FITB
$35.71
Fifth Third Bancorp
($.77)
(2.11%)
Earnings Details
3rd Quarter September 2022
Thursday, October 20, 2022 6:30:00 AM
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Summary

Fifth Third Bancorp (FITB) Recent Earnings

Fifth Third Bancorp (FITB) reported 3rd Quarter September 2022 earnings of $0.93 per share on revenue of $2.4 billion. The consensus earnings estimate was $0.98 per share on revenue of $2.2 billion. Revenue grew 14.3% 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
$0.93
Earnings Whisper
-
Consensus Estimate
$0.98
Reported Revenue
$2.43 Bil
Revenue Estimate
$2.20 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Fifth Third Announces Third Quarter 2022 Results

Reported diluted earnings per share of $0.91

Reported results included a negative $0.02 impact from a certain item on page 2 of the 3Q22 earnings release

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

Key Highlights

Select Business Highlights:

  • Generated consumer household growth of 3% compared to 3Q21
  • Increased quarterly cash dividend on common shares 3 cents, or 10%
  • Private Bank recognized as Best Private Bank for High Net Worth Clients by Digital Banker and Global Private Banker
  • Surpassed 1 million Momentum banking accounts

Select Financial Highlights:

  • ROTCE(a) of 21.9%; adjusted ROTCE(a) of 17.7% excl. AOCI
  • Compared to 3Q21, PPNR(a) increased 18% (adjusted PPNR(a) increased 24%)
  • Efficiency ratio(a) of 53.7%, a 4 point improvement from 3Q21
  • Net interest income(a) increased 12% compared to 2Q22; NIM(a) up 30 basis points compared to 2Q22
  • ACL of 1.91%, an increase of 6 bps from 2Q22 (increase of 2 bps excluding Dividend Finance); NPA ratio of 0.46% improved 1 bp compared to 2Q22

 

 

 

 

 

 

 

 

 

 

Key Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions for all balance sheet and income statement items

 

 

 

 

 

3Q22

2Q22

3Q21

 

 

 

 

 

 

 

 

 

 

 

 

Income Statement Data

 

 

 

 

 

 

 

Net income available to common shareholders

$631

 

$526

 

$684

 

 

Net interest income (U.S. GAAP)

1,498

 

1,339

 

1,189

 

 

Net interest income (FTE)(a)

1,502

 

1,342

 

1,192

 

 

Noninterest income

672

 

676

 

836

 

 

Noninterest expense

1,167

 

1,112

 

1,172

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

Earnings per share, basic

$0.91

 

$0.76

 

$0.98

 

 

Earnings per share, diluted

0.91

 

0.76

 

0.97

 

 

Book value per share

21.30

 

24.56

 

29.59

 

 

Tangible book value per share(a)

13.87

 

17.10

 

22.79

 

 

 

 

 

 

 

 

 

 

Balance Sheet & Credit Quality

 

 

 

 

 

 

 

Average portfolio loans and leases

$119,644

 

$117,693

 

$107,970

 

 

Average deposits

159,469

 

162,890

 

162,647

 

 

Net charge-off ratio(b)

0.21

%

0.21

%

0.08

%

 

Nonperforming asset ratio(c)

0.46

 

0.47

 

0.52

 

 

 

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

 

 

Return on average assets

1.25

%

1.09

%

1.36

%

 

Return on average common equity

14.9

 

12.3

 

13.0

 

 

Return on average tangible common equity(a)

21.9

 

17.5

 

16.9

 

 

CET1 capital(d)(e)

9.11

 

8.95

 

9.86

 

 

Net interest margin(a)

3.22

 

2.92

 

2.59

 

 

Efficiency(a)

53.7

 

55.1

 

57.8

 

 

Other than the Quarterly Financial Review tables beginning on page 14 of the 3Q22 earnings release, 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

Our third quarter financial results were strong and reflected our disciplined approach throughout the bank. We generated record adjusted revenue driven by interest-earning assets growth combined with a 30 basis point improvement in our net interest margin. We also achieved one of our lowest adjusted efficiency ratios over the past decade reflecting our expense discipline.

We extended our track record of strong organic growth, adding new quality relationships in commercial and new households in consumer. Provide and Dividend Finance - our recent fintech acquisitions - have also contributed to our healthy loan growth with record originations. We are committed throughout the bank to continuous improvement and developing innovative, software-led solutions to deliver best-in-class products and services.

Fifth Third has been built to perform well through-the-cycle. Our key credit quality metrics in both commercial and consumer portfolios remain resilient, reflecting our focus on high-quality relationships and disciplined approach to client selection. We remain well positioned to outperform peers and generate long-term sustainable value for customers, communities, employees and shareholders.

-Tim Spence, President and CEO

 

Income Statement Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except per share data)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Condensed Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (NII)(a)

$1,502

 

$1,342

 

$1,192

 

12%

 

26%

 

 

Provision for (benefit from) credit losses

158

 

179

 

(42)

 

(12)%

 

NM

 

 

Noninterest income

672

 

676

 

836

 

(1)%

 

(20)%

 

 

Noninterest expense

1,167

 

1,112

 

1,172

 

5%

 

 

 

Income before income taxes(a)

$849

 

$727

 

$898

 

17%

 

(5)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable equivalent adjustment

$4

 

$3

 

$3

 

33%

 

33%

 

 

Applicable income tax expense

192

 

162

 

191

 

19%

 

1%

 

 

Net income

$653

 

$562

 

$704

 

16%

 

(7)%

 

 

Dividends on preferred stock

22

 

36

 

20

 

(39)%

 

10%

 

 

Net income available to common shareholders

$631

 

$526

 

$684

 

20%

 

(8)%

 

 

Earnings per share, diluted

$0.91

 

$0.76

 

$0.97

 

20%

 

(6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fifth Third Bancorp (NASDAQ®: FITB) today reported third quarter 2022 net income of $653 million compared to net income of $562 million in the prior quarter and $704 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $631 million, or $0.91 per diluted share, compared to $526 million, or $0.76 per diluted share, in the prior quarter and $684 million, or $0.97 per diluted share, in the year-ago quarter.

 

 

 

 

 

 

 

Diluted earnings per share impact of certain item(s) - 3Q22

 

 

 

 

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

 

 

 

 

 

Valuation of Visa total return swap (noninterest income)

$(13)

 

 

 

 

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

$(0.02)

 

 

 

 

 

 

 

 

 

 

1Diluted earnings per share impact reflects 694.593 million average diluted shares outstanding

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(FTE; $ in millions)(a)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$1,764

 

 

$1,467

 

 

$1,295

 

 

20%

 

36%

 

 

Interest expense

262

 

 

125

 

 

103

 

 

110%

 

154%

 

 

Net interest income (NII)

$1,502

 

 

$1,342

 

 

$1,192

 

 

12%

 

26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Yield/Rate Analysis

 

 

 

 

 

 

 

 

 

bps Change

 

 

Yield on interest-earning assets

3.78%

 

 

3.19%

 

 

2.81%

 

 

59

 

97

 

 

Rate paid on interest-bearing liabilities

0.87%

 

 

0.43%

 

 

0.36%

 

 

44

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

2.91%

 

 

2.76%

 

 

2.45%

 

 

15

 

46

 

 

Net interest margin (NIM)

3.22%

 

 

2.92%

 

 

2.59%

 

 

30

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compared to the prior quarter, NII increased $160 million, or 12%, primarily reflecting higher market rates, growth in commercial loan balances, the full quarter impact of securities purchased in the second quarter, as well as a higher day count, partially offset by an increase in wholesale funding primarily due to a decline in average core deposit balances. Compared to the prior quarter, NIM increased 30 bps, reflecting the net benefit of higher market rates as well as a decrease in other short-term investments (primarily interest-bearing cash), partially offset by the aforementioned increase in wholesale funding.

Compared to the year-ago quarter, NII increased $310 million, or 26%, reflecting the net benefit 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 63 bps, reflecting the benefit of higher market rates as well as growth in investment portfolio balances, partially offset by a decrease in other short-term investments (primarily interest-bearing cash).

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

$143

 

$154

 

$152

 

(7)%

 

(6)%

 

 

Commercial banking revenue

134

 

137

 

152

 

(2)%

 

(12)%

 

 

Mortgage banking net revenue

69

 

31

 

86

 

123%

 

(20)%

 

 

Wealth and asset management revenue

141

 

140

 

147

 

1%

 

(4)%

 

 

Card and processing revenue

105

 

105

 

102

 

 

3%

 

 

Leasing business revenue

60

 

56

 

78

 

7%

 

(23)%

 

 

Other noninterest income

59

 

85

 

120

 

(31)%

 

(51)%

 

 

Securities losses, net

(38)

 

(32)

 

(1)

 

19%

 

NM

 

 

Securities losses, net - non-qualifying hedges

 

 

 

 

 

 

 

 

 

 

 

on mortgage servicing rights

(1)

 

 

 

NM

 

NM

 

 

Total noninterest income

$672

 

$676

 

$836

 

(1)%

 

(20)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported noninterest income decreased $4 million, or 1%, from the prior quarter, and decreased $164 million, or 20%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below. Reported current quarter results included $38 million of net securities losses, which included $7 million in net losses attributable to mark-to-market impacts related to investments supporting non-qualified deferred compensation plans, as well as a $28 million net loss attributable to market value changes on Fifth Third's shares of Rubicon Technologies, Inc. and AvidXchange Holdings, Inc.

 

Noninterest Income excluding certain items

 

($ in millions)

For the Three Months Ended

 

 

 

September

 

June

 

 

September

 

 

 

2022

 

2022

 

 

2021

 

 

Noninterest Income excluding certain items

 

 

 

 

 

 

 

 

 

Noninterest income (U.S. GAAP)

$672

 

 

$676

 

 

$836

 

 

Valuation of Visa total return swap

17

 

 

18

 

 

17

 

 

Net disposition charges/(gain)

 

 

6

 

 

(60)

 

 

Securities losses, net

38

 

 

32

 

 

1

 

 

Noninterest income excluding certain items(a)

$727

 

 

$732

 

 

$794

 

 

 

 

 

 

 

 

 

 

 

Compared to the prior quarter, noninterest income excluding certain items decreased $5 million, or 1%. Compared to the year-ago quarter, noninterest income excluding certain items decreased $67 million, or 8%.

Compared to the prior quarter, service charges on deposits decreased $11 million, or 7%, reflecting the impact of higher treasury management earnings credits which more than offset gross revenue growth, as well as the elimination of consumer non-sufficient funds fees. Commercial banking revenue decreased $3 million, or 2%, primarily driven by lower M&A advisory revenue and corporate bond fees, partially offset by higher loan syndication revenue. Mortgage banking net revenue increased $38 million, or 123%, primarily reflecting a $19 million reduction in MSR asset decay and an $18 million increase from MSR net valuation adjustments. Wealth and asset management revenue increased $1 million, or 1%, primarily driven by increased high-net-worth insurance revenue, partially offset by a decline in personal asset management revenue. Card and processing revenue was flat as lower rewards were offset by lower spend volumes. Leasing business revenue increased $4 million, or 7%, primarily reflecting higher lease remarketing revenue. The decrease in other noninterest income was primarily attributable to lower private equity income.

Compared to the year-ago quarter, service charges on deposits decreased $9 million, or 6%, reflecting higher treasury management earnings credits and the elimination of consumer non-sufficient funds fees. Commercial banking revenue decreased $18 million, or 12%, primarily driven by decreases in corporate bond fees, M&A advisory revenue, and loan syndication revenue, partially offset by an increase in client financial risk management revenue. Mortgage banking net revenue decreased $17 million, or 20%, reflecting a $54 million decrease in origination fees and gains on loan sales and a $10 million reduction from MSR net valuation adjustments, partially offset by a $29 million decrease in MSR asset decay and an $18 million increase in mortgage servicing revenue. Wealth and asset management revenue decreased $6 million, or 4%, primarily reflecting lower personal asset management revenue impacted by market valuations. Card and processing revenue increased $3 million, or 3%, driven by higher spend volumes partially offset by higher rewards. Leasing business revenue decreased $18 million, or 23%, reflecting the disposition of LaSalle Solutions, partially offset by an increase in lease remarketing revenue. The decrease in other noninterest income was primarily attributable to lower private equity income.

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

$605

 

 

$584

 

 

$627

 

 

4%

 

(4)%

 

 

Net occupancy expense

74

 

 

75

 

 

79

 

 

(1)%

 

(6)%

 

 

Technology and communications

106

 

 

98

 

 

98

 

 

8%

 

8%

 

 

Equipment expense

36

 

 

36

 

 

34

 

 

 

6%

 

 

Card and processing expense

21

 

 

20

 

 

19

 

 

5%

 

11%

 

 

Leasing business expense

33

 

 

31

 

 

33

 

 

6%

 

 

 

Marketing expense

35

 

 

28

 

 

29

 

 

25%

 

21%

 

 

Other noninterest expense

257

 

 

240

 

 

253

 

 

7%

 

2%

 

 

Total noninterest expense

$1,167

 

 

$1,112

 

 

$1,172

 

 

5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compared to the prior quarter, noninterest expense increased $55 million, or 5%. Noninterest expense in the current quarter included a $7 million benefit related to the impact of non-qualified deferred compensation mark-to-market (compared to a $27 million benefit in the prior quarter). Excluding the non-qualified deferred compensation impacts from both periods, total noninterest expense increased $35 million, or 3%, primarily driven by higher technology and marketing expense, the full quarter impact of the Dividend Finance acquisition, and the impact of the recent minimum wage increase.

Compared to the year-ago quarter, noninterest expense decreased $5 million primarily reflecting a decrease in compensation and benefits expense. This was partially offset by an increase in technology and communications expense related to continued modernization investments as well as higher marketing expense.

 

Average Interest-Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Average Portfolio Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

$56,646

 

 

$55,460

 

 

$47,766

 

 

2%

 

19%

 

 

Commercial mortgage loans

10,751

 

 

10,710

 

 

10,317

 

 

 

4%

 

 

Commercial construction loans

5,557

 

 

5,356

 

 

5,728

 

 

4%

 

(3)%

 

 

Commercial leases

2,792

 

 

2,839

 

 

3,158

 

 

(2)%

 

(12)%

 

 

Total commercial loans and leases

$75,746

 

 

$74,365

 

 

$66,969

 

 

2%

 

13%

 

 

Consumer loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage loans

$17,617

 

 

$17,363

 

 

$16,223

 

 

1%

 

9%

 

 

Home equity

3,956

 

 

3,895

 

 

4,409

 

 

2%

 

(10)%

 

 

Indirect secured consumer loans

16,750

 

 

17,241

 

 

15,590

 

 

(3)%

 

7%

 

 

Credit card

1,756

 

 

1,704

 

 

1,748

 

 

3%

 

 

 

Other consumer loans

3,819

 

 

3,125

 

 

3,031

 

 

22%

 

26%

 

 

Total consumer loans

$43,898

 

 

$43,328

 

 

$41,001

 

 

1%

 

7%

 

 

Total average portfolio loans and leases

$119,644

 

 

$117,693

 

 

$107,970

 

 

2%

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average PPP loans

$283

 

 

$549

 

 

$3,071

 

 

(48)%

 

(91)%

 

 

Average portfolio commercial and industrial loans - excl. PPP loans

$56,363

 

 

$54,911

 

 

$44,695

 

 

3%

 

26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Loans and Leases Held for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases held for sale

$3

 

 

$7

 

 

$31

 

 

(57)%

 

(90)%

 

 

Consumer loans held for sale

2,253

 

 

2,536

 

 

5,527

 

 

(11)%

 

(59)%

 

 

Total average loans and leases held for sale

$2,256

 

 

$2,543

 

 

$5,558

 

 

(11)%

 

(59)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average loans and leases

$121,900

 

 

$120,236

 

 

$113,528

 

 

1%

 

7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (taxable and tax-exempt)

$57,713

 

 

$54,538

 

 

$37,208

 

 

6%

 

55%

 

 

Other short-term investments

5,765

 

 

9,632

 

 

32,065

 

 

(40)%

 

(82)%

 

 

Total average interest-earning assets

$185,378

 

 

$184,406

 

 

$182,801

 

 

1%

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compared to the prior quarter, total average portfolio loans and leases increased 2%, reflecting an increase in both commercial and consumer portfolios. Average commercial portfolio loans and leases increased 2%, primarily reflecting an increase in commercial and industrial (C&I) and commercial construction loan balances. Average consumer portfolio loans increased 1%, reflecting an increase in other consumer loan balances (primarily Dividend Finance) and residential mortgage loan balances, partially offset by a decrease in indirect secured consumer loan balances.

Compared to the year-ago quarter, total average portfolio loans and leases increased 11%, reflecting an increase in both commercial and consumer portfolios. Average commercial portfolio loans and leases increased 13%, primarily reflecting an increase in C&I loan balances, partially offset by a decrease in commercial lease balances. Average consumer portfolio loans increased 7%, as increases in both residential mortgage and indirect secured consumer loan balances were partially offset by a decrease in home equity balances.

Average loans and leases held for sale were $2 billion in the current quarter compared to $3 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 $58 billion in the current quarter increased $3 billion, or 6%, compared to the prior quarter and increased $21 billion, or 55%, compared to the year-ago quarter. Average other short-term investments (including interest-bearing cash) of $6 billion in the current quarter decreased $4 billion, or 40%, compared to the prior quarter and decreased $26 billion, or 82%, compared to the year-ago quarter.

Total period-end commercial portfolio loans and leases of $76 billion increased 1% compared to the prior quarter, primarily reflecting an increase in C&I balances. Compared to the year-ago quarter, total period-end commercial portfolio loans increased 14%, primarily reflecting an increase in C&I balances, partially offset by a decrease in commercial lease balances. Period-end commercial revolving line utilization was 37%, compared to 37% in the prior quarter and 31% in the year-ago quarter.

Period-end consumer portfolio loans of $44 billion increased 1% compared to the prior quarter, primarily reflecting an increase in other consumer loan balances (primarily Dividend Finance) and home equity balances, partially offset by a decrease in indirect secured consumer loan balances. Compared to the year-ago quarter, total period-end consumer portfolio loans increased 7%, reflecting an increase in residential mortgage balances and other consumer loan balances, partially offset by a decrease in home equity balances.

Total period-end securities (taxable and tax-exempt; amortized cost) of $58 billion in the current quarter increased $1 billion, or 2%, compared to the prior quarter and increased $21 billion, or 57%, compared to the year-ago quarter. Period-end other short-term investments of $7 billion decreased $1 billion, or 11%, compared to the prior quarter and decreased $28 billion, or 81%, compared to the year-ago quarter.

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand

$59,535

 

 

$62,555

 

 

$62,626

 

 

(5)%

 

(5)%

 

 

Interest checking

42,574

 

 

44,349

 

 

45,128

 

 

(4)%

 

(6)%

 

 

Savings

23,814

 

 

23,708

 

 

20,941

 

 

 

14%

 

 

Money market

29,066

 

 

29,284

 

 

30,514

 

 

(1)%

 

(5)%

 

 

Foreign office(g)

206

 

 

139

 

 

195

 

 

48%

 

6%

 

 

Total transaction deposits

$155,195

 

 

$160,035

 

 

$159,404

 

 

(3)%

 

(3)%

 

 

CDs $250,000 or less

2,048

 

 

2,193

 

 

2,937

 

 

(7)%

 

(30)%

 

 

Total core deposits

$157,243

 

 

$162,228

 

 

$162,341

 

 

(3)%

 

(3)%

 

 

CDs over $250,000

2,226

 

 

662

 

 

306

 

 

236%

 

627%

 

 

Total average deposits

$159,469

 

 

$162,890

 

 

$162,647

 

 

(2)%

 

(2)%

 

 

 

Compared to the prior quarter, average core deposits decreased 3%, primarily reflecting a decline in commercial deposit balances including the full quarter impact of second quarter's deliberate deposit runoff. Average demand deposits represented 38% of total core deposits in the current quarter, relatively stable with the prior quarter. Average commercial transaction deposits decreased 5% and average consumer transaction deposits decreased 1%. Period end core deposits were flat compared to the prior quarter.

Compared to the year-ago quarter, average core deposits decreased 3%, primarily reflecting the aforementioned commercial deposit runoff. Average commercial transaction deposits decreased 10% and average consumer transaction deposits increased 5%. Period end core deposits decreased 3% compared to the year-ago quarter.

The period end portfolio loan-to-core deposit ratio was 75% in the current quarter, compared to 75% in the prior quarter and 65% in the year-ago quarter.

Average Wholesale Funding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

 

 

 

September

 

June

 

September

 

 

 

 

 

 

 

2022

 

2022

 

2021

 

Seq

 

Yr/Yr

 

 

Average Wholesale Funding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CDs over $250,000

$2,226

 

 

$662

 

 

$306

 

 

236%

 

627%

 

 

Federal funds purchased

607

 

 

392

 

 

348

 

 

55%

 

74%

 

 

Other short-term borrowings

7,436

 

 

3,571

 

 

1,122

 

 

108%

 

563%

 

 

Long-term debt

11,796

 

 

11,164

 

 

12,057

 

 

6%

 

(2)%

 

 

Total average wholesale funding

$22,065

 

 

$15,789

 

 

$13,833

 

 

40%

 

60%

 

 

 

Compared to the prior quarter, average wholesale funding increased 40%, as earning asset growth outpaced core deposit balances. The growth in wholesale funding was primarily attributed to increases in other short-term borrowings and jumbo CD balances. Compared to the year-ago quarter, average wholesale funding increased 60%, 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

 

September

 

June

 

March

 

December

 

September

 

2022

 

2022

 

2022

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonaccrual portfolio loans and leases (NPLs)

$522

 

 

$539

 

 

$534

 

 

$498

 

 

$528

 

Repossessed property

6

 

 

6

 

 

5

 

 

5

 

 

4

 

OREO

18

 

 

14

 

 

27

 

 

24

 

 

27

 

Total nonperforming portfolio loans and leases and OREO (NPAs)

$546

 

 

$559

 

 

$566

 

 

$527

 

 

$559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NPL ratio(h)

0.44%

 

 

0.45%

 

 

0.46%

 

 

0.44%

 

 

0.49%

 

NPA ratio(c)

0.46%

 

 

0.47%

 

 

0.49%

 

 

0.47%

 

 

0.52%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$335

 

 

$294

 

 

$288

 

 

$254

 

 

$267

 

Total loans and leases 90 days past due (accrual)

59

 

 

39

 

 

50

 

 

117

 

 

92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses (ALLL), beginning

$2,014

 

 

$1,908

 

 

$1,892

 

 

$1,954

 

 

$2,033

 

Total net losses charged-off

(62)

 

 

(62)

 

 

(34)

 

 

(38)

 

 

(21)

 

Provision for (benefit from) loan and lease losses

147

 

 

168

 

 

50

 

 

(24)

 

 

(58)

 

ALLL, ending

$2,099

 

 

$2,014

 

 

$1,908

 

 

$1,892

 

 

$1,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reserve for unfunded commitments, beginning

$188

 

 

$177

 

 

$182

 

 

$205

 

 

$189

 

Provision for (benefit from) the reserve for unfunded commitments

11

 

 

11

 

 

(5)

 

 

(23)

 

 

16

 

Reserve for unfunded commitments, ending

$199

 

 

$188

 

 

$177

 

 

$182

 

 

$205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total allowance for credit losses (ACL)

$2,298

 

 

$2,202

 

 

$2,085

 

 

$2,074

 

 

$2,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a % of portfolio loans and leases

1.91%

 

 

1.85%

 

 

1.80%

 

 

1.85%

 

 

2.00%

 

As a % of nonperforming portfolio loans and leases

440%

 

 

408%

 

 

391%

 

 

416%

 

 

409%

 

As a % of nonperforming portfolio assets

420%

 

 

394%

 

 

369%

 

 

394%

 

 

386%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL as a % of portfolio loans and leases

1.75%

 

 

1.70%

 

 

1.65%

 

 

1.69%

 

 

1.81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total losses charged-off

$(104)

 

 

$(90)

 

 

$(64)

 

 

$(77)

 

 

$(56)

 

Total recoveries of losses previously charged-off

42

 

 

28

 

 

30

 

 

39

 

 

35

 

Total net losses charged-off

$(62)

 

 

$(62)

 

 

$(34)

 

 

$(38)

 

 

$(21)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

0.21%

 

 

0.21%

 

 

0.12%

 

 

0.14%

 

 

0.08%

 

Commercial NCO ratio

0.17%

 

 

0.19%

 

 

0.05%

 

 

0.10%

 

 

0.03%

 

Consumer NCO ratio

0.28%

 

 

0.24%

 

 

0.25%

 

 

0.21%

 

 

0.16%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming portfolio loans and leases were $522 million in the current quarter, with the resulting NPL ratio of 0.44%. Compared to the prior quarter, NPLs decreased $17 million with the NPL ratio decreasing 1 bp. Compared to the year-ago quarter, NPLs decreased $6 million with the NPL ratio decreasing 5 bps.

Nonperforming portfolio assets were $546 million in the current quarter, with the resulting NPA ratio of 0.46%. Compared to the prior quarter, NPAs decreased $13 million with the NPA ratio decreasing 1 bp. Compared to the year-ago quarter, NPAs decreased $13 million with the NPA ratio decreasing 6 bps.

The provision for credit losses totaled $158 million in the current quarter. The allowance for credit loss ratio represented 1.91% of total portfolio loans and leases at quarter end, compared with 1.85% for the prior quarter end and 2.00% for the year-ago quarter end. In the current quarter, the allowance for credit losses represented 440% of nonperforming portfolio loans and leases and 420% 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, both net charge-offs and the NCO ratio remained flat. Compared to the year-ago quarter, net charge-offs increased $41 million and the NCO ratio increased 13 bps, reflecting a normalization from historically low net charge-offs in the year-ago quarter.

 

Capital Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

 

 

 

 

September

 

June

 

March

 

December

 

September

 

 

 

 

2022

 

2022

 

2022

 

2021

 

 

2021

 

 

Capital Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

9.13%

 

 

9.35%

 

 

10.23%

 

10.71%

 

 

11.16%

 

 

Tangible equity(a)

 

8.18%

 

 

8.05%

 

 

7.98%

 

7.97%

 

 

8.06%

 

 

Tangible common equity (excluding AOCI)(a)

 

7.16%

 

 

7.01%

 

 

6.96%

 

6.94%

 

 

7.01%

 

 

Tangible common equity (including AOCI)(a)

 

4.75%

 

 

5.82%

 

 

6.48%

 

7.47%

 

 

7.74%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital Ratios(d)(e)

 

 

 

 

CET1 capital

 

9.11%

 

 

8.95%

 

 

9.31%

 

9.54%

 

 

9.86%

 

 

Tier 1 risk-based capital

 

10.38%

 

 

10.23%

 

 

10.63%

 

10.91%

 

 

11.28%

 

 

Total risk-based capital

 

12.61%

 

 

12.47%

 

 

12.93%

 

13.42%

 

 

13.94%

 

 

Leverage

 

8.44%

 

 

8.30%

 

 

8.32%

 

8.27%

 

 

8.41%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The CET1 capital ratio was 9.11%, the tangible common equity to tangible assets ratio was 7.16% excluding AOCI, and 4.75% including AOCI. The Tier 1 risk-based capital ratio was 10.38%, the Total risk-based capital ratio was 12.61%, and the Leverage ratio was 8.44%.

Fifth Third increased its quarterly cash dividend on its common shares by $0.03, or 10%, to $0.33 per share for the third quarter of 2022.

Tax Rate

The effective tax rate for the quarter was 22.7% compared with 22.4% in the prior quarter and 21.3% 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 is a bank that’s as long on innovation as it is on history. Since 1858, we’ve been helping individuals, families, businesses and communities grow through smart financial services that improve lives. Our list of firsts is extensive, and it’s one that continues to expand as we explore the intersection of tech-driven innovation, dedicated people, and focused community impact. Fifth Third is one of the few U.S.-based banks to have been named among Ethisphere's World’s Most Ethical Companies® for several years. With a commitment to taking care of our customers, employees, communities and shareholders, our goal is not only to be the nation’s highest performing regional bank, but to be the bank people most value and trust.

Fifth Third Bank, National Association is a federally chartered institution. Fifth Third Bancorp is the indirect parent company of Fifth Third Bank and its common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.” Investor information and press releases can be viewed at www.53.com.

Earnings Release End Notes

(a)

 

Non-GAAP measure; see discussion of non-GAAP reconciliation beginning on page 27 of the 3Q22 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)

 

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 environmental and/or social 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