8-KRegulation FDOther EventsExhibits & Filings

FIFTH THIRD BANCORP 8-K Report, Regulation FD Disclosure (Sep 16, 2009)

Filed September 16, 2009For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed an 8-K on September 16, 2009, to disclose updated expectations for its third quarter 2009 financial performance, particularly concerning credit quality. The report highlights an anticipated increase in net charge-offs and nonperforming assets, driven significantly by a Shared National Credit (SNC) examination. These disclosures are being made in conjunction with a presentation at the Barclays Capital Global Financial Services Conference. Investors should note the projected increase in total net charge-offs to approximately $775 million for Q3 2009, up from $626 million in Q2 2009. A substantial portion of this increase is attributed to SNC credits, with an expected $110 million in charge-offs compared to $17 million in the prior quarter. The bank also anticipates a 20% rise in nonperforming assets to around $3.4 billion by the end of Q3, with SNC credits contributing approximately $150 million to this growth. Despite these headwinds, overall operating trends for the quarter are expected to remain broadly in line with previous guidance.

Key Highlights

  • 1Fifth Third Bancorp provided updated Q3 2009 credit performance expectations at the Barclays Capital Global Financial Services Conference.
  • 2Anticipates total net charge-offs to increase to approximately $775 million in Q3 2009, up from $626 million in Q2 2009.
  • 3Shared National Credit (SNC) examination results are a significant factor, with expected SNC-related charge-offs of $110 million in Q3, versus $17 million in Q2.
  • 4Commercial loan net charge-offs are projected to be between $500-$525 million for Q3.
  • 5Consumer loan net charge-offs are projected to be between $250-$260 million for Q3.
  • 6Nonperforming assets in the loan portfolio are expected to rise approximately 20% to $3.4 billion by the end of Q3, from $2.8 billion at the end of Q2.
  • 7SNC credits are expected to account for about $150 million of the increase in nonperforming assets.
  • 8Expects significantly lower SNC-related charge-offs in Q4 2009 compared to Q3 2009.

Frequently Asked Questions

The increase in expected net charge-offs is largely due to the results of a Shared National Credit (SNC) examination conducted by supervisory authorities, which has identified a higher level of required charge-offs within these specific credit exposures.

SNC credits are a significant factor. Fifth Third expects $110 million in net charge-offs related to SNC credits in the third quarter, a notable increase from $17 million in the second quarter. Additionally, SNC credits are expected to contribute approximately $150 million to the overall increase in nonperforming assets for the third quarter.

The filing indicates that operating trends for the third quarter are expected to be broadly in line with trends previously communicated at the time of the second quarter 2009 earnings announcement on July 23, 2009. The updated credit performance figures represent specific guidance within those broader trends.

No, the company currently expects SNC-related charge-offs in the fourth quarter of 2009 to be significantly below those expected in the third quarter, suggesting a potential moderation of this specific issue.