Reported diluted earnings per share of
$0.94
Fifth Third Bancorp (NASDAQ ®: FITB):
Key Highlights
Select Business Highlights:
- Launched Fifth Third Momentum Banking across footprint - a
fintech banking solution with Early Pay, Extra Time, smart savings,
and other features with no monthly fee
- Announced acquisition of Provide, a leading fintech company
serving healthcare practices (expect to close early August
2021)
- Generated consumer household growth of 4% vs. 2Q20
- Published second annual ESG report on June 30th
Select Financial Highlights:
(2Q21 versus 1Q21 where applicable)
- ROTCE(a) of 16.6%; adjusted ROTCE(a) of 19.7% excl. AOCI
- PPNR(a) increased 12%; adjusted PPNR(a) increased 15%
- Historically low NCO ratio of 0.16% reflecting improvements in
both commercial and consumer
- Benefit to credit losses and resulting reserve coverage
reflects improved macroeconomic environment and strong credit
results; NPA ratio improved 11 bps
- Repurchased shares totaling $347 million; capital plans support
repurchase of shares totaling approximately $850 million in 2H21;
continue to target 9.5% CET1 by June 2022
Key Financial Data
$ millions for all balance sheet and
income statement items
2Q21
1Q21
2Q20
Income Statement Data
Net income available to common
shareholders
$674
$674
$163
Net interest income (U.S. GAAP)
1,208
1,176
1,200
Net interest income (FTE)(a)
1,211
1,179
1,203
Noninterest income
741
749
650
Noninterest expense
1,153
1,215
1,121
Per Share Data
Earnings per share, basic
$0.95
$0.94
$0.23
Earnings per share, diluted
0.94
0.93
0.23
Book value per share
29.57
28.78
28.88
Tangible book value per share(a)
23.34
22.60
22.66
Balance Sheet & Credit
Quality
Average portfolio loans and leases
$108,534
$108,956
$118,506
Average deposits
162,619
158,888
150,598
Net charge-off ratio(b)
0.16
%
0.27
%
0.44
%
Nonperforming asset ratio(c)
0.61
0.72
0.65
Financial Ratios
Return on average assets
1.38
%
1.38
%
0.40
%
Return on average common equity
13.0
13.1
3.2
Return on average tangible common
equity(a)
16.6
16.8
4.3
CET1 capital(d)(e)
10.37
10.46
9.72
Net interest margin(a)
2.63
2.62
2.75
Efficiency(a)
59.1
63.0
60.5
Other than the Quarterly Financial Review
tables beginning on page 14 of the earnings release, commentary is
on a fully taxable-equivalent (FTE) basis unless otherwise noted.
Consistent with SEC guidance in Industry Guide 3 that contemplates
the calculation of tax-exempt income on a taxable-equivalent basis,
net interest income, net interest margin, net interest rate spread,
total revenue and the efficiency ratio are provided on an FTE
basis.
CEO Commentary
"We delivered outstanding financial results once again this
quarter supported by strong business performance across our
franchise and reflecting improved and diversified revenues. This
was combined with well-managed expenses and yet another quarter of
historically low net charge-offs reflecting our disciplined client
selection, conservative underwriting, and improvement in the
broader economy supported by government stimulus programs.
Commercial lending production trends and pipelines continue to
indicate improved loan growth once supply and labor constraints
normalize. To further accelerate profitable relationship growth
over the long-term, we recently announced the acquisition of
Provide, a leading fintech company serving healthcare
practices.
Furthermore, we recently launched Fifth Third Momentum Banking,
a consumer banking value proposition unparalleled in the industry,
which combines the best of a traditional bank offering with several
leading fintech features. We believe this will further accelerate
our already-strong household growth and continue to provide a
differentiated customer experience.
We remain focused on disciplined client selection, generating
strong relationships and managing the balance sheet through varying
cycles over a long-term performance horizon. We are well-positioned
to benefit when interest rates rise and well-hedged if rates remain
at low levels for several more years. As a result, we expect to
generate and return a significant amount of excess capital to
shareholders over the next year.”
-Greg D. Carmichael, Chairman and
CEO
Income Statement Highlights
($ in millions, except per share
data)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Condensed Statements of Income
Net interest income (NII)(a)
$1,211
$1,179
$1,203
3%
1%
(Benefit from) provision for credit
losses
(115)
(173)
485
(34)%
NM
Noninterest income
741
749
650
(1)%
14%
Noninterest expense
1,153
1,215
1,121
(5)%
3%
Income before income taxes(a)
$914
$886
$247
3%
270%
Taxable equivalent adjustment
$3
$3
$3
—
—
Applicable income tax expense
202
189
49
7%
312%
Net income
$709
$694
$195
2%
264%
Dividends on preferred stock
35
20
32
75%
9%
Net income available to common
shareholders
$674
$674
$163
—
313%
Earnings per share, diluted
$0.94
$0.93
$0.23
1%
309%
Fifth Third Bancorp (NASDAQ®: FITB) today reported second
quarter 2021 net income of $709 million compared to net income of
$694 million in the prior quarter and $195 million in the year-ago
quarter. Net income available to common shareholders in the current
quarter was $674 million, or $0.94 per diluted share, compared to
$674 million, or $0.93 per diluted share, in the prior quarter and
$163 million, or $0.23 per diluted share, in the year-ago
quarter.
Net Interest Income
(FTE; $ in millions)(a)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Interest Income
Interest income
$1,326
$1,305
$1,406
2%
(6)%
Interest expense
115
126
203
(9)%
(43)%
Net interest income (NII)
$1,211
$1,179
$1,203
3%
1%
Average Yield/Rate Analysis
bps Change
Yield on interest-earning assets
2.88
%
2.90
%
3.21
%
(2)
(33)
Rate paid on interest-bearing
liabilities
0.40
%
0.44
%
0.66
%
(4)
(26)
Ratios
Net interest rate spread
2.48
%
2.46
%
2.55
%
2
(7)
Net interest margin (NIM)
2.63
%
2.62
%
2.75
%
1
(12)
Compared to the prior quarter, NII increased $32 million, or 3%.
Results reflected the impact of purchases of GNMA loan buyouts
associated with CARES Act forbearance plans from a third party
($3.7 billion purchased since December 2020, including $1.0 billion
in April 2021), elevated investment portfolio prepayment penalties,
higher day count, and the early redemption of long-term debt,
partially offset by the impact of lower commercial loan balances
and lower yields on loan balances. PPP-related interest income was
$53 million, unchanged relative to the prior quarter. Compared to
the prior quarter, NIM increased 1 bp reflecting elevated
investment portfolio prepayment penalties, early redemption of
long-term debt, and the impact of the aforementioned GNMA loan
buyout purchases, partially offset by lower C&I loan balances
and lower yields on loan balances. PPP and excess liquidity had a
negative impact on NIM of approximately 49 bps in the second
quarter of 2021, compared to 48 bps in the prior quarter. As a
result, underlying NIM(f) expanded 2 bps sequentially.
Compared to the year-ago quarter, NII increased $8 million, or
1%, primarily reflecting lower deposit costs, the impact of the
aforementioned GNMA loan buyout purchases, interest income from PPP
loans, and a reduction in long-term debt, partially offset by lower
C&I loan balances. Compared to the year-ago quarter, NIM
decreased 12 bps, primarily reflecting the impact of excess
liquidity, lower market rates, and lower commercial loan balances,
partially offset by lower deposit costs.
Noninterest Income
($ in millions)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Noninterest Income
Service charges on deposits
$149
$144
$122
3%
22%
Commercial banking revenue
160
153
137
5%
17%
Mortgage banking net revenue
64
85
99
(25)%
(35)%
Wealth and asset management revenue
145
143
120
1%
21%
Card and processing revenue
102
94
82
9%
24%
Leasing business revenue
61
87
57
(30)%
7%
Other noninterest income
49
42
12
17%
308%
Securities gains, net
10
3
21
233%
(52)%
Securities gains (losses), net -
non-qualifying hedges on mortgage servicing rights
1
(2)
—
NM
NM
Total noninterest income
$741
$749
$650
(1)%
14%
Reported noninterest income decreased $8 million, or 1%, from
the prior quarter, and increased $91 million, or 14%, 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 $10 million attributable to
mark-to-market impacts related to non-qualified deferred
compensation assets in the current quarter.
Noninterest Income excluding certain
items
($ in millions)
For the Three Months Ended
June
March
June
2021
2021
2020
Noninterest Income excluding certain
items
Noninterest income (U.S. GAAP)
$741
$749
$650
Valuation of Visa total return swap
37
13
29
Branch and non-branch real estate
charges
—
—
12
Securities (gains), net
(10)
(3)
(21)
Noninterest income excluding certain
items(a)
$768
$759
$670
Compared to the prior quarter, noninterest income excluding
certain items increased $9 million, or 1%. Compared to the year-ago
quarter, noninterest income excluding certain items increased $98
million, or 15%.
Compared to the prior quarter, service charges on deposits
increased $5 million, or 3%, reflecting an increase in both
commercial and consumer deposit fees. Commercial banking revenue
increased $7 million, or 5%, primarily driven by increases in loan
syndication revenue and financial risk management revenue,
partially offset by lower corporate bond fees. Mortgage banking net
revenue decreased $21 million, or 25%, reflecting an incremental
$21 million unfavorable impact from MSR net valuation adjustments
and an $8 million decrease in origination fees and gains on loan
sales due to market pressures including margin compression. This
was partially offset by an $8 million decrease in MSR asset decay
reflecting slower prepayment speeds. Current quarter mortgage
originations of $5.0 billion increased 7% compared to the prior
quarter. Wealth and asset management revenue increased $2 million,
or 1%, driven primarily by higher personal asset management revenue
and brokerage fees, partially offset by seasonally strong tax
preparation fees from the prior quarter. Card and processing
revenue increased $8 million, or 9%, primarily driven by higher
credit and debit interchange, partially offset by higher rewards.
Leasing business revenue decreased $26 million, or 30%, primarily
driven by strong lease syndication revenue from the prior
quarter.
Compared to the year-ago quarter, service charges on deposits
increased $27 million, or 22%, reflecting an increase in both
commercial and consumer deposit fees. Commercial banking revenue
increased $23 million, or 17%, primarily driven by increases in
loan syndication revenue and M&A advisory revenue, partially
offset by lower corporate bond fees. Mortgage banking net revenue
decreased $35 million, or 35%, primarily driven by an increase in
MSR asset decay and a decrease in origination fees and gains on
loan sales due to market pressures including margin compression.
Wealth and asset management revenue increased $25 million, or 21%,
primarily driven by higher personal asset management revenue and
brokerage fees. Card and processing revenue increased by $20
million, or 24%, primarily driven by higher credit and debit
interchange, partially offset by higher rewards. Leasing business
revenue increased $4 million, or 7%, primarily reflecting increases
in lease remarketing revenue and business solutions revenue.
Noninterest Expense
($ in millions)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Noninterest Expense
Compensation and benefits
$638
$706
$627
(10)%
2%
Net occupancy expense
77
79
82
(3)%
(6)%
Technology and communications
94
93
90
1%
4%
Equipment expense
34
34
32
—
6%
Card and processing expense
20
30
29
(33)%
(31)%
Leasing business expense
33
35
33
(6)%
—
Marketing expense
20
23
20
(13)%
—
Other noninterest expense
237
215
208
10%
14%
Total noninterest expense
$1,153
$1,215
$1,121
(5)%
3%
Reported noninterest expense decreased $62 million, or 5%, from
the prior quarter, and increased $32 million, or 3%, from the
year-ago quarter. The reported results reflect the impact of
certain items in the table below.
Noninterest Expense excluding certain
items
($ in millions)
For the Three Months Ended
June
March
June
2021
2021
2020
Noninterest Expense excluding certain
items
Noninterest expense (U.S. GAAP)
$1,153
$1,215
$1,121
Merger-related expenses
—
—
(9)
FHLB debt extinguishment charge
—
—
(6)
Noninterest expense excluding certain
items(a)
$1,153
$1,215
$1,106
Compared to the prior quarter, noninterest expense decreased $62
million, or 5%, reflecting the prior quarter seasonal compensation
and benefits expense impacts, lower card and processing expense due
to contract renegotiations, and diligent expense management
throughout the company. These expense decreases were partially
offset by increased performance-based compensation expense
reflecting strong business results, higher other noninterest
expense including the expenses associated with the aforementioned
GNMA loan buyout purchases, and the impact of non-qualified
deferred compensation mark-to-market expense ($12 million in the
current quarter compared to $7 million in the prior quarter).
Full-time equivalent employees declined 2% compared to the prior
quarter.
Compared to the year-ago quarter, noninterest expense excluding
certain items increased $47 million, or 4%, primarily due to an
increase in performance-based compensation expense reflecting
strong business results and higher other noninterest expense
including the expenses associated with the aforementioned GNMA loan
buyout purchases, partially offset by lower card and processing
expense and lower net occupancy expense. Full-time equivalent
employees declined 5% compared to the year-ago quarter.
Average Interest-Earning Assets
($ in millions)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Average Portfolio Loans and
Leases
Commercial loans and leases:
Commercial and industrial loans
$48,773
$49,629
$59,040
(2)%
(17)%
Commercial mortgage loans
10,459
10,532
11,222
(1)%
(7)%
Commercial construction loans
6,043
6,039
5,548
—
9%
Commercial leases
3,174
3,114
3,056
2%
4%
Total commercial loans and leases
$68,449
$69,314
$78,866
(1)%
(13)%
Consumer loans:
Residential mortgage loans
$15,883
$15,803
$16,561
1%
(4)%
Home equity
4,674
5,009
5,820
(7)%
(20)%
Indirect secured consumer loans
14,702
13,955
12,124
5%
21%
Credit card
1,770
1,879
2,248
(6)%
(21)%
Other consumer loans
3,056
2,996
2,887
2%
6%
Total consumer loans
$40,085
$39,642
$39,640
1%
1%
Total average portfolio loans and
leases
$108,534
$108,956
$118,506
—
(8)%
Average Loans and Leases Held for
Sale
Commercial loans and leases held for
sale
$52
$104
$68
(50)%
(24)%
Consumer loans held for sale
5,857
4,641
844
26%
594%
Total average loans and leases held for
sale
$5,909
$4,745
$912
25%
548%
Securities (taxable and tax-exempt)
$36,917
$36,297
$36,973
2%
—
Other short-term investments
33,558
32,717
19,833
3%
69%
Total average interest-earning assets
$184,918
$182,715
$176,224
1%
5%
Compared to the prior quarter, total average portfolio loans and
leases were flat, as an increase in consumer loans was offset by a
decrease in commercial loan and lease balances. Average commercial
portfolio loans and leases decreased 1%, reflecting lower C&I
term loan balances (nearly half of the sequential decline was due
to PPP forgiveness), as well as lower commercial mortgage loans.
Average consumer portfolio loans increased 1%, as higher indirect
secured consumer loans were partially offset by lower home equity
and credit card balances.
Compared to the year-ago quarter, total average portfolio loans
and leases decreased 8% reflecting lower C&I revolving line of
credit utilization and term loan balances, as well as declines in
home equity and commercial mortgage loans, partially offset by
increases in indirect secured consumer loans and commercial
construction loans. Average commercial portfolio loans and leases
decreased 13% due to declines in C&I revolving line of credit
utilization and term loan balances and lower commercial mortgage
loans, partially offset by growth in commercial construction loans.
Average consumer portfolio loans increased 1%, as higher indirect
secured consumer loans were partially offset by lower home equity,
residential mortgage, and credit card balances.
Average loans and leases held for sale of $6 billion in the
current quarter increased $1 billion compared to the prior quarter
and increased $5 billion compared to the year-ago quarter, impacted
by the aforementioned GNMA loan buyout purchases within consumer
loans held for sale ($3.7 billion purchased since December 2020,
including $1.0 billion in April 2021).
Average other short-term investments (including interest-bearing
cash) of $34 billion in the current quarter increased $1 billion
compared to the prior quarter and increased $14 billion compared to
the year-ago quarter. The increase relative to the year-ago quarter
reflected average core deposit growth of 10% compared to average
total loan decline of 4%.
Total period-end commercial portfolio loans and leases of $67
billion decreased 3% from the prior quarter driven by lower C&I
term loan balances almost entirely due to PPP forgiveness, as well
as declines in commercial construction and commercial mortgage loan
balances. Compared to the year-ago quarter, total period-end
commercial portfolio loans decreased $8 billion, or 11%, reflecting
lower C&I revolving line of credit utilization and term loan
balances partially due to PPP forgiveness, as well as lower
commercial mortgage loans, partially offset by growth in commercial
construction loans. Period-end commercial revolving line
utilization was flat compared to the prior quarter at 31%, compared
to 38% in the year-ago quarter. Period-end consumer portfolio loans
of $41 billion increased 2% compared to the prior quarter, as
continued growth in indirect secured consumer loans and residential
mortgage loans were partially offset by a decline in home equity
balances. Compared to the year-ago quarter, total period-end
consumer portfolio loans increased $1 billion, or 3%, reflecting
higher indirect secured consumer loan balances, partially offset by
lower home equity balances.
Average Deposits
($ in millions)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Average Deposits
Demand
$61,994
$58,586
$45,761
6%
35%
Interest checking
45,307
45,568
49,760
(1)%
(9)%
Savings
20,494
18,951
16,354
8%
25%
Money market
30,844
30,601
30,022
1%
3%
Foreign office(g)
140
128
182
9%
(23)%
Total transaction deposits
$158,779
$153,834
$142,079
3%
12%
Other time
2,696
3,045
4,421
(11)%
(39)%
Total core deposits
$161,475
$156,879
$146,500
3%
10%
Certificates - $100,000 and over
1,144
2,009
4,067
(43)%
(72)%
Other deposits
—
—
31
NM
(100)%
Total average deposits
$162,619
$158,888
$150,598
2%
8%
Compared to the prior quarter, average core deposits increased
3%, as increases in consumer and commercial deposit balances across
most product types benefited from continued fiscal and monetary
stimulus and were partially offset by a decrease in other time
balances. Average demand deposits represented 38% of total core
deposits in the current quarter compared to 37% in the prior
quarter. Average commercial transaction deposits increased 1% and
average consumer transaction deposits increased 5%.
Compared to the year-ago quarter, average core deposits
increased 10%, driven by the impacts of fiscal and monetary
stimulus combined with success generating consumer household
growth. Average commercial transaction deposits increased 7% and
average consumer transaction deposits increased 17%.
The period end portfolio loan-to-core deposit ratio was 67% in
the current quarter, compared to 68% in the prior quarter and 75%
in the year-ago quarter. Excluding the impact of PPP loans, the
period end portfolio loan-to-core deposit ratio was 64% in the
current quarter, compared to 64% in the prior quarter and 72% in
the year-ago quarter.
Average Wholesale Funding
($ in millions)
For the Three Months Ended
% Change
June
March
June
2021
2021
2020
Seq
Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over
$1,144
$2,009
$4,067
(43)%
(72)%
Other deposits
—
—
31
NM
(100)%
Federal funds purchased
346
324
309
7%
12%
Other short-term borrowings
1,097
1,209
2,377
(9)%
(54)%
Long-term debt
13,883
14,849
16,955
(7)%
(18)%
Total average wholesale funding
$16,470
$18,391
$23,739
(10)%
(31)%
Compared to the prior quarter, average wholesale funding
decreased 10%, driven by the retirement of approximately $2.3
billion in long-term debt in the current quarter, as well as
continued runoff in jumbo CD balances. Compared to the year-ago
quarter, average wholesale funding decreased 31%, reflecting
decreases in long-term debt, jumbo CD balances, and other
short-term borrowings.
Credit Quality Summary
($ in millions)
As of and For the Three Months
Ended
June
March
December
September
June
2021
2021
2020
2020
2020
Total nonaccrual portfolio loans and
leases (NPLs)
$621
$741
$834
$891
$700
Repossessed property
5
7
9
7
4
OREO
31
35
21
33
43
Total nonperforming portfolio loans and
leases and OREO (NPAs)
$657
$783
$864
$931
$747
NPL ratio(h)
0.58%
0.68%
0.77%
0.80%
0.61%
NPA ratio(c)
0.61%
0.72%
0.79%
0.84%
0.65%
Total loans and leases 30-89 days past due
(accrual)
$281
$305
$357
$323
$381
Total loans and leases 90 days past due
(accrual)
83
124
163
139
136
Allowance for loan and lease losses
(ALLL), beginning
$2,208
$2,453
$2,574
$2,696
$2,348
Total net losses charged-off
(44)
(71)
(118)
(101)
(130)
(Benefit from) provision for loan and
lease losses
(131)
(174)
(3)
(21)
478
ALLL, ending
$2,033
$2,208
$2,453
$2,574
$2,696
Reserve for unfunded commitments,
beginning
$173
$172
$182
$176
$169
Provision for (benefit from) the reserve
for unfunded commitments
16
1
(10)
6
7
Reserve for unfunded commitments,
ending
$189
$173
$172
$182
$176
Total allowance for credit losses
(ACL)
$2,222
$2,381
$2,625
$2,756
$2,872
ACL ratios:
As a % of portfolio loans and leases
2.06%
2.19%
2.41%
2.49%
2.50%
As a % of nonperforming portfolio loans
and leases
358%
321%
315%
309%
410%
As a % of nonperforming portfolio
assets
338%
304%
304%
296%
385%
ALLL as a % of portfolio loans and
leases
1.89%
2.03%
2.25%
2.32%
2.34%
Total losses charged-off
$(103)
$(109)
$(154)
$(135)
$(163)
Total recoveries of losses previously
charged-off
59
38
36
34
33
Total net losses charged-off
$(44)
$(71)
$(118)
$(101)
$(130)
Net charge-off ratio (NCO ratio)(b)
0.16%
0.27%
0.43%
0.35%
0.44%
Commercial NCO ratio
0.10%
0.17%
0.40%
0.33%
0.40%
Consumer NCO ratio
0.26%
0.43%
0.47%
0.40%
0.52%
Nonperforming portfolio loans and leases were $621 million in
the current quarter, with the resulting NPL ratio of 0.58%.
Compared to the prior quarter, NPLs decreased $120 million with the
NPL ratio decreasing 10 bps. Compared to the year-ago quarter, NPLs
decreased $79 million with the NPL ratio decreasing 3 bps.
Nonperforming portfolio assets were $657 million in the current
quarter, with the resulting NPA ratio of 0.61%. Compared to the
prior quarter, NPAs decreased $126 million with the NPA ratio
decreasing 11 bps. Compared to the year-ago quarter, NPAs decreased
$90 million with the NPA ratio decreasing 4 bps.
The benefit from credit losses totaled $115 million in the
current quarter. The allowance for credit loss ratio represented
2.06% of total portfolio loans and leases in the current quarter,
compared with 2.19% in the prior quarter and 2.50% in the year-ago
quarter. In the current quarter, the allowance for credit losses
represented 358% of nonperforming portfolio loans and leases and
338% of nonperforming portfolio assets. The allowance for loan and
lease losses ratio represented 1.89% of total portfolio loans and
leases in the current quarter.
Net charge-offs were $44 million in the current quarter, with
the resulting NCO ratio of 0.16%. Compared to the prior quarter,
net charge-offs decreased $27 million and the NCO ratio decreased
11 bps, reflecting improvement in both commercial and consumer
portfolios. Compared to the year-ago quarter, net charge-offs
decreased $86 million and the NCO ratio decreased 28 bps.
Capital Position
As of and For the Three Months
Ended
June
March
December
September
June
2021
2021
2020
2020
2020
Capital Position
Average total Bancorp shareholders' equity
as a % of average assets
11.11
%
11.26
%
11.34%
11.33%
11.30
%
Tangible equity(a)
8.35
%
8.20
%
8.18%
8.09%
7.68
%
Tangible common equity (excluding
AOCI)(a)
7.28
%
7.14
%
7.11%
6.99%
6.77
%
Tangible common equity (including
AOCI)(a)
8.18
%
7.95
%
8.29%
8.31%
8.13
%
Regulatory Capital Ratios(d)(e)
CET1 capital
10.37
%
10.46
%
10.34%
10.14%
9.72
%
Tier I risk-based capital
11.83
%
11.94
%
11.83%
11.64%
10.96
%
Total risk-based capital
14.60
%
14.80
%
15.08%
14.93%
14.24
%
Tier I leverage
8.55
%
8.61
%
8.49%
8.37%
8.16
%
Capital ratios remained strong this quarter. The CET1 capital
ratio was 10.37%, the tangible common equity to tangible assets
ratio was 7.28% excluding AOCI, and 8.18% including AOCI. The Tier
I risk-based capital ratio was 11.83%, the Total risk-based capital
ratio was 14.60%, and the Tier I leverage ratio was 8.55%. 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 0% risk-weighted assets resulting from
interest-bearing cash as well as PPP loans.
During the second quarter of 2021, Fifth Third repurchased
approximately $347 million of its outstanding stock, which reduced
common shares by approximately 8.6 million at quarter end.
On June 24, 2021, the Federal Reserve Board (FRB) notified Fifth
Third that its required stress capital buffer (SCB) beginning July
1, 2021 will be 2.5%, which is the floor under the regulatory
capital rules. Without the floor, Fifth Third's buffer would have
been approximately 2.1%.
Fifth Third's capital position and earnings capacity support an
increase in the quarterly common dividend starting in the third
quarter of 2021, subject to economic conditions and approval by the
Fifth Third Board of Directors.
Tax Rate
The effective tax rate was 22.1% compared with 21.4% in the
prior quarter and 19.9% in the year-ago quarter.
Conference Call
Fifth Third will host a conference call to discuss these
financial results at 9:00 a.m. (Eastern Time) today. This
conference call will be webcast live and may be accessed through
the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor
Relations”). Those unable to listen to the live webcast may access
a webcast replay through the Fifth Third Investor Relations website
at the same web address, 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 June 30, 2021, the Company had $205 billion in
assets and operates 1,096 full-service Banking Centers, and 2,369
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 June 30, 2021, had $483 billion
in assets under care, of which it managed $61 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 27 of the earnings
release.
(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)
Second quarter 2021 underlying
NIM calculated by reducing average interest-earning assets
approximately $31.1 billion resulting from excess cash compared to
normalized levels (average other short term investments less a $2.5
billion normalized level) and approximately $4.8 billion from
average PPP balances (with a corresponding reduction to net
interest income of approximately $53 million), resulting in an
underlying NIM of approximately 3.12%; 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%.
(g)
Includes commercial customer
Eurodollar sweep balances for which the Bank pays rates comparable
to other commercial deposit accounts.
(h)
Nonperforming portfolio loans and
leases as a percent of portfolio loans and leases and OREO.
FORWARD-LOOKING STATEMENTS
This release contains statements that we believe are
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Rule 175 promulgated
thereunder, and Section 21E of the Securities Exchange Act of 1934,
as amended, and Rule 3b-6 promulgated thereunder. These statements
relate to our financial condition, results of operations, plans,
objectives, future performance, 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.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210722005226/en/
Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed
Loyd (513) 534-6397
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