Reported diluted earnings per share of
$0.97
Reported results included a positive $0.03
impact from certain items on page 2 of the 3Q21 earnings
release
Fifth Third Bancorp (NASDAQ ®: FITB):
Key Highlights
Select Business Highlights:
- Closed acquisition of Provide, a leading fintech company
serving healthcare practices
- Finalized HSA deposit sale, generating a pre-tax gain of $60
million (noninterest income)
- Made $15 million pre-tax contribution to accelerate racial
equality, equity and inclusion in our communities
- Generated consumer household growth of 3% vs. 3Q20
- Commercial loan production increased 5% compared to 2Q21;
strongest production quarter since 4Q19
Select Financial Highlights:
- ROTCE(a) of 16.9%; adjusted ROTCE(a) of 18.7% excl. AOCI
- PPNR(a) increased 17% and adjusted PPNR(a) increased 4%
compared to 3Q20
- Period-end C&I loan growth of 1% (or 4% excl. impact of PPP
loans) compared to 2Q21
- Historically low NCO ratio of 0.08% reflecting improvements in
both commercial and consumer
- Repurchased shares totaling $550 million; capital plans support
repurchase of shares totaling approximately $300 million in 4Q21;
continue to target 9.5% CET1 by June 2022
Key Financial Data
$ millions for all balance sheet and
income statement items
3Q21
2Q21
3Q20
Income Statement Data
Net income available to common
shareholders
$684
$674
$562
Net interest income (U.S. GAAP)
1,189
1,208
1,170
Net interest income (FTE)(a)
1,192
1,211
1,173
Noninterest income
836
741
722
Noninterest expense
1,172
1,153
1,161
Per Share Data
Earnings per share, basic
$0.98
$0.95
$0.78
Earnings per share, diluted
0.97
0.94
0.78
Book value per share
29.59
29.57
29.25
Tangible book value per share(a)
22.79
23.34
23.06
Balance Sheet & Credit
Quality
Average portfolio loans and leases
$107,970
$108,534
$113,362
Average deposits
162,647
162,619
155,911
Net charge-off ratio(b)
0.08
%
0.16
%
0.35
%
Nonperforming asset ratio(c)
0.52
0.61
0.84
Financial Ratios
Return on average assets
1.36
%
1.38
%
1.14
%
Return on average common equity
13.0
13.0
10.7
Return on average tangible common
equity(a)
16.9
16.6
13.8
CET1 capital(d)(e)
9.85
10.37
10.14
Net interest margin(a)
2.59
2.63
2.58
Efficiency(a)
57.8
59.1
61.3
Other than the Quarterly Financial Review
tables beginning on page 14 of the 3Q21 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
"Fifth Third has continued to deliver strong and steady
financial results throughout the pandemic while fully supporting
our customers, communities, and employees. Our performance this
quarter once again reflected strong business outcomes across our
franchise, resulting in improved and diversified revenues. This was
combined with disciplined balance sheet management, expense
management, and yet another quarter of benign credit results. As a
result of our continued momentum, we generated positive operating
leverage on a year-over-year basis.
Excluding the impact of the Paycheck Protection Program (PPP),
loan growth this quarter reflected robust production, with even
better growth on an end-of-period basis. We expect this positive
momentum to carry forward in the fourth quarter and beyond.
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. We made a $15 million contribution in the third
quarter to accelerate racial equality, equity and inclusion in our
communities.
We closed two transactions during the third quarter to improve
growth and profitability. The acquisition of Provide – a leading
fintech company serving healthcare practices – will further
accelerate profitable relationship growth. Additionally, we
finalized the sale of HSA deposits as part of our multi-year
strategy to simplify the organization and prioritize investments in
order to generate differentiated outcomes for customers and
shareholders. We continue to focus on growing strong relationships
and managing the balance sheet with a through-the-cycle perspective
in order to generate sustainable long-term value."
-Greg D. Carmichael, Chairman and
CEO
Income Statement Highlights
($ in millions, except per share
data)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Condensed Statements of Income
Net interest income (NII)(a)
$1,192
$1,211
$1,173
(2)%
2%
Benefit from credit losses
(42)
(115)
(15)
(63)%
180%
Noninterest income
836
741
722
13%
16%
Noninterest expense
1,172
1,153
1,161
2%
1%
Income before income taxes(a)
$898
$914
$749
(2)%
20%
Taxable equivalent adjustment
$3
$3
$3
—
—
Applicable income tax expense
191
202
165
(5)%
16%
Net income
$704
$709
$581
(1)%
21%
Dividends on preferred stock
20
35
19
(43)%
5%
Net income available to common
shareholders
$684
$674
$562
1%
22%
Earnings per share, diluted
$0.97
$0.94
$0.78
3%
24%
Fifth Third Bancorp (NASDAQ®: FITB) today reported third quarter
2021 net income of $704 million compared to net income of $709
million in the prior quarter and $581 million in the year-ago
quarter. Net income available to common shareholders in the current
quarter was $684 million, or $0.97 per diluted share, compared to
$674 million, or $0.94 per diluted share, in the prior quarter and
$562 million, or $0.78 per diluted share, in the year-ago
quarter.
Diluted earnings per share impact of
certain items - 3Q21
(after-tax impacts(f); $ in millions,
except per share data)
Valuation of Visa total return swap
(noninterest income)
$(13)
Fifth Third Foundation contribution
expense
(12)
HSA disposition gain (noninterest
income)
46
After-tax impact(f) of certain items
$21
Diluted earnings per share impact of
certain items1
$0.03
1Diluted earnings per share impact
reflects 706.090 million average diluted shares outstanding
Net Interest Income
(FTE; $ in millions)(a)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Interest Income
Interest income
$1,295
$1,326
$1,332
(2)%
(3)%
Interest expense
103
115
159
(10)%
(35)%
Net interest income (NII)
$1,192
$1,211
$1,173
(2)%
2%
Average Yield/Rate Analysis
bps Change
Yield on interest-earning assets
2.81%
2.88%
2.93%
(7)
(12)
Rate paid on interest-bearing
liabilities
0.36%
0.40%
0.51%
(4)
(15)
Ratios
Net interest rate spread
2.45%
2.48%
2.42%
(3)
3
Net interest margin (NIM)
2.59%
2.63%
2.58%
(4)
1
Compared to the prior quarter, NII decreased $19 million, or 2%,
primarily due to lower PPP-related income, lower yields on
commercial loan balances (excluding PPP), and a reduction in
prepayment penalties received in the investment portfolio,
partially offset by higher day count and reductions in long-term
debt. PPP-related interest income was $47 million compared to $53
million in the prior quarter. Compared to the prior quarter, NIM
decreased 4 bps, primarily due to lower yields on commercial loan
balances (excluding PPP), a reduction in prepayment penalties
received in the investment portfolio, and higher day count,
partially offset by reductions in long-term debt. Underlying NIM(g)
decreased 9 bps sequentially. Excess liquidity and PPP had a
negative impact on reported NIM of approximately 44 bps in the
current quarter, compared to 49 bps in the prior quarter.
Compared to the year-ago quarter, NII increased $19 million, or
2%, primarily reflecting the benefit of GNMA forbearance loan
buyout purchases, lower deposit costs, a reduction in long-term
debt, and higher interest income from PPP loans, partially offset
by lower C&I, home equity, and credit card balances and the
impact of lower market rates. Compared to the year-ago quarter,
reported NIM increased 1 bp, primarily reflecting lower deposit
costs, PPP-related income, and a reduction in long-term debt,
partially offset by lower market rates, loan spread compression,
and the impact of excess liquidity.
Noninterest Income
($ in millions)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Noninterest Income
Service charges on deposits
$152
$149
$144
2%
6%
Commercial banking revenue
152
160
125
(5)%
22%
Mortgage banking net revenue
86
64
76
34%
13%
Wealth and asset management revenue
147
145
132
1%
11%
Card and processing revenue
102
102
92
—
11%
Leasing business revenue
78
61
77
28%
1%
Other noninterest income
120
49
26
145%
362%
Securities (losses) gains, net
(1)
10
51
NM
NM
Securities (losses) gains, net -
non-qualifying hedges on mortgage servicing rights
—
1
(1)
(100)%
(100)%
Total noninterest income
$836
$741
$722
13%
16%
Reported noninterest income increased $95 million, or 13%, from
the prior quarter, and increased $114 million, or 16%, from the
year-ago quarter. The reported results reflect the impact of
certain items in the table below, including securities gains and
losses.
Noninterest Income excluding certain
items
($ in millions)
For the Three Months Ended
September
June
September
2021
2021
2020
Noninterest Income excluding certain
items
Noninterest income (U.S. GAAP)
$836
$741
$722
Valuation of Visa total return swap
17
37
22
HSA disposition gain
(60)
—
—
Branch and non-branch real estate
charges
—
—
10
Securities losses/(gains), net
1
(10)
(51)
Noninterest income excluding certain
items(a)
$794
$768
$703
Compared to the prior quarter, noninterest income excluding
certain items increased $26 million, or 3%. Compared to the
year-ago quarter, noninterest income excluding certain items
increased $91 million, or 13%.
Compared to the prior quarter, service charges on deposits
increased $3 million, or 2%, reflecting an increase in both
commercial and consumer deposit fees. Commercial banking revenue
decreased $8 million, or 5%, primarily driven by lower financial
risk management revenue and corporate bond fees, partially offset
by an increase in M&A advisory revenue. Mortgage banking net
revenue increased $22 million, or 34%, reflecting an incremental
$12 million favorable impact from MSR net valuation adjustments and
a $9 million decrease in MSR asset decay reflecting slower
prepayment speeds. This was partially offset by a $3 million
decrease in origination fees and gains on loan sales. Current
quarter mortgage originations of $5.0 billion were flat compared to
the prior quarter. Wealth and asset management revenue increased $2
million, or 1%, driven primarily by higher personal asset
management revenue. Leasing business revenue increased $17 million,
or 28%, primarily driven by an increase in business solutions
revenue and lease syndication revenue.
Compared to the year-ago quarter, service charges on deposits
increased $8 million, or 6%, reflecting an increase in both
commercial treasury management and consumer deposit fees.
Commercial banking revenue increased $27 million, or 22%, primarily
driven by increases in loan syndication revenue and M&A
advisory revenue, partially offset by lower corporate bond fees.
Mortgage banking net revenue increased $10 million, or 13%,
reflecting an incremental $17 million favorable impact from MSR net
valuation adjustments and an $11 million decrease in MSR asset
decay reflecting slower prepayment speeds. This was partially
offset by a $15 million decrease in origination fees and gains on
loan sales. Wealth and asset management revenue increased $15
million, or 11%, primarily driven by higher personal asset
management revenue and brokerage fees. Card and processing revenue
increased $10 million, or 11%, primarily driven by higher spend
volumes, partially offset by higher rewards. Leasing business
revenue increased $1 million, or 1%, primarily reflecting increases
in lease syndication revenue. Other noninterest income excluding
certain items increased $19 million, primarily reflecting higher
private equity income in the current quarter compared to the
year-ago quarter.
Noninterest Expense
($ in millions)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Noninterest Expense
Compensation and benefits
$627
$638
$637
(2)%
(2)%
Net occupancy expense
79
77
90
3%
(12)%
Technology and communications
98
94
89
4%
10%
Equipment expense
34
34
33
—
3%
Card and processing expense
19
20
29
(5)%
(34)%
Leasing business expense
33
33
35
—
(6)%
Marketing expense
29
20
23
45%
26%
Other noninterest expense
253
237
225
7%
12%
Total noninterest expense
$1,172
$1,153
$1,161
2%
1%
Reported noninterest expense increased $19 million, or 2%, from
the prior quarter, and increased $11 million, or 1%, from the
year-ago quarter. The reported results reflect the impact of
certain items in the table below.
Noninterest Expense excluding certain
items
($ in millions)
For the Three Months Ended
September
June
September
2021
2021
2020
Noninterest Expense excluding certain
items
Noninterest expense (U.S. GAAP)
$1,172
$1,153
$1,161
Fifth Third Foundation contribution
(15)
—
—
Restructuring severance expense
—
—
(19)
Branch and non-branch real estate
charges
—
—
(9)
Noninterest expense excluding certain
items(a)
$1,157
$1,153
$1,133
Compared to the prior quarter, noninterest expense excluding
certain items increased $4 million, primarily reflecting an
increase in marketing expense associated with Fifth Third Momentum
Banking, and an increase in travel and entertainment expense. This
was partially offset by a decrease in compensation and benefits
expense, primarily reflecting a decline in full-time equivalent
employees compared to the prior quarter.
Compared to the year-ago quarter, noninterest expense excluding
certain items increased $24 million, or 2%, primarily driven by an
increase in performance-based compensation expense reflecting
strong business results, expenses associated with the
aforementioned GNMA forbearance loan buyout purchases, and an
increase in travel and entertainment expense. This was partially
offset by lower card and processing expense due to contract
renegotiations and lower net occupancy expense. Full-time
equivalent employees declined 5% compared to the year-ago
quarter.
Average Interest-Earning Assets
($ in millions)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Average Portfolio Loans and
Leases
Commercial loans and leases:
Commercial and industrial loans
$47,766
$48,773
$54,004
(2)%
(12)%
Commercial mortgage loans
10,317
10,459
11,069
(1)%
(7)%
Commercial construction loans
5,728
6,043
5,534
(5)%
4%
Commercial leases
3,158
3,174
2,966
(1)%
6%
Total commercial loans and leases
$66,969
$68,449
$73,573
(2)%
(9)%
Consumer loans:
Residential mortgage loans
$16,223
$15,883
$16,618
2%
(2)%
Home equity
4,409
4,674
5,581
(6)%
(21)%
Indirect secured consumer loans
15,590
14,702
12,599
6%
24%
Credit card
1,748
1,770
2,134
(1)%
(18)%
Other consumer loans
3,031
3,056
2,857
(1)%
6%
Total consumer loans
$41,001
$40,085
$39,789
2%
3%
Total average portfolio loans and
leases
$107,970
$108,534
$113,362
(1)%
(5)%
Memo:
Average PPP loans
$3,071
$4,810
$5,216
(36)%
(41)%
Average portfolio commercial and
industrial loans - excl. PPP loans
$44,695
$43,963
$48,788
2%
(8)%
Average Loans and Leases Held for
Sale
Commercial loans and leases held for
sale
$31
$52
$55
(40)%
(44)%
Consumer loans held for sale
5,527
5,857
1,196
(6)%
362%
Total average loans and leases held for
sale
$5,558
$5,909
$1,251
(6)%
344%
Securities (taxable and tax-exempt)
$37,208
$36,917
$36,300
1%
3%
Other short-term investments
32,065
33,558
29,791
(4)%
8%
Total average interest-earning assets
$182,801
$184,918
$180,704
(1)%
1%
Compared to the prior quarter, total average portfolio loans and
leases decreased 1%, as a decline in commercial loan and lease
balances (primarily due to PPP balance declines) was partially
offset by an increase in consumer loans. Average commercial
portfolio loans and leases decreased 2%, as a decline in PPP
balances was partially offset by growth in C&I loans (excluding
PPP). Average consumer portfolio loans increased 2%, as higher
indirect secured consumer loans and residential mortgage loans were
partially offset by lower home equity balances.
Compared to the year-ago quarter, total average portfolio loans
and leases decreased 5%, as lower commercial loan and lease
balances were partially offset by an increase in consumer loans.
Average commercial portfolio loans and leases decreased 9% due to
declines in C&I revolving line of credit utilization and term
loan balances, PPP forgiveness, and lower commercial mortgage
loans. Average consumer portfolio loans increased 3%, 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 were $6 billion in the
current quarter compared to $6 billion in the prior quarter and $1
billion in the year-ago quarter. The increase from the year-ago
quarter was primarily attributable to the aforementioned GNMA
forbearance loan buyout purchases within consumer loans held for
sale (approximately $4.0 billion purchased since December 2020,
including $0.3 billion in September 2021).
Average securities (taxable and tax-exempt) of $37 billion in
the current quarter increased $0.3 billion, or 1%, compared to the
prior quarter and increased $1 billion, or 3%, compared to the
year-ago quarter.
Average other short-term investments (including interest-bearing
cash) of $32 billion in the current quarter decreased $1 billion,
or 4%, compared to the prior quarter and increased $2 billion, or
8%, compared to the year-ago quarter.
Total period-end commercial portfolio loans and leases of $67
billion were flat compared to the prior quarter, as PPP forgiveness
and lower construction loan balances were offset by an increase in
C&I loan balances (excluding PPP). Compared to the year-ago
quarter, total period-end commercial portfolio loans decreased $5
billion, or 6%, reflecting PPP forgiveness, lower C&I revolving
line of credit utilization and term loan balances as well as lower
commercial mortgage loans. Period-end commercial revolving line
utilization was flat compared to the prior quarter at 31%, down
from 33% in the year-ago quarter.
Period-end consumer portfolio loans of $41 billion increased 1%
compared to the prior quarter, as continued growth in indirect
secured consumer loans was partially offset by a decline in home
equity balances. Compared to the year-ago quarter, total period-end
consumer portfolio loans increased $2 billion, or 4%, reflecting
higher indirect secured consumer loan balances, partially offset by
lower home equity balances.
Average Deposits
($ in millions)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Average Deposits
Demand
$62,626
$61,994
$50,414
1%
24%
Interest checking
45,128
45,307
49,800
—
(9)%
Savings
20,941
20,494
17,013
2%
23%
Money market
30,514
30,844
31,151
(1)%
(2)%
Foreign office(h)
195
140
189
39%
3%
Total transaction deposits
$159,404
$158,779
$148,567
—
7%
Other time
2,383
2,696
3,711
(12)%
(36)%
Total core deposits
$161,787
$161,475
$152,278
—
6%
Certificates - $100,000 and over
860
1,144
3,633
(25)%
(76)%
Total average deposits
$162,647
$162,619
$155,911
—
4%
Compared to the prior quarter, average core deposits were flat,
as increases in demand and savings deposit balances were offset by
decreases in money market deposit balances and other time deposit
balances. The HSA deposit sale was finalized near the end of the
third quarter, and consisted of approximately $360 million in
average interest checking balances for the third quarter of 2021.
Average demand deposits represented 39% of total core deposits in
the current quarter compared to 38% in the prior quarter. Average
commercial transaction deposits were flat and average consumer
transaction deposits increased 1%.
Compared to the year-ago quarter, average core deposits
increased 6%, driven by the impacts of fiscal and monetary stimulus
combined with success in generating consumer household growth.
Average commercial transaction deposits increased 2% and average
consumer transaction deposits increased 14%.
The period end portfolio loan-to-core deposit ratio was 66% in
the current quarter, compared to 67% in the prior quarter and 72%
in the year-ago quarter. Excluding the impact of PPP loans, the
period end portfolio loan-to-core deposit ratio was 64% in the
current quarter, compared to 64% in the prior quarter and 69% in
the year-ago quarter.
Average Wholesale Funding
($ in millions)
For the Three Months Ended
% Change
September
June
September
2021
2021
2020
Seq
Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over
$860
$1,144
$3,633
(25)%
(76)%
Federal funds purchased
348
346
273
1%
27%
Other short-term borrowings
1,122
1,097
1,626
2%
(31)%
Long-term debt
12,057
13,883
16,230
(13)%
(26)%
Total average wholesale funding
$14,387
$16,470
$21,762
(13)%
(34)%
Compared to the prior quarter, average wholesale funding
decreased 13%, reflecting the impact of reductions in long-term
debt over the past two quarters (including the retirement of $850
million in long-term debt in September 2021), as well as continued
runoff in jumbo CD balances. Compared to the year-ago quarter,
average wholesale funding decreased 34%, reflecting decreases in
long-term debt, jumbo CD balances, and other short-term
borrowings.
Credit Quality Summary
($ in millions)
As of and For the Three Months
Ended
September
June
March
December
September
2021
2021
2021
2020
2020
Total nonaccrual portfolio loans and
leases (NPLs)
$528
$621
$741
$834
$891
Repossessed property
4
5
7
9
7
OREO
27
31
35
21
33
Total nonperforming portfolio loans and
leases and OREO (NPAs)
$559
$657
$783
$864
$931
NPL ratio(i)
0.49%
0.58%
0.68%
0.77%
0.80%
NPA ratio(c)
0.52%
0.61%
0.72%
0.79%
0.84%
Total loans and leases 30-89 days past due
(accrual)
$267
$281
$305
$357
$323
Total loans and leases 90 days past due
(accrual)
92
83
124
163
139
Allowance for loan and lease losses
(ALLL), beginning
$2,033
$2,208
$2,453
$2,574
$2,696
Total net losses charged-off
(21)
(44)
(71)
(118)
(101)
Benefit from loan and lease losses
(58)
(131)
(174)
(3)
(21)
ALLL, ending
$1,954
$2,033
$2,208
$2,453
$2,574
Reserve for unfunded commitments,
beginning
$189
$173
$172
$182
$176
Provision for (benefit from) the reserve
for unfunded commitments
16
16
1
(10)
6
Reserve for unfunded commitments,
ending
$205
$189
$173
$172
$182
Total allowance for credit losses
(ACL)
$2,159
$2,222
$2,381
$2,625
$2,756
ACL ratios:
As a % of portfolio loans and leases
2.00%
2.06%
2.19%
2.41%
2.49%
As a % of nonperforming portfolio loans
and leases
409%
358%
321%
315%
309%
As a % of nonperforming portfolio
assets
386%
338%
304%
304%
296%
ALLL as a % of portfolio loans and
leases
1.81%
1.89%
2.03%
2.25%
2.32%
Total losses charged-off
$(56)
$(103)
$(109)
$(154)
$(135)
Total recoveries of losses previously
charged-off
35
59
38
36
34
Total net losses charged-off
$(21)
$(44)
$(71)
$(118)
$(101)
Net charge-off ratio (NCO ratio)(b)
0.08%
0.16%
0.27%
0.43%
0.35%
Commercial NCO ratio
0.03%
0.10%
0.17%
0.40%
0.33%
Consumer NCO ratio
0.16%
0.26%
0.43%
0.47%
0.40%
Nonperforming portfolio loans and leases were $528 million in
the current quarter, with the resulting NPL ratio of 0.49%.
Compared to the prior quarter, NPLs decreased $93 million with the
NPL ratio decreasing 9 bps. Compared to the year-ago quarter, NPLs
decreased $363 million with the NPL ratio decreasing 31 bps.
Nonperforming portfolio assets were $559 million in the current
quarter, with the resulting NPA ratio of 0.52%. Compared to the
prior quarter, NPAs decreased $98 million with the NPA ratio
decreasing 9 bps. Compared to the year-ago quarter, NPAs decreased
$372 million with the NPA ratio decreasing 32 bps.
The benefit from credit losses totaled $42 million in the
current quarter. The allowance for credit loss ratio represented
2.00% of total portfolio loans and leases in the current quarter,
compared with 2.06% in the prior quarter and 2.49% in the year-ago
quarter. In the current quarter, the allowance for credit losses
represented 409% of nonperforming portfolio loans and leases and
386% of nonperforming portfolio assets. The allowance for loan and
lease losses ratio represented 1.81% of total portfolio loans and
leases in the current quarter.
Net charge-offs were $21 million in the current quarter, with
the resulting NCO ratio of 0.08%. Compared to the prior quarter,
net charge-offs decreased $23 million and the NCO ratio decreased 8
bps, reflecting improvement in both commercial and consumer
portfolios. Compared to the year-ago quarter, net charge-offs
decreased $80 million and the NCO ratio decreased 27 bps.
Capital Position
As of and For the Three Months
Ended
September
June
March
December
September
2021
2021
2021
2020
2020
Capital Position
Average total Bancorp shareholders' equity
as a % of average assets
11.16
%
11.11
%
11.26%
11.34%
11.33%
Tangible equity(a)
8.06
%
8.35
%
8.20%
8.18%
8.09%
Tangible common equity (excluding
AOCI)(a)
7.01
%
7.28
%
7.14%
7.11%
6.99%
Tangible common equity (including
AOCI)(a)
7.74
%
8.18
%
7.95%
8.29%
8.31%
Regulatory Capital Ratios(d)(e)
CET1 capital
9.85
%
10.37
%
10.46%
10.34%
10.14%
Tier I risk-based capital
11.27
%
11.83
%
11.94%
11.83%
11.64%
Total risk-based capital
13.92
%
14.60
%
14.80%
15.08%
14.93%
Tier I leverage
8.35
%
8.55
%
8.61%
8.49%
8.37%
Capital ratios remained strong this quarter. The CET1 capital
ratio was 9.85%, the tangible common equity to tangible assets
ratio was 7.01% excluding AOCI, and 7.74% including AOCI. The Tier
I risk-based capital ratio was 11.27%, the Total risk-based capital
ratio was 13.92%, and the Tier I leverage ratio was 8.35%. 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 third quarter of 2021, Fifth Third repurchased
approximately $550 million of its outstanding stock, which reduced
common shares by approximately 14.5 million at quarter end. Fifth
Third also increased its quarterly cash dividend on its common
shares $0.03, or 11%, to $0.30 per share for the third quarter of
2021.
Tax Rate
The effective tax rate was 21.3% compared with 22.1% in the
prior quarter and 22.1% 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 September 30, 2021, the Company had $208 billion
in assets and operates 1,100 full-service Banking Centers, and
2,336 Fifth Third branded ATMs in Ohio, Kentucky, Indiana,
Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia,
North Carolina and South Carolina. In total, Fifth Third provides
its customers with access to approximately 52,000 fee-free ATMs
across the United States. Fifth Third operates four main
businesses: Commercial Banking, Branch Banking, Consumer Lending,
and Wealth & Asset Management. Fifth Third is among the largest
money managers in the Midwest and, as of September 30, 2021, had
$541 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 3Q21 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)
Assumes a 23% tax rate.
(g)
Third quarter 2021 underlying NIM
calculated by reducing average interest-earning assets
approximately $29.6 billion resulting from excess cash compared to
normalized levels (average other short term investments less a $2.5
billion normalized level) and approximately $3.1 billion from
average PPP balances (with a corresponding reduction to net
interest income of approximately $47 million), resulting in an
underlying NIM of approximately 3.03%; 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%.
(h)
Includes commercial customer Eurodollar
sweep balances for which the Bank pays rates comparable to other
commercial deposit accounts.
(i)
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. All statements
other than statements of historical fact are forward-looking
statements. 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. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in our expectations or any changes in events, conditions or
circumstances on which any such statement is based, except as may
be required by law, and we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. The information contained herein is
intended to be reviewed in its totality, and any stipulations,
conditions or provisos that apply to a given piece of information
in one part of this press release should be read as applying
mutatis mutandis to every other instance of such information
appearing herein.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211019005319/en/
Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed
Loyd (513) 534-6397
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