10-QPeriod: Q1 FY2010

FIFTH THIRD BANCORP Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 7, 2010For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported a net loss of $10 million for the first quarter of 2010, translating to a loss of $0.09 per diluted share. This marks a deterioration from a net income of $50 million, or $0.04 per diluted share, in the prior year's first quarter. The primary driver for this shift was a significant increase in the provision for loan and lease losses, which rose to $590 million, up from $773 million in Q1 2009, indicating ongoing credit quality concerns despite some signs of stabilization. However, net interest income (FTE) saw a robust increase of 15% to $901 million, driven by an improved interest rate spread and a favorable shift in funding mix towards lower-cost deposits. Noninterest income declined by 10% to $627 million, largely due to the sale of the Bancorp's processing businesses in June 2009, which significantly reduced card and processing revenue. Noninterest expense remained relatively flat, with increases in FDIC insurance premiums and representation/warranty reserves on mortgage loans offsetting cost savings from the business sale. Despite the net loss, the Bancorp maintained strong capital ratios, exceeding regulatory "well-capitalized" guidelines, with its Tier 1 capital ratio at 13.40%.

Financial Highlights

36 data points
Beta

Net Income

-$10.00M

EPS (Diluted)

$-0.09

Total Assets

$112.65B

Free Cash Flow

$868.00M

Financial Statements
Beta
Interest Expense$246.00M
Net Income-$10.00M
EPS (Basic)$-0.09
EPS (Diluted)$-0.09
Shares Outstanding (Basic)790.00M
Shares Outstanding (Diluted)790.00M

Key Highlights

  • 1Net loss of $10 million (loss of $0.09 per diluted share) in Q1 2010, compared to net income of $50 million (loss of $0.04 per diluted share) in Q1 2009.
  • 2Net interest income (FTE) increased 15% year-over-year to $901 million, primarily due to a 59 basis point increase in the interest rate spread.
  • 3Noninterest income decreased 10% to $627 million, largely impacted by the prior year's sale of processing businesses.
  • 4Provision for loan and lease losses decreased 24% to $590 million, reflecting early signs of credit quality stabilization.
  • 5Net charge-offs as a percentage of average loans increased to 3.01% from 2.37% year-over-year.
  • 6Nonperforming assets as a percentage of loans, leases, and other assets (including OREO) stood at 4.02%, up from 3.19% in the prior year's first quarter.
  • 7Tier 1 capital ratio remained strong at 13.40%, exceeding regulatory requirements.

Frequently Asked Questions

Fifth Third Bancorp reported a net loss of $10 million for the first quarter of 2010, down from a net income of $50 million in the same period last year. This was driven by higher provision for loan losses and a decrease in noninterest income, although net interest income saw a significant increase.

The provision for loan and lease losses decreased by 24% to $590 million in the first quarter of 2010 compared to $773 million in the first quarter of 2009. While this is a positive development, net charge-offs as a percentage of average loans increased, indicating continued credit quality challenges.

Noninterest income decreased by 10% due to lower card and processing revenue and corporate banking revenue. This was primarily a result of the sale of a majority interest in the Bancorp's merchant acquiring and financial institutions processing businesses in June 2009.

The Bancorp maintains a strong capital position, with its Tier 1 capital ratio at 13.40% and total risk-based capital ratio at 17.55% as of March 31, 2010. These ratios comfortably exceed the 'well-capitalized' guidelines set by regulators.