01—Abstract
Summary
Summary of the 8-K filed January 23, 2025. Cited figures are marked; the original filing is the authoritative source.
Fifth Third Bancorp reported fourth-quarter 2024 net income available to common shareholders of $582 milliona, or $0.85 per diluted share, up 9% from $0.78 in the third quarter and 18% from $0.72 a year earlier.
Full-year 2024 earnings were $2.155 billionb, or $3.14 per diluted share, versus $3.22 in 2023. Results were supported by a 6% sequential increase in noninterest income excluding certain items to $791 million, a 7 basis point rise in net interest margin to 2.97% (FTE), and a 4% sequential decline in noninterest expense on a reported basis. Net charge-offs fell to a 0.46% ratio, though nonperforming assets rose to 0.71% of portfolio loans and OREO, the highest level in the five quarters shown.
The quarter also contained several one-time items. A $42 millionc after-tax interchange litigation charge reduced EPS by about $0.05 on a net basis when combined with other items, which included a $15 million tax benefit and smaller foundation and FDIC adjustments. Provision for credit losses rose to $179 million from $160 million, with the ACL at 2.08% of portfolio loans.
Capital metrics were mixed. The CET1 ratio declined to 10.51% from 10.75% because loan growth lifted risk-weighted assets, and tangible book value per share including AOCI fell to $18.69d from $20.20 as unrealized losses widened to $4.6 billion. The company repurchased $300 million of common stock during the quarter.
The filing is an 8-K that furnishes the January 21, 2025 earnings release under Item 8.01. It contains no new forward-looking guidance beyond the standard cautionary statement. Investors would likely focus on the durability of margin expansion, the trajectory of credit costs in commercial and consumer books, and the impact of the AOCI-driven decline in tangible book value.
02—Key points
Key Highlights
- Q4 2024 diluted EPS of $0.85 rose 9% sequentially and 18% year over year; FY2024 diluted EPS was $3.14, down from $3.22 in 2023.
- Net interest margin (FTE) expanded to 2.97%, up 7 bps sequentially and 12 bps year over year, driven by a 38 bps decline in the cost of interest-bearing liabilities.
- Noninterest income excluding certain items reached $791 million, up 6% sequentially, led by capital markets fees (+11%) and commercial banking revenue (+17%).
- Reported noninterest expense fell 16% year over year to $1.226 billion, largely due to the prior-year $224 million FDIC special assessment; excluding certain items, expense rose 1% year over year.
- Credit quality showed mixed signals: the NCO ratio improved to 0.46% from 0.48%, but the NPA ratio rose to 0.71% from 0.62% and nonaccrual loans increased $137 million sequentially.
- CET1 ratio fell to 10.51% from 10.75% as risk-weighted assets grew, while the company repurchased $300 million of common stock in the quarter.
- Tangible book value per share including AOCI declined to $18.69 from $20.20 because accumulated other comprehensive loss widened to $4.6 billion, even as excluding-AOCI TBVPS rose to $25.61.
03—Questions
Frequently Asked Questions
Why did Fifth Third's reported EPS improve while total noninterest income declined year over year?
Reported noninterest income fell 2% year over year to $732 million, but the decline was driven by lower other noninterest income (tax receivable agreement revenue and Visa total return swap valuation effects) and securities losses. Excluding certain items, noninterest income rose 5% year over year to $791 million, and net interest income rose 1%, which together supported higher pre-tax income.
Is the margin expansion sustainable?
The filing attributes the improvement mainly to lower deposit and wholesale funding costs, which fell 38 bps sequentially. Yield on interest-earning assets dropped 22 bps, and the company said it is carrying elevated liquidity, with about $18 billion in short-term investments, which weighs on margin. Continued margin gains would depend on further funding cost reductions and the mix of floating-rate loans, but the filing provides no explicit forward guidance.
Should investors be concerned about the rise in nonperforming assets?
Nonperforming assets increased to $853 million, or 0.71% of portfolio loans and OREO, up from 0.62% in the prior quarter and 0.59% a year ago. Commercial NCOs fell to 0.32%, and the ACL covered nonperforming loans 302%. However, the NPL ratio has risen for two consecutive quarters, and provision expense increased, so this trend warrants monitoring in upcoming filings.
What drove the decline in tangible book value and how does it affect capital?
Tangible book value per share including AOCI fell to $18.69 from $20.20, primarily because AOCI widened to a $4.6 billion loss from $3.4 billion as rates moved against the securities portfolio and cash flow hedges. Tangible book value excluding AOCI rose to $25.61. The CET1 ratio declined to 10.51% due to loan growth raising risk-weighted assets, though it remains well above typical regulatory minimums.
04—Continue