FITB
$34.39
Fifth Third Bancorp
($.28)
(.81%)
Earnings Details
2nd Quarter June 2022
Thursday, July 21, 2022 6:30:00 AM
Tweet Share Watch
Summary

Fifth Third Bancorp Misses

Fifth Third Bancorp (FITB) reported 2nd Quarter June 2022 earnings of $0.79 per share on revenue of $2.1 billion. The consensus earnings estimate was $0.87 per share on revenue of $2.1 billion. The Earnings Whisper number was $0.90 per share. Revenue grew 3.7% on a year-over-year basis.

Fifth Third Bancorp along with its subsidiaries provides financial products and services such as checking, savings and money market accounts, and credit products such as credit cards, installment loans, mortgage loans and leases.

Results
Reported Earnings
$0.79
Earnings Whisper
$0.90
Consensus Estimate
$0.87
Reported Revenue
$2.14 Bil
Revenue Estimate
$2.08 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Fifth Third Announces Second Quarter 2022 Results

Reported diluted earnings per share of $0.76

Reported results included a negative $0.03 impact from certain item(s) on page 2

CINCINNATI--(BUSINESS WIRE)--Fifth Third Bancorp (NASDAQ: FITB):

Key Highlights

Select Business Highlights:

  • Generated consumer household growth of 2% compared to 2Q21
  • Announced stress capital buffer requirement of 2.5% (regulatory minimum)
  • Closed acquisition of Dividend Finance, a national point-of-sale consumer lender
  • Announced $100 billion environmental and social finance target to be achieved through 2030

Select Financial Highlights:

  • ROTCE(a) of 17.5%; adjusted ROTCE(a) of 15.2% excl. AOCI
  • Compared to 2Q21, PPNR(a) increased 13% (adjusted PPNR(a) increased 11%)
  • Efficiency ratio(a) of 55%, a 4 point improvement from 2Q21
  • Net interest income(a) increased 12% compared to 1Q22; NIM(a) up 33 basis points compared to 1Q22
  • ACL of 1.85%, an increase of 5 bps from 1Q22 (includes 4 bps from Dividend Finance); Net charge-off ratio of 0.21% and NPA ratio of 0.47%

 

 

 

 

 

 

Key Financial Data

 

 

 

 

 

 

 

 

 

 

 

$ millions for all balance sheet and income statement items

 

 

 

 

2Q22

 

1Q22

 

2Q21

 

 

 

 

 

 

 

Income Statement Data

 

 

 

 

 

Net income available to common shareholders

$526

 

$474

 

$674

 

Net interest income (U.S. GAAP)

1,339

 

1,195

 

1,208

 

Net interest income (FTE)(a)

1,342

 

1,198

 

1,211

 

Noninterest income

676

 

684

 

741

 

Noninterest expense

1,112

 

1,222

 

1,153

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

Earnings per share, basic

$0.76

 

$0.69

 

$0.95

 

Earnings per share, diluted

0.76

 

0.68

 

0.94

 

Book value per share

24.56

 

26.33

 

29.57

 

Tangible book value per share(a)

17.10

 

19.54

 

23.34

 

 

 

 

 

 

 

Balance Sheet & Credit Quality

 

 

 

 

 

Average portfolio loans and leases

$117,693

 

$113,467

 

$108,534

 

Average deposits

162,890

 

168,662

 

162,619

 

Net charge-off ratio(b)

0.21

%

0.12

%

0.16

%

Nonperforming asset ratio(c)

0.47

 

0.49

 

0.61

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

Return on average assets

1.09

%

0.96

%

1.38

%

Return on average common equity

12.3

 

10.0

 

13.0

 

Return on average tangible common equity(a)

17.5

 

13.4

 

16.6

 

CET1 capital(d)(e)

8.96

 

9.31

 

10.37

 

Net interest margin(a)

2.92

 

2.59

 

2.63

 

Efficiency(a)

55.1

 

64.9

 

59.1

 

Other than the Quarterly Financial Review tables beginning on page 14, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Regulation S-K 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 been deliberately built to perform well through-the-cycle. Our focus on maintaining discipline across the Company while growing and diversifying our revenues should ultimately result in sustainable outperformance relative to peers regardless of the economic environment. This outcome is evident in our second quarter financial performance. NIM expanded, net interest income increased, and expenses decreased compared to the prior quarter, resulting in an efficiency ratio of 55% despite softer fee revenue due to the macro environment. As a result, PPNR increased 13% compared to the year-ago quarter. We generated broad-based growth of relationships across our businesses. Our key credit quality metrics also remain well-behaved, reflecting our disciplined approach to client selection. Additionally, we added $10 billion in forward-starting swaps during the quarter to provide rate protection over the next decade.

Fifth Third continues to navigate the dynamic environment and generate strong financial results while fully supporting customers, communities, and employees. I am very proud that in addition to consistently producing strong financial results, we have also extended our ESG leadership position. Whether it's the 8 million meals we recently provided to fight hunger or our new $100 billion environmental and social finance target, we continue to live our purpose every day to improve the lives of our customers and the well-being of our communities.

-Tim Spence, President and CEO

 

Income Statement Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except per share data)

For the Three Months Ended

 

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Condensed Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (NII)(a)

$1,342

 

$1,198

 

$1,211

 

12%

 

11%

 

 

Provision for (benefit from) credit losses

179

 

45

 

(115)

 

298%

 

NM

 

 

Noninterest income

676

 

684

 

741

 

(1)%

 

(9)%

 

 

Noninterest expense

1,112

 

1,222

 

1,153

 

(9)%

 

(4)%

 

 

Income before income taxes(a)

$727

 

$615

 

$914

 

18%

 

(20)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable equivalent adjustment

$3

 

$3

 

$3

 

 

 

 

Applicable income tax expense

162

 

118

 

202

 

37%

 

(20)%

 

 

Net income

$562

 

$494

 

$709

 

14%

 

(21)%

 

 

Dividends on preferred stock

36

 

20

 

35

 

80%

 

3%

 

 

Net income available to common shareholders

$526

 

$474

 

$674

 

11%

 

(22)%

 

 

Earnings per share, diluted

$0.76

 

$0.68

 

$0.94

 

12%

 

(19)%

 

Fifth Third Bancorp (NASDAQ®: FITB) today reported second quarter 2022 net income of $562 million compared to net income of $494 million in the prior quarter and $709 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $526 million, or $0.76 per diluted share, compared to $474 million, or $0.68 per diluted share, in the prior quarter and $674 million, or $0.94 per diluted share, in the year-ago quarter.

 

 

 

 

 

 

 

Diluted earnings per share impact of certain item(s) - 2Q22

 

 

 

 

(after-tax impact(f); $ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Valuation of Visa total return swap (noninterest income)

$(14)

 

 

 

 

Business disposition charges (noninterest income)

(5)

 

 

 

 

After-tax impact(f) of certain items

$(19)

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share impact of certain item(s)1

$(0.03)

 

 

 

 

 

 

 

 

 

 

1Diluted earnings per share impact reflects 694.805 million average diluted shares outstanding

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(FTE; $ in millions)(a)

For the Three Months Ended

 

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$1,467

 

 

$1,292

 

 

$1,326

 

 

14%

 

11%

 

 

Interest expense

125

 

 

94

 

 

115

 

 

33%

 

9%

 

 

Net interest income (NII)

$1,342

 

 

$1,198

 

 

$1,211

 

 

12%

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Yield/Rate Analysis

 

 

 

 

 

 

 

 

 

bps Change

 

 

Yield on interest-earning assets

3.19%

 

 

2.79%

 

 

2.88%

 

 

40

 

31

 

 

Rate paid on interest-bearing liabilities

0.43%

 

 

0.33%

 

 

0.40%

 

 

10

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

2.76%

 

 

2.46%

 

 

2.48%

 

 

30

 

28

 

 

Net interest margin (NIM)

2.92%

 

 

2.59%

 

 

2.63%

 

 

33

 

29

 

Compared to the prior quarter, NII increased $144 million, or 12%, primarily reflecting higher market rates, as well as growth in investment portfolio balances and commercial & industrial (C&I) loan balances, partially offset by a reduction in prepayment penalties received in the investment portfolio (approximately $5 million in the current quarter compared to $24 million in the prior quarter) as well as lower interest income from government guaranteed mortgage buyouts. PPP-related income was $12 million in the current quarter compared to $20 million in the prior quarter. Compared to the prior quarter, NIM increased 33 bps, reflecting the benefit of higher market rates as well as a decrease in other short-term investments (primarily interest-bearing cash), partially offset by a reduction in prepayment penalties received in the investment portfolio.

Compared to the year-ago quarter, NII increased $131 million, or 11%, reflecting the recent benefits of higher market rates, as well as growth in investment portfolio balances and C&I loan balances, partially offset by lower PPP-related income and lower interest income from government guaranteed mortgage buyouts. Compared to the year-ago quarter, NIM increased 29 bps, reflecting the benefit of higher market rates as well as a decrease in other short-term investments (primarily interest-bearing cash).

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

$154

 

$152

 

$149

 

1%

 

3%

 

 

Commercial banking revenue

137

 

135

 

160

 

1%

 

(14)%

 

 

Mortgage banking net revenue

31

 

52

 

64

 

(40)%

 

(52)%

 

 

Wealth and asset management revenue

140

 

149

 

145

 

(6)%

 

(3)%

 

 

Card and processing revenue

105

 

97

 

102

 

8%

 

3%

 

 

Leasing business revenue

56

 

62

 

61

 

(10)%

 

(8)%

 

 

Other noninterest income

85

 

52

 

49

 

63%

 

73%

 

 

Securities (losses) gains, net

(32)

 

(14)

 

10

 

129%

 

NM

 

 

Securities (losses) gains, net - non-qualifying hedges

 

 

 

 

 

 

 

 

 

 

 

on mortgage servicing rights

 

(1)

 

1

 

(100)%

 

(100)%

 

 

Total noninterest income

$676

 

$684

 

$741

 

(1)%

 

(9)%

 

Reported noninterest income decreased $8 million, or 1%, from the prior quarter, and decreased $65 million, or 9%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below. Reported current quarter results included $32 million of net securities losses, which included $26 million in net losses attributable to mark-to-market impacts related to investments supporting non-qualified deferred compensation plans, as well as a $3 million loss attributable to market value changes on Fifth Third's shares of AvidXchange Holdings, Inc.

 

Noninterest Income excluding certain items

 

($ in millions)

For the Three Months Ended

 

 

 

June

 

March

 

 

June

 

 

 

2022

 

2022

 

 

2021

 

 

Noninterest Income excluding certain items

 

 

 

 

 

 

 

 

 

Noninterest income (U.S. GAAP)

$676

 

 

$684

 

 

$741

 

 

Valuation of Visa total return swap

18

 

 

11

 

 

37

 

 

Business disposition charges

6

 

 

 

 

 

 

Securities losses/(gains), net

32

 

 

14

 

 

(10)

 

 

Noninterest income excluding certain items(a)

$732

 

 

$709

 

 

$768

 

Compared to the prior quarter, noninterest income excluding certain items increased $23 million, or 3%. Compared to the year-ago quarter, noninterest income excluding certain items decreased $36 million, or 5%.

Compared to the prior quarter, service charges on deposits increased $2 million, or 1%, primarily reflecting an increase in consumer deposit fees, as an increase in gross commercial treasury management revenue was offset by earnings credits. Commercial banking revenue increased $2 million, or 1%, primarily driven by M&A advisory revenue and higher customer financial risk management revenue, partially offset by a decrease in corporate bond fees. Mortgage banking net revenue decreased $21 million, or 40%, primarily reflecting a $28 million decrease from MSR net valuation adjustments, partially offset by a $10 million increase in mortgage servicing revenue. Wealth and asset management revenue decreased $9 million, or 6%, driven by the impact of lower market values and seasonally strong tax-related private client service revenue from the prior quarter. Card and processing revenue increased $8 million, or 8%, primarily driven by higher spend volumes, partially offset by higher rewards. Leasing business revenue decreased $6 million, or 10%, reflecting the disposition of LaSalle Solutions. The increase in other noninterest income was primarily attributable to higher private equity income.

Compared to the year-ago quarter, service charges on deposits increased $5 million, or 3%, primarily reflecting an increase in commercial treasury management fees. Commercial banking revenue decreased $23 million, or 14%, primarily driven by decreases in corporate bond fees and loan syndication revenue, partially offset by an increase in customer financial risk management revenue. Mortgage banking net revenue decreased $33 million, or 52%, reflecting a $58 million decrease in origination fees and gains on loan sales and a $16 million reduction from MSR net valuation adjustments, partially offset by a $22 million increase in mortgage servicing revenue and a $19 million decrease in MSR asset decay reflecting slower prepayment speeds. Wealth and asset management revenue decreased $5 million, or 3%, reflecting lower personal asset management revenue. Card and processing revenue increased $3 million, or 3%, primarily driven by higher spend volumes, partially offset by higher rewards. Leasing business revenue decreased $5 million, or 8%, reflecting the disposition of LaSalle Solutions, partially offset by an increase in lease syndication revenue. The increase in other noninterest income was primarily attributable to higher private equity income.

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

$584

 

 

$711

 

 

$638

 

 

(18)%

 

(8)%

 

 

Net occupancy expense

75

 

 

77

 

 

77

 

 

(3)%

 

(3)%

 

 

Technology and communications

98

 

 

101

 

 

94

 

 

(3)%

 

4%

 

 

Equipment expense

36

 

 

36

 

 

34

 

 

 

6%

 

 

Card and processing expense

20

 

 

19

 

 

20

 

 

5%

 

 

 

Leasing business expense

31

 

 

32

 

 

33

 

 

(3)%

 

(6)%

 

 

Marketing expense

28

 

 

24

 

 

20

 

 

17%

 

40%

 

 

Other noninterest expense

240

 

 

222

 

 

237

 

 

8%

 

1%

 

 

Total noninterest expense

$1,112

 

 

$1,222

 

 

$1,153

 

 

(9)%

 

(4)%

 

Compared to the prior quarter, noninterest expense decreased $110 million, or 9%, driven by a decrease in compensation and benefits expense, reflecting seasonally-higher compensation in the prior quarter, lower incentive-based compensation due to the current market dynamics, and overall expense discipline throughout the firm. Noninterest expense in the current quarter included a $27 million benefit related to the impact of non-qualified deferred compensation mark-to-market (compared to a $12 million benefit in the prior quarter). Excluding the non-qualified deferred compensation impacts from both periods, total noninterest expense decreased $95 million, or 8%.

Compared to the year-ago quarter, noninterest expense decreased $41 million, or 4%, reflecting a decrease in compensation and benefits expense. This was partially offset by higher marketing expense and an increase in technology and communications expense related to continued modernization investments.

 

Average Interest-Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Average Portfolio Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

$55,460

 

 

$52,554

 

 

$48,773

 

 

6%

 

14%

 

 

Commercial mortgage loans

10,710

 

 

10,521

 

 

10,459

 

 

2%

 

2%

 

 

Commercial construction loans

5,356

 

 

5,371

 

 

6,043

 

 

 

(11)%

 

 

Commercial leases

2,839

 

 

2,942

 

 

3,174

 

 

(4)%

 

(11)%

 

 

Total commercial loans and leases

$74,365

 

 

$71,388

 

 

$68,449

 

 

4%

 

9%

 

 

Consumer loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage loans

$17,363

 

 

$16,501

 

 

$15,883

 

 

5%

 

9%

 

 

Home equity

3,895

 

 

4,009

 

 

4,674

 

 

(3)%

 

(17)%

 

 

Indirect secured consumer loans

17,241

 

 

17,136

 

 

14,702

 

 

1%

 

17%

 

 

Credit card

1,704

 

 

1,691

 

 

1,770

 

 

1%

 

(4)%

 

 

Other consumer loans

3,125

 

 

2,742

 

 

3,056

 

 

14%

 

2%

 

 

Total consumer loans

$43,328

 

 

$42,079

 

 

$40,085

 

 

3%

 

8%

 

 

Total average portfolio loans and leases

$117,693

 

 

$113,467

 

 

$108,534

 

 

4%

 

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average PPP loans

$549

 

 

$1,012

 

 

$4,810

 

 

(46)%

 

(89)%

 

 

Average portfolio commercial and industrial loans - excl. PPP loans

$54,911

 

 

$51,542

 

 

$43,963

 

 

7%

 

25%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Loans and Leases Held for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases held for sale

$7

 

 

$18

 

 

$52

 

 

(61)%

 

(87)%

 

 

Consumer loans held for sale

2,536

 

 

3,677

 

 

5,857

 

 

(31)%

 

(57)%

 

 

Total average loans and leases held for sale

$2,543

 

 

$3,695

 

 

$5,909

 

 

(31)%

 

(57)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average loans and leases

$120,236

 

 

$117,162

 

 

$114,443

 

 

3%

 

5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (taxable and tax-exempt)

$54,538

 

 

$42,422

 

 

$36,917

 

 

29%

 

48%

 

 

Other short-term investments

9,632

 

 

28,310

 

 

33,558

 

 

(66)%

 

(71)%

 

 

Total average interest-earning assets

$184,406

 

 

$187,894

 

 

$184,918

 

 

(2)%

 

 

Compared to the prior quarter, total average portfolio loans and leases increased 4%, reflecting an increase in both commercial and consumer portfolios. Average commercial portfolio loans and leases increased 4%, primarily reflecting C&I loan growth of 6%. Average consumer portfolio loans increased 3%, reflecting higher residential mortgage and other consumer loans (primarily from the Dividend Finance acquisition), partially offset by lower home equity balances.

Compared to the year-ago quarter, total average portfolio loans and leases increased 8%, reflecting an increase in both commercial and consumer portfolios. Average commercial portfolio loans and leases increased 9%, primarily reflecting C&I loan growth of 14%, partially offset by lower commercial construction loans. Average consumer portfolio loans increased 8%, as higher indirect secured consumer and residential mortgage loans were partially offset by lower home equity balances.

Average loans and leases held for sale were $3 billion in the current quarter compared to $4 billion in the prior quarter and $6 billion in the year-ago quarter. Current quarter average loans and leases held for sale were impacted by a decline in residential mortgage balances (primarily from a decline in government guaranteed mortgage buyouts).

Average securities (taxable and tax-exempt) of $55 billion in the current quarter increased $12 billion, or 29%, compared to the prior quarter and increased $18 billion, or 48%, compared to the year-ago quarter. Average other short-term investments (including interest-bearing cash) of $10 billion in the current quarter decreased $19 billion, or 66%, compared to the prior quarter and decreased $24 billion, or 71%, compared to the year-ago quarter.

Total period-end commercial portfolio loans and leases of $75 billion increased 3% compared to the prior quarter, primarily reflecting C&I loan growth of 4%. Compared to the year-ago quarter, total period-end commercial portfolio loans increased 12%, primarily reflecting C&I loan growth of 18%, partially offset by lower commercial construction loan balances. Period-end commercial revolving line utilization was 37%, compared to 36% in the prior quarter and 31% in the year-ago quarter.

Period-end consumer portfolio loans of $44 billion increased 2% compared to the prior quarter, primarily reflecting higher other consumer loans (primarily from the Dividend Finance acquisition) and residential mortgage loans, partially offset by a decline in indirect secured consumer loan balances. Compared to the year-ago quarter, total period-end consumer portfolio loans increased 8%, reflecting an increase in indirect secured consumer loans and residential mortgage loans, partially offset by lower home equity balances.

Total period-end securities (taxable and tax-exempt; amortized cost) of $57 billion in the current quarter increased $6 billion, or 12%, compared to the prior quarter and increased $20 billion, or 54%, compared to the year-ago quarter. Period-end other short-term investments of $7 billion in the current quarter decreased $13 billion, or 64%, compared to the prior quarter and decreased $25 billion, or 77%, compared to the year-ago quarter.

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand

$62,555

 

 

$64,212

 

 

$61,994

 

 

(3)%

 

1%

 

 

Interest checking

44,349

 

 

48,659

 

 

45,307

 

 

(9)%

 

(2)%

 

 

Savings

23,708

 

 

22,772

 

 

20,494

 

 

4%

 

16%

 

 

Money market

29,284

 

 

30,263

 

 

30,844

 

 

(3)%

 

(5)%

 

 

Foreign office(g)

139

 

 

126

 

 

140

 

 

10%

 

(1)%

 

 

Total transaction deposits

$160,035

 

 

$166,032

 

 

$158,779

 

 

(4)%

 

1%

 

 

CDs $250,000 or less

2,193

 

 

2,376

 

 

3,514

 

 

(8)%

 

(38)%

 

 

Total core deposits

$162,228

 

 

$168,408

 

 

$162,293

 

 

(4)%

 

 

 

CDs over $250,000

662

 

 

254

 

 

326

 

 

161%

 

103%

 

 

Total average deposits

$162,890

 

 

$168,662

 

 

$162,619

 

 

(3)%

 

 

Compared to the prior quarter, average core deposits decreased 4% as decreases in interest checking, demand deposit and money market balances (primarily reflecting runoff of excess and higher cost commercial deposits) were partially offset by increases in savings deposit balances. Average demand deposits represented 39% of total core deposits in the current quarter, relatively stable with the prior quarter. Average commercial transaction deposits decreased 8% and average consumer transaction deposits increased 1%.

Compared to the year-ago quarter, average core deposits were flat, as ongoing success in generating consumer household growth was offset by runoff of excess and higher cost commercial deposits. Average commercial transaction deposits decreased 5% and average consumer transaction deposits increased 7%.

The period end portfolio loan-to-core deposit ratio was 75% in the current quarter, compared to 68% in the prior quarter and 67% in the year-ago quarter.

Average Wholesale Funding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

 

% Change

 

 

 

June

 

March

 

June

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Average Wholesale Funding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CDs over $250,000

$662

 

 

$254

 

 

$326

 

 

161%

 

103%

 

 

Federal funds purchased

392

 

 

259

 

 

346

 

 

51%

 

13%

 

 

Other short-term borrowings

3,571

 

 

890

 

 

1,097

 

 

301%

 

226%

 

 

Long-term debt

11,164

 

 

11,165

 

 

13,883

 

 

 

(20)%

 

 

Total average wholesale funding

$15,789

 

 

$12,568

 

 

$15,652

 

 

26%

 

1%

 

Compared to the prior quarter, average wholesale funding increased 26%, reflecting increases in other short-term borrowings, jumbo CD balances, and federal funds purchased. During the quarter, $700 million in long-term debt was retired and $1 billion in long-term debt was issued. Compared to the year-ago quarter, average wholesale funding increased 1%, reflecting increases in other short-term borrowings, jumbo CD balances, and federal funds purchased, partially offset by decreases in long-term debt.

Credit Quality Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

As of and For the Three Months Ended

 

June

 

March

 

December

 

September

 

June

 

2022

 

2022

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonaccrual portfolio loans and leases (NPLs)

$539

 

 

$534

 

 

$498

 

 

$528

 

 

$621

 

Repossessed property

6

 

 

5

 

 

5

 

 

4

 

 

5

 

OREO

14

 

 

27

 

 

24

 

 

27

 

 

31

 

Total nonperforming portfolio loans and leases and OREO (NPAs)

$559

 

 

$566

 

 

$527

 

 

$559

 

 

$657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NPL ratio(h)

0.45%

 

 

0.46%

 

 

0.44%

 

 

0.49%

 

 

0.58%

 

NPA ratio(c)

0.47%

 

 

0.49%

 

 

0.47%

 

 

0.52%

 

 

0.61%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases 30-89 days past due (accrual)

$294

 

 

$288

 

 

$254

 

 

$267

 

 

$281

 

Total loans and leases 90 days past due (accrual)

39

 

 

50

 

 

117

 

 

92

 

 

83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses (ALLL), beginning

$1,908

 

 

$1,892

 

 

$1,954

 

 

$2,033

 

 

$2,208

 

Total net losses charged-off

(62)

 

 

(34)

 

 

(38)

 

 

(21)

 

 

(44)

 

Provision for (benefit from) loan and lease losses

168

 

 

50

 

 

(24)

 

 

(58)

 

 

(131)

 

ALLL, ending

$2,014

 

 

$1,908

 

 

$1,892

 

 

$1,954

 

 

$2,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reserve for unfunded commitments, beginning

$177

 

 

$182

 

 

$205

 

 

$189

 

 

$173

 

Provision for (benefit from) the reserve for unfunded commitments

11

 

 

(5)

 

 

(23)

 

 

16

 

 

16

 

Reserve for unfunded commitments, ending

$188

 

 

$177

 

 

$182

 

 

$205

 

 

$189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total allowance for credit losses (ACL)

$2,202

 

 

$2,085

 

 

$2,074

 

 

$2,159

 

 

$2,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a % of portfolio loans and leases

1.85%

 

 

1.80%

 

 

1.85%

 

 

2.00%

 

 

2.06%

 

As a % of nonperforming portfolio loans and leases

408%

 

 

391%

 

 

416%

 

 

409%

 

 

358%

 

As a % of nonperforming portfolio assets

394%

 

 

369%

 

 

394%

 

 

386%

 

 

338%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL as a % of portfolio loans and leases

1.70%

 

 

1.65%

 

 

1.69%

 

 

1.81%

 

 

1.89%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total losses charged-off

$(90)

 

 

$(64)

 

 

$(77)

 

 

$(56)

 

 

$(103)

 

Total recoveries of losses previously charged-off

28

 

 

30

 

 

39

 

 

35

 

 

59

 

Total net losses charged-off

$(62)

 

 

$(34)

 

 

$(38)

 

 

$(21)

 

 

$(44)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-off ratio (NCO ratio)(b)

0.21%

 

 

0.12%

 

 

0.14%

 

 

0.08%

 

 

0.16%

 

Commercial NCO ratio

0.19%

 

 

0.05%

 

 

0.10%

 

 

0.03%

 

 

0.10%

 

Consumer NCO ratio

0.24%

 

 

0.25%

 

 

0.21%

 

 

0.16%

 

 

0.26%

 

Nonperforming portfolio loans and leases were $539 million in the current quarter, with the resulting NPL ratio of 0.45%. Compared to the prior quarter, NPLs increased $5 million with the NPL ratio decreasing 1 bp. Compared to the year-ago quarter, NPLs decreased $82 million with the NPL ratio decreasing 13 bps.

Nonperforming portfolio assets were $559 million in the current quarter, with the resulting NPA ratio of 0.47%. Compared to the prior quarter, NPAs decreased $7 million with the NPA ratio decreasing 2 bps. Compared to the year-ago quarter, NPAs decreased $98 million with the NPA ratio decreasing 14 bps.

The provision for credit losses totaled $179 million in the current quarter, including approximately $53 million for the provision expense for loans and unfunded commitments associated with the Dividend Finance acquisition. The allowance for credit loss ratio represented 1.85% of total portfolio loans and leases at quarter end, compared with 1.80% for the prior quarter end and 2.06% for the year-ago quarter end. In the current quarter, the allowance for credit losses represented 408% of nonperforming portfolio loans and leases and 394% of nonperforming portfolio assets.

Net charge-offs were $62 million in the current quarter, with the resulting NCO ratio of 0.21%. Compared to the prior quarter, net charge-offs increased $28 million and the NCO ratio increased 9 bps, reflecting higher charge-offs in the commercial portfolio. Compared to the year-ago quarter, net charge-offs increased $18 million and the NCO ratio increased 5 bps, reflecting higher commercial net charge-offs, offset by slightly lower consumer net charge-offs.

 

Capital Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

 

 

 

 

June

 

March

 

December

 

September

June

 

 

 

 

 

2022

 

2022

 

2021

 

2021

 

2021

 

 

Capital Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total Bancorp shareholders' equity as a % of average assets

 

9.35%

 

 

10.23%

 

 

10.71%

 

11.16%

 

11.11%

 

 

Tangible equity(a)

 

8.05%

 

 

7.98%

 

 

7.97%

 

8.06%

 

8.35%

 

 

Tangible common equity (excluding AOCI)(a)

 

7.01%

 

 

6.96%

 

 

6.94%

 

7.01%

 

7.28%

 

 

Tangible common equity (including AOCI)(a)

 

5.82%

 

 

6.48%

 

 

7.47%

 

7.74%

 

8.18%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital Ratios(d)(e)

 

 

 

 

CET1 capital

 

8.96%

 

 

9.31%

 

 

9.54%

 

9.86%

 

10.37%

 

 

Tier 1 risk-based capital

 

10.24%

 

 

10.63%

 

 

10.91%

 

11.28%

 

11.83%

 

 

Total risk-based capital

 

12.48%

 

 

12.93%

 

 

13.42%

 

13.94%

 

14.60%

 

 

Leverage

 

8.30%

 

 

8.32%

 

 

8.27%

 

8.41%

 

8.55%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The CET1 capital ratio was 8.96%, the tangible common equity to tangible assets ratio was 7.01% excluding AOCI, and 5.82% including AOCI. The Tier 1 risk-based capital ratio was 10.24%, the Total risk-based capital ratio was 12.48%, and the Leverage ratio was 8.30%.

On June 27, 2022, Fifth Third released its indicative stress capital buffer requirement resulting from the Federal Reserve Board’s 2022 annual bank stress test, incorporating the supervisory severely adverse scenario published in February 2022. Fifth Third’s indicative stress capital buffer under this scenario is 2.5%, effective October 1, 2022. The stress capital buffer of 2.5% is the floor under the regulatory capital rules.

Tax Rate

The effective tax rate was 22.4% compared with 19.2% 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 June 30, 2022, the Company had $207 billion in assets and operates 1,080 full-service Banking Centers, and 2,153 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 56,000 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, 2022, had $512 billion in assets under care, of which it managed $54 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.

(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)

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.

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”).

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; (44) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases; and (45) Fifth Third's ability to meet its sustainability targets, goals and commitments.

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. 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 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

Investor contact: Chris Doll (513) 534-2345
Media contact: Ed Loyd (513) 534-6397                                           

Source: Fifth Third Bancorp