10-QPeriod: Q1 FY2004

FIFTH THIRD BANCORP Quarterly Report for Q1 Ended Mar 31, 2004

Filed May 6, 2004For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported a solid first quarter for 2004, with net income increasing by 10% year-over-year to $430 million and diluted earnings per share rising by 12% to $0.75. This growth was driven by a 6% increase in net interest income, bolstered by a 9% expansion in average interest-earning assets. While the net interest margin experienced a slight contraction, this was primarily due to the prevailing low interest rate environment and share repurchase activity. The bank demonstrated continued strength in its deposit base, which grew year-over-year, and maintained strong capital ratios well above regulatory requirements. The company also saw positive momentum in its electronic payment processing and investment advisory segments. Management remains focused on efficiency initiatives and has successfully addressed previously identified risk management and internal control issues, with a written agreement with regulators being terminated. Overall, FITB presents a picture of steady financial performance and strategic execution in the first quarter of 2004.

Key Highlights

  • 1Net income increased by 10% to $430 million, and diluted EPS grew by 12% to $0.75 for Q1 2004 compared to Q1 2003.
  • 2Net interest income (FTE) rose 6% to $759 million, driven by a 9% increase in average interest-earning assets.
  • 3Total assets grew 11% year-over-year to $93.7 billion.
  • 4Shareholder equity increased 2% to $8.9 billion, with capital ratios remaining significantly above well-capitalized regulatory levels.
  • 5Electronic payment processing revenue increased 14% year-over-year, and investment advisory revenue grew 17%.
  • 6The company repurchased 5.6 million shares of common stock for approximately $325 million in Q1 2004.
  • 7A written agreement with the Federal Reserve Bank of Cleveland and the Ohio Department of Commerce, Division of Financial Institutions, related to risk management and internal controls, has been terminated.

Frequently Asked Questions

Fifth Third Bancorp reported a 10% increase in net income to $430 million and a 12% increase in diluted earnings per share to $0.75 for the first quarter of 2004, compared to the same period in 2003.

The increase in net interest income was primarily driven by a 9% expansion in average interest-earning assets, despite a slight contraction in the net interest margin. The company also benefited from a steepening yield curve in the short end.

Fifth Third Bancorp announced that the written agreement with the Federal Reserve Bank of Cleveland and the Ohio Department of Commerce, Division of Financial Institutions, which addressed risk management processes and internal controls, has been terminated as of April 7, 2004.

The company's capital position remains strong. Shareholder equity increased to $8.9 billion, and its Tier 1 risk-based capital ratio (10.90%), total risk-based capital ratio (13.15%), and leverage ratio (9.24%) were all significantly above the 'well-capitalized' regulatory requirements at March 31, 2004.