10-QPeriod: Q2 FY2021

FIFTH THIRD BANCORP Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 6, 2021For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported a strong second quarter of 2021, demonstrating significant year-over-year growth in net income and earnings per diluted share. Net income available to common shareholders reached $674 million ($0.94 per diluted share) for the quarter, a substantial increase from $163 million ($0.23 per diluted share) in the same period last year. This performance was driven by a strong increase in noninterest income, up 14%, and a significant decrease in the provision for credit losses, which swung from a $485 million provision in Q2 2020 to a $115 million benefit in Q2 2021, reflecting improved credit quality and economic outlook. Despite a slight decline in net interest income on an FTE basis by 2% year-over-year, the Bancorp's overall revenue on an FTE basis grew by 5%. Loan balances saw a modest decrease, primarily in commercial and industrial loans, offset by growth in residential mortgage and indirect secured consumer loans. Deposits increased by 3% driven by strong demand and savings account growth, fueled by stimulus programs and customer liquidity. The Bancorp also actively managed its capital, completing accelerated share repurchases totaling $527 million in the first half of the year and maintained robust capital ratios, with a CET1 ratio of 10.37% as of June 30, 2021.

Financial Highlights

41 data points
Beta

Revenue

$149.00M

Net Income

$709.00M

475.8% Net Margin

EPS (Diluted)

$0.94

Total Assets

$205.39B

Cash & Equivalents

$3.29B

Free Cash Flow

$423.00M

Financial Statements
Beta
Revenue$149.00M
Interest Expense$115.00M
Net Income$709.00M
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)708.83M
Shares Outstanding (Diluted)718.08M

Key Highlights

  • 1Net income available to common shareholders surged to $674 million ($0.94/share) in Q2 2021, up from $163 million ($0.23/share) in Q2 2020.
  • 2Provision for credit losses decreased significantly, turning into a benefit of $115 million in Q2 2021 from a provision of $485 million in Q2 2020, indicating improved credit quality.
  • 3Total revenue (FTE basis) increased by 5% year-over-year to $1.95 billion.
  • 4Noninterest income grew by 14% to $741 million, driven by increases across several categories including commercial banking, service charges on deposits, and wealth and asset management.
  • 5Total deposits increased by 3% to $162.3 billion, reflecting strong demand deposit growth.
  • 6Common Equity Tier 1 (CET1) capital ratio remained strong at 10.37% as of June 30, 2021.
  • 7The company repurchased approximately $527 million of its common stock through accelerated share repurchase transactions during the first half of 2021.

Frequently Asked Questions

Fifth Third Bancorp showed significant improvement in profitability. Net income available to common shareholders increased substantially to $674 million in Q2 2021, compared to $163 million in Q2 2020. Diluted earnings per share also saw a dramatic increase, rising to $0.94 from $0.23 year-over-year.

The improved profitability was mainly driven by a significant reduction in the provision for credit losses, which shifted from a substantial expense of $485 million in Q2 2020 to a benefit of $115 million in Q2 2021. This reduction reflects an improved economic outlook and better credit quality. Additionally, noninterest income increased by 14%, contributing to the strong performance.

Total loans and leases decreased slightly by $60 million from December 31, 2020, with a decline in commercial loans and leases offset by an increase in consumer loans, notably residential mortgage and indirect secured consumer loans. Deposits, however, showed solid growth, increasing by 3% from the prior year-end, primarily due to a rise in demand deposits, supported by customer liquidity and stimulus programs.

Fifth Third Bancorp maintained a strong capital position. As of June 30, 2021, its Common Equity Tier 1 (CET1) capital ratio was 10.37%, its Tier 1 risk-based capital ratio was 11.83%, and its total risk-based capital ratio was 14.60%. These ratios are well above the minimum regulatory requirements.

Yes, the company was authorized to pay dividends and execute share repurchases in Q2 2021, consistent with recent income levels. During the first half of 2021, Fifth Third Bancorp entered into and settled accelerated share repurchase transactions totaling $527 million. Dividends per common share remained stable at $0.27 for the quarter.