Net Income of $882 million, Exceeds Tier 1 Common Commitment by 60%
CINCINNATI, July 23 /PRNewswire-FirstCall/ -- -- Generated over
$1.4 billion in tangible common equity through the combination of
an "at the market" common equity offering and exchange of cash and
common stock for convertible preferred stock -- Subsequent to the
close of the second quarter, Fifth Third sold its Visa, Inc. class
B common stock for an after-tax benefit of approximately $206
million -- These actions result in Tier 1 common equity credit
under the SCAP assessment of $1.75 billion, exceeding Fifth Third's
$1.1 billion SCAP commitment by 60% -- Completed sale of an
approximate 51% interest in Fifth Third's processing business,
resulting in a gain of $1.8 billion pre-tax, or $1.1 billion
after-tax -- Tier 1 common ratio of 7.0%, Tier 1 ratio of 12.9% as
of June 30, 2009 -- Visa transaction improves pro forma capital
ratios by approximately 19 bps; pro forma Tier 1 common equity
ratio of 7.2% -- Average core deposits increased 9% from the
previous year; wholesale funding reduced by nearly $7 billion
reflecting strong liquidity position -- Net interest margin of
3.26%, up 20 bps sequentially -- Noninterest income increased 11%
on strong mortgage banking and payments processing revenue,
excluding gain from processing joint venture and investment
securities gains/losses -- Allowance to loan ratio increased to
4.28%, allowance to nonperforming loans ratio of 135%, allowance to
annualized net charge-off ratio of 1.4 times -- Extended over $21
billion of new and renewed credit in the second quarter Earnings
Highlights For the Three Months Ended --------------------------
June March December September June 2009 2009 2008 2008 2008 ----
---- ---- ---- ---- Earnings ($ in millions) Net income (loss) $882
$50 ($2,142) ($56) ($202) Net income (loss) available to common
shareholders $856 ($26) ($2,184) ($81) ($202) Common Share Data
Earnings per share, basic 1.35 (0.04) (3.78) (0.14) (0.37) Earnings
per share, diluted 1.15 (0.04) (3.78) (0.14) (0.37) Cash dividends
per Common share 0.01 0.01 0.01 0.15 0.15 Financial Ratios Return
on average assets 3.05% 0.17% (7.16%) (.19%) (.72%) Return on
average common equity 41.2 (1.4) (94.6) (3.3) (8.5) Tier I capital
12.90 10.93 10.59 8.57 8.51 Tier I common equity 7.00 4.50 4.37
5.18 5.18 Net interest margin (a) 3.26 3.06 3.46 4.24 3.04
Efficiency (a) 29.9 65.1 131.3 54.2 58.6 Common shares outstanding
(in thousands) 795,313 576,936 577,387 577,487 577,530 Average
common Shares outstanding (in thousands): Basic 629,789 571,810
571,809 571,705 540,030 Diluted 718,245 571,810 571,809 571,705
540,030 % Change -------- Seq Yr/Yr --- ----- Earnings ($ in
millions) Net income (loss) 1666% NM Net income (loss) available to
common shareholders NM NM Common Share Data Earnings per share,
basic NM NM Earnings per share, diluted NM NM Cash dividends per
common share 0% (93%) Financial Ratios Return on average assets
1694% NM Return on average common equity NM NM Tier I capital 18%
52% Tier I common equity 12% 40% Net interest margin (a) 7% 7%
Efficiency (a) (54%) (49%) Common shares outstanding (in thousands)
38% 38% Average common shares outstanding (in thousands): Basic 10%
17% Diluted 26% 33% (a) Presented on a fully taxable equivalent
basis NM: not meaningful ------------------ Fifth Third Bancorp
(NASDAQ:FITB) today reported second quarter 2009 net income of $882
million, compared with net income of $50 million in the first
quarter of 2009 and a net loss of $202 million in the second
quarter of 2008. After preferred dividends, second quarter 2009 net
income available to common shareholders was $856 million, compared
with a net loss of $26 million in the first quarter of 2009 and a
net loss of $202 million in the second quarter of 2008. In the
quarter, we reported EPS of $1.15 per diluted share, compared with
a net loss of $0.04 per diluted share in the first quarter and a
net loss of $0.37 per diluted share in the same quarter of 2008.
Second quarter of 2009 net income included a gain of $1,764 million
pre-tax, or $1,055 million after-tax, from the completion of the
previously announced processing business transaction with Advent
International. Results also included a special FDIC deposit
insurance fund assessment, which decreased net income by $55
million pre-tax, or $36 million after-tax. Net income available to
common shareholders also included a $35 million benefit, recorded
as a reduction to preferred dividend expense, reflecting the excess
of the carrying value of preferred shares over the fair value of
the common shares and cash exchanged through our tender offer for
Series G preferred stock. The benefit of this reduction in
preferred dividend expense is not included in earnings per diluted
share under the "if converted" method (discussed further below)
utilized for determining diluted earnings per share in the second
quarter. First quarter 2009 net income benefited by $101 million
after-tax, or $0.18 per share, due to the net impact of several
significant items. These items included a tax benefit related to
the decision to surrender of one of our bank-owned life insurance
(BOLI) policies, charges related to this BOLI policy, a reduction
in income tax expense and a related charge due to our agreement
with the IRS to settle all of Fifth Third's disputed leveraged
leases for all open years, securities losses, and severance
expense. Second quarter 2008 results included net charges of
approximately $233 million after-tax, or $0.44 per share, related
to significant items. These included $130 million pre-tax charge to
reflect a projected change in the timing of tax benefits pursuant
to FSP FAS 13-2, an increase to tax expense of approximately $140
million required for interest related to previous tax years
pursuant to FIN 48, and $13 million pre-tax in acquisition-related
expenses. During the second quarter of 2009, the reported common
shares outstanding increased reflecting the effect of shares issued
during the quarter through our "at-the-market" common share
offering as well as the common shares issued in connection with the
exchange of a portion of our Series G preferred stock. Average
diluted common shares of 718 million increased 146 million shares
from the first quarter of 2009. The increase reflected an average
impact of 47 million shares from the issuance of 158 million shares
in our common share offering, and 9 million common shares from the
exchange. The increase also reflected the inclusion of the 96
million shares underlying our Series G preferred stock, due to the
utilization of the "if-converted" method. Period-end common shares
of 795 million increased 218 million shares from the first quarter
of 2009 due to the issuance of 158 million in the common share
offering and 60 million converted through the preferred stock
exchange. We would expect our average basic and diluted shares
going forward to approximate the period end share count of 795
million, with the remaining 36 million common shares underlying
unexchanged Series G preferred shares being included in periods
when the impact of their inclusion is dilutive to the diluted EPS
calculation. The impact of second quarter activities on reported
share counts is more fully discussed later in this release. During
the quarter, we completed the sale of a 51 percent interest in our
processing business through a joint venture with Advent
International. This transaction produced an after-tax gain of $1.1
billion and enhanced our tangible common equity ratios by
approximately 100 basis points. Additionally, we successfully
issued $1.0 billion of common stock and exchanged 63 percent of our
convertible preferred shares into common stock through a cash and
stock tender. These two common stock transactions resulted in a
further increase in tangible common equity ratio of approximately
130 basis points. Finally, subsequent to the end of the second
quarter, we sold our Visa, Inc. class B common shares for an
after-tax benefit of approximately $206 million. The combined
effect of these transactions has enhanced our tangible common
equity by $2.7 billion, or approximately 240 bps, while at the same
time increasing tangible book value per share by approximately
$1.00 per share to $9.75 on a pro forma basis. Also during the
quarter, the 19 largest U.S. banks completed the results of the
Supervisory Capital Assessment Program (SCAP) "stress test." The
purpose of this stress test was to evaluate results, loan losses,
and capital levels under a "more adverse scenario" that was viewed
as a possible although unlikely development. Under this assessment,
Fifth Third committed to increase its Tier 1 common equity by $1.1
billion, a commitment, which has been exceeded by approximately
$650 million through the common stock transactions, and Visa sale
outlined above. The SCAP required participating banks to take
actions to ensure that their Tier 1 common equity ratio would
exceed 4 percent of risk-weighted assets under the more adverse
scenario. Including the effect of the Visa transaction, our pro
forma Tier 1 common equity ratio as of the second quarter of 2009
was 7.2 percent. "This was an eventful quarter for Fifth Third and
for the industry," said Kevin T. Kabat, Chairman, CEO and President
of Fifth Third Bancorp. "We completed our processing joint venture
transaction at a gain of $1.1 billion, raised $1.0 billion in new
common equity, and brought about the early conversion of 63 percent
of our existing convertible preferred stock, further increasing
common equity by $441 million. We exceeded the SCAP Tier 1 common
equity commitment by 60 percent. Our operating results and credit
loss experience through the second quarter have been superior to
the results submitted under the SCAP more adverse scenario, and we
expect that to remain the case in coming quarters. Results for the
second quarter were in line with our expectations and continue to
reflect strong core results coupled with high credit costs. As
expected, we saw significant improvement in the net interest
margin, up 20 basis points from the prior quarter, driven by
improved liability pricing and wider loan spreads, which drove a 7
percent sequential increase in net interest income. We expect
expansion in the net interest margin to continue in the second half
of the year. Fee growth remained strong, up 11 percent on a core
basis from the first quarter of 2009. Expense management remains a
key focus, and core expenses were relatively flat from the first
quarter despite the strong revenue performance. Credit trends
remain difficult and signals regarding future trends are somewhat
mixed at this point. We continue to work aggressively to manage the
risk in our loan portfolio. As expected, net charge-offs increased
from the first quarter to $626 million. We expect loan losses to
increase moderately in the third quarter, with higher commercial
real estate charge-offs partially offset by lower consumer
charge-offs. Second quarter nonperforming asset growth of 7 percent
represented deceleration from prior quarters, and significantly
lower levels of inflows. We currently expect higher NPA growth in
the third quarter although below the levels of growth experienced
in prior quarters. The provision for loan losses exceeded net
charge-offs by $415 million, increasing the reserve to loan ratio
to 4.28 percent. Our reserve position relative to loans,
nonperforming loans, and levels of charge-offs are very strong and
we currently do not expect significant additional growth in loan
loss reserves to be necessary, absent further deterioration in
credit conditions. The level of our reserves coupled with our
strong levels of underlying earnings and capital place us in a very
strong position to deal with the expected challenges in the
remainder of this credit cycle." Income Statement Highlights For
the Three Months Ended -------------------------- June March
December September June 2009 2009 2008 2008 2008 ---- ---- ----
---- ---- Condensed Statements of Income ($ in millions) Net
interest income (taxable equivalent) $836 $781 $897 $1,068 $744
Provision for loan and lease losses 1,041 773 2,356 941 719 Total
noninterest income 2,583 697 642 717 722 Total noninterest expense
1,021 962 2,022 967 858 --------- ----- --- ----- --- --- Income
(loss) before income taxes (taxable equivalent) 1,357 (257) (2,839)
(123) (111) -------------------- ----- ---- ------ ---- ----
Taxable equivalent adjustment 5 5 5 5 6 Applicable income taxes 470
(312) (702) (72) 85 ----------------------- --- ---- ---- --- --
Net income (loss) 882 50 (2,142) (56) (202) Dividends on preferred
stock 26 76 42 25 - ---------------------- -- -- -- -- - Net income
(loss) available to common shareholders 856 (26) (2,184) (81) (202)
-------------------- --- --- ------ --- ---- Earnings per share,
diluted $1.15 ($0.04) ($3.78) ($0.14) ($0.37) -------------------
----- ------ ------ ------ ------ % Change -------- Seq Yr/Yr ---
----- Condensed Statements of Income ($ in millions) Net interest
income (taxable equivalent) 7% 12% Provision for loan and lease
losses 35% 45% Total noninterest income 271% 258% Total noninterest
expense 6% 19% ------------------------- - -- Income (loss) before
income taxes (taxable equivalent) NM NM
--------------------------------- -- -- Taxable equivalent
adjustment 0% (17%) Applicable income taxes NM 453%
----------------------- -- --- Net income (loss) 1666% NM Dividends
on preferred stock (66%) NM ---------------------------- --- -- Net
income (loss) available to common shareholders NM NM
------------------------------------- -- -- Earnings per share,
diluted NM NM --------------------------- -- -- NM: not meaningful
------------------ Net Interest Income For the Three Months Ended
-------------------------- June March December September June 2009
2009 2008 2008 2008 ---- ---- ---- ---- ---- Interest Income ($ in
millions) Total interest income (taxable equivalent) $1,184 $1,183
$1,411 $1,553 $1,213 Total interest expense 348 402 514 485 469
---------------------- --- --- --- --- --- Net interest income
(taxable equivalent) $836 $781 $897 $1,068 $744
--------------------- ---- ---- ---- ------ ---- Average Yield
Yield on interest-earning assets 4.62% 4.63% 5.44% 6.16% 4.95%
Yield on interest-bearing liabilities 1.67% 1.89% 2.28% 2.25% 2.23%
---------------------------- ---- ---- ---- ---- Net interest rate
spread (taxable equivalent) 2.95% 2.74% 3.16% 3.91% 2.72%
-------------------- ---- ---- ---- ---- ---- Net interest margin
(taxable equivalent) 3.26% 3.06% 3.46% 4.24% 3.04% Average Balances
($ in millions) Loans and leases, including held for sale $84,996
$85,829 $87,426 $85,772 $85,212 Total securities and other
short-term investments 17,762 17,835 15,683 14,515 13,363 Total
interest-bearing liabilities 83,407 86,218 89,440 85,990 84,417
Shareholders' equity 12,490 12,084 10,291 10,843 9,629
-------------------- ------ ------ ------ ------ ----- % Change
-------- Seq Yr/Yr --- ----- Interest Income ($ in millions) Total
interest income (taxable equivalent) 0% (2%) Total interest expense
(13%) (26%) ---------------------- --- --- Net interest income
(taxable equivalent) 7% 12%
---------------------------------------- - -- Average Yield Yield
on interest-earning assets 0% (7%) Yield on interest-bearing
liabilities (12%) (25%) ------------------------------------- ---
--- Net interest rate spread (taxable equivalent) 8% 8%
------------------------------------ - - Net interest margin
(taxable equivalent) 7% 7% Average Balances ($ in millions) Loans
and leases, including held for sale (1%) 0% Total securities and
other short-term investments 0% 33% Total interest-bearing
liabilities (3%) (1%) Shareholders' equity 3% 30%
-------------------- - -- Net interest income of $836 million on a
taxable equivalent basis increased $55 million, or 7 percent, from
the first quarter of 2009. The sequential increase was driven by
improved spreads on loan originations, and a deposit mix shift to
lower cost core deposits as higher priced term deposits issued in
the third and fourth quarters of 2008 matured, partially offset by
higher non-accrual loan balances. The reported net interest margin
was 3.26 percent, up 20 bps from 3.06 percent in the first quarter
of 2009. The sequential increase in net interest margin was largely
driven by the factors outlined above. Compared with the second
quarter of 2008, net interest income increased $92 million and the
net interest margin increased 22 bps from 3.04 percent. Second
quarter 2008 results included the effect of the changes in
estimated cash flows on certain leveraged lease transactions that
reduced net interest income by approximately $130 million.
Excluding the leveraged lease litigation charge recorded in the
second quarter of 2008, net interest income declined by $38 million
from the same period in 2008 and the net interest margin declined
30 bps. The declines in net interest income and net interest margin
were largely driven by shift in deposit mix toward higher priced
certificates of deposit (CDs) in the latter part of 2008 and higher
interest reversals, partially offset by improved pricing spreads on
loan originations. Average Loans For the Three Months Ended
-------------------------- June March December September June 2009
2009 2008 2008 2008 ---- ---- ---- ---- ---- Average Portfolio
Loans and Leases ($ in millions) Commercial: Commercial loans
$28,027 $28,949 $30,227 $28,284 $28,299 Commercial mortgage 12,463
12,508 13,189 13,257 12,590 Commercial construction 4,672 4,987
5,990 6,110 5,700 Commercial leases 3,512 3,564 3,610 3,641 3,747
-------------------- ----- ----- ----- ----- ----- Subtotal -
commercial loans and leases 48,674 50,008 53,016 51,292 50,336
-------------------- ------ ------ ------ ------ ------ Consumer:
Residential mortgage Loans 8,713 9,195 9,335 9,681 9,922 Home
equity 12,636 12,763 12,677 12,534 12,012 Automobile loans 8,692
8,687 8,428 8,303 8,439 Credit card 1,863 1,825 1,748 1,720 1,703
Other consumer loans and leases 995 1,083 1,165 1,165 1,125
---------------------- --- ----- ----- ----- ----- Subtotal -
consumer loans and leases 32,899 33,553 33,353 33,403 33,201
------------------- ------ ------ ------ ------ ------ Total
average loans and leases (excluding held for sale) $81,573 $83,561
$86,369 $84,695 $83,537 Average loans held for sale 3,422 2,268
1,057 1,077 1,676 ------------------- ----- ----- ----- ----- -----
% Change -------- Seq Yr/Yr --- ----- Average Portfolio Loans and
Leases ($ in millions) Commercial: Commercial loans (3%) (1%)
Commercial mortgage 0% (1%) Commercial construction (6%) (18%)
Commercial leases (1%) (6%) -------------------- -- -- Subtotal -
commercial loans and leases (3%) (3%)
-------------------------------------- -- -- Consumer: Residential
mortgage loans (5%) (12%) Home equity (1%) 5% Automobile loans 0%
3% Credit card 2% 9% Other consumer loans and leases (8%) (12%)
---------------------------------- -- --- Subtotal - consumer loans
and leases (2%) (1%) ------------------------------------ -- --
Total average loans and leases (excluding held for sale) (2%) (2%)
Average loans held for sale 51% 104% --------------------------- --
--- Average portfolio loan and lease balances decreased 2 percent
both sequentially and compared with the second quarter of 2008. The
decline was due to lower customer demand for loans as both consumer
and commercial customers are using credit more cautiously.
Excluding the impact of $1.3 billion in commercial loans sold or
transferred to held-for-sale during the fourth quarter of 2008 and
the impact of loans charged-off, period-end portfolio loan and
lease balances were flat versus the previous year. Average
commercial loan and lease balances decreased 3 percent both
sequentially and compared with the second quarter of the previous
year. During the second quarter of 2009, commercial and industrial
(C&I) average loans decreased by 3 percent, primarily due to
lower customer line usage, which accounted for about $700 million
of the $900 million decline. Excluding commercial loans charged-off
and the impact of loans that were either sold or transferred to
held-for-sale in the fourth quarter of 2008, period-end commercial
loan and lease balances declined by 1 percent sequentially and from
the previous year. Average commercial mortgage and commercial
construction loan balances declined by a combined 2 percent
sequentially. Average consumer loan and lease balances decreased 2
percent sequentially and declined 1 percent from the second quarter
of 2008. Sequentially, modest credit card loan growth was more than
offset by a decline in home equity and residential mortgage loan
balances. On a year-over-year basis, growth in home equity, auto,
and credit card loans was more than offset by a reduction in
residential mortgages. Excluding loans charged-off, period-end
consumer loans were flat relative to the previous year. High
mortgage origination volumes during the second quarter of 2009
drove a $1.2 billion increase in the warehouse of residential
mortgages held-for-sale on an average basis. The majority of Fifth
Third's mortgages are originated to be sold to agencies, and are
not reflected in portfolio loans or portfolio loan growth. Average
Deposits For the Three Months Ended -------------------------- June
March December September June 2009 2009 2008 2008 2008 ---- ----
---- ---- ---- Average Deposits ($ in millions) Demand deposits
$16,689 $15,532 $14,602 $14,225 $14,023 Interest checking 14,837
14,229 13,698 13,843 14,396 Savings 16,705 16,272 15,960 16,154
16,583 Money market 4,167 4,559 4,983 6,051 6,592 Foreign office
(a) 1,717 1,755 1,876 2,126 2,169 --------------------- ----- -----
----- ----- ----- Subtotal - Transaction deposits 54,115 52,347
51,119 52,399 53,763 --------------------- ------ ------ ------
------ ------ Other time 14,612 14,501 13,337 10,780 9,517
------------- ------ ------ ------ ------ ----- Subtotal - Core
deposits 68,727 66,848 64,456 63,179 63,280 ---------------- ------
------ ------ ------ ------ Certificates - $100,000 and over 11,455
11,802 12,468 11,623 8,143 Other 240 247 1,090 395 2,948 ---------
--- --- ----- --- ----- Total deposits $80,422 $78,897 $78,014
$75,197 $74,371 -------------- ------- ------- ------- -------
------- % Change -------- Seq Yr/Yr --- ----- Average Deposits ($
in millions) Demand deposits 7% 19% Interest checking 4% 3% Savings
3% 1% Money market (9%) (37%) Foreign office (a) (2%) (21%)
--------------------- -- --- Subtotal - Transaction deposits 3% 1%
------------------------------- - - Other time 1% 54% -------------
- -- Subtotal - Core deposits 3% 9% ------------------------ - -
Certificates - $100,000 and over (3%) 41% Other (3%) (92%)
--------- -- --- Total deposits 2% 8% -------------- - - (a)
Includes commercial customer Eurodollar sweep balances for which
the Bancorp pays rates comparable to other commercial deposit
accounts. Average core deposits increased 3 percent sequentially
and 9 percent from the second quarter of 2008. Acquisitions had a 3
percent beneficial effect on the year-over-year comparison. On both
a sequential and year-over-year basis, growth in average demand
deposit (DDA) - up 19 percent year-over-year and up 7 percent
sequentially - interest checking, savings, and consumer CD balances
were partially offset by lower money market and foreign office
commercial sweep deposits. Average transaction deposits (excluding
consumer time deposits) were up 3 percent from first quarter 2009
and increased 1 percent from a year ago. Sequential and
year-over-year growth was driven by strong checking account balance
growth partially offset by migration of money market balances to
CDs that offered higher rates. Retail average core deposits
increased 3 percent sequentially and increased 11 percent from the
second quarter of 2008. Sequential growth in DDA, interest
checking, savings, and consumer CD balances was partially offset by
lower money market balances, a result of migration into higher-rate
consumer CDs. Higher average account balances drove DDA growth, and
strong account production drove the increase in savings account
balances. Commercial core deposits increased 2 percent sequentially
and 3 percent from the previous year. Sequential growth in DDA and
interest checking account balances, driven by higher average
account balances, more than offset lower savings and money market
account balances. Noninterest Income For the Three Months Ended
-------------------------- June March December September June 2009
2009 2008 2008 2008 ---- ---- ---- ---- ---- Noninterest Income ($
in millions) Electronic payment processing revenue $243 $223 $230
$235 $235 Service charges on deposits 162 146 162 172 159
Investment advisory revenue 73 76 78 90 92 Corporate banking
revenue 99 116 121 104 111 Mortgage banking net revenue 147 134
(29) 45 86 Gain on sale of FTPS joint venture 1,764 - - - - Other
noninterest income 49 10 24 112 49 Securities gains (losses), net 5
(24) (40) (63) (10) Securities gains, net - non-qualifying hedges
on mortgage servicing rights 41 16 96 22 0 -----------------------
-- -- -- -- - Total noninterest income $2,583 $697 $642 $717 $722
----------------- ------ ---- ---- ---- ---- % Change -------- Seq
Yr/Yr --- ----- Noninterest Income ($ in millions) Electronic
payment processing revenue 9% 4% Service charges on deposits 11% 2%
Investment advisory revenue (4%) (21%) Corporate banking revenue
(15%) (11%) Mortgage banking net revenue 10% 72% Gain on sale of
FTPS joint venture NM NM Other noninterest income 380% (1%)
Securities gains (losses), net NM NM Securities gains, net -
non-qualifying Hedges on mortgage servicing rights 157% NM
------------------------------- --- -- Total noninterest income
271% 258% ------------------------ --- --- Noninterest income of
$2.6 billion increased $1.9 billion both sequentially and from a
year ago. Second quarter 2009 results included a $1.8 billion gain
from the completion of the processing business joint venture, while
first quarter 2009 results included $54 million in charges related
to one of our BOLI policies. Excluding these items and investment
securities gains/losses in each period, noninterest income of $814
million increased by $39 million or 5 percent from the previous
quarter and increased by $82 million or 11 percent from the same
period the previous year. Both sequential and year-over-year growth
was driven by stronger mortgage banking revenue, payment processing
revenue, and deposit service charges. Electronic payment processing
revenue of $243 million increased 9 percent sequentially and
increased 4 percent from a year ago. Merchant processing revenue
increased 20 percent sequentially and increased 10 percent compared
with the previous year. The sequential and year-over-year increases
were driven by strong debit card processing revenue, offset by
decreased average ticket size on both credit and debit transaction.
Card issuer interchange revenue increased 10 percent sequentially
and increased 3 percent from the previous year, driven by an
increase in credit card transactions tempered by a decline in the
average dollar amount per transaction. Financial institutions
revenue decreased 2 percent compared with the previous quarter and
decreased 3 percent from the second quarter of 2008 on declines in
contract cancellation fees partially offset by strong transaction
volumes. Service charges on deposits of $162 million increased 11
percent sequentially and 2 percent compared with the same quarter
last year. Retail service charges increased 20 percent from the
previous quarter and were flat compared with the second quarter of
2008. The sequential increase was driven by strong growth in net
new accounts and transaction activity. Commercial service charges
increased 2 percent sequentially and increased 3 percent compared
with last year. Year-over-year growth primarily reflected an
increase in customer accounts and lower market interest rates, as
reduced earnings credit rates paid on customer balances have
resulted in higher realized net service fees to pay for treasury
management services. Corporate banking revenue of $99 million
decreased by $17 million or 15 percent from strong first quarter
results, largely due to an $11 million decline in lease termination
fees and the effects of stabilization in the macroeconomic
environment on customer derivatives activity. Sequential results
were driven by lower volume of interest rate derivative sales
revenue, foreign exchange revenue and business lending fees,
partially offset by growth in institutional sales. On a
year-over-year basis, corporate banking revenue decreased by $12
million, or 11 percent, driven by lower volume of interest rate
derivative sales revenue and foreign exchange revenue partially
offset by growth in institutional sales and business lending fees.
Investment advisory revenue of $73 million was down 4 percent
sequentially and 21 percent from the second quarter of 2008.
Institutional trust revenue was flat from the previous quarter and
down 20 percent from the previous year. The year-over-year decline
was largely driven by lower overall market value declines. Mutual
fund fees were up 6 percent from the previous quarter, reflecting
higher asset valuations due to the better performance of equity
markets in the second quarter. Brokerage fees were down 5 percent
from the first quarter of 2009, reflecting a decline in
transaction-based revenues. Mortgage banking net revenue was $147
million in the second quarter of 2009, an increase of $13 million
from strong first quarter 2009 results and $61 million from the
second quarter of 2008. Second quarter of 2009 originations were a
record $6.9 billion, up from $4.9 billion the previous quarter, and
resulted in gains on mortgages sold of $161 million compared with
gains of $131 million during the previous quarter and $79 million
during the same period in 2008. Revenue for the second quarter
included $1 million of gains on the sale of portfolio loans
compared with $3 million in the previous quarter and $9 million in
the second quarter of 2008. Net servicing revenue, before mortgage
servicing rights (MSR) valuation adjustments, totaled $2 million in
the second quarter, compared with $2 million last quarter and $11
million a year ago. MSR valuation adjustments, including
mark-to-market related adjustments on free-standing derivatives
used to economically hedge the MSR portfolio, represented a net
loss of $16 million in the second quarter of 2009, compared with a
net gain of $1 million last quarter and a net loss of $4 million a
year ago. The mortgage-servicing asset, net of the valuation
reserve, was $594 million at quarter end on a servicing portfolio
of $43.5 billion. Net securities gains on non-qualifying hedges on
MSRs were $41 million in the second quarter of 2009 compared with
net gains of $16 million in the previous quarter and no gain in the
second quarter of 2008. Net gains on investment securities were $5
million in the second quarter of 2009, compared with securities
losses of $24 million in the previous quarter and losses of $10
million in the same period the previous year. Other noninterest
income totaled $49 million in the second quarter of 2009 compared
with $10 million the previous quarter and $49 million in the second
quarter of 2008. Second quarter 2009 results included a $15 million
write-down on an facility we intend to vacate, while first quarter
2009 results included $54 million in charges associated with a
certain BOLI policy. Excluding these items, other noninterest
income was flat compared with the previous quarter and increased by
$15 million from the same period the previous year. Year-over-year
growth was otherwise driven by gains on non-performing assets that
were sold, settled, or transferred to OREO, which were $11 million
in the second quarter of 2009 and $13 million in the first quarter
of 2009. The results of our joint processing transaction are
discussed more fully elsewhere in this release. Noninterest Expense
For the Three Months Ended -------------------------- June March
December September June 2009 2009 2008 2008 2008 ---- ---- ----
---- ---- Noninterest Expense ($ in millions) Salaries, wages and
Incentives $346 $327 $337 $321 $331 Employee benefits $75 $83 $61
$72 $60 Payment processing expense $75 $67 $70 $70 $67 Net
occupancy expense $79 $79 $77 $77 $73 Technology and communications
$45 $45 $48 $47 $49 Equipment expense $31 $31 $35 $34 $31 Other
noninterest expense $370 $330 $1,394 $346 $247
------------------------- ---- ---- ------ ---- ---- Total
noninterest expense $1,021 $962 $2,022 $967 $858
------------------------- ------ ---- ------ ---- ---- % Change
-------- Seq Yr/Yr --- ----- Noninterest Expense ($ in millions)
Salaries, wages and incentives 6% 4% Employee benefits (10%) 24%
Payment processing expense 12% 11% Net occupancy expense 1% 8%
Technology and communications 1% (7%) Equipment expense (2%) 1%
Other noninterest expense 12% 50% ------------------------- -- --
Total noninterest expense 6% 19% ------------------------- - --
Noninterest expense of $1.0 billion increased $59 million
sequentially and increased $163 million from a year ago. Second
quarter of 2009 results included a $55 million FDIC special
assessment charge, while first quarter 2009 results included $8
million in severance expense. Excluding these items, expenses
increased by $12 million, or 1 percent, driven by higher expenses
related to loan collection activities, partially offset by
broad-based expense control. Second quarter 2008 results included
$13 million in acquisition-related expenses. Excluding the items
noted above for the second quarter in 2009 and 2008, expenses
increased by $121 million, or 14 percent from the same quarter the
previous year, driven by higher credit-related costs as well as the
effect of the June 2008 acquisition of First Charter. Credit
Quality For the Three Months Ended -------------------------- June
March December September June 2009 2009 2008 2008 2008 ---- ----
---- ---- ---- Total net losses charged off ($ in millions)
Commercial loans ($177) ($103) ($422) ($85) ($107) Commercial
mortgage loans (85) (77) (465) (94) (21) Commercial construction
loans (79) (76) (539) (88) (49) Commercial leases (1) 0 0 0 0
Residential mortgage loans (112) (75) (68) (77) (63) Home equity
(88) (72) (54) (55) (54) Automobile loans (36) (46) (43) (32) (26)
Credit card (45) (36) (30) (24) (21) Other consumer loans and
leases (3) (5) (6) (8) (3) --------------------------- -- -- -- --
-- Total net losses charged off (626) (490) (1,627) (463) (344)
Total losses (658) (521) (1,652) (481) (365) Total recoveries 32 31
25 18 21 ---------------- -- -- -- -- -- Total net losses charged
off ($626) ($490) ($1,627) ($463) ($344) Ratios (annualized) Net
losses charged off as a percent of average loans and leases
(excluding average loans and leases (excluding held for sale) 3.08%
2.38% 7.50% 2.17% 1.66% Commercial 2.81% 2.08% 10.70% 2.07% 1.41%
Consumer 3.48% 2.82% 2.40% 2.33% 2.04% ------------ ---- ---- ----
---- ---- Net charge-offs were $626 million in the second quarter
of 2009, or 308 bps of average loans on an annualized basis. First
quarter net losses were $490 million, or 238 bps of average loans
on an annualized basis. Loss experience overall continues to be
driven by commercial and residential real estate loans in Michigan
and Florida. In aggregate, Florida and Michigan represented
approximately 45 percent of total losses during the quarter and 28
percent of total loans and leases. Commercial net charge-offs were
$342 million, or 281 bps, in the second quarter of 2009, an
increase of $86 million from the first quarter of 2009. Within the
commercial portfolio, C&I losses were $177 million and
increased $74 million from the previous quarter. C&I losses
included losses on loans to auto dealers of $28 million and losses
on loans to companies in real estate-related industries of $38
million. Commercial mortgage net losses totaled $85 million, an
increase of $8 million from the previous quarter. Michigan and
Florida accounted for 45 percent of commercial mortgage losses.
Commercial construction net losses were $79 million, compared with
$76 million in the first quarter, with Michigan and Florida
accounting for 54 percent of commercial construction losses. Across
all commercial portfolios, net losses on residential builder and
developer portfolio loans totaled $76 million, compared with $64
million in first quarter. These homebuilder losses included $45
million on commercial construction loans, $25 million on commercial
mortgage loans, and $6 million on C&I loans. Originations of
homebuilder/developer loans were suspended in 2007 and remaining
portfolio balance totals $2.1 billion. Commercial net charge-offs
excluding losses in the homebuilder/developer portfolio were $266
million, or 228 bps in the second quarter. Consumer net charge-offs
of $284 million, or 348 bps, were up $50 million from the first
quarter of 2009. Michigan and Florida represented 45 percent of
second quarter home equity losses and 29 percent of total home
equity loans. Net charge-offs within the residential mortgage
portfolio were $112 million, an increase of $37 million from the
previous quarter, with losses in Michigan and Florida representing
75 percent of losses in the second quarter and approximately 44
percent of total residential mortgage loans. Home equity net
charge-offs of $88 million increased $16 million sequentially and
growth continued to be driven by losses on brokered home equity
loans. Net losses on brokered home equity loans were $39 million,
up $9 million sequentially, and represented 44 percent of second
quarter home equity losses. Brokered home equity loans represented
$2.1 billion, or 17 percent, of the total home equity portfolio
with originations being discontinued in 2007. Net charge-offs in
the auto portfolio decreased by $10 million from the first quarter
of 2009 to $36 million reflecting improved values on used cars sold
at auction. Net losses on consumer credit card loans were $45
million, up $9 million from the last quarter, as higher
unemployment and weakening economic conditions continue to impact
the credit card portfolio. For the Three Months Ended
-------------------------- June March December September June 2009
2009 2008 2008 2008 ---- ---- ---- ---- ---- Allowance for Credit
Losses ($ in millions) Allowance for loan and lease losses,
beginning $3,070 $2,787 $2,058 $1,580 $1,205 Total net losses
charged off (626) (490) (1,627) (463) (344) Provision for loan and
lease losses 1,041 773 2,356 941 719 -------------------------
----- --- ----- --- --- Allowance for loan and lease losses, ending
3,485 3,070 2,787 2,058 1,580 Reserve for unfunded commitments,
beginning 231 195 132 115 103 Provision for unfunded commitments 8
36 63 17 10 Acquisitions 0 0 0 0 2 --------------- - - - - -
Reserve for unfunded commitments, ending 239 231 195 132 115
Components of allowance for credit losses: Allowance for loan and
lease losses 3,485 3,070 2,787 2,058 1,580 Reserve for unfunded
commitments 239 231 195 132 115 ----------------------- --- --- ---
--- --- Total allowance for credit losses $3,724 $3,301 $2,982
$2,190 $1,695 Allowance for loan and lease losses ratio As a
percent of loans and leases 4.28% 3.72% 3.31% 2.41% 1.85% As a
percent of nonperforming loans and leases (a) (b) 135% 128% 157%
92% 92% As a percent of nonperforming assets (a) (b) 123% 116% 139%
84% 81% (a) Excludes non accrual loans and leases in loans held for
sale (b) During 1Q09 the Bancorp modified its nonaccrual policy to
exclude TDR loans less than 90 days past due because they were
performing in accordance with restructured terms. For comparability
purposes, prior periods were adjusted to reflect this
reclassification Provision for loan and lease losses totaled $1.0
billion in the second quarter of 2009, exceeding net charge-offs by
$415 million. The allowance for loan and lease losses represented
4.28 percent of total loans and leases outstanding as of quarter
end, compared with 3.72 percent last quarter, and represented 135
percent of nonperforming loans and leases and 139 percent of
annualized second quarter net charge-offs. As of ----- June March
December September June 2009 2009 2008 2008 2008 ---- ---- ----
---- ---- Nonperforming Assets and Delinquency ($ in millions)
Nonaccrual loans and leases: Commercial loans $603 $667 $541 $550
$407 Commercial mortgage 760 692 482 724 524 Commercial
construction 684 551 362 636 537 Commercial leases 51 27 21 23 18
Residential mortgage 262 265 259 216 142 Home equity 26 25 26 27 35
Automobile 1 2 5 3 7 Other consumer loans and leases - - - - 0.00
------------------------- - - - - ---- Total nonaccrual loans and
leases $2,387 $2,229 $1,696 $2,179 $1,670 Restructured loans and
leases - commercial (non accrual) (a) 12 - - - - Restructured loans
and leases - consumer (non accrual) (a) 188 167 80 50 56
------------------------- --- --- -- -- -- Total nonperforming
loans and leases $2,587 $2,396 $1,776 $2,229 $1,726 Repossessed
personal property 21 25 24 24 22 Other real estate owned (b) 232
227 206 198 190 ------------------------- --- --- --- --- --- Total
nonperforming assets (c) $2,840 $2,648 $2,006 $2,451 $1,938
Nonaccrual loans held for sale 352 403 473 - -
------------------------- --- --- --- - - Total nonperforming
assets including loans held for sale $3,192 $3,051 $2,479 $2,451
$1,938 --------------------------- ------ ------ ------ ------
------ Restructured loans and leases (accrual) (a) $1,074 $615 494
377 262 Total loans and leases 90 days past due $762 $733 $662 $671
$608 Nonperforming loans and leases as a percent of portfolio
loans, leases and other assets, including other real estate owned
(c) 3.17% 2.89% 2.11% 2.60% 2.01% Nonperforming assets as a percent
of portfolio loans, leases and other assets, including other real
estate owned (c) 3.48% 3.20% 2.38% 2.86% 2.26% (a) During 1Q09 the
Bancorp modified its nonaccrual policy to exclude TDR loans less
than 90 days past due because they were performing in accordance
with restructured terms. For comparability purposes, prior periods
were adjusted to reflect this reclassification. (b) Excludes
government insured advances. (c) Does not include non accrual loans
held-for-sale.
--------------------------------------------------------
Nonperforming assets (NPAs) at quarter end were $2.8 billion or
3.48 percent of total loans and leases and other real estate owned
(OREO), up $192 million from $2.6 billion, or 3.20 percent, last
quarter. Including $352 million of nonaccrual loans classified as
held-for-sale, total nonperforming assets were $3.2 billion
compared with $3.1 billion in the first quarter. Growth in NPAs
continues to be largely associated with commercial and residential
real estate loans in Michigan and Florida. In aggregate, Florida
and Michigan represented approximately 42 percent of NPAs in the
loan portfolio. Commercial NPAs at quarter-end were $2.2 billion,
or 4.52 percent, and increased $193 million, or 10 percent, from
the first quarter of 2009. C&I portfolio NPAs of $633 million
decreased $42 million from the previous quarter. Commercial
construction portfolio NPAs were $735 million, an increase of $138
million from the first quarter of 2009. Commercial mortgage NPAs
were $791 million, a sequential increase of $72 million. Commercial
real estate loans in Michigan and Florida represented 38 percent of
our total commercial real estate portfolio in the second quarter
2009 and 43 percent of commercial real estate NPAs. Across the
entire commercial loan portfolio, residential real estate builder
and developer portfolio NPAs were $613 million in the second
quarter, up $59 million from the previous quarter. Of the
residential real estate builder and developer portfolio NPAs, $333
million were commercial construction NPAs, $246 million were
commercial mortgage NPAs and $34 million were C&I NPAs. At
quarter-end, $352 million of commercial nonaccrual loans were
held-for-sale, compared with $403 million at the end of the first
quarter, and in the second quarter recorded a net gain of $11
million on $40 million of loans that were sold, settled, or
transferred to OREO. These loans continue to be carried at the
lower of cost or market, currently 26 cents of the original
balance. Consumer NPAs of $628 million, or 1.92 percent, decreased
$2 million from the first quarter of 2009. Of consumer NPAs, $548
million were in residential real estate portfolios. Residential
mortgage NPAs were $475 million, consistent with the previous
quarter, and home equity NPAs decreased $10 million to $73 million.
Residential real estate loans in Michigan and Florida represented
62 percent of total residential real estate NPAs and 35 percent of
total residential real estate loans. Nonaccrual troubled debt
restructurings were $188 million, compared with $167 million last
quarter. Excluding TDRs, consumer NPAs declined by $23 million from
the previous quarter. Second quarter OREO balances were $232
million compared with OREO balances of $227 million in the first
quarter of 2009, and included $115 million in residential mortgage
assets, $16 million in home equity assets, and $101 million in
commercial real estate assets. Repossessed personal property of $21
million largely consisted of autos. Loans still accruing over 90
days past due were $762 million, up $29 million from the first
quarter of 2009. Commercial 90 days past due balances increased 9
percent from the previous quarter. Consumer 90 days past due
balances were unchanged from the previous quarter. Capital Position
For the Three Months Ended -------------------------- June March
December September June 2009 2009 2008 2008 2008 ---- ---- ----
---- ---- Capital Position Average shareholders' equity to average
assets 10.78% 10.18% 8.65% 9.45% 8.59% Tangible equity (a) 9.72%
7.89% 7.86% 6.19% 6.37% Tangible common equity (excluding
unrealized gains/ losses) (a) 6.55% 4.23% 4.23% 5.23% 5.40%
Tangible common equity (including unrealized gains/ losses) (a)
6.67% 4.35% 4.31% 5.19% 5.28% Tangible common equity as a percent
of risk-weighted assets (excluding unrealized gains/losses) (a) (b)
6.96% 4.51% 4.39% 5.19% 5.21% Regulatory capital ratios: (c)
------------------------------ Tier I capital 12.90% 10.93% 10.59%
8.57% 8.51% Total risk-based capital 16.96% 15.13% 14.78% 12.30%
12.15% Tier I leverage 12.17% 10.29% 10.27% 8.77% 9.08% Tier I
common equity 7.00% 4.50% 4.37% 5.18% 5.18% Book value per share
12.71 13.61 13.57 16.65 16.75 Tangible book value per share (a)
9.51 8.79 8.74 10.10 10.16 (a) The tangible equity ratio, tangible
common equity ratios and tangible book value per share ratio, while
not required by accounting principles generally accepted in the
United States of America (GAAP), are considered to be critical
metrics with which to analyze banks. The ratios have been included
herein to facilitate a greater understanding of the Bancorp's
capital structure and financial condition. See the Regulation G
Non-GAAP Reconciliation table for a reconciliation of these ratios
to GAAP. (b) Under the banking agencies risk-based capital
guidelines, assets and credit equivalent amounts of derivatives and
off-balance sheet exposures are assigned to broad risk categories.
The aggregate dollar amount in each risk category is multiplied by
the associated risk weight of the category. The resulting weighted
values are added together resulting in the Bancorp's total risk
weighted assets. (c) Current period regulatory capital data ratios
are estimated. The Tier 1 common equity ratio increased 250 bps
from the previous quarter to 7.0 percent, and the tangible common
equity to risk weighted assets ratio increased 245 bps from the
previous quarter to 7.0 percent. The Tier 1 capital ratio increased
197 bps to 12.9 percent, and the total capital ratio increased 183
bps to 17.0 percent. The increase in capital ratios was related to
the benefit of the closing of the processing business joint venture
with Advent International, the $1.0 billion "at the market" common
equity offering, and the net effect of the exchange of common
shares and cash for outstanding preferred stock. These transactions
are described more fully below. Additionally, as described below,
subsequent to the end of the second quarter, Fifth Third sold Visa,
Inc. class B common shares in a transaction that resulted in a net
benefit of $206 million. On a pro forma basis, this gain is
expected to increase our capital ratios by approximately 19 bps.
Book value per share at June 30, 2009 was $12.71 and tangible book
value per share was $9.51, compared with March 31, 2009 book value
per share of $13.62 and tangible book value per share of $8.79. The
Visa transaction would increase both measures by approximately
$0.26 on a pro forma basis. Other Matters During the second quarter
of 2009, Fifth Third completed an "at the market" $1.0 billion
common equity offering in which Fifth Third issued 157,995,960
shares at an average price of $6.33 per share. In a tender offer
that expired June 17, 2009, Fifth Third offered to exchange shares
of its common stock and cash for any and all of its outstanding
Depository Shares each representing a 1/250th interest in a share
of 8.50 percent Non-Cumulative Perpetual Convertible Preferred
Stock, Series G. A total of 6,962,250 Depository Shares were
validly tendered, and overall, $696,225,000 liquidation amount of
Fifth Third's Depository Shares were exchanged, which represented
62.86 percent of the aggregate liquidation amount of its Depository
Shares. The transaction resulted in the issuance of approximately
60,121,124 shares of common stock and payment of $229,754,622 in
cash, including payment in lieu of fractional shares. Net income
available to common shareholders included a $35 million benefit,
recorded as a reduction to preferred dividend expense, reflecting
the carrying value of preferred shares relative to the fair value
of the common shares and cash exchanged through our tender offer
for Series G preferred stock. The benefit of this reduction in
preferred dividend expense is not included in earnings per diluted
share under the "if converted" method (discussed further below)
utilized for determining earnings per diluted share in the second
quarter. On June 30, 2009, Fifth Third and Advent International
announced the closing of their joint venture transaction for Fifth
Third's processing business. Advent International purchased an
approximate 51 percent interest in Fifth Third's merchant acquiring
and financial institutions businesses, most of the assets and
operations of which are held by a limited liability company ("the
LLC"). The transaction was valued at approximately $2.35 billion
before valuation adjustments by either party. Fifth Third retains
an approximate 49 percent interest in the LLC, and will also retain
its credit card issuing business, which includes retail credit card
and commercial multi-card services. Fifth Third recognized a
pre-tax gain of approximately $1.8 billion ($1.1 billion after-tax)
on the transaction. Common shares outstanding increased during the
quarter, reflecting the effect of shares issued during the quarter
through the "at-the-market" common share offering as well as the
common shares issued in the preferred stock exchange. Average basic
Common shares outstanding of 630 million increased 58 million
shares from the first quarter of 2009. This reflected the average
effect of the common shares issued - 47 million from the common
share issuance and 9 million from the exchange. Period end common
shares of 795 million increased 218 million shares - 158 million
shares in the common share offering and 60 million shares issued in
the preferred stock exchange - from the first quarter of 2009.
Average diluted common shares of 718 million shares increased 146
million shares from the first quarter of 2009. The increase
included the 58 million shares reflected in our basic common
shares. The reporting of results under the "if converted" method
resulted in a further increase in our diluted share count for the
quarter of 87 million shares, of which 51 million represented the
average effect prior to the exchange of common shares underlying
Series G preferred shares that were exchanged. The remaining 8
million shares underlying the Series G Preferred were included in
our average basic share count. In the future, these 51 million
shares will be reflected in average basic and diluted shares on a
full quarter basis. The remaining 36 million common shares included
in this quarter's average diluted share count continue to underlie
unexchanged Series G preferred shares. In previous quarters, these
shares were excluded from the diluted EPS calculation, as their
impact would have been anti-dilutive to EPS. Subsequent to the end
of the second quarter of 2009, Fifth Third sold its Visa, Inc.
class B common shares for a pre-tax benefit of $317 million or an
after-tax benefit of $206 million, which will be recognized in the
third quarter of 2009. These shares were carried on our books at a
value of zero. As a result, the transaction will benefit the Tier 1
Common capital ratio on a pro forma basis by approximately 19 basis
points. 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 by Thomson Financial and
may be accessed through the Fifth Third Investor Relations website
at http://www.53.com/ (click on "About Fifth Third" then "Investor
Relations"). The webcast also is being distributed over Thomson
Financial's Investor Distribution Network to both institutional and
individual investors. Individual investors can listen to the call
through Thomson Financial's individual investor center at
http://www.earnings.com/ or by visiting any of the investor sites
in Thomson Financial's Individual Investor Network. Institutional
investors can access the call via Thomson Financial's
password-protected event management site, StreetEvents
(http://www.streetevents.com/). Those unable to listen to the live
webcast may access a webcast replay or podcast through the Fifth
Third Investor Relations website at the same web address.
Additionally, a telephone replay of the conference call will be
available beginning approximately two hours after the conference
call until Thursday, August 6th by dialing 800-642-1687 for
domestic access and 706-645-9291 for international access (passcode
17561949#). Corporate Profile Fifth Third Bancorp is a diversified
financial services company headquartered in Cincinnati, Ohio. As of
June 30, 2009, the Company has $116 billion in assets, operates 16
affiliates with 1,306 full-service Banking Centers, including 99
Bank Mart locations open seven days a week inside select grocery
stores and 2,355 ATMs in Ohio, Kentucky, Indiana, Michigan,
Illinois, Florida, Tennessee, West Virginia, Pennsylvania,
Missouri, Georgia and North Carolina. Fifth Third operates four
main businesses: Commercial Banking, Branch Banking, Consumer
Lending, and Investment Advisors. Fifth Third also has a 49%
interest in Fifth Third Processing Solutions, LLC. Fifth Third is
among the largest money managers in the Midwest and, as of June 30,
2009, has $180 billion in assets under care, of which it managed
$24 billion for individuals, corporations and not-for-profit
organizations. Investor information and press releases can be
viewed at http://www.53.com/. Fifth Third's common stock is traded
on the NASDAQ National Global Select Market under the symbol
"FITB." Forward-Looking Statements This news 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. These statements relate to our financial
condition, results of operations, plans, objectives, future
performance 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," "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 and our most
recent quarterly report on Form 10-Q. When considering these
forward-looking statements, you should keep in mind these risks and
uncertainties, as well as any cautionary statements we may make.
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. 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)
general economic conditions and weakening in the economy,
specifically the real estate market, either nationally or in the
states in which Fifth Third, one or more acquired entities and/or
the combined company do business, are less favorable than expected;
(2) deteriorating credit quality; (3) political developments, wars
or other hostilities may disrupt or increase volatility in
securities markets or other economic conditions; (4) changes in the
interest rate environment reduce interest margins; (5) prepayment
speeds, loan origination and sale volumes, charge-offs and loan
loss provisions; (6) Fifth Third's ability to maintain required
capital levels and adequate sources of funding and liquidity; (7)
maintaining capital requirements may limit Fifth Third's operations
and potential growth; (8) changes and trends in capital markets;
(9) problems encountered by larger or similar financial
institutions may adversely affect the banking industry and/or Fifth
Third (10) competitive pressures among depository institutions
increase significantly; (11) effects of critical accounting
policies and judgments; (12) changes in accounting policies or
procedures as may be required by the Financial Accounting Standards
Board (FASB) or other regulatory agencies; (13) legislative or
regulatory changes or actions, or significant litigation, adversely
affect Fifth Third, one or more acquired entities and/or the
combined company or the businesses in which Fifth Third, one or
more acquired entities and/or the combined company are engaged;
(14) ability to maintain favorable ratings from rating agencies;
(15) fluctuation of Fifth Third's stock price; (16) ability to
attract and retain key personnel; (17) ability to receive dividends
from its subsidiaries; (18) potentially dilutive effect of future
acquisitions on current shareholders' ownership of Fifth Third;
(19) effects of accounting or financial results of one or more
acquired entities; (20) lower than expected gains related to any
sale or potential sale of businesses; (21) difficulties in
separating Fifth Third Processing Solutions from Fifth Third; (22)
loss of income from any sale or potential sale of businesses that
could have an adverse effect on Fifth Third's earnings and future
growth;(23) ability to secure confidential information through the
use of computer systems and telecommunications networks; and (24)
the impact of reputational risk created by these developments on
such matters as business generation and retention, funding and
liquidity. 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. DATASOURCE: Fifth
Third Bancorp CONTACT: Jim Eglseder (Investors), +1-513-534-8424,
Rich Rosen (Investors), +1-513-534-3307, or Debra DeCourcy, APR
(Media), +1-513-534-6957, all of Fifth Third Bancorp Web Site:
http://www.53.com/
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