10-QPeriod: Q1 FY2013

FIFTH THIRD BANCORP Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 9, 2013For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported solid financial results for the first quarter of 2013, demonstrating resilience despite a moderately improving economic environment. Net income available to common shareholders was $413 million, or $0.46 per diluted share, a slight decrease from $421 million in the prior year quarter, primarily impacted by lower net interest income and a gain from the Vantiv IPO in the prior year. The bank made progress on credit quality, with a notable decrease in provision for loan and lease losses and net charge-offs. Capital ratios remain strong and well above regulatory requirements, with the Tier I risk-based capital ratio at 10.83% and Tier I leverage ratio at 10.03%. The company also received a non-objection from the Federal Reserve on its capital plan, allowing for a dividend increase and significant share repurchase authorizations, signaling confidence in its financial strength and future outlook. The Bancorp's revenue streams showed a mixed performance, with net interest income decreasing by 1% due to lower asset yields, partially offset by higher average loan balances. Noninterest income experienced a 3% decline, largely due to the absence of the prior year's significant gain from the Vantiv IPO, although mortgage banking net revenue, card and processing revenue, and investment advisory revenue showed positive growth. Expenses remained largely stable, with the efficiency ratio slightly increasing to 59.8%. The loan portfolio saw a modest increase in average balances, driven by commercial and industrial loans and residential mortgages, while consumer loans saw a slight decline.

Financial Highlights

36 data points
Beta

Net Income

$422.00M

EPS (Diluted)

$0.46

Total Assets

$121.38B

Free Cash Flow

$1.16B

Financial Statements
Beta
Interest Expense$107.00M
Net Income$422.00M
EPS (Basic)$0.47
EPS (Diluted)$0.46
Shares Outstanding (Basic)870.92M
Shares Outstanding (Diluted)913.16M

Key Highlights

  • 1Net income available to common shareholders was $413 million, or $0.46 per diluted share.
  • 2Provision for loan and lease losses decreased by 31% to $62 million, reflecting improved credit quality.
  • 3Net charge-offs as a percentage of average loans and leases decreased by 42% to 0.63%.
  • 4Tier 1 risk-based capital ratio stood at 10.83%, exceeding regulatory requirements.
  • 5The Bancorp's capital plan was not objected to by the Federal Reserve, allowing for a potential dividend increase to $0.12 per share and significant share repurchase programs.
  • 6Mortgage banking net revenue increased by 7% to $220 million, driven by higher net servicing revenue.
  • 7Average loans and leases increased by 6% to $88.9 billion, with growth in commercial and industrial and residential mortgage loans.

Frequently Asked Questions

Net income available to common shareholders decreased slightly to $413 million ($0.46 per diluted share) in Q1 2013 from $421 million ($0.45 per diluted share) in Q1 2012. This was primarily due to a decrease in net interest income and lower noninterest income, significantly impacted by the absence of the Vantiv IPO gain from the prior year quarter.

Credit quality showed improvement. The provision for loan and lease losses decreased by 31% to $62 million, and net charge-offs as a percentage of average loans and leases decreased by 42% to 0.63%. Nonperforming assets as a percentage of total assets also decreased.

Fifth Third Bancorp maintained a strong capital position, with its Tier 1 risk-based capital ratio at 10.83%, Tier 1 leverage ratio at 10.03%, and total risk-based capital ratio at 14.35%, all exceeding regulatory "well-capitalized" guidelines. The company also received a non-objection from the Federal Reserve on its 2013 CCAR capital plan.

Net interest income decreased by 1% to $888 million due to a 34 basis point decrease in yields on interest-earning assets, which was partially offset by a $5.1 billion increase in average loans and leases and a decrease in interest expense driven by lower long-term debt and decreased rates paid on interest-bearing liabilities.