10-QPeriod: Q1 FY2017

FIFTH THIRD BANCORP Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported its first quarter 2017 financial results, showing a slight decline in net income available to common shareholders to $290 million, or $0.38 per diluted share, down from $311 million, or $0.40 per diluted share, in the prior year's first quarter. This decrease was primarily driven by a significant drop in noninterest income, which fell 18% to $523 million, largely due to a $47 million positive valuation adjustment on the Vantiv Holding, LLC stock warrant recognized in the prior year, along with a $31 million impairment charge on operating lease assets in the current quarter. Despite the lower net income, net interest income on an FTE basis saw a positive increase of 3% to $939 million, supported by higher yields on loans and leases and the impact of Federal Reserve rate hikes in late 2016 and early 2017. The bank's capital position remains strong, with its CET1 capital ratio at 10.76%, well above regulatory requirements. Credit quality metrics showed improvement, with net losses charged off as a percentage of average portfolio loans and leases decreasing to 0.40% and nonperforming assets as a percentage of portfolio loans and leases and OREO declining to 0.79%. Total assets stood at $140.2 billion, down slightly from the prior quarter. The Bancorp also completed an accelerated share repurchase transaction during the quarter, repurchasing approximately 5.9 million shares.

Financial Highlights

37 data points
Beta

Net Income

$305.00M

EPS (Diluted)

$0.38

Total Assets

$140.20B

Free Cash Flow

$478.00M

Financial Statements
Beta
Interest Expense$153.00M
Net Income$305.00M
EPS (Basic)$0.38
EPS (Diluted)$0.38
Shares Outstanding (Basic)747.67M
Shares Outstanding (Diluted)760.81M

Key Highlights

  • 1Net income available to common shareholders was $290 million, or $0.38 per diluted share, a decrease from $311 million, or $0.40 per diluted share, in Q1 2016.
  • 2Noninterest income decreased by 18% to $523 million, primarily due to the absence of a significant prior-year valuation adjustment on Vantiv Holding, LLC stock warrant and an impairment charge on operating lease assets.
  • 3Net interest income on an FTE basis increased by 3% to $939 million, benefiting from higher loan yields and the impact of interest rate increases.
  • 4Provision for loan and lease losses decreased by 38% to $74 million, reflecting improved credit quality trends.
  • 5The CET1 capital ratio was a strong 10.76%, exceeding regulatory requirements.
  • 6Nonperforming assets as a percentage of portfolio loans and leases and OREO improved to 0.79% from 0.88% in the prior year.
  • 7The Bancorp settled an accelerated share repurchase transaction during the quarter, repurchasing approximately 5.9 million shares.

Frequently Asked Questions

The primary driver for the decrease in net income was a significant drop in noninterest income, which was down 18% year-over-year. This was mainly due to the absence of a large positive valuation adjustment on the Vantiv Holding, LLC stock warrant recorded in the first quarter of 2016, and an impairment charge taken on operating lease assets in the current quarter.

Fifth Third Bancorp maintained a strong capital position. The Common Equity Tier 1 (CET1) capital ratio stood at 10.76%, exceeding the 'well-capitalized' regulatory guidelines and the capital conservation buffer requirements.

Credit quality metrics showed improvement. Net losses charged off as a percentage of average portfolio loans and leases decreased to 0.40% from 0.42% in the prior year. Additionally, nonperforming assets as a percentage of portfolio loans and leases and Other Real Estate Owned (OREO) declined to 0.79% from 0.88% at the end of the previous quarter and 0.88% in the prior year's first quarter.

Yes, Fifth Third Bancorp settled an accelerated share repurchase transaction entered into in December 2016, repurchasing approximately 5.9 million shares of its common stock.