Fifth Third Announces Third Quarter 2013 Net Income to Common Shareholders of $421 Million, or $0.47

Fifth Third AnnouncesThird Quarter 2013 Net Income to Common Shareholders of $421 Million, or $0.47 Per Diluted Share

• 3Q13 net income available to common shareholders of $421 million, or $0.47 per diluted common share, included a benefit of $85 million pre-tax (~$55 million after-tax, or ~$0.06 per share) on the sale of shares of Vantiv and $6 million pre-tax (~$4 million after-tax) on the valuation of the warrant Fifth Third holds in Vantiv

  • 2Q13 net income available to common shareholders of $582 million, or $0.65 per share, included a benefit of $242 million pre-tax (~$157 million after-tax, or ~$0.17 per share) on the sale of shares of Vantiv and $76 million pre-tax (~$49 million after-tax, or ~$0.05 per share) on the valuation of the Vantiv warrant

  • 3Q12 net income available to common shareholders of $354 million, or $0.38 per share, included a $16 million pre-tax negative adjustment (~$10 million after-tax, or ~$0.01 per share) on the valuation of the Vantiv warrant

• 3Q13 return on average assets (ROA) of 1.35%; return on average common equity of 12.1%; return on average tangible common equity** of 14.7%

• Pre-provision net revenue (PPNR)** of $655 million in 3Q13, including $91 million in Vantiv-related gains and $30 million in charges to increase litigation reserves

  • Net interest income (FTE) of $898 million, up 2% sequentially; net interest margin of 3.31%

    • Period end portfolio loans of $87.2 billion, up $199 million; average portfolio loans up 1% sequentially

  • Noninterest income of $721 million compared with $1.1 billion in prior quarter; decrease largely driven by Vantiv share sales and lower mortgage banking net revenue

  • Noninterest expense of $959 million, down 7% from 2Q13, driven by lower mortgage-related expense, lower litigation reserve expense, and $15 million reduction in mortgage representation and warranty reserve

• Credit trends remain favorable

  • 3Q13 net charge-offs of $109 million (0.49% of loans and leases) vs. 2Q13 NCOs of $112 million (0.51% of loans and leases) and 3Q12 NCOs of $156 million (0.75% of loans and leases)

  • 3Q13 provision expense of $51 million vs. provision of $64 million in 2Q13 and $65 million in 3Q12

  • Allowance for loan and lease losses decreased $58 million sequentially reflecting continued improvement in credit trends; allowance to loan ratio of 1.92%

  • Total nonperforming assets (NPAs) of $1.0 billion, including loans held-for-sale (HFS), declined $140 million, or 12%, sequentially; portfolio NPA ratio of 1.16% down 16 bps from 2Q13, NPL ratio of 0.88% down 16 bps from 2Q13

• Strong capital ratios*

  • Tier 1 common ratio 9.89%**, up 46 bps sequentially, includes 37 bps benefit due to July 1 conversion of convertible preferred stock to common stock (Basel III pro forma estimate of ~9.5%**)

  • Tier 1 risk-based capital ratio 11.15%, Total risk-based capital ratio 14.36%, Leverage ratio 10.58%

  • Tangible common equity ratio** of 9.27% excluding unrealized gains/losses; 9.42% including them

• Book value per share of $15.84; tangible book value per share** of $13.09; up 3% from 2Q13 and 8% from 3Q12

• $600 million+ in share repurchase capacity remaining (through March 31, 2014) under submitted CCAR plan

* Capital ratios estimated; presented under current U.S. capital regulations.The pro forma Basel III Tier I common equity ratio is management's estimate based upon its current interpretation of recent prospective regulatory capital requirements approved in July 2013. See "Capital Position" section for more information.

** Non-GAAP measure; see Reg. G reconciliation on page 35 in Exhibit 99.1 of 8-k filing dated 10/17/13.

CINCINNATI--(BUSINESS WIRE)-- Fifth Third Bancorp (NAS: FITB) today reported third quarter 2013 net income of $421 million, compared with net income of $591 million in the second quarter of 2013 and net income of $363 million in the third quarter of 2012. Third quarter 2013 net income available to common shareholders was also $421 million, or $0.47 per diluted share, as there were no preferred dividends paid in the third quarter. After preferred dividends, second quarter 2013 net income to common shareholders was $582 million, or $0.65 per diluted share, and third quarter 2012 net income to common shareholders was $354 million, or $0.38 per diluted share.

Third quarter 2013 noninterest income included an $85 million gain on the sale of Vantiv shares and a $6 million positive valuation adjustment on the Vantiv warrant. Third quarter noninterest expense included $30 million in charges to increase litigation reserves, $5 million in severance expense, and $5 million in large bank assessments for 2012 and 2013 initiated by regulators under the Dodd-Frank Act. Results also included the benefit of a $15 million reduction in the mortgage representation and warranty reserve and a $4 million seasonal pension settlement charge.

Second quarter 2013 noninterest income included a $242 million gain on the sale of Vantiv shares, a $76 million positive valuation adjustment on the Vantiv warrant, and a pre-tax benefit of $10 million resulting from a settlement related to a previously surrendered bank-owned life insurance (BOLI) policy. Second quarter noninterest expense included $51 million in charges to increase litigation reserves and $1 million in severance expense. Results also included $9 million of charges to increase the mortgage representation and warranty reserve.

Third quarter 2012 noninterest income included a $16 million negative valuation adjustment on the Vantiv warrant and $13 million in gains recognized on the sale of certain Fifth Third funds. Third quarter 2012 noninterest expense included $26 million of debt extinguishment costs associated with the redemption of Fifth Third Capital Trust V and Fifth Third Capital Trust VI trust preferred securities (TruPS), $5 million in charges to increase litigation reserves, $2 million of expenses associated with the sale of certain Fifth Third funds, and $2 million of severance expense. Results also included $24 million of charges to increase the mortgage representation and warranty reserve.

"Fifth Third reported solid third quarter results, reflecting our continued focus on revenue generation as well as expense discipline," said Kevin T. Kabat, Vice Chairman and CEO of Fifth Third Bancorp. "Return on average assets was 1.4 percent and return on average tangible common equity* was 14.7 percent for the quarter including Vantiv-related gains, and were 1.2 percent and 12.6 percent, respectively, excluding them.

"Highlights from the quarter include an increase in net interest income of 2 percent and continued balance sheet strength. Period end loans in the portfolio reached the highest level in the company's history, despite significant borrower caution. Core deposits grew 2 percent over last quarter, reflecting higher deposits in nearly all of our key markets as recent annual FDIC market share data also shows. Lower fee income reflected lower Vantiv-related gains and the impact of significantly higher mortgage rates and resultant effects on that business, as well as the comparison to a very strong second quarter. On a year-over-year basis, fee income performance was driven by deposit service charges, investment advisory revenue, and card and processing revenue.

"Credit trends continued to improve as net charge-offs declined below 50 basis points of average loans and leases for the first time in 6 years, and we saw continued improvement in nearly every key credit metric.

"We recently completed our outstanding repurchase agreement for $539 million of common shares. We have approximately $600 million of repurchase capacity remaining under our current CCAR plan extending through March 31, 2014, excluding any potential gains from Vantiv share sales in the future. Our capital position under the Basel III rules would remain strong with an estimated pro forma Tier 1 common equity ratio* of 9.5 percent under the new final capital rules compared with 9.9 percent under current capital rules."

* Non-GAAP measure; see Reg. G reconciliation on page 35 in Exhibit 99.1 of 8-k filing dated 10/17/13.