Strong capital accretion and continued to grow
deposits and improve liquidity
Reported results included a negative $0.27
impact from certain items on page 2 of the earnings release
Fifth Third Bancorp (NASDAQ: FITB):
Key Financial Data
Key Highlights
$ in millions for all balance sheet and
income statement items
4Q23
3Q23
4Q22
Stability:
- Average deposits increased 2% compared to 3Q23; increased 5%
compared to 4Q22
- Maintained full Category 1 LCR compliance during the quarter
and achieved a loan-to-core deposit ratio of 72%
- Transferred 23% of AFS securities portfolio to HTM on January
3, 2024
- CET1 capital increased 49 bps sequentially to 10.29% reflecting
strong earnings power and balance sheet optimization efforts
- NCO ratio declined 9 bps compared to 3Q23
Profitability:
Compared to 3Q23
- Adjusted ROTCE ex. AOCI(a) of 16.8% increased 90 basis
points
- Adjusted efficiency ratio(a) of 55.3%
- Tangible book value per share (including AOCI) increased
28%
Growth:
- Generated consumer household growth of 3% compared to 4Q22
- Opened 19 branches during the quarter, 18 of which are in
high-growth Southeast markets
Income Statement Data
Net income available to common
shareholders
$492
$623
$699
Net interest income (U.S. GAAP)
1,416
1,438
1,577
Net interest income (FTE)(a)
1,423
1,445
1,582
Noninterest income
744
715
735
Noninterest expense
1,455
1,188
1,218
Per Share Data
Earnings per share, basic
$0.72
$0.91
$1.01
Earnings per share, diluted
0.72
0.91
1.01
Book value per share
25.04
21.19
22.26
Tangible book value per share(a)
17.64
13.76
14.83
Balance Sheet & Credit
Quality
Average portfolio loans and leases
$118,858
$121,630
$121,371
Average deposits
169,447
165,644
161,061
Accumulated other comprehensive loss
(4,487
)
(6,839
)
(5,110
)
Net charge-off ratio(b)
0.32
%
0.41
%
0.22
%
Nonperforming asset ratio(c)
0.59
0.51
0.44
Financial Ratios
Return on average assets
0.98
%
1.26
%
1.42
%
Return on average common equity
12.9
16.3
18.8
Return on average tangible common
equity(a)
19.8
24.7
29.2
CET1 capital(d)(e)
10.29
9.80
9.28
Net interest margin(a)
2.85
2.98
3.35
Efficiency(a)
67.2
55.0
52.6
Other than the Quarterly Financial Review
tables beginning on page 14 of the earnings release, commentary is
on a fully taxable-equivalent (FTE) basis unless otherwise noted.
Consistent with SEC guidance in Regulation S-K that contemplates
the calculation of tax-exempt income on a taxable-equivalent basis,
net interest income, net interest margin, net interest rate spread,
total revenue and the efficiency ratio are provided on an FTE
basis.
From Tim Spence, Fifth Third Chairman,
President and CEO:
Fifth Third delivered strong operating results in 2023 while
continuing to successfully navigate the challenging environment. We
generated record revenue while prudently managing expenses and
continuing to invest in our businesses. Our credit metrics reflect
disciplined credit risk management, with net charge-offs for the
quarter in-line with our expectations.
In the fourth quarter, we successfully completed our
risk-weighted assets initiative and accreted nearly 50 basis points
of CET1 capital. We generated another quarter of strong deposit
growth, with average deposits up 5% compared to the year-ago
quarter while the industry declined 3%. Additionally, we maintained
full Category 1 LCR compliance during the quarter.
We continued to invest for growth by opening 19 branches during
the quarter, 18 of which are in our high-growth Southeast markets,
and generated consumer household growth of 3% compared to the prior
year. Our new quality middle market relationships in commercial
continued to grow at a record pace.
While the economic and regulatory environments remain uncertain,
we remain well positioned to respond to a range of potential
economic and regulatory outcomes. We will continue to follow our
guiding principles of stability, profitability, and growth – in
that order.
Income Statement Highlights
($ in millions, except per share
data)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Condensed Statements of Income
Net interest income (NII)(a)
$1,423
$1,445
$1,582
(2)%
(10)%
Provision for credit losses
55
119
180
(54)%
(69)%
Noninterest income
744
715
735
4%
1%
Noninterest expense
1,455
1,188
1,218
22%
19%
Income before income taxes(a)
$657
$853
$919
(23)%
(29)%
Taxable equivalent adjustment
$7
$7
$5
—
40%
Applicable income tax expense
120
186
177
(35)%
(32)%
Net income
$530
$660
$737
(20)%
(28)%
Dividends on preferred stock
38
37
38
3%
—
Net income available to common
shareholders
$492
$623
$699
(21)%
(30)%
Earnings per share, diluted
$0.72
$0.91
$1.01
(21)%
(29)%
Fifth Third Bancorp (NASDAQ®: FITB) today reported fourth
quarter 2023 net income of $530 million compared to net income of
$660 million in the prior quarter and $737 million in the year-ago
quarter. Net income available to common shareholders in the current
quarter was $492 million, or $0.72 per diluted share, compared to
$623 million, or $0.91 per diluted share, in the prior quarter and
$699 million, or $1.01 per diluted share, in the year-ago
quarter.
Diluted earnings per share impact of
certain item(s) - 4Q23
(after-tax impact; $ in millions,
except per share data)
FDIC special assessment (noninterest
expense)(f)
$(172)
Valuation of Visa total return swap
(noninterest income)(f)
(17)
Fifth Third Foundation contribution
(noninterest expense)(f)
(12)
Restructuring severance expense
(noninterest expense)(f)
(4)
Income tax benefit associated with
resolution of certain acquisition related tax matters
17
After-tax impact of certain item(s)
$(188)
Diluted earnings per share impact of
certain item(s)1
$(0.27)
1Diluted earnings per share impact
reflects 687.729 million average diluted shares outstanding
Reported full year 2023 net income was $2.3 billion compared to
full year 2022 net income of $2.4 billion. Full year 2023 net
income available to common shareholders was $2.2 billion, or $3.22
per diluted share, compared to 2022 full year net income available
to common shareholders of $2.3 billion, or $3.35 per diluted
share.
Net Interest Income
(FTE; $ in millions)(a)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Interest Income
Interest income
$2,655
$2,536
$2,080
5%
28%
Interest expense
1,232
1,091
498
13%
147%
Net interest income (NII)
$1,423
$1,445
$1,582
(2)%
(10)%
Average Yield/Rate Analysis
bps Change
Yield on interest-earning assets
5.31%
5.23%
4.40%
8
91
Rate paid on interest-bearing
liabilities
3.34%
3.10%
1.56%
24
178
Ratios
Net interest rate spread
1.97%
2.13%
2.84%
(16)
(87)
Net interest margin (NIM)
2.85%
2.98%
3.35%
(13)
(50)
NII decreased $22 million, or 2%, compared to the prior quarter.
During the quarter, the risk-weighted asset reduction initiative
was completed, and strong core deposit growth continued. Balance
sheet positioning and deposit performance continue to provide
flexibility in managing through a range of uncertain economic and
regulatory environments. The impacts of increasing deposit costs
due to higher average market rates and continued competition were
partially offset by improved loan yields and the funding benefits
from the core deposit balance growth. Compared to the prior
quarter, NIM decreased 13 bps, reflecting the impact of higher cash
balances due to the combined impact of the decrease in average
loans and the growth in core deposits. NIM will continue to be
impacted by the decision to carry additional liquidity, with the
combination of cash and due from banks and other short-term
investments exceeding $25 billion at quarter-end.
Compared to the year-ago quarter, NII decreased $159 million, or
10%, reflecting the impact of the deposit mix shift from demand to
interest-bearing accounts and continued deposit repricing dynamics,
partially offset by higher loan yields. Compared to the year-ago
quarter, NIM decreased 50 bps, reflecting the impact of higher
market rates and their effects on deposit pricing and the decision
to carry additional liquidity, partially offset by higher loan
yields.
Noninterest Income
($ in millions)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Noninterest Income
Service charges on deposits
$146
$149
$140
(2)%
4%
Commercial banking revenue
163
154
158
6%
3%
Mortgage banking net revenue
66
57
63
16%
5%
Wealth and asset management revenue
147
145
139
1%
6%
Card and processing revenue
106
104
103
2%
3%
Leasing business revenue
46
58
58
(21)%
(21)%
Other noninterest income
54
55
72
(2)%
(25)%
Securities gains (losses), net
15
(7
)
2
NM
650%
Securities gains, net - non-qualifying
hedges
on mortgage servicing rights
1
—
—
NM
NM
Total noninterest income
$744
$715
$735
4%
1%
Reported noninterest income increased $29 million, or 4%, from
the prior quarter, and increased $9 million, or 1%, from the
year-ago quarter. The reported results reflect the impact of
certain items in the table below, including securities gains/losses
which incorporate mark-to-market impacts from securities associated
with non-qualified deferred compensation plans that are primarily
offset in compensation and benefits expense.
Noninterest Income excluding certain
items
($ in millions)
For the Three Months Ended
December
September
December
% Change
2023
2023
2022
Seq
Yr/Yr
Noninterest Income excluding certain
items
Noninterest income (U.S. GAAP)
$744
$715
$735
Valuation of Visa total return swap
22
10
38
Branch impairment charges
—
—
6
Securities (gains) losses, net
(15)
7
(2)
Noninterest income excluding certain
items(a)
$751
$732
$777
3%
(3)%
Noninterest income excluding certain items increased $19
million, or 3%, from the prior quarter, and decreased $26 million,
or 3%, from the year-ago quarter.
Compared to the prior quarter, service charges on deposits
decreased $3 million, or 2%, primarily reflecting a decrease in
consumer deposit fees due to the elimination of extended overdraft
fees. Commercial banking revenue increased $9 million, or 6%,
primarily reflecting higher institutional brokerage revenue,
business lending fees, and corporate bond fees, partially offset by
a decrease in loan syndication revenue. Mortgage banking net
revenue increased $9 million, or 16%, primarily reflecting a
decrease in MSR asset decay and an increase in MSR net valuation
adjustments, which had a $2 million gain in the fourth quarter
compared to a $2 million loss in the prior quarter. Wealth and
asset management revenue increased $2 million, or 1%, primarily
driven by higher brokerage fees, partially offset by lower personal
asset management revenue. Card and processing revenue increased $2
million, or 2%, primarily driven by higher interchange revenue.
Leasing business revenue decreased $12 million, or 21%, primarily
reflecting lower lease remarketing revenue. Other noninterest
income results were driven by the recognition of tax receivable
agreement revenue of $22 million in the current quarter.
Compared to the year-ago quarter, service charges on deposits
increased $6 million, or 4%, reflecting an increase in commercial
treasury management fees, partially offset by a decrease in
consumer deposit fees. Commercial banking revenue increased $5
million, or 3%, primarily driven by higher institutional brokerage
revenue, corporate bond fees and business lending fees, partially
offset by lower M&A advisory revenue and client financial risk
management revenue. Mortgage banking net revenue increased $3
million, or 5%, primarily reflecting a decrease in MSR asset decay
and an increase in origination fees and gains on loans sales.
Wealth and asset management revenue increased $8 million, or 6%,
driven by higher brokerage fees and personal asset management
revenue. Card and processing revenue increased $3 million, or 3%,
primarily reflecting higher interchange revenue. Leasing business
revenue decreased $12 million, or 21%, primarily reflecting lower
operating lease revenue and lease remarketing revenue. The decrease
in other noninterest income was primarily attributable to lower tax
receivable agreement revenue and private equity income.
Noninterest Expense
($ in millions)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Noninterest Expense
Compensation and benefits
$659
$629
$655
5%
1%
Net occupancy expense
83
84
82
(1)%
1%
Technology and communications
117
115
111
2%
5%
Equipment expense
37
37
37
—
—
Card and processing expense
21
21
21
—
—
Leasing business expense
27
29
36
(7)%
(25)%
Marketing expense
30
35
31
(14)%
(3)%
Other noninterest expense
481
238
245
102%
96%
Total noninterest expense
$1,455
$1,188
$1,218
22%
19%
Reported noninterest expense increased $267 million, or 22%,
from the prior quarter, and increased $237 million, or 19%, from
the year-ago quarter. The reported results reflect the impact of
certain items in the table below.
Noninterest Expense excluding certain
item(s)
($ in millions)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Noninterest Expense excluding certain
item(s)
Noninterest expense (U.S. GAAP)
$1,455
$1,188
$1,218
FDIC special assessment
(224)
—
—
Fifth Third Foundation contribution
(15)
—
—
Restructuring severance expense
(5)
—
—
Noninterest expense excluding certain
item(s)(a)
$1,211
$1,188
$1,218
2%
(1)%
Compared to the prior quarter, noninterest expense excluding
certain items increased $23 million, or 2%, primarily driven by the
impact of non-qualified deferred compensation mark-to-market, which
was a $17 million expense in the fourth quarter compared to a $5
million benefit in the prior quarter, both of which were largely
offset in net securities gains/losses through noninterest
income.
Compared to the year-ago quarter, noninterest expense excluding
certain items decreased $7 million, or 1%, primarily driven by
lower leasing business expense and other noninterest expense,
partially offset by higher technology and communications expense
primarily related to continued modernization investments. The
year-ago quarter included $6 million of noninterest expense related
to the impact of non-qualified deferred compensation
mark-to-market, which was largely offset in net securities
gains/losses through noninterest income.
Average Interest-Earning Assets
($ in millions)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Average Portfolio Loans and
Leases
Commercial loans and leases:
Commercial and industrial loans
$54,633
$57,001
$57,646
(4)%
(5)%
Commercial mortgage loans
11,338
11,216
10,898
1%
4%
Commercial construction loans
5,727
5,539
5,544
3%
3%
Commercial leases
2,535
2,616
2,736
(3)%
(7)%
Total commercial loans and leases
$74,233
$76,372
$76,824
(3)%
(3)%
Consumer loans:
Residential mortgage loans
$17,129
$17,400
$17,577
(2)%
(3)%
Home equity
3,905
3,897
4,024
—
(3)%
Indirect secured consumer loans
15,129
15,787
16,536
(4)%
(9)%
Credit card
1,829
1,808
1,795
1%
2%
Other consumer loans
6,633
6,366
4,615
4%
44%
Total consumer loans
$44,625
$45,258
$44,547
(1)%
—
Total average portfolio loans and
leases
$118,858
$121,630
$121,371
(2)%
(2)%
Average Loans and Leases Held for
Sale
Commercial loans and leases held for
sale
$72
$17
$84
324%
(14)%
Consumer loans held for sale
379
619
1,411
(39)%
(73)%
Total average loans and leases held for
sale
$451
$636
$1,495
(29)%
(70)%
Total average loans and leases
$119,309
$122,266
$122,866
(2)%
(3)%
Securities (taxable and tax-exempt)
$57,351
$56,994
$58,489
1%
(2)%
Other short-term investments
21,506
12,956
6,285
66%
242%
Total average interest-earning assets
$198,166
$192,216
$187,640
3%
6%
Compared to the prior quarter, total average portfolio loans and
leases decreased 2%, reflecting the aforementioned reduction in
risk-weighted assets initiative which impacted both commercial and
consumer portfolios. Average commercial portfolio loans and leases
decreased 3%, reflecting a decrease in commercial and industrial
(C&I) loan balances. Average consumer portfolio loans decreased
1%, primarily reflecting decreases in indirect secured consumer
loan balances and residential mortgage loan balances, partially
offset by an increase in other consumer loan balances driven by
Dividend Finance.
Compared to the year-ago quarter, total average portfolio loans
and leases decreased 2%, reflecting a decrease in the commercial
portfolio. Average commercial portfolio loans and leases decreased
3%, primarily reflecting a decrease in C&I loan balances,
partially offset by an increase in commercial mortgage loan
balances. Average consumer portfolio loans were flat, primarily
reflecting an increase in other consumer loan balances driven by
Dividend Finance, offset by a decrease in indirect secured consumer
loan balances and residential mortgage loan balances.
Average loans and leases held for sale were $0.5 billion in the
current quarter compared to $0.6 billion in the prior quarter and
$1.5 billion in the year-ago quarter.
Average securities (taxable and tax-exempt; amortized cost) of
$57 billion in the current quarter increased $0.4 billion, or 1%,
compared to the prior quarter and decreased $1 billion, or 2%,
compared to the year-ago quarter. Average other short-term
investments (including interest-bearing cash) of $22 billion in the
current quarter increased $9 billion, or 66%, compared to the prior
quarter and increased $15 billion, or 242%, compared to the
year-ago quarter.
Total period-end commercial portfolio loans and leases of $73
billion decreased 3% compared to the prior quarter, primarily
reflecting a decrease in C&I loan balances. Compared to the
year-ago quarter, total period-end commercial portfolio loans and
leases decreased 5%, primarily reflecting a decrease in C&I
loan balances. Period-end commercial revolving line utilization was
35%, compared to 36% in the prior quarter and 37% in the year-ago
quarter.
Total period-end consumer portfolio loans of $44 billion
decreased 1% compared to the prior quarter, primarily reflecting
decreases in indirect secured consumer loan balances and
residential mortgage loan balances, partially offset by an increase
in other consumer loan balances driven by Dividend Finance.
Compared to the year-ago quarter, total period-end consumer
portfolio loans decreased 1%, primarily driven by decreases in
indirect secured consumer loan balances and residential mortgage
loan balances, partially offset by an increase in other consumer
loan balances driven by Dividend Finance.
Total period-end securities (taxable and tax-exempt; amortized
cost) of $57 billion in the current quarter were stable compared to
the prior quarter and decreased $1 billion, or 2%, compared to the
year-ago quarter. Period-end other short-term investments of
approximately $22 billion increased $3 billion, or 17%, compared to
the prior quarter, and increased $14 billion, or 164%, compared to
the year-ago quarter.
On January 3, 2024, Fifth Third transferred $12.6 billion
(amortized cost) of securities, with an unrealized loss of $994
million, from available-for-sale to held-to-maturity. This transfer
is in response to Fifth Third's decision to hold these securities
to maturity in order to reduce potential capital volatility
associated with investment security market price fluctuations.
Average Deposits
($ in millions)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Average Deposits
Demand
$43,396
$44,228
$54,550
(2)%
(20)%
Interest checking
57,114
53,109
47,801
8%
19%
Savings
18,252
20,511
23,474
(11)%
(22)%
Money market
34,292
32,072
28,713
7%
19%
Foreign office(g)
178
168
209
6%
(15)%
Total transaction deposits
$153,232
$150,088
$154,747
2%
(1)%
CDs $250,000 or less
10,556
9,630
2,748
10%
284%
Total core deposits
$163,788
$159,718
$157,495
3%
4%
CDs over $250,000
5,659
5,926
3,566
(5)%
59%
Total average deposits
$169,447
$165,644
$161,061
2%
5%
CDs over $250,000 includes $4.8BN, $5.2BN,
and $3.4BN of retail brokered certificates of deposit which are
fully covered by FDIC insurance for the three months ended
12/31/23, 9/30/23, and 12/31/22, respectively.
Compared to the prior quarter, total average deposits increased
2%, primarily due to seasonality. Average demand deposits
represented 26% of total core deposits in the current quarter,
compared to 28% in the prior quarter. Compared to the prior
quarter, average consumer segment deposits increased 1%, average
commercial segment deposits increased 5%, and average wealth &
asset management segment deposits increased 1%. Period-end total
deposits increased 1% compared to the prior quarter.
Compared to the year-ago quarter, total average deposits
increased 5%, primarily reflecting an increase in interest checking
and time deposit balances, partially offset by a decrease in demand
account balances. Period-end total deposits increased 3% compared
to the year-ago quarter.
The period-end portfolio loan-to-core deposit ratio was 72% in
the current quarter, compared to 74% in the prior quarter and 76%
in the year-ago quarter. Estimated uninsured deposits were
approximately $71 billion, or 42% of total deposits, as of quarter
end.
Average Wholesale Funding
($ in millions)
For the Three Months Ended
% Change
December
September
December
2023
2023
2022
Seq
Yr/Yr
Average Wholesale Funding
CDs over $250,000
$5,659
$5,926
$3,566
(5)%
59%
Federal funds purchased
191
181
264
6%
(28)%
Securities sold under repurchase
agreements
350
352
476
(1)%
(26)%
FHLB advances
3,293
3,726
5,489
(12)%
(40)%
Derivative collateral and other secured
borrowings
34
48
225
(29)%
(85)%
Long-term debt
16,588
14,056
13,425
18%
24%
Total average wholesale funding
$26,115
$24,289
$23,445
8%
11%
CDs over $250,000 includes $4.8BN, $5.2BN,
and $3.4BN of retail brokered certificates of deposit which are
fully covered by FDIC insurance for the three months ended
12/31/23, 9/30/23, and 12/31/22, respectively.
Compared to the prior quarter, average wholesale funding
increased 8%, primarily reflecting an increase in long-term debt
(reflecting the full quarter impact of issuing long-term debt and
automobile loan portfolio securitization in the prior quarter),
partially offset by a decrease in FHLB advances. Compared to the
year-ago quarter, average wholesale funding increased 11%,
primarily reflecting an increase in long-term debt and CDs over
$250,000, partially offset by a decrease in FHLB advances.
Credit Quality Summary
($ in millions)
As of and For the Three Months
Ended
December
September
June
March
December
2023
2023
2023
2023
2022
Total nonaccrual portfolio loans and
leases (NPLs)
$649
$570
$629
$593
$515
Repossessed property
10
11
8
8
6
OREO
29
31
24
22
18
Total nonperforming portfolio loans and
leases and OREO (NPAs)
$688
$612
$661
$623
$539
NPL ratio(h)
0.55%
0.47%
0.52%
0.48%
0.42%
NPA ratio(c)
0.59%
0.51%
0.54%
0.51%
0.44%
Portfolio loans and leases 30-89 days past
due (accrual)
$359
$316
$339
$317
$364
Portfolio loans and leases 90 days past
due (accrual)
36
29
51
46
40
30-89 days past due as a % of portfolio
loans and leases
0.31%
0.26%
0.28%
0.26%
0.30%
90 days past due as a % of portfolio loans
and leases
0.03%
0.02%
0.04%
0.04%
0.03%
Allowance for loan and lease losses
(ALLL), beginning
$2,340
$2,327
$2,215
$2,194
$2,099
Impact of adoption of ASU 2022-02
—
—
—
(49)
—
Total net losses charged-off
(96)
(124)
(90)
(78)
(68)
Provision for loan and lease losses
78
137
202
148
163
ALLL, ending
$2,322
$2,340
$2,327
$2,215
$2,194
Reserve for unfunded commitments,
beginning
$189
$207
$232
$216
$199
(Benefit from) provision for the reserve
for unfunded commitments
(23)
(18)
(25)
16
17
Reserve for unfunded commitments,
ending
$166
$189
$207
$232
$216
Total allowance for credit losses
(ACL)
$2,488
$2,529
$2,534
$2,447
$2,410
ACL ratios:
As a % of portfolio loans and leases
2.12%
2.11%
2.08%
1.99%
1.98%
As a % of nonperforming portfolio loans
and leases
383%
443%
403%
413%
468%
As a % of nonperforming portfolio
assets
362%
413%
383%
393%
447%
ALLL as a % of portfolio loans and
leases
1.98%
1.95%
1.91%
1.80%
1.81%
Total losses charged-off
$(133)
$(158)
$(121)
$(110)
$(103)
Total recoveries of losses previously
charged-off
37
34
31
32
35
Total net losses charged-off
$(96)
$(124)
$(90)
$(78)
$(68)
Net charge-off ratio (NCO ratio)(b)
0.32%
0.41%
0.29%
0.26%
0.22%
Commercial NCO ratio
0.13%
0.34%
0.16%
0.17%
0.13%
Consumer NCO ratio
0.64%
0.53%
0.50%
0.42%
0.38%
Nonperforming portfolio loans and leases were $649 million in
the current quarter, with the resulting NPL ratio of 0.55%.
Compared to the prior quarter, NPLs increased $79 million with the
NPL ratio increasing 8 bps. Compared to the year-ago quarter, NPLs
increased $134 million with the NPL ratio increasing 13 bps.
Nonperforming portfolio assets were $688 million in the current
quarter, with the resulting NPA ratio of 0.59%. Compared to the
prior quarter, NPAs increased $76 million with the NPA ratio
increasing 8 bps. Compared to the year-ago quarter, NPAs increased
$149 million with the NPA ratio increasing 15 bps.
The provision for credit losses totaled $55 million in the
current quarter. The allowance for credit loss ratio represented
2.12% of total portfolio loans and leases at quarter end, compared
with 2.11% for the prior quarter end and 1.98% for the year-ago
quarter end. In the current quarter, the allowance for credit
losses represented 383% of nonperforming portfolio loans and leases
and 362% of nonperforming portfolio assets.
Net charge-offs were $96 million in the current quarter,
resulting in an NCO ratio of 0.32%. Compared to the prior quarter,
net charge-offs decreased $28 million and the NCO ratio decreased 9
bps. Commercial net charge-offs were $25 million, resulting in a
commercial NCO ratio of 0.13%, which decreased 21 bps compared to
the prior quarter. Consumer net charge-offs were $71 million,
resulting in a consumer NCO ratio of 0.64%, which increased 11 bps
compared to the prior quarter.
Compared to the year-ago quarter, net charge-offs increased $28
million and the NCO ratio increased 10 bps, reflecting a
normalizing from near-historically low net charge-offs in the
year-ago quarter. The commercial NCO ratio was flat compared to the
prior year, and the consumer NCO ratio increased 26 bps compared to
the prior year.
Capital Position
As of and For the Three Months
Ended
December
September
June
March
December
2023
2023
2023
2023
2022
Capital Position
Average total Bancorp shareholders' equity
as a % of average assets
8.04%
8.30%
8.90%
8.77%
8.18%
Tangible equity(a)
8.65%
8.46%
8.58%
8.39%
8.31%
Tangible common equity (excluding
AOCI)(a)
7.67%
7.49%
7.57%
7.38%
7.30%
Tangible common equity (including
AOCI)(a)
5.73%
4.51%
5.26%
5.49%
5.00%
Regulatory Capital Ratios(d)(e)
CET1 capital
10.29%
9.80%
9.49%
9.28%
9.28%
Tier 1 risk-based capital
11.59%
11.06%
10.73%
10.53%
10.53%
Total risk-based capital
13.72%
13.13%
12.83%
12.64%
12.79%
Leverage
8.73%
8.85%
8.81%
8.67%
8.56%
The CET1 capital ratio was 10.29%, the Tangible common equity to
tangible assets ratio was 7.67% excluding AOCI, and 5.73% including
AOCI. The Tier 1 risk-based capital ratio was 11.59%, the Total
risk-based capital ratio was 13.72%, and the Leverage ratio was
8.73%. Fifth Third did not execute share repurchases in the fourth
quarter of 2023.
Tax Rate
The effective tax rate for the quarter was 18.4% compared with
22.0% in the prior quarter and 19.4% in the year-ago quarter. The
tax rate in the fourth quarter reflects a favorable adjustment of
$17 million associated with resolution of certain acquisition
related tax matters.
Conference Call
Fifth Third will host a conference call to discuss these
financial results at 9:00 a.m. (Eastern Time) today. This
conference call will be webcast live and may be accessed through
the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor
Relations”). Those unable to listen to the live webcast may access
a webcast replay through the Fifth Third Investor Relations website
at the same web address, which will be available for 30 days.
Corporate Profile
Fifth Third is a bank that’s as long on innovation as it is on
history. Since 1858, we’ve been helping individuals, families,
businesses and communities grow through smart financial services
that improve lives. Our list of firsts is extensive, and it’s one
that continues to expand as we explore the intersection of
tech-driven innovation, dedicated people, and focused community
impact. Fifth Third is one of the few U.S.-based banks to have been
named among Ethisphere's World’s Most Ethical Companies® for
several years. With a commitment to taking care of our customers,
employees, communities and shareholders, our goal is not only to be
the nation’s highest performing regional bank, but to be the bank
people most value and trust.
Fifth Third Bank, National Association is a federally chartered
institution. Fifth Third Bancorp is the indirect parent company of
Fifth Third Bank and its common stock is traded on the NASDAQ®
Global Select Market under the symbol “FITB.” Investor information
and press releases can be viewed at www.53.com.
Earnings Release End Notes
(a)
Non-GAAP measure; see discussion of non-GAAP reconciliation
beginning on page 27 of the earnings release.
(b)
Net losses charged-off as a percent of average portfolio loans
and leases presented on an annualized basis.
(c)
Nonperforming portfolio assets as
a percent of portfolio loans and leases and OREO.
(d)
Regulatory capital ratios are
calculated pursuant to the five-year transition provision option to
phase in the effects of CECL on regulatory capital after its
adoption on January 1, 2020.
(e)
Current period regulatory capital
ratios are estimated.
(f)
Assumes a 23% tax rate.
(g)
Includes commercial customer
Eurodollar sweep balances for which the Bank pays rates comparable
to other commercial deposit accounts.
(h)
Nonperforming portfolio loans and
leases as a percent of portfolio loans and leases.
FORWARD-LOOKING STATEMENTS
This release contains statements that we believe are
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Rule 175 promulgated
thereunder, and Section 21E of the Securities Exchange Act of 1934,
as amended, and Rule 3b-6 promulgated thereunder. All statements
other than statements of historical fact are forward-looking
statements. These statements relate to our financial condition,
results of operations, plans, objectives, future performance,
capital actions or business. They usually can be identified by the
use of forward-looking language such as “will likely result,”
“may,” “are expected to,” “is anticipated,” “potential,”
“estimate,” “forecast,” “projected,” “intends to,” or may include
other similar words or phrases such as “believes,” “plans,”
“trend,” “objective,” “continue,” “remain,” or similar expressions,
or future or conditional verbs such as “will,” “would,” “should,”
“could,” “might,” “can,” or similar verbs. You should not place
undue reliance on these statements, as they are subject to risks
and uncertainties, including but not limited to the risk factors
set forth in our most recent Annual Report on Form 10-K as updated
by our filings with the U.S. Securities and Exchange Commission
(“SEC”).
There are a number of important factors that could cause future
results to differ materially from historical performance and these
forward-looking statements. Factors that might cause such a
difference include, but are not limited to: (1) deteriorating
credit quality; (2) loan concentration by location or industry of
borrowers or collateral; (3) problems encountered by other
financial institutions; (4) inadequate sources of funding or
liquidity; (5) unfavorable actions of rating agencies; (6)
inability to maintain or grow deposits; (7) limitations on the
ability to receive dividends from subsidiaries; (8) effects of the
global COVID-19 pandemic; (9) cyber-security risks; (10) Fifth
Third’s ability to secure confidential information and deliver
products and services through the use of computer systems and
telecommunications networks; (11) failures by third-party service
providers; (12) inability to manage strategic initiatives and/or
organizational changes; (13) inability to implement technology
system enhancements; (14) failure of internal controls and other
risk management systems; (15) losses related to fraud, theft,
misappropriation or violence; (16) inability to attract and retain
skilled personnel; (17) adverse impacts of government regulation;
(18) governmental or regulatory changes or other actions; (19)
failures to meet applicable capital requirements; (20) regulatory
objections to Fifth Third’s capital plan; (21) regulation of Fifth
Third’s derivatives activities; (22) deposit insurance premiums;
(23) assessments for the orderly liquidation fund; (24) replacement
of LIBOR; (25) weakness in the national or local economies; (26)
global political and economic uncertainty or negative actions; (27)
changes in interest rates and the effects of inflation; (28)
changes and trends in capital markets; (29) fluctuation of Fifth
Third’s stock price; (30) volatility in mortgage banking revenue;
(31) litigation, investigations, and enforcement proceedings by
governmental authorities; (32) breaches of contractual covenants,
representations and warranties; (33) competition and changes in the
financial services industry; (34) changing retail distribution
strategies, customer preferences and behavior; (35) difficulties in
identifying, acquiring or integrating suitable strategic
partnerships, investments or acquisitions; (36) potential dilution
from future acquisitions; (37) loss of income and/or difficulties
encountered in the sale and separation of businesses, investments
or other assets; (38) results of investments or acquired entities;
(39) changes in accounting standards or interpretation or declines
in the value of Fifth Third’s goodwill or other intangible assets;
(40) inaccuracies or other failures from the use of models; (41)
effects of critical accounting policies and judgments or the use of
inaccurate estimates; (42) weather-related events, other natural
disasters, or health emergencies (including pandemics); (43) the
impact of reputational risk created by these or other developments
on such matters as business generation and retention, funding and
liquidity; (44) changes in law or requirements imposed by Fifth
Third’s regulators impacting our capital actions, including
dividend payments and stock repurchases; and (45) Fifth Third's
ability to meet its environmental and/or social targets, goals and
commitments.
You should refer to our periodic and current reports filed with
the Securities and Exchange Commission, or “SEC,” for further
information on other factors, which could cause actual results to
be significantly different from those expressed or implied by these
forward-looking statements. Moreover, you should treat these
statements as speaking only as of the date they are made and based
only on information then actually known to us. We expressly
disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in our expectations or any changes in
events, conditions or circumstances on which any such statement is
based, except as may be required by law, and we claim the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The information contained herein is intended to be reviewed in its
totality, and any stipulations, conditions or provisos that apply
to a given piece of information in one part of this press release
should be read as applying mutatis mutandis to every other instance
of such information appearing herein.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240119449055/en/
Investor contact: Matt Curoe (513) 534-2345 Media contact:
Jennifer Hendricks Sullivan (614) 744-7693
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