Fifth Third has a warrant to purchase additional shares in Vantiv which is carried as a derivative asset at a fair value of $358 million as of September 30, 2014.
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 by Thomson Financial and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Fifth Third” then “Investor Relations”). Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).
Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available beginning approximately two hours after the conference call until Thursday, October 30 by dialing 800-585-8367 for domestic access and 404-537-3406 for international access (passcode 10261976#).
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of September 30, 2014, the Company had $134 billion in assets and operated 15 affiliates with 1,308 full-service Banking Centers, including 102 Bank Mart® locations, most open seven days a week, inside select grocery stores and 2,639 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has a 22.8% interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of September 30, 2014, had $303 billion in assets under care, of which it managed $26 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
Forward-Looking Statements
This news release contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) general economic conditions and weakening in the economy, specifically the real estate market, either nationally or in the states in which Fifth Third, one or more acquired entities and/or the combined company do business, are less favorable than expected; (2) deteriorating credit quality; (3) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (4) changes in the interest rate environment reduce interest margins; (5) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (6) Fifth Third’s ability to maintain required capital levels and adequate sources of funding and liquidity; (7) maintaining capital requirements may limit Fifth Third’s operations and potential growth; (8) changes and trends in capital markets; (9) problems encountered by larger or similar financial institutions may adversely affect the banking industry and/or Fifth Third; (10) competitive pressures among depository institutions increase significantly; (11) effects of critical accounting policies and judgments; (12) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies; (13) legislative or regulatory changes or actions, or significant litigation, adversely affect Fifth Third, one or more acquired entities and/or the combined company or the businesses in which Fifth Third, one or more acquired entities and/or the combined company are engaged, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; (14) ability to maintain favorable ratings from rating agencies; (15) fluctuation of Fifth Third’s stock price; (16) ability to attract and retain key personnel; (17) ability to receive dividends from its subsidiaries; (18) potentially dilutive effect of future acquisitions on current shareholders’ ownership of Fifth Third; (19) effects of accounting or financial results of one or more acquired entities; (20) difficulties from Fifth Third’s investment in, relationship with, and nature of the operations of Vantiv, LLC; (21) loss of income from any sale or potential sale of businesses that could have an adverse effect on Fifth Third’s earnings and future growth; (22) ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; and (23) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity.
You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.