10-QPeriod: Q2 FY2019

FIFTH THIRD BANCORP Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 8, 2019For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp's (FITB) Q2 2019 10-Q filing reveals a mixed financial performance driven significantly by the recent acquisition of MB Financial, Inc. The report highlights increased net interest income, benefiting from higher loan volumes and yields, alongside a robust increase in deposits. However, net income available to common shareholders saw a notable decrease compared to the prior year's quarter, primarily due to higher noninterest expenses, including substantial merger-related costs and increased technology investments. The company also reported a significant gain from the sale of Worldpay, Inc. shares in the prior year's comparable quarter, which impacted year-over-year comparisons of noninterest income. Capital ratios remain strong and well above regulatory requirements, demonstrating a solid financial foundation despite the integration-related expenses.

Financial Highlights

40 data points
Beta

Revenue

$143.00M

Net Income

$453.00M

316.8% Net Margin

EPS (Diluted)

$0.57

Total Assets

$168.80B

Cash & Equivalents

$2.76B

Free Cash Flow

$212.00M

Financial Statements
Beta
Revenue$143.00M
Interest Expense$391.00M
Net Income$453.00M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)738.05M
Shares Outstanding (Diluted)747.75M

Key Highlights

  • 1Net interest income (FTE) increased by 22% for the three months ended June 30, 2019, compared to the prior year, driven by higher loan volumes and improved yields.
  • 2Total deposits increased by 15% from December 31, 2018, largely due to the assumption of MB Financial, Inc. deposits.
  • 3Net income available to common shareholders decreased by 26% for the three months ended June 30, 2019, compared to the prior year, primarily due to higher noninterest expenses.
  • 4Noninterest expense increased by 24% for the three months ended June 30, 2019, largely due to $109 million in merger-related expenses associated with the MB Financial acquisition.
  • 5The company recognized a $562 million gain on the sale of Worldpay, Inc. shares in the six months ended June 30, 2019, compared to a $205 million gain in the prior year period.
  • 6Common equity Tier 1 (CET1) capital ratio was 9.57% as of June 30, 2019, exceeding regulatory requirements.
  • 7The acquisition of MB Financial, Inc. for approximately $3.6 billion was completed in March 2019, with fair value estimates for acquired assets and liabilities still considered preliminary as of June 30, 2019.

Frequently Asked Questions

The acquisition of MB Financial, Inc. significantly impacted Fifth Third's balance sheet, driving an increase in total assets, loans, leases, and deposits. However, it also contributed to higher noninterest expenses due to merger-related costs, totaling $109 million in the three months ended June 30, 2019.

Net interest income (FTE) saw a substantial increase of 22% to $1.3 billion for the three months ended June 30, 2019, compared to $1.0 billion in the prior year period. This growth was driven by increases in average commercial and industrial loans and commercial mortgage loans, coupled with higher yields on average loans and leases.

The decrease in net income available to common shareholders by 26% to $427 million for the three months ended June 30, 2019, compared to $579 million in the prior year period, was primarily due to a 24% increase in noninterest expense. This increase was largely attributed to $109 million in merger-related expenses and increased investments in technology.

Fifth Third Bancorp's capital ratios remain strong and well above regulatory requirements. As of June 30, 2019, the Common Equity Tier 1 (CET1) capital ratio was 9.57%, the Tier I risk-based capital ratio was 10.62%, and the Total risk-based capital ratio was 13.53%.