10-QPeriod: Q2 FY2013

FIFTH THIRD BANCORP Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported strong financial performance for the quarter ended June 30, 2013. Net income available to common shareholders surged by 55% year-over-year to $582 million, translating to diluted earnings per share of $0.65, a 63% increase from the prior year's $0.40. This growth was driven by a significant increase in noninterest income, up 56% to $1.06 billion, largely due to a $242 million gain from the sale of Vantiv, Inc. shares. The provision for loan and lease losses decreased by 11%, reflecting improved credit quality as net charge-offs as a percentage of average loans declined. Capital ratios remain robust, exceeding well-capitalized guidelines, with Tier 1 risk-based capital at 11.07%. The Bancorp also announced significant capital actions, including an increased quarterly dividend and continued share repurchases, demonstrating a commitment to returning value to shareholders.

Financial Highlights

36 data points
Beta

Net Income

$591.00M

EPS (Diluted)

$0.65

Total Assets

$123.36B

Free Cash Flow

$1.29B

Financial Statements
Beta
Interest Expense$104.00M
Net Income$591.00M
EPS (Basic)$0.67
EPS (Diluted)$0.65
Shares Outstanding (Basic)858.58M
Shares Outstanding (Diluted)900.63M

Key Highlights

  • 1Net income available to common shareholders increased by 55% to $582 million compared to the prior year's second quarter.
  • 2Diluted earnings per share rose by 63% to $0.65, outpacing the previous year's $0.40.
  • 3Noninterest income saw a substantial 56% increase to $1.06 billion, primarily driven by a $242 million gain on the sale of Vantiv, Inc. shares.
  • 4The provision for loan and lease losses decreased by 11% to $64 million, indicating an improvement in credit quality.
  • 5Net charge-offs as a percentage of average loans and leases fell to 0.51% from 0.88% year-over-year.
  • 6Capital ratios remain strong, with Tier 1 risk-based capital at 11.07% as of June 30, 2013.
  • 7The Bancorp announced capital actions including a dividend increase and significant share repurchase activity, reflecting confidence in its financial position.

Frequently Asked Questions

The primary driver of the 56% increase in noninterest income to $1.06 billion was a $242 million gain recognized from the sale of Vantiv, Inc. shares in the second quarter of 2013.

Credit quality has improved. The provision for loan and lease losses decreased by 11% to $64 million, and net charge-offs as a percentage of average loans and leases fell to 0.51% from 0.88% year-over-year. Nonperforming assets as a percentage of total loans, leases, and other assets also decreased to 1.32%.

Fifth Third Bancorp announced several capital actions, including a proposed increase in its quarterly common stock dividend to $0.12 per share, potential share repurchases up to $984 million, and the potential conversion of Series G preferred stock. These actions were part of its 2013 CCAR submission and received non-objection from the FRB.

The Bancorp manages interest rate risk through a variety of techniques, including maintaining a diversified balance sheet, utilizing derivative financial instruments such as interest rate swaps, caps, and floors to hedge interest rate volatility, and performing regular net interest income (NII) and economic value of equity (EVE) simulations. The Bancorp's ALCO policy limits have been lowered to reflect its current risk appetite and market uncertainties.