10-QPeriod: Q3 FY2009

FIFTH THIRD BANCORP Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 6, 2009For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported a net loss of $97 million for the third quarter of 2009, or a loss of $0.20 per diluted share, a deterioration from the prior year's net loss of $56 million. This performance was primarily attributed to a challenging credit environment and a continued economic slowdown, leading to a significant increase in the provision for loan and lease losses to $952 million, up from $941 million in the prior year's quarter. Net interest income decreased by 18% year-over-year to $869 million, impacted by a lower net interest margin. Noninterest income saw a substantial increase of 19% to $851 million, largely driven by a $244 million gain from the sale of Visa, Inc. Class B common shares and revenue from a transition service agreement related to the sale of its processing business. The bank's capital position remained robust, with Tier 1 capital ratio at 13.23% and total risk-based capital ratio at 17.48%, both exceeding regulatory well-capitalized guidelines. However, net charge-offs increased significantly to 3.75% of average loans and leases, up from 2.17% in the prior year, and nonperforming assets rose to 4.04% of loans, leases, and other assets. Despite the challenging operating environment, the Bancorp strategically managed its balance sheet by reducing wholesale funding and increasing core deposits.

Financial Highlights

37 data points
Beta

Net Income

-$97.00M

EPS (Diluted)

$-0.20

Total Assets

$110.74B

Free Cash Flow

$1.78B

Financial Statements
Beta
Interest Expense$300.00M
Net Income-$97.00M
EPS (Basic)$-0.20
EPS (Diluted)$-0.20
Shares Outstanding (Basic)790.00M
Shares Outstanding (Diluted)790.00M

Key Highlights

  • 1Net loss of $97 million for Q3 2009, compared to a net loss of $56 million in Q3 2008.
  • 2Provision for loan and lease losses increased to $952 million, reflecting worsening credit quality.
  • 3Net interest income decreased 18% to $869 million due to a lower net interest margin.
  • 4Noninterest income increased 19% to $851 million, significantly boosted by the Visa share sale gain ($244 million) and processing business sale revenue ($38 million).
  • 5Net charge-offs as a percentage of average loans increased to 3.75% from 2.17% year-over-year.
  • 6Nonperforming assets as a percentage of total assets rose to 4.04% from 2.86% year-over-year.
  • 7Strong capital ratios were maintained, with Tier 1 capital at 13.23% and total risk-based capital at 17.48%.

Frequently Asked Questions

Fifth Third Bancorp reported a net loss of $97 million in Q3 2009 primarily due to a challenging credit environment and the ongoing economic slowdown. This led to a significant increase in the provision for loan and lease losses, which more than offset gains from noninterest income sources like the Visa share sale.

Credit quality has deteriorated. Net charge-offs increased significantly to 3.75% of average loans and leases, up from 2.17% in Q3 2008. Similarly, nonperforming assets as a percentage of loans, leases, and other assets rose to 4.04% from 2.86% in the prior year's quarter.

The significant increase in noninterest income was primarily driven by a $244 million gain from the sale of Fifth Third Bancorp's Visa, Inc. Class B common shares and $38 million in revenue from a transition service agreement related to the sale of its processing business.

The Bancorp's capital position remains strong. As of September 30, 2009, its Tier 1 capital ratio was 13.23%, and its total risk-based capital ratio was 17.48%, both of which exceed the 'well-capitalized' regulatory guidelines.