UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 20, 2015

 

 

 

(Exact Name of Registrant as Specified in Its Charter)

 

 

OHIO

(State or Other Jurisdiction of Incorporation)

 

001-33653		31-0854434
(Commission File Number)		(IRS Employer Identification No.)

 

Fifth Third Center 38 Fountain Square Plaza, Cincinnati, Ohio		45263
(Address of Principal Executive Offices)		(Zip Code)

(800) 972-3030

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition

On October 20, 2015 Fifth Third Bancorp issued a press release and its quarterly financial supplement announcing its earnings release for the third quarter of 2015. A copy of this press release and its quarterly financial supplement are attached as Exhibits 99.1 and 99.3, respectively. This information is furnished under both Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure. The information in this Form 8-K and Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference.

 

Item 7.01

Regulation FD Disclosure

On October 20, 2015 Fifth Third Bancorp issued a press release and its quarterly financial supplement announcing its earnings release for the third quarter of 2015. A copy of this press release and its quarterly financial supplement are attached as Exhibits 99.1 and 99.3, respectively. This information is furnished under both Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure. The information in this Form 8-K and Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference.

For the benefit of its investors, Fifth Third Bancorp is furnishing information regarding its earnings conference call. A copy of this item is attached as Exhibit 99.2. The information in this Form 8-K and Exhibit attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference.

 

Item 9.01

Financial Statements and Exhibits

Exhibit 99.1 – Press release dated October 20, 2015

Exhibit 99.2 – Third Quarter Earnings Conference Call

Exhibit 99.3 – Quarterly Financial Supplement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				FIFTH THIRD BANCORP
				(Registrant)
October 20, 2015				/s/ Tayfun Tuzun
				Tayfun Tuzun
				Executive Vice President and Chief Financial Officer

Exhibit 99.1

 

				News Release
CONTACTS:		Jim Eglseder (Investors)		FOR IMMEDIATE RELEASE
		(513) 534-8424		October 20, 2015
		Larry Magnesen (Media)
		(513) 534-8055

FIFTH THIRD ANNOUNCES THIRD QUARTER 2015 NET INCOME TO COMMON SHAREHOLDERS OF $366 MILLION, OR $0.45 PER DILUTED SHARE

 

•

3Q15 net income available to common shareholders of $366 million, or $0.45 per diluted common share

 

•

Includes a $130 million pre-tax (~$84 million after tax) positive valuation adjustment on the warrant Fifth Third holds in Vantiv, $35 million pre-tax (~$23 million after tax) of provision expense related to the restructuring of a student loan backed commercial credit originally extended in 2007, a $9 million pre-tax (~$6 million after tax) charge associated with executive retirement and severance costs, and an $8 million pre-tax (~$5 million after tax) charge related to the valuation of the Visa total return swap, resulting in a net $0.06 impact on earnings per share

 

•

3Q15 return on average assets (ROA) of 1.07%; return on average common equity of 10.0%; return on average tangible common equity** of 12.0%

 

•

Pre-provision net revenue (PPNR)** of $671 million in 3Q15

 

•

Net interest income (FTE) of $906 million, up 2 percent sequentially and flat from 3Q14; net interest margin of 2.89%, down 1 bp sequentially

 

•

Average portfolio loans of $93.4 billion, up $1.2 billion sequentially and up $2.6 billion from 3Q14; both increases primarily driven by increases in C&I loans

 

•

Noninterest income of $713 million compared with $556 million in the prior quarter; impacted by valuations on the Vantiv warrant in both quarters, lower mortgage banking net revenue, and the impairment charge related to announced changes in the branch network in the prior quarter

 

•

Noninterest expense of $943 million, flat from prior quarter

 

•

Credit trends

 

•

3Q15 net charge-offs of $188 million (0.80% of loans and leases) increased from 2Q15 NCOs of $86 million (0.37% of loans and leases) due to the $102 million impact from the restructuring of a student loan backed commercial credit originally extended in 2007

 

•

Portfolio NPA ratio of 0.65% down 2 bps from 2Q15, NPL ratio of 0.49% down 2 bps from 2Q15; total nonperforming assets (NPAs) of $608 million, including loans held-for-sale (HFS), declined $19 million sequentially

 

•

3Q15 provision expense of $156 million; $79 million in 2Q15 and $71 million in 3Q14; increases driven by a $35 million expense related to the restructuring of a student loan backed commercial credit originally extended in 2007 in 3Q15 and broadening global economic slowdown and associated implications

 

•

Strong capital ratios*

 

•

Common equity Tier 1 (CET1) ratio 9.40%; fully phased-in CET1 ratio of 9.30%

 

•

Tier 1 risk-based capital ratio 10.49%, Total risk-based capital ratio 13.68%, Leverage ratio 9.38%

 

•

Tangible common equity ratio** of 8.65%; 8.32% excluding securities portfolio unrealized gains/losses

 

•

15 million reduction in common shares outstanding during the quarter

 

•

Book value per share of $18.22 up 3 percent from 2Q15 and up 8 percent from 3Q14; tangible book value per share** of $15.18

 

*	Capital ratios estimated; presented under current U.S. capital regulations.

**	Non-GAAP measure; see Reg. G reconciliation on page 33.

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Fifth Third Bancorp (Nasdaq: FITB) today reported third quarter 2015 net income of $381 million versus net income of $315 million in the second quarter of 2015 and $340 million in the third quarter of 2014. After preferred dividends, net income available to common shareholders was $366 million, or $0.45 per diluted share, in the third quarter of 2015, compared with $292 million, or $0.36 per diluted share, in the second quarter of 2015, and $328 million, or $0.39 per diluted share, in the third quarter of 2014.

Third quarter 2015 included:

Income

 

•

$130 million positive valuation adjustment on the Vantiv warrant

 

•

($8 million) charge related to the valuation of the Visa total return swap

Expense

 

•

($9 million) charge associated with executive retirement and severance costs

Results also included $35 million of provision expense related to the restructuring of a student loan backed commercial credit originally extended in 2007.

Second quarter 2015 included:

Income

 

•

$14 million positive valuation adjustment on the Vantiv warrant

 

•

($2 million) charge related to the valuation of the Visa total return swap

 

•

($97 million) non-cash impairment charge related to previously announced changes in the branch network

Third quarter 2014 included:

Income

 

•

($53 million) negative valuation adjustment on the Vantiv warrant

 

•

($3 million) charge related to the valuation of the Visa total return swap

 

2

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Earnings Highlights

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Earnings ($ in millions)
Net income attributable to Bancorp		$	381			$	315			$	361			$	385			$	340				21%				12%
Net income available to common shareholders		$	366			$	292			$	346			$	362			$	328				25%				12%
Common Share Data
Earnings per share, basic			0.46				0.36				0.42				0.44				0.39				28%				18%
Earnings per share, diluted			0.45				0.36				0.42				0.43				0.39				25%				15%
Cash dividends per common share			0.13				0.13				0.13				0.13				0.13				—				—
Financial Ratios
Return on average assets			1.07	%			0.90	%			1.06	%			1.13	%			1.02	%			19%				5%
Return on average common equity			10.0				8.1				9.7				10.0				9.2				23%				9%
Return on average tangible common equity(b)			12.0				9.7				11.7				12.1				11.1				25%				9%
CET1 capital(c)			9.40				9.42				9.52				N/A				N/A				—				N/A
Tier I risk-based capital(c)			10.49				10.51				10.62				10.83				10.83				—				N/A
Tier I common equity(b)			N/A				N/A				N/A				9.65				9.64				N/A				N/A
CET1 capital (fully-phased in)(b)(c)			9.30				9.31				9.41				N/A				N/A				—				N/A
Net interest margin(a)			2.89				2.90				2.86				2.96				3.10				—				(7%	)
Efficiency(a)			58.2				65.4				62.3				59.6				62.1				(11%	)			(6%	)
Common shares outstanding (in thousands)			795,439				810,054				815,190				824,047				834,262				(2%	)			(5%	)
Average common shares outstanding (in thousands):
Basic			795,793				803,965				810,210				819,057				829,392				(1%	)			(4%	)
Diluted			805,023				812,843				818,672				827,831				838,324				(1%	)			(4%	)

 

(a)	Presented on a fully taxable equivalent basis.

(b)	These 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 U.S. GAAP.

(c)

Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets used in the calculation of the tier I risk-based capital and common equity tier 1 ratios beginning January 1, 2015. Current period regulatory capital ratios are estimated.

NA: Not applicable.

“We had a very active quarter as we made progress in our strategic business executions to improve the future performance of our company,” said Greg D. Carmichael, President and CEO-elect of Fifth Third Bancorp. “During the quarter we executed the sale of 29 retail locations in Pittsburgh and St. Louis which are expected to close early next year, while the remaining branch consolidations continue on the planned track for completion by the middle of 2016. In the past few weeks, we also resolved three significant, long-standing matters with government agencies, as previously disclosed. In addition, during the quarter we added three seasoned, key executives to the executive team. I am confident that we have the experience and talent to achieve our goal to be the top performing bank across the full business cycle. Our focus is on building long-term value for our shareholders by growing profitable relationships with our retail and commercial clients as a trusted partner.

 

3

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“Our core businesses continue to produce solid results despite the uncertainties surrounding the domestic and global economic environment,” said Carmichael. “Current strategies reflect our focus on loan growth and revenue generation with an emphasis on maintaining a strong balance sheet that will perform well in a variety of economic environments. The business decisions and risk management actions this quarter and going forward will continue to reflect our fundamental goal to produce consistent, long-term outperformance in our sector. Our management team will maintain that discipline in all of our businesses.

“Net interest income was up 2 percent sequentially and flat from a year ago, supported by growth in our commercial business, particularly in C&I lending, which was up 1 percent sequentially and 4 percent from a year ago. Corporate banking revenues grew 4 percent from a year ago, driven by capital markets fee growth of 17%. Our balance sheet remains well-positioned with appropriate interest rate and liquidity risk positions for the current rate environment.

“As I begin my tenure as CEO, our 18,000-plus team members are focused on maintaining the historical core performance of the company and creating and sustaining the operational excellence necessary to perform well through the economic cycles.”

Income Statement Highlights

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Condensed Statements of Income ($ in millions)
Net interest income (taxable equivalent)		$	906			$	892			$	852			$	888			$	908				2	%			—
Provision for loan and lease losses			156				79				69				99				71				97	%			NM
Total noninterest income			713				556				630				653				520				28	%			37	%
Total noninterest expense			943				947				923				918				888				—				6	%
Income before income taxes (taxable equivalent)			520				422				490				524				469				23	%			11	%
Taxable equivalent adjustment			5				5				5				5				5				—				—
Applicable income taxes			134				108				124				134				124				24	%			8	%
Net income			381				309				361				385				340				23	%			12	%
Less: Net income attributable to noncontrolling interests			—				(6	)			—				—				—				(100	%)			—
Net income attributable to Bancorp			381				315				361				385				340				21	%			12	%
Dividends on preferred stock			15				23				15				23				12				(35	%)			25	%
Net income available to common shareholders			366				292				346				362				328				25	%			12	%
Earnings per share, diluted		$	0.45			$	0.36			$	0.42			$	0.43			$	0.39				25	%			15	%

 

4

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Net Interest Income

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Interest Income ($ in millions)
Total interest income (taxable equivalent)		$	1,031			$	1,008			$	975			$	1,016			$	1,023				2	%			1	%
Total interest expense			125				116				123				128				115				8	%			9	%
Net interest income (taxable equivalent)		$	906			$	892			$	852			$	888			$	908				2	%			—
Average Yield
Yield on interest-earning assets (taxable equivalent)			3.29	%			3.28	%			3.28	%			3.38	%			3.49	%			—				(6	%)
Rate paid on interest-bearing liabilities			0.58	%			0.56	%			0.60	%			0.61	%			0.56	%			4	%			4	%
Net interest rate spread (taxable equivalent)			2.71	%			2.72	%			2.68	%			2.77	%			2.93	%			—				(8	%)
Net interest margin (taxable equivalent)			2.89	%			2.90	%			2.86	%			2.96	%			3.10	%			—				(7	%)
Average Balances ($ in millions)
Loans and leases, including held for sale		$	94,329			$	92,739			$	91,659			$	91,581			$	91,428				2	%			3	%
Total securities and other short-term investments			30,102				30,563				29,038				27,604				24,927				(2	%)			21	%
Total interest-earning assets			124,431				123,302				120,697				119,185				116,355				1	%			7	%
Total interest-bearing liabilities			85,204				83,512				83,339				82,544				81,157				2	%			5	%
Bancorp shareholders’ equity			15,815				15,841				15,820				15,644				15,486				—				2	%

Net interest income increased $14 million to $906 million on a fully taxable equivalent basis from the second quarter, primarily driven by loan growth, partially offset by interest expense associated with the $1.1 billion of holding company debt and $1.3 billion of bank-level debt issued in the third quarter of 2015.

The net interest margin was 2.89 percent, a decrease of 1 bp from the previous quarter, primarily driven by the impact of debt issuances discussed above, day count, and loan yield compression, partially offset by the benefit of the slightly lower short-term cash position during the quarter.

Compared with the third quarter of 2014, net interest income decreased $2 million and the net interest margin decreased 21 bps. The decrease in net interest income was driven by a $24 million decline due to the changes to the Bancorp’s deposit advance product that were effective January 1, 2015, higher interest expense due to increased long-term debt balances, as well as continued loan repricing, partially offset by the impact of higher investment securities balances. The decline in the net interest margin from the prior year was primarily driven by an 8 basis point impact due to the changes to the deposit advance product and loan repricing.

Securities

Average securities and other short-term investments were $30.1 billion in the third quarter of 2015 compared with $30.6 billion in the previous quarter and $24.9 billion in the third quarter of 2014. Other short-term investments average balances of $1.8 billion decreased $1.4 billion sequentially reflecting lower cash balances held at the Federal Reserve. On an end of period basis, securities balances of $29.3 billion increased $816 million driven by purchases funded with cash balances at the Federal Reserve held in other short-term investments and the increase in the unrealized gain in the available-for-sale portfolio of $309 million.

 

5

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Loans

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Average Portfolio Loans and Leases ($ in millions)
Commercial:
Commercial and industrial loans		$	43,149			$	42,550			$	41,426			$	41,277			$	41,477				1	%			4	%
Commercial mortgage loans			7,023				7,148				7,241				7,480				7,633				(2	%)			(8	%)
Commercial construction loans			2,965				2,549				2,197				1,909				1,563				16	%			90	%
Commercial leases			3,846				3,776				3,715				3,600				3,571				2	%			8	%
Subtotal—commercial loans and leases			56,983				56,023				54,579				54,266				54,244				2	%			5	%
Consumer:
Residential mortgage loans			13,144				12,831				12,433				13,046				12,785				2	%			3	%
Home equity			8,479				8,654				8,802				8,937				9,009				(2	%)			(6	%)
Automobile loans			11,877				11,902				11,933				12,073				12,105				—				(2	%)
Credit card			2,277				2,296				2,321				2,324				2,295				(1	%)			(1	%)
Other consumer loans and leases			613				467				440				395				361				31	%			70	%
Subtotal—consumer loans and leases			36,390				36,150				35,929				36,775				36,555				1	%			—
Total average loans and leases (excluding held for sale)		$	93,373			$	92,173			$	90,508			$	91,041			$	90,799				1	%			3	%
Average loans held for sale			956				566				1,151				540				629				69	%			52	%

Average loan and lease balances (excluding loans held-for-sale) increased $1.2 billion, or 1 percent, sequentially and increased $2.6 billion, or 3 percent, from the third quarter of 2014. The sequential and prior year increases in average loans and leases were driven by increased commercial and industrial (C&I), commercial construction, and residential mortgage balances, partially offset by decreased home equity and commercial mortgage balances. Period end loans and leases (excluding loans held-for-sale) of $93.6 billion increased $871 million, or 1 percent, sequentially and increased $3.0 billion, or 3 percent, from a year ago.

Average commercial portfolio loan and lease balances increased $960 million, or 2 percent, sequentially and increased $2.7 billion, or 5 percent, from the third quarter of 2014. Average C&I loans increased $599 million, or 1 percent, from the prior quarter and increased $1.7 billion, or 4 percent, from the third quarter of 2014. Within commercial real estate, average commercial mortgage balances continued to decline and average commercial construction balances increased due to better customer activity and the continued focus on that business. Commercial line usage, on an end of period basis, was 32 percent of committed lines in the third quarter of 2015 compared with 33 percent in the second quarter of 2015 and 32 percent in the third quarter of 2014.

Average consumer portfolio loan and lease balances increased $240 million, or 1 percent, sequentially and were flat year-over-year. Average residential mortgage loans increased 2 percent sequentially and 3 percent from a year ago. Average auto loans were flat sequentially and down 2 percent from the previous year. Average home equity loans declined 2 percent sequentially and 6 percent from the third quarter of 2014. Average credit card loans decreased 1 percent sequentially and from the third quarter of 2014.

 

6

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Average loans held-for-sale balances of $956 million increased $390 million sequentially primarily due to loans associated with the announced sale of certain branches during the quarter, and increased $327 million compared with the third quarter of 2014.

Deposits

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Average Deposits ($ in millions)
Demand		$	35,231			$	35,384			$	33,760			$	33,301			$	31,790				—				11	%
Interest checking			25,590				26,894				26,885				25,478				24,926				(5	%)			3	%
Savings			14,868				15,156				15,174				15,173				15,759				(2	%)			(6	%)
Money market			18,253				18,071				17,492				17,023				15,222				1	%			20	%
Foreign office(a)			718				955				861				1,439				1,663				(25	%)			(57	%)
Subtotal—Transaction deposits			94,660				96,460				94,172				92,414				89,360				(2	%)			6	%
Other time			4,057				4,074				4,022				3,936				3,800				—				7	%
Subtotal—Core deposits			98,717				100,534				98,194				96,350				93,160				(2	%)			6	%
Certificates—$100,000 and over			2,924				2,558				2,683				2,998				3,339				14	%			(12	%)
Other			222				—				—				—				—				100	%			100	%
Total average deposits		$	101,863			$	103,092			$	100,877			$	99,348			$	96,499				(1	%)			6	%

 

(a)	Includes commercial customer Eurodollar sweep balances for which the Bancorp pays rates comparable to other commercial deposit accounts.

Average core deposits decreased $1.8 billion, or 2 percent, sequentially and increased $5.6 billion, or 6 percent, from the third quarter of 2014. Average transaction deposits decreased $1.8 billion, or 2 percent, from the second quarter of 2015 primarily driven by lower interest checking and savings account balances, partially offset by higher money market account balances. The lower interest checking balances were largely due to targeted pricing changes in certain accounts. Year-over-year transaction deposits increased $5.3 billion, or 6 percent, driven by higher demand deposit, money market account, and interest checking account balances, partially offset by lower foreign office and savings account balances. Other time deposits were flat sequentially and increased 7 percent compared with the third quarter of 2014.

Average commercial transaction deposits decreased 2 percent sequentially and increased 9 percent from the previous year. Sequential performance was primarily driven by declines in interest checking account balances due to targeted pricing changes in LCR punitive accounts, partially offset by higher money market account and demand deposit account balances. Year-over-year growth reflected higher demand deposit, money market account, and interest checking account balances, partially offset by lower foreign office balances.

Average consumer transaction deposits decreased 2 percent sequentially and increased 4 percent from the third quarter of 2014. The sequential performance reflected lower demand deposit, savings, and interest checking account balances as a result of targeted repricing of certain deposit accounts. Year-over-year growth was driven by increased money market account, demand deposit, and interest checking account balances, partially offset by lower savings account balances.

 

7

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Wholesale Funding

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Average Wholesale Funding ($ in millions)
Certificates—$100,000 and over		$	2,924			$	2,558			$	2,683			$	2,998			$	3,339				14%				(12%	)
Other deposits			222				—				—				—				—				100%				100%
Federal funds purchased			1,978				326				172				161				520				NM				NM
Other short-term borrowings			1,897				1,705				1,602				1,481				1,973				11%				(4%	)
Long-term debt			14,697				13,773				14,448				14,855				13,955				7%				5%
Total average wholesale funding		$	21,718			$	18,362			$	18,905			$	19,495			$	19,787				18%				10%

Average wholesale funding of $21.7 billion increased $3.4 billion, or 18 percent, sequentially, and increased $1.9 billion, or 10 percent, compared with the third quarter of 2014. The sequential increase was primarily driven by an increase in federal funds purchased, and the issuance of $1.1 billion of 5-year holding company debt and $1.3 billion of 3-year bank-level debt. Total wholesale funding was $23.5 billion on an end of period basis due to increased short-term borrowings in response to deposit runoff from targeted pricing changes in LCR punitive accounts and meeting quarter end cash targets. The year-over-year increase in average wholesale funding reflected an increase in long-term debt due to issuances during 2014 and 2015 and an increase in federal funds purchased, partially offset by decreases in certificates $100,000 and over and other short-term borrowings.

Noninterest Income

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Noninterest Income ($ in millions)
Service charges on deposits		$	145			$	139			$	135			$	142			$	145				4%				—
Corporate banking revenue			104				113				63				120				100				(8%	)			4%
Mortgage banking net revenue			71				117				86				61				61				(39%	)			16%
Investment advisory revenue			103				105				108				100				103				(2%	)			—
Card and processing revenue			77				77				71				76				75				—				3%
Other noninterest income			213				1				163				150				33				NM				NM
Securities gains, net			—				4				4				4				3				(100%	)			(100%	)
Total noninterest income		$	713			$	556			$	630			$	653			$	520				28%				37%

Noninterest income of $713 million increased $157 million sequentially and increased $193 million compared with prior year results. The sequential and year-over-year comparisons reflect the impacts described below.

 

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Noninterest Income excluding certain items

 

		For the Three Months Ended												% Change
		September 2015				June 2015				September 2014				Seq				Yr/Yr
Noninterest Income excluding certain items ($ in millions)
Noninterest income (U.S. GAAP)		$	713			$	556			$	520
Vantiv warrant valuation			(130	)			(14	)			53
Valuation of Visa total return swap			8				2				3
Branch / land valuation adjustments			—				97				—
Securities (gains) / losses			—				(4	)			(3	)
Noninterest income excluding certain items		$	591			$	637			$	573				(7%	)			3	%

Excluding the items in the table above, noninterest income of $591 million decreased $46 million, or 7 percent, from the previous quarter and increased $18 million, or 3 percent, from the third quarter of 2014. The sequential decline was primarily due to decreases in mortgage banking net revenue and corporate banking revenue. The year-over-year increase was primarily due to higher mortgage banking net revenue.

Service charges on deposits of $145 million increased 4 percent from the second quarter and were flat compared with the same quarter last year. The sequential increase was due to a 6 percent increase in retail service charges due to seasonally higher overdraft occurrences as well as a 4 percent increase in commercial service charges.

Corporate banking revenue of $104 million decreased $9 million from the second quarter of 2015 and increased $4 million from the third quarter of 2014. The sequential decrease was primarily due to seasonally lower institutional sales revenue, business lending fees, and foreign exchange fees, partially offset by higher interest rate derivative fees and syndications revenue. The year-over-year increase was driven by higher institutional sales revenue and loan syndications revenue, partially offset by lower foreign exchange fees.

Mortgage banking net revenue was $71 million in the third quarter of 2015, down $46 million from the second quarter of 2015 and up $10 million from the third quarter of 2014. Third quarter 2015 originations were $2.3 billion, compared with $2.5 billion in the previous quarter and $2.1 billion in the third quarter of 2014. Third quarter 2015 originations resulted in gains of $46 million on mortgages sold, compared with gains of $43 million during the previous quarter and $34 million during the third quarter of 2014. Mortgage servicing fees were $54 million this quarter, $56 million in the second quarter of 2015, and $61 million in the third quarter of 2014. Mortgage banking net revenue is also affected by net servicing asset valuation adjustments, which include mortgage servicing rights (MSR) amortization and MSR valuation adjustments (including mark-to-market adjustments on free-standing derivatives used to economically hedge the MSR portfolio). These net servicing asset valuation adjustments were negative $29 million in the third quarter of 2015 (reflecting MSR amortization of $37 million and MSR valuation adjustments of positive $8 million); positive $18 million in the second quarter of 2015 (MSR amortization of $39 million and MSR valuation adjustments of positive $57 million); and negative $34 million in the third quarter of 2014 (MSR amortization of $33 million and MSR valuation adjustments of negative $1 million). The mortgage servicing asset, net of the valuation reserve, was $757 million at quarter end on a servicing portfolio of $60 billion.

 

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Investment advisory revenue of $103 million decreased 2 percent from the second quarter and was flat year-over-year. The sequential decrease was due to lower securities and brokerage fees and personal asset management fees due to the market decline during the quarter.

Card and processing revenue of $77 million in the third quarter of 2015 was flat sequentially and increased 3 percent from the third quarter of 2014. The year-over-year increase reflects an increase in the number of actively used cards and an increase in customer spend volume.

Other noninterest income totaled $213 million in the third quarter of 2015, compared with $1 million in the previous quarter and $33 million in the third quarter of 2014. As previously described, the results included the adjustments in the prior table with the exception of securities gains in all comparable periods. Excluding these items, other noninterest income of $91 million increased approximately $5 million, or 6 percent, from the second quarter of 2015 and increased approximately $2 million, or 2 percent, from the third quarter of 2014.

Net gains on investment securities were immaterial in the third quarter of 2015, compared with $4 million in the previous quarter and $3 million in the third quarter of 2014.

Noninterest Expense

 

		For the Three Months Ended																				% Change
		September 2015				June 2015				March 2015				December 2014				September 2014				Seq				Yr/Yr
Noninterest Expense ($ in millions)
Salaries, wages and incentives		$	387			$	383			$	369			$	366			$	357				1	%			8	%
Employee benefits			72				78				99				79				75				(8	%)			(4	%)
Net occupancy expense			77				83				79				77				78				(7	%)			(1	%)
Technology and communications			56				54				55				54				53				4	%			6	%
Equipment expense			31				31				31				30				30				—				3	%
Card and processing expense			40				38				36				36				37				5	%			8	%
Other noninterest expense			280				280				254				276				258				—				9	%
Total noninterest expense		$	943			$	947			$	923			$	918			$	888				—				6	%

Noninterest expense of $943 million was flat compared with the second quarter of 2015 and increased 6 percent compared with the third quarter of 2014. The sequential comparison reflected lower benefits and occupancy expense, partially offset by higher compensation primarily associated with executive retirement and severance costs. The year-over-year increase reflected higher compensation expense, the change in provision for unfunded commitments and marketing expense.

 

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Credit Quality

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Total net losses charged-off ($ in millions)
Commercial and industrial loans		($	128	)		($	34	)		($	38	)		($	44	)		($	50	)
Commercial mortgage loans			(11	)			(11	)			(1	)			(10	)			(5	)
Commercial construction loans			(3	)			—				—				—				—
Commercial leases			—				—				—				(1	)			—
Residential mortgage loans			(3	)			(5	)			(6	)			(94	)			(9	)
Home equity			(9	)			(9	)			(14	)			(11	)			(14	)
Automobile loans			(7	)			(4	)			(8	)			(7	)			(7	)
Credit card			(21	)			(21	)			(21	)			(20	)			(23	)
Other consumer loans and leases			(6	)			(2	)			(3	)			(4	)			(7	)
Total net losses charged-off			(188	)			(86	)			(91	)			(191	)			(115	)
Total losses charged-off			(209	)			(112	)			(115	)			(215	)			(146	)
Total recoveries of losses previously charged-off			21				26				24				24				31
Total net losses charged-off		($	188	)		($	86	)		($	91	)		($	191	)		($	115	)
Ratios (annualized)
Net losses charged-off as a percent of average portfolio loans and leases (excluding held for sale)			0.80	%			0.37	%			0.41	%			0.83	%			0.50	%
Commercial			0.99	%			0.32	%			0.29	%			0.40	%			0.40	%
Consumer			0.51	%			0.46	%			0.59	%			1.47	%			0.66	%

Net charge-offs were $188 million, or 80 bps of average loans and leases on an annualized basis, in the third quarter of 2015 compared with net charge-offs of $86 million, or 37 bps, in the second quarter of 2015 and $115 million, or 50 bps, in the third quarter of 2014. The third quarter of 2015 net charge-offs included $102 million related to the restructuring of a student loan backed commercial credit originally extended in 2007, $80 million of which had been reserved for in prior quarters as the loan is collateral dependent with the related allowance for loan loss being measured based on the fair value of the underlying collateral. During the quarter, changing collateral performance characteristics and lower valuations for student loan portfolios resulted in the need to restructure the terms of the commercial loan. The resulting decline in the market values led to the actions taken as the reserves on this collateral-dependent loan are measured based on the fair value of the underlying student loan portfolio. Excluding this credit, net charge-offs were $86 million, or 37 bps, in the third quarter of 2015, flat with net charge-offs in the prior quarter.

Commercial net charge-offs were $142 million, or 99 bps, and were up $97 million sequentially. C&I net charge-offs of $128 million increased $94 million from the previous quarter primarily due to the student loan backed credit mentioned above, and commercial real estate net charge-offs increased $3 million from the previous quarter.

Consumer net charge-offs were $46 million, or 51 bps, up $5 million sequentially. Net charge-offs on residential mortgage loans in the portfolio were $3 million, down $2 million from the previous quarter. Home equity net charge-offs were $9 million, in line with the second quarter of 2015, and net charge-offs in the auto portfolio of $7 million were up $3 million compared with the prior quarter due to seasonality. Net charge-offs on consumer credit card loans were $21 million, in line with the second quarter. Net charge-offs on other consumer loans were $6 million, up $4 million compared with the previous quarter primarily due to seasonality.

 

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		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Allowance for Credit Losses ($ in millions)
Allowance for loan and lease losses, beginning		$	1,293			$	1,300			$	1,322			$	1,414			$	1,458
Total net losses charged-off			(188	)			(86	)			(91	)			(191	)			(115	)
Provision for loan and lease losses			156				79				69				99				71
Allowance for loan and lease losses, ending			1,261				1,293				1,300				1,322				1,414
Reserve for unfunded commitments, beginning			132				130				135				134				142
Provision (benefit) for unfunded commitments			2				2				(4	)			1				(8	)
Charge-offs			—				—				(1	)			—				—
Reserve for unfunded commitments, ending			134				132				130				135				134
Components of allowance for credit losses:
Allowance for loan and lease losses			1,261				1,293				1,300				1,322				1,414
Reserve for unfunded commitments			134				132				130				135				134
Total allowance for credit losses		$	1,395			$	1,425			$	1,430			$	1,457			$	1,548
Allowance for loan and lease losses ratio
As a percent of portfolio loans and leases			1.35	%			1.39	%			1.42	%			1.47	%			1.56	%
As a percent of nonperforming loans and leases(a)			275	%			272	%			247	%			228	%			228	%
As a percent of nonperforming assets(a)			208	%			206	%			188	%			178	%			178	%

 

(a)	Excludes nonaccrual loans and leases in loans held for sale.

Provision for loan and lease losses totaled $156 million in the third quarter of 2015. The allowance represented 1.35 percent of total portfolio loans and leases outstanding as of quarter end, compared with 1.39 percent last quarter, and represented 275 percent of nonperforming loans and leases, and 208 percent of nonperforming assets.

The provision increased $77 million from the second quarter of 2015 and increased $85 million from the third quarter of 2014. This quarter’s provision included a $35 million impact related to the aforementioned student loan backed commercial credit, and the remainder of the increase was primarily due to the broadening global economic slowdown, stress on capital markets, and the prolonged softness in commodity prices. The allowance for loan and lease losses decreased $32 million sequentially, including a $67 million reduction related to the aforementioned student loan backed credit.

 

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		As of
		September 2015				June 2015				March 2015				December 2014				September 2014
Nonperforming Assets and Delinquent Loans ($ in millions)
Nonaccrual portfolio loans and leases:
Commercial and industrial loans		$	47			$	61			$	61			$	86			$	102
Commercial mortgage loans			60				49				57				64				77
Commercial construction loans			—				—				—				—				2
Commercial leases			2				2				2				3				3
Residential mortgage loans			31				35				40				44				52
Home equity			65				70				71				72				69
Total nonaccrual portfolio loans and leases (excludes restructured loans)		$	205			$	217			$	231			$	269			$	305
Restructured loans—commercial (nonaccrual)(c)			177				175				205				214				201
Restructured loans—consumer (nonaccrual)			76				83				90				96				114
Total nonaccrual portfolio loans and leases		$	458			$	475			$	526			$	579			$	620
Repossessed personal property			17				16				20				18				19
OREO(a)			131				135				145				147				157
Total nonperforming assets(b)		$	606			$	626			$	691			$	744			$	796
Nonaccrual loans held for sale			1				1				2				24				4
Restructured loans—(nonaccrual) held for sale			1				—				—				15				3
Total nonperforming assets including loans held for sale		$	608			$	627			$	693			$	783			$	803
Restructured Consumer loans and leases (accrual)		$	973			$	970			$	943			$	905			$	1,610
Restructured Commercial loans and leases (accrual)(c)		$	571			$	769			$	774			$	844			$	885
Total loans and leases 90 days past due		$	70			$	70			$	78			$	87			$	87
Nonperforming loans and leases as a percent of portfolio loans, leases and other assets, including OREO(b)			0.49	%			0.51	%			0.57	%			0.64	%			0.68	%
Nonperforming assets as a percent of portfolio loans, leases and other assets, including OREO(b)			0.65	%			0.67	%			0.76	%			0.82	%			0.88	%

 

(a)

Excludes OREO related to government insured loans. The Bancorp has historically excluded government guaranteed loans classified in OREO from its nonperforming asset disclosures. Upon the prospective adoption on January 1, 2015 of ASU 2014-14 “Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure,” government guaranteed loans meeting certain criteria will be reclassified to other receivables rather than OREO upon foreclosure.

(b)	Does not include nonaccrual loans held for sale.

(c)	Excludes $21 million of restructured nonaccrual loans and $7 million of restructured accruing loans as of September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014.

Total nonperforming assets, including loans held-for-sale, declined $19 million, or 3 percent, from the previous quarter to $608 million. Nonperforming loans (NPLs) at quarter-end decreased $17 million, or 4 percent, from the previous quarter to $458 million or 0.49 percent of total loans, leases and OREO.

Commercial NPAs decreased $6 million, or 2 percent, from the second quarter to $370 million, or 0.65 percent of commercial loans, leases and OREO. Commercial NPLs decreased $1 million from last quarter to $286 million, or 0.50 percent of commercial loans and leases. C&I NPAs decreased $10 million from the prior quarter to $183 million. Commercial mortgage NPAs decreased $1 million from the previous quarter to $165 million. Commercial construction NPAs increased $5 million from the previous quarter to $19 million. Commercial lease NPAs were $3 million, flat from the previous quarter. Commercial NPAs included $177 million of nonaccrual troubled debt restructurings (TDRs), compared with $175 million last quarter.

 

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Consumer NPAs decreased $14 million from the second quarter to $236 million, or 0.64 percent of consumer loans, leases and OREO. Consumer NPLs decreased $16 million from last quarter to $172 million, or 0.47 percent of consumer loans and leases. Residential mortgage NPAs decreased $10 million from the second quarter to $91 million. Home equity NPAs decreased $3 million, sequentially, to $103 million and credit card NPAs were down $3 million compared with the previous quarter to $33 million. Consumer nonaccrual TDRs were $76 million in the third quarter of 2015, compared with $83 million in the second quarter of 2015.

Third quarter OREO balances included in NPA balances were down $4 million from the second quarter to $131 million, and included $74 million in commercial OREO and $57 million in consumer OREO. Repossessed personal property increased $1 million from the prior quarter to $17 million.

Loans over 90 days past due and still accruing were flat from the second quarter of 2015 to $70 million. Commercial balances over 90 days past due were $5 million compared with $2 million in the prior quarter, and consumer balances 90 days past due decreased $3 million from the previous quarter to $65 million. Loans 30-89 days past due of $214 million were up $1 million from the previous quarter. Commercial balances 30-89 days past due increased $1 million sequentially to $25 million and consumer balances 30-89 days past due were flat from the second quarter at $189 million. The above delinquencies figures exclude nonaccruals described previously.

 

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Capital Position

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Capital Position
Average total Bancorp shareholders’ equity to average assets			11.24	%			11.32	%			11.49	%			11.54	%			11.71	%
Tangible equity(a)			9.28	%			9.28	%			9.37	%			9.41	%			9.65	%
Tangible common equity (excluding unrealized gains/losses)(a)			8.32	%			8.33	%			8.40	%			8.43	%			8.64	%
Tangible common equity (including unrealized gains/losses)(a)			8.65	%			8.51	%			8.77	%			8.71	%			8.84	%
Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses)			9.38	%(b)			9.39	%(b)			9.49	%(d)			9.70	%(d)			9.70	%(d)
		Basel III Transitional(c)												Basel I(d)
Regulatory capital ratios:
CET1 capital			9.40	%(b)			9.42	%(b)			9.52	%(b)			N/A				N/A
Tier I risk-based capital			10.49	%(b)			10.51	%(b)			10.62	%(b)			10.83	%			10.83	%
Total risk-based capital			13.68	%(b)			13.69	%(b)			14.01	%(b)			14.33	%			14.34	%
Tier I leverage			9.38	%			9.44	%			9.59	%			9.66	%			9.82	%
Tier I common equity			N/A				N/A				N/A				9.65	%(a)			9.64	%(a)
CET1 capital (fully phased-in)			9.30	(a)(b)			9.31	(a)(b)			9.41	(a)(b)			N/A				N/A
Book value per share			18.22				17.62				17.83				17.35				16.87
Tangible book value per share(a)			15.18				14.62				14.85				14.40				13.95

 

(a)	These 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 U.S. GAAP.

(b)	Under the banking agencies Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets.

(c)	Current period regulatory capital ratios are estimated.

(d)	These capital ratios were calculated under the Supervisory Agencies general risk-based capital rules (Basel I) which was in effect prior to January 1, 2015.

Capital ratios remained strong during the quarter. The common equity Tier 1 ratio was 9.40 percent, the tangible common equity to tangible assets ratio* was 8.32 percent (excluding unrealized gains/losses), and 8.65 percent (including unrealized gains/losses). The Tier 1 risk-based capital ratio was 10.49 percent, the total risk-based capital ratio was 13.68 percent, and the Leverage ratio was 9.38 percent.

 

*	Non-GAAP measure; see Reg. G reconciliation on page 33.

 

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Book value per share at September 30, 2015 was $18.22 and tangible book value per share* was $15.18, compared with the June 30, 2015 book value per share of $17.62 and tangible book value per share* of $14.62.

Fifth Third entered into and completed multiple share repurchases during the quarter. Below is a summary of those share repurchases.

 

•

On July 31, 2015, Fifth Third settled the forward contracted related to the April 27, 2015 $155 million share repurchase agreement. An additional 0.84 million shares were repurchased upon completion of the agreement.

 

•

On July 29, 2015, Fifth Third entered into a share repurchase agreement whereby Fifth Third would purchase approximately $150 million of its outstanding stock. This reduced the third quarter share count by 6.0 million shares.

 

•

On August 31, 2015, Fifth Third settled the forward contracted related to the July 29, 2015 $150 million share repurchase agreement. An additional 1.35 million shares were repurchased upon completion of the agreement.

 

•

On September 3, 2015, Fifth Third entered into a share repurchase agreement whereby Fifth Third would purchase approximately $150 million of its outstanding stock. This reduced the third quarter share count by 6.54 million shares. Settlement of the forward contract related to this agreement is expected to occur on or before December 4, 2015.

In total, common shares outstanding decreased by approximately 15 million shares in the third quarter of 2015 from the second quarter of 2015.

Tax Rate

The effective tax rate was 26.0 percent this quarter compared with 26.1 percent in the second quarter of 2015 and 26.7 percent in the third quarter of 2014.

Other

Fifth Third Bank owns 43 million units representing a 22.8 percent interest in Vantiv Holding, LLC, convertible into shares of Vantiv, Inc., a publicly traded firm (NYSE: VNTV). Based upon Vantiv’s closing price of $44.92 on September 30, 2015, our interest in Vantiv was valued at approximately $1.9 billion. Next month in our 10-Q, we will update our disclosure of the carrying value of our interest in Vantiv stock, which was $415 million as of June 30, 2015. The difference between the market value and the book value of Fifth Third’s interest in Vantiv’s shares is not recognized in Fifth Third’s equity or capital. Additionally, Fifth Third has a warrant to purchase additional shares in Vantiv which is carried as a derivative asset at a fair value of $630 million as of September 30, 2015.

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 www.53.com (click on “About Fifth Third” then “Investor Relations”). Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).

 

*	Non-GAAP measure; see Reg. G reconciliation on page 33.

 

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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. Additionally, a telephone replay of the conference call will be available beginning approximately two hours after the conference call until Tuesday, November 3, 2015 by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 44604046#).

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of September 30, 2015, the Company had $142 billion in assets and operates 1,295 full-service Banking Centers, including 99 Bank Mart^® locations, most open seven days a week, inside select grocery stores and 2,650 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 22.8% interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of September 30, 2015, had $297 billion in assets under care, of which it managed $25 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ^® Global Select Market under the symbol “FITB.”

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. 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,” “anticipates,” “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 from time to time by our Quarterly Reports 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 is a risk that additional information may arise during the company’s close process or as a result of subsequent events that would require the company to make adjustments to the financial information contained herein.

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 and adequate sources of funding and liquidity 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, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; (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) difficulties from Fifth Third’s investment in, relationship with, and nature of the operations of Vantiv, LLC; (21) 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; (22) difficulties in separating the operations of any branches or other assets divested; (23) inability to achieve expected benefits from branch consolidations and planned sales within desired timeframes, if at all; (24) ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; and (25) 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.

# # #

 

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Quarterly Financial Review for September 30, 2015

Table of Contents

 

Financial Highlights			19-20
Consolidated Statements of Income			21
Consolidated Statements of Income (Taxable Equivalent)			22
Consolidated Balance Sheets			23-24
Consolidated Statements of Changes in Equity			25
Average Balance Sheet and Yield Analysis			26-28
Summary of Loans and Leases			29
Regulatory Capital			30
Summary of Credit Loss Experience			31
Asset Quality			32
Regulation G Non-GAAP Reconciliation			33
Segment Presentation			34

 

18

---

Fifth Third Bancorp and Subsidiaries

Financial Highlights

$ in millions, except per share data

(unaudited)

 

		For the Three Months Ended												% Change								Year to Date								% Change
		September 2015				June 2015				September 2014				Seq				Yr/Yr				September 2015				September 2014				Yr/Yr
Income Statement Data
Net interest income(a)		$	906			$	892			$	908				2	%			—			$	2,650			$	2,712				(2	%)
Noninterest income			713				556				520				28	%			37	%			1,900				1,820				4	%
Total revenue(a)			1,619				1,448				1,428				12	%			13	%			4,550				4,532				—
Provision for loan and lease losses			156				79				71				97	%			NM				305				216				41	%
Noninterest expense			943				947				888				—				6	%			2,814				2,792				1	%
Net income attributable to Bancorp			381				315				340				21	%			12	%			1,056				1,096				(4	%)
Net income available to common shareholders			366				292				328				25	%			12	%			1,004				1,052				(5	%)
Common Share Data
Earnings per share, basic		$	0.46			$	0.36			$	0.39				28	%			18	%		$	1.24			$	1.25				(1	%)
Earnings per share, diluted			0.45				0.36				0.39				25	%			15	%			1.22				1.23				(1	%)
Cash dividends per common share			0.13				0.13				0.13				—				—				0.39				0.38				3	%
Book value per share			18.22				17.62				16.87				3	%			8	%			18.22				16.87				8	%
Market price per share			18.91				20.82				20.02				(9	%)			(6	%)			18.91				20.02				(6	%)
Common shares outstanding (in thousands)			795,439				810,054				834,262				(2	%)			(5	%)			795,439				834,262				(5	%)
Average common shares outstanding (in thousands):
Basic			795,793				803,965				829,392				(1	%)			(4	%)			803,270				837,854				(4	%)
Diluted			805,023				812,843				838,324				(1	%)			(4	%)			812,099				848,068				(4	%)
Market capitalization		$	15,042			$	16,865			$	16,702				(11	%)			(10	%)		$	15,042			$	16,702				(10	%)
Financial Ratios
Return on average assets			1.07	%			0.90	%			1.02	%			19	%			5	%			1.01	%			1.12	%			(10	%)
Return on average common equity			10.0	%			8.1	%			9.2	%			23	%			9	%			9.3	%			10.0	%			(7	%)
Return on average tangible common equity(b)(d)(j)			12.0	%			9.7	%			11.1	%			25	%			9	%			11.1	%			12.2	%			(9	%)
Noninterest income as a percent of total revenue			44	%			38	%			36	%			16	%			22	%			42	%			40	%			5	%
Dividend payout ratio			28.3	%			36.1	%			33.3	%			(22	%)			(15	%)			31.5	%			30.4	%			4	%
Average total Bancorp shareholders’ equity as a percent of average assets			11.24	%			11.32	%			11.71	%			(1	%)			(4	%)			11.35	%			11.61	%			(2	%)
Tangible common equity(c)(d)(j)			8.32	%			8.33	%			8.64	%			—				(4	%)			8.32	%			8.64	%			(4	%)
Net interest margin(a)			2.89	%			2.90	%			3.10	%			—				(7	%)			2.88	%			3.16	%			(9	%)
Efficiency(a)			58.2	%			65.4	%			62.1	%			(11	%)			(6	%)			61.8	%			61.6	%			—
Effective tax rate			26.0	%			26.1	%			26.7	%			—				(3	%)			25.9	%			27.2	%			(5	%)
Credit Quality
Net losses charged-off		$	188			$	86			$	115				NM				63	%		$	366			$	384				(5	%)
Net losses charged-off as a percent of average portfolio loans and leases			0.80	%			0.37	%			0.50	%			NM				60	%			0.53	%			0.57	%			(7	%)
ALLL as a percent of portfolio loans and leases			1.35	%			1.39	%			1.56	%			(3	%)			(13	%)			1.35	%			1.56	%			(13	%)
Allowance for credit losses as a percent of portfolio loans and leases			1.49	%			1.54	%			1.71	%			(3	%)			(13	%)			1.49	%			1.71	%			(13	%)
Nonperforming assets as a percent of portfolio loans, leases and other assets, including OREO(e)			0.65	%			0.67	%			0.88	%			(3	%)			(26	%)			0.65	%			0.88	%			(26	%)
Average Balances
Loans and leases, including held for sale		$	94,329			$	92,739			$	91,428				2	%			3	%		$	92,919			$	90,973				2	%
Total securities and other short-term investments			30,102				30,563				24,927				(2	%)			21	%			29,905				23,944				25	%
Total assets			140,739				139,992				132,220				1	%			6	%			139,472				130,717				7	%
Transaction deposits(f)			94,660				96,460				89,360				(2	%)			6	%			95,100				88,807				7	%
Core deposits(g)			98,717				100,534				93,160				(2	%)			6	%			99,151				92,511				7	%
Wholesale funding(h)			21,718				18,362				19,787				18	%			10	%			19,672				19,084				3	%
Bancorp shareholders’ equity			15,815				15,841				15,486				—				2	%			15,826				15,170				4	%
Regulatory Capital Ratios(i)		Basel III Transitional								Basel I(l)												Basel III Transitional				Basel I(l)
CET1 capital(k)			9.40	%			9.42	%			N/A				—				N/A				9.40	%			N/A				N/A
Tier I risk-based capital			10.49	%			10.51	%			10.83	%			—				N/A				10.49	%			10.83	%			N/A
Total risk-based capital			13.68	%			13.69	%			14.34	%			—				N/A				13.68	%			14.34	%			N/A
Tier I leverage			9.38	%			9.44	%			9.82	%			(1	%)			N/A				9.38	%			9.82	%			N/A
Tier I common equity(d)(j)			N/A				N/A				9.64	%			N/A				N/A				N/A				9.64	%			N/A
CET1 capital (fully phased-in)(k)			9.30	%			9.31	%			N/A				—				N/A				9.30	%			N/A				N/A
Operations
Banking centers			1,295				1,299				1,308				—				(1	%)			1,295				1,308				(1	%)
ATMs			2,650				2,630				2,639				1	%			—				2,650				2,639				—
Full-time equivalent employees			18,311				18,527				18,503				(1	%)			(1	%)			18,311				18,503				(1	%)

 

(a)	Presented on a fully taxable equivalent basis.

(b)	The return on average tangible common equity is calculated as tangible net income available to common shareholders excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets).

(c)	The tangible common equity ratio is calculated as tangible common equity (shareholders’ equity less preferred stock, goodwill, intangible assets and accumulated other comprehensive income divided by tangible assets (total assets less goodwill, intangible assets and AOCI).

(d)	These ratios have been included herein to facilitate a greater understanding of the Bancorp’s capital structure and financial condition. Non-GAAP measure; see Reg. G reconciliation on page 33.

(e)	Excludes nonaccrual loans held for sale.

(f)	Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.

(g)	Includes transaction deposits plus other time deposits.

(h)	Includes certificates $100,000 and over, other deposits, federal funds purchased, short-term borrowings and long-term debt.

(i)	Current period regulatory capital ratios are estimates.

(j)	Non-GAAP measure; see Reg. G reconciliation on page 33.

(k)	Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets.

(l)	These capital ratios were calculated under the Supervisory Agencies general risk-based capital rules (Basel I) which were in effect prior to January 1, 2015.

 

19

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Fifth Third Bancorp and Subsidiaries

Financial Highlights

$ in millions, except per share data

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Income Statement Data
Net interest income(a)		$	906			$	892			$	852			$	888			$	908
Noninterest income			713				556				630				653				520
Total revenue(a)			1,619				1,448				1,482				1,541				1,428
Provision for loan and lease losses			156				79				69				99				71
Noninterest expense			943				947				923				918				888
Net income attributable to Bancorp			381				315				361				385				340
Net income available to common shareholders			366				292				346				362				328
Common Share Data
Earnings per share, basic		$	0.46			$	0.36			$	0.42			$	0.44			$	0.39
Earnings per share, diluted			0.45				0.36				0.42				0.43				0.39
Cash dividends per common share			0.13				0.13				0.13				0.13				0.13
Book value per share			18.22				17.62				17.83				17.35				16.87
Market price per share			18.91				20.82				18.85				20.38				20.02
Common shares outstanding (in thousands)			795,439				810,054				815,190				824,047				834,262
Average common shares outstanding (in thousands):
Basic			795,793				803,965				810,210				819,057				829,392
Diluted			805,023				812,843				818,672				827,831				838,324
Market capitalization		$	15,042			$	16,865			$	15,366			$	16,790			$	16,702
Financial Ratios
Return on average assets			1.07	%			0.90	%			1.06	%			1.13	%			1.02	%
Return on average common equity			10.0	%			8.1	%			9.7	%			10.0	%			9.2	%
Return on average tangible common equity(b)(d)(j)			12.0	%			9.7	%			11.7	%			12.1	%			11.1	%
Noninterest income as a percent of total revenue			44	%			38	%			43	%			42	%			36	%
Dividend payout ratio			28.3	%			36.1	%			31.0	%			29.5	%			33.3	%
Average total Bancorp shareholders’ equity as a percent of average assets			11.24	%			11.32	%			11.49	%			11.54	%			11.71	%
Tangible common equity(c)(d)(j)			8.32	%			8.33	%			8.40	%			8.43	%			8.64	%
Net interest margin(a)			2.89	%			2.90	%			2.86	%			2.96	%			3.10	%
Efficiency(a)			58.2	%			65.4	%			62.3	%			59.6	%			62.1	%
Effective tax rate			26.0	%			26.1	%			25.6	%			25.9	%			26.7	%
Credit Quality
Net losses charged-off		$	188			$	86			$	91			$	191			$	115
Net losses charged-off as a percent of average portfolio loans and leases			0.80	%			0.37	%			0.41	%			0.83	%			0.50	%
ALLL as a percent of portfolio loans and leases			1.35	%			1.39	%			1.42	%			1.47	%			1.56	%
Allowance for credit losses as a percent of portfolio loans and leases			1.49	%			1.54	%			1.57	%			1.62	%			1.71	%
Nonperforming assets as a percent of portfolio loans, leases and other assets, including OREO(e)			0.65	%			0.67	%			0.76	%			0.82	%			0.88	%
Average Balances
Loans and leases, including held for sale		$	94,329			$	92,739			$	91,659			$	91,581			$	91,428
Total securities and other short-term investments			30,102				30,563				29,038				27,604				24,927
Total assets			140,739				139,992				137,651				135,580				132,220
Transaction deposits(f)			94,660				96,460				94,172				92,414				89,360
Core deposits(g)			98,717				100,534				98,194				96,350				93,160
Wholesale funding(h)			21,718				18,362				18,905				19,495				19,787
Bancorp shareholders’ equity			15,815				15,841				15,820				15,644				15,486
Regulatory Capital Ratios(i)		Basel III Transitional												Basel I(l)
CET1 capital(k)			9.40	%			9.42	%			9.52	%			N/A				N/A
Tier I risk-based capital			10.49	%			10.51	%			10.62	%			10.83	%			10.83	%
Total risk-based capital			13.68	%			13.69	%			14.01	%			14.33	%			14.34	%
Tier I leverage			9.38	%			9.44	%			9.59	%			9.66	%			9.82	%
Tier I common equity(d)(j)			N/A				N/A				N/A				9.65	%			9.64	%
CET1 capital (fully phased-in)(k)			9.30	%			9.31	%			9.41	%			N/A				N/A
Operations
Banking centers			1,295				1,299				1,303				1,302				1,308
ATMs			2,650				2,630				2,637				2,638				2,639
Full-time equivalent employees			18,311				18,527				18,471				18,351				18,503

 

(a)	Presented on a fully taxable equivalent basis.

(b)	The return on average tangible common equity is calculated as tangible net income available to common shareholders excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets).

(c)	The tangible common equity ratio is calculated as tangible common equity (shareholders’ equity less preferred stock, goodwill, intangible assets and accumulated other comprehensive income divided by tangible assets (total assets less goodwill, intangible assets and AOCI).

(d)	The ratios have been included herein to facilitate a greater understanding of the Bancorp’s capital structure and financial condition. Non-GAAP measure; see Reg. G reconciliation on page 33.

(e)	Excludes nonaccrual loans held for sale.

(f)	Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.

(g)	Includes transaction deposits plus other time deposits.

(h)	Includes certificates $100,000 and over, other deposits, federal funds purchased, short-term borrowings and long-term debt.

(i)	Current period regulatory capital ratios are estimates.

(j)	Non-GAAP measure; see Reg. G reconciliation on page 33.

(k)	Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets.

(l)	These capital ratios were calculated under the Supervisory Agencies general risk-based capital rules (Basel I) which were in effect prior to January 1, 2015.

 

20

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Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Income

$ in millions

(unaudited)

 

		For the Three Months Ended												% Change								Year to Date								% Change
		September 2015				June 2015				September 2014				Seq				Yr/Yr				September 2015				September 2014				Yr/Yr
Interest Income
Interest and fees on loans and leases		$	795			$	782			$	827				2	%			(4	%)		$	2,355			$	2,477				(5	%)
Interest on securities			230				219				189				5	%			22	%			637				538				18	%
Interest on other short-term investments			1				2				2				(50	%)			(50	%)			7				5				40	%
Total interest income			1,026				1,003				1,018				2	%			1	%			2,999				3,020				(1	%)
Interest Expense
Interest on deposits			44				46				51				(4	%)			(14	%)			140				147				(5	%)
Interest on other short-term borrowings			1				1				1				—				—				2				2				—
Interest on long-term debt			80				69				63				16	%			27	%			221				174				27	%
Total interest expense			125				116				115				8	%			9	%			363				323				12	%
Net Interest Income			901				887				903				2	%			—				2,636				2,697				(2	%)
Provision for loan and lease losses			156				79				71				97	%			NM				305				216				41	%
Net Interest Income After Provision for Loan and Lease Losses			745				808				832				(8	%)			(10	%)			2,331				2,481				(6	%)
Noninterest Income
Service charges on deposits			145				139				145				4	%			—				419				418				—
Corporate banking revenue			104				113				100				(8	%)			4	%			280				311				(10	%)
Mortgage banking net revenue			71				117				61				(39	%)			16	%			274				248				10	%
Investment advisory revenue			103				105				103				(2	%)			—				315				307				3	%
Card and processing revenue			77				77				75				—				3	%			225				218				3	%
Other noninterest income			213				1				33				NM				NM				378				300				26	%
Securities gains, net			—				4				3				(100	%)			(100	%)			9				18				(50	%)
Total noninterest income			713				556				520				28	%			37	%			1,900				1,820				4	%
Noninterest Expense
Salaries, wages and incentives			387				383				357				1	%			8	%			1,139				1,083				5	%
Employee benefits			72				78				75				(8	%)			(4	%)			248				255				(3	%)
Net occupancy expense			77				83				78				(7	%)			(1	%)			238				236				1	%
Technology and communications			56				54				53				4	%			6	%			165				158				4	%
Equipment expense			31				31				30				—				3	%			92				90				2	%
Card and processing expense			40				38				37				5	%			8	%			114				104				10	%
Other noninterest expense			280				280				258				—				9	%			818				866				(6	%)
Total noninterest expense			943				947				888				—				6	%			2,814				2,792				1	%
Income Before Income Taxes			515				417				464				24	%			11	%			1,417				1,509				(6	%)
Applicable income tax expense			134				108				124				24	%			8%				367				411				(11	%)
Net Income			381				309				340				23	%			12	%			1,050				1,098				(4	%)
Less: Net income attributable to noncontrolling interests			—				(6	)			—				(100	%)			—				(6	)			2				NM
Net Income Attributable to Bancorp			381				315				340				21	%			12	%			1,056				1,096				(4	%)
Dividends on preferred stock			15				23				12				(35	%)			25	%			52				44				18	%
Net Income Available to Common Shareholders		$	366			$	292			$	328				25	%			12	%		$	1,004			$	1,052				(5	%)

 

21

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Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Income (Taxable Equivalent)

$ in millions

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Interest Income
Interest and fees on loans and leases		$	795			$	782			$	778			$	823			$	827
Interest on securities			230				219				188				185				189
Interest on other short-term investments			1				2				4				3				2
Total interest income			1,026				1,003				970				1,011				1,018
Taxable equivalent adjustment			5				5				5				5				5
Total interest income (taxable equivalent)			1,031				1,008				975				1,016				1,023
Interest Expense
Interest on deposits			44				46				50				54				51
Interest on other short-term borrowings			1				1				—				—				1
Interest on long-term debt			80				69				73				74				63
Total interest expense			125				116				123				128				115
Net Interest Income (Taxable Equivalent)			906				892				852				888				908
Provision for loan and lease losses			156				79				69				99				71
Net Interest Income (Taxable Equivalent) After Provision for Loan and Lease Losses			750				813				783				789				837
Noninterest Income
Service charges on deposits			145				139				135				142				145
Corporate banking revenue			104				113				63				120				100
Mortgage banking net revenue			71				117				86				61				61
Investment advisory revenue			103				105				108				100				103
Card and processing revenue			77				77				71				76				75
Other noninterest income			213				1				163				150				33
Securities gains, net			—				4				4				4				3
Total noninterest income			713				556				630				653				520
Noninterest Expense
Salaries, wages and incentives			387				383				369				366				357
Employee benefits			72				78				99				79				75
Net occupancy expense			77				83				79				77				78
Technology and communications			56				54				55				54				53
Equipment expense			31				31				31				30				30
Card and processing expense			40				38				36				36				37
Other noninterest expense			280				280				254				276				258
Total noninterest expense			943				947				923				918				888
Income Before Income Taxes (Taxable Equivalent)			520				422				490				524				469
Taxable equivalent adjustment			5				5				5				5				5
Income Before Income Taxes			515				417				485				519				464
Applicable income tax expense			134				108				124				134				124
Net Income			381				309				361				385				340
Less: Net Income attributable to noncontrolling interests			—				(6	)			—				—				—
Net Income Attributable to Bancorp			381				315				361				385				340
Dividends on preferred stock			15				23				15				23				12
Net Income Available to Common Shareholders		$	366			$	292			$	346			$	362			$	328

 

22

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Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)

 

		As of												% Change
		September 2015				June 2015				September 2014				Seq				Yr/Yr
Assets
Cash and due from banks		$	2,455			$	2,785			$	3,125				(12	%)			(21	%)
Available-for-sale and other securities(a)			28,799				27,987				22,912				3	%			26	%
Held-to-maturity securities(b)			157				157				191				—				(18	%)
Trading securities			374				370				389				1	%			(4	%)
Other short-term investments			1,994				3,451				3,637				(42	%)			(45	%)
Loans held for sale			994				995				641				—				55	%
Portfolio loans and leases:
Commercial and industrial loans			42,948				42,800				41,072				—				5	%
Commercial mortgage loans			7,061				7,150				7,564				(1	%)			(7	%)
Commercial construction loans			3,101				2,709				1,702				14	%			82	%
Commercial leases			3,898				3,881				3,554				—				10	%
Residential mortgage loans			13,392				12,933				12,941				4	%			3	%
Home equity			8,427				8,547				8,987				(1	%)			(6	%)
Automobile loans			11,826				11,909				12,121				(1	%)			(2	%)
Credit card			2,229				2,278				2,317				(2	%)			(4	%)
Other consumer loans and leases			692				496				366				40	%			89	%
Portfolio loans and leases			93,574				92,703				90,624				1	%			3	%
Allowance for loan and lease losses			(1,261	)			(1,293	)			(1,414	)			(2	%)			(11	%)
Portfolio loans and leases, net			92,313				91,410				89,210				1	%			3	%
Bank premises and equipment			2,264				2,298				2,467				(1	%)			(8	%)
Operating lease equipment			680				670				732				1	%			(7	%)
Goodwill			2,416				2,416				2,416				—				—
Intangible assets			13				13				16				—				(19	%)
Servicing rights			757				854				935				(11	%)			(19	%)
Other assets			8,702				8,252				7,517				5	%			16	%
Total Assets		$	141,918			$	141,658			$	134,188				—				6	%
Liabilities
Deposits:
Demand		$	34,832			$	35,449			$	32,258				(2	%)			8	%
Interest checking			24,832				27,074				24,930				(8	%)			—
Savings			14,632				14,976				15,355				(2	%)			(5	%)
Money market			18,887				17,900				16,199				6	%			17	%
Foreign office			754				728				1,577				4	%			(52	%)
Other time			4,041				4,050				3,856				—				5	%
Certificates—$100,000 and over			2,915				2,846				3,117				2	%			(6	%)
Total deposits			100,893				103,023				97,292				(2	%)			4	%
Federal funds purchased			132				126				148				5	%			(11	%)
Other short-term borrowings			4,904				4,136				2,730				19	%			80	%
Accrued taxes, interest and expenses			1,990				1,858				1,706				7	%			17	%
Other liabilities			2,614				3,356				2,533				(22	%)			3	%
Long-term debt			15,527				13,521				14,336				15	%			8	%
Total Liabilities			126,060				126,020				118,745				—				6	%
Equity
Common stock(c)			2,051				2,051				2,051				—				—
Preferred stock			1,331				1,331				1,331				—				—
Capital surplus			2,659				2,632				2,621				1	%			1	%
Retained earnings			11,826				11,564				10,886				2	%			9	%
Accumulated other comprehensive income			522				291				301				79	%			73	%
Treasury stock			(2,563	)			(2,264	)			(1,786	)			13	%			44	%
Total Bancorp shareholders’ equity			15,826				15,605				15,404				1	%			3	%
Noncontrolling interests			32				33				39				(3	%)			(18	%)
Total Equity			15,858				15,638				15,443				1	%			3	%
Total Liabilities and Equity		$	141,918			$	141,658			$	134,188				—				6	%
(a) Amortized cost		$	27,986			$	27,483			$	22,392				2	%			25	%
(b) Market values			157				157				191				—				(18	%)
(c) Common shares, stated value $2.22 per share (in thousands):
Authorized			2,000,000				2,000,000				2,000,000				—				—
Outstanding, excluding treasury			795,439				810,054				834,262				(2	%)			(5	%)
Treasury			128,453				113,838				89,631				13	%			43	%

 

23

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Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)

 

		As of
		September 2015				June 2015				March 2015				December 2014				September 2014
Assets
Cash and due from banks		$	2,455			$	2,785			$	2,920			$	3,091			$	3,125
Available-for-sale and other securities(a)			28,799				27,987				26,409				22,408				22,912
Held-to-maturity securities(b)			157				157				177				187				191
Trading securities			374				370				392				360				389
Other short-term investments			1,994				3,451				4,919				7,914				3,637
Loans held for sale			994				995				724				1,261				641
Portfolio loans and leases:
Commercial and industrial loans			42,948				42,800				42,052				40,765				41,072
Commercial mortgage loans			7,061				7,150				7,209				7,399				7,564
Commercial construction loans			3,101				2,709				2,302				2,069				1,702
Commercial leases			3,898				3,881				3,786				3,720				3,554
Residential mortgage loans			13,392				12,933				12,569				12,389				12,941
Home equity			8,427				8,547				8,714				8,886				8,987
Automobile loans			11,826				11,909				11,873				12,037				12,121
Credit card			2,229				2,278				2,291				2,401				2,317
Other consumer loans and leases			692				496				448				418				366
Portfolio loans and leases			93,574				92,703				91,244				90,084				90,624
Allowance for loan and lease losses			(1,261	)			(1,293	)			(1,300	)			(1,322	)			(1,414	)
Portfolio loans and leases, net			92,313				91,410				89,944				88,762				89,210
Bank premises and equipment			2,264				2,298				2,433				2,465				2,467
Operating lease equipment			680				670				695				728				732
Goodwill			2,416				2,416				2,416				2,416				2,416
Intangible assets			13				13				14				15				16
Servicing rights			757				854				789				858				935
Other assets			8,702				8,252				8,638				8,241				7,517
Total Assets		$	141,918			$	141,658			$	140,470			$	138,706			$	134,188
Liabilities
Deposits:
Demand		$	34,832			$	35,449			$	35,343			$	34,809			$	32,258
Interest checking			24,832				27,074				27,191				26,800				24,930
Savings			14,632				14,976				15,355				15,051				15,355
Money market			18,887				17,900				18,105				17,083				16,199
Foreign office			754				728				811				1,114				1,577
Other time			4,041				4,050				4,044				3,960				3,856
Certificates—$100,000 and over			2,915				2,846				2,566				2,895				3,117
Total deposits			100,893				103,023				103,415				101,712				97,292
Federal funds purchased			132				126				200				144				148
Other short-term borrowings			4,904				4,136				1,413				1,556				2,730
Accrued taxes, interest and expenses			1,990				1,858				1,979				2,020				1,706
Other liabilities			2,614				3,356				3,504				2,642				2,533
Long-term debt			15,527				13,521				14,055				14,967				14,336
Total Liabilities			126,060				126,020				124,566				123,041				118,745
Equity
Common stock(c)			2,051				2,051				2,051				2,051				2,051
Preferred stock			1,331				1,331				1,331				1,331				1,331
Capital surplus			2,659				2,632				2,659				2,646				2,621
Retained earnings			11,826				11,564				11,380				11,141				10,886
Accumulated other comprehensive income			522				291				588				429				301
Treasury stock			(2,563	)			(2,264	)			(2,145	)			(1,972	)			(1,786	)
Total Bancorp shareholders’ equity			15,826				15,605				15,864				15,626				15,404
Noncontrolling interests			32				33				40				39				39
Total Equity			15,858				15,638				15,904				15,665				15,443
Total Liabilities and Equity		$	141,918			$	141,658			$	140,470			$	138,706			$	134,188
(a) Amortized cost		$	27,986			$	27,483			$	25,475			$	21,677			$	22,392
(b) Market values			157				157				177				187				191
(c) Common shares, stated value $2.22 per share (in thousands):
Authorized			2,000,000				2,000,000				2,000,000				2,000,000				2,000,000
Outstanding, excluding treasury			795,439				810,054				815,190				824,047				834,262
Treasury			128,453				113,838				108,702				99,846				89,631

 

24

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Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Changes in Equity

$ in millions

(unaudited)

 

		For the Three Months Ended								Year to Date
		September 2015				September 2014				September 2015				September 2014
Total equity, beginning		$	15,638			$	15,508			$	15,665			$	14,626
Net income attributable to Bancorp			381				340				1,056				1,096
Other comprehensive income, net of tax:
Change in unrealized gains and (losses):
Available-for-sale securities			201				(72	)			53				217
Qualifying cash flow hedges			29				(10	)			35				(1	)
Change in accumulated other comprehensive income related to employee benefit plans			1				1				5				3
Comprehensive income			612				259				1,149				1,315
Cash dividends declared:
Common stock			(103	)			(108	)			(315	)			(320	)
Preferred stock			(15	)			(12	)			(52	)			(44	)
Impact of stock transactions under stock compensation plans, net			27				21				54				41
Shares acquired for treasury			(300	)			(225	)			(635	)			(474	)
Issuance of preferred stock			—				—				—				297
Noncontrolling interest			(1	)			—				(6	)			2
Other			—				—				(2	)			—
Total equity, ending		$	15,858			$	15,443			$	15,858			$	15,443

 

25

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Fifth Third Bancorp and Subsidiaries

Average Balance Sheet and Yield Analysis

$ in millions, except share data

(unaudited)

 

		For the Three Months Ended												% Change
		September 2015				June 2015				September 2014				Seq				Yr/Yr
Assets
Interest-earning assets:
Commercial and industrial loans		$	43,162			$	42,554			$	41,525				1	%			4	%
Commercial mortgage loans			7,038				7,149				7,637				(2	%)			(8	%)
Commercial construction loans			2,966				2,549				1,565				16	%			90	%
Commercial leases			3,847				3,776				3,576				2	%			8	%
Residential mortgage loans			13,976				13,375				13,342				4	%			5	%
Home equity			8,521				8,655				9,009				(2	%)			(5	%)
Automobile loans			11,881				11,902				12,105				—				(2	%)
Credit card			2,277				2,296				2,295				(1	%)			(1	%)
Other consumer loans and leases			661				483				374				37	%			77	%
Taxable securities			28,251				27,344				22,594				3	%			25	%
Tax exempt securities			52				59				50				(12	%)			4	%
Other short-term investments			1,799				3,160				2,283				(43	%)			(21	%)
Total interest-earning assets			124,431				123,302				116,355				1	%			7	%
Cash and due from banks			2,503				2,636				2,862				(5	%)			(13	%)
Other assets			15,097				15,354				14,461				(2	%)			4	%
Allowance for loan and lease losses			(1,292	)			(1,300	)			(1,458	)			(1	%)			(11	%)
Total Assets		$	140,739			$	139,992			$	132,220				1	%			6	%
Liabilities
Interest-bearing liabilities:
Interest checking		$	25,590			$	26,894			$	24,926				(5	%)			3	%
Savings			14,868				15,156				15,759				(2	%)			(6	%)
Money market			18,253				18,071				15,222				1	%			20	%
Foreign office			718				955				1,663				(25	%)			(57	%)
Other time			4,057				4,074				3,800				—				7	%
Certificates—$100,000 and over			2,924				2,558				3,339				14	%			(12	%)
Other deposits			222				—				—				100	%			100	%
Federal funds purchased			1,978				326				520				NM				NM
Other short-term borrowings			1,897				1,705				1,973				11	%			(4	%)
Long-term debt			14,697				13,773				13,955				7	%			5	%
Total interest-bearing liabilities			85,204				83,512				81,157				2	%			5	%
Demand deposits			35,231				35,384				31,790				—				11	%
Other liabilities			4,458				5,215				3,749				(15	%)			19	%
Total Liabilities			124,893				124,111				116,696				1	%			7	%
Total Equity			15,846				15,881				15,524				—				2	%
Total Liabilities and Equity		$	140,739			$	139,992			$	132,220				1	%			6	%
Yield Analysis
Interest-earning assets:
Commercial and industrial loans(a)			3.11	%			3.14	%			3.25	%			(1	%)			(4	%)
Commercial mortgage loans(a)			3.17	%			3.22	%			3.34	%			(2	%)			(5	%)
Commercial construction loans(a)			3.13	%			3.17	%			3.49	%			(1	%)			(10	%)
Commercial leases(a)			2.72	%			2.83	%			2.96	%			(4	%)			(8	%)
Residential mortgage loans			3.63	%			3.69	%			3.84	%			(2	%)			(5	%)
Home equity			3.61	%			3.66	%			3.69	%			(1	%)			(2	%)
Automobile loans			2.62	%			2.65	%			2.72	%			(1	%)			(4	%)
Credit card			10.38	%			10.33	%			9.87	%			—				5	%
Other consumer loans and leases			6.81	%			8.49	%			36.98	%			(20	%)			(82	%)
Total loans and leases			3.36	%			3.41	%			3.61	%			(1	%)			(7	%)
Taxable securities			3.23	%			3.20	%			3.32	%			1	%			(3	%)
Tax exempt securities(a)			5.20	%			4.82	%			5.34	%			8	%			(3	%)
Other short-term investments			0.23	%			0.25	%			0.26	%			(8	%)			(12	%)
Total interest-earning assets			3.29	%			3.28	%			3.49	%			—				(6	%)
Interest-bearing liabilities:
Interest checking			0.18	%			0.19	%			0.22	%			(5	%)			(18	%)
Savings			0.05	%			0.05	%			0.09	%			—				(44	%)
Money market			0.21	%			0.23	%			0.37	%			(9	%)			(43	%)
Foreign office			0.14	%			0.14	%			0.29	%			—				(52	%)
Other time			1.19	%			1.24	%			1.07	%			(4	%)			11	%
Certificates—$100,000 and over			1.16	%			1.24	%			0.96	%			(6	%)			21	%
Other deposits			0.16	%			0.00	%			0.00	%			100	%			100	%
Federal funds purchased			0.14	%			0.12	%			0.09	%			17	%			56	%
Other short-term borrowings			0.13	%			0.12	%			0.10	%			8	%			30	%
Long-term debt			2.15	%			2.04	%			1.80	%			5	%			19	%
Total interest-bearing liabilities			0.58	%			0.56	%			0.56	%			4	%			4	%
Ratios:
Net interest margin (taxable equivalent)			2.89	%			2.90	%			3.10	%			—				(7	%)
Net interest rate spread (taxable equivalent)			2.71	%			2.72	%			2.93	%			—				(8	%)
Interest-bearing liabilities to interest-earning assets			68.47	%			67.73	%			69.75	%			1	%			(2	%)

 

(a)	Presented on a fully taxable equivalent basis.

 

26

---

Fifth Third Bancorp and Subsidiaries

Average Balance Sheet and Yield Analysis

$ in millions, except share data

(unaudited)

 

		Year to Date								% Change
		September 2015				September 2014				Yr/Yr
Assets
Interest-earning assets:
Commercial and industrial loans		$	42,399			$	41,133				3	%
Commercial mortgage loans			7,144				7,834				(9	%)
Commercial construction loans			2,574				1,351				91	%
Commercial leases			3,780				3,580				6	%
Residential mortgage loans			13,624				13,283				3	%
Home equity			8,658				9,101				(5	%)
Automobile loans			11,905				12,066				(1	%)
Credit card			2,298				2,252				2	%
Other consumer loans and leases			537				373				44	%
Taxable securities			26,251				21,570				22	%
Tax exempt securities			57				50				14	%
Other short-term investments			3,597				2,324				55	%
Total interest-earning assets			122,824				114,917				7	%
Cash and due from banks			2,655				2,853				(7	%)
Other assets			15,297				14,451				6	%
Allowance for loan and lease losses			(1,304	)			(1,504	)			(13	%)
Total Assets		$	139,472			$	130,717				7	%
Liabilities
Interest-bearing liabilities:
Interest checking		$	26,452			$	25,349				4	%
Savings			15,065				16,386				(8	%)
Money market			17,942				13,878				29	%
Foreign office			844				1,959				(57	%)
Other time			4,051				3,704				9	%
Certificates—$100,000 and over			2,722				4,243				(36	%)
Other deposits			75				—				100	%
Federal funds purchased			832				558				49	%
Other short-term borrowings			1,736				2,006				(13	%)
Long-term debt			14,306				12,277				17	%
Total interest-bearing liabilities			84,025				80,360				5	%
Demand deposits			34,797				31,235				11	%
Other liabilities			4,788				3,913				22	%
Total Liabilities			123,610				115,508				7	%
Total Equity			15,862				15,209				4	%
Total Liabilities and Equity		$	139,472			$	130,717				7	%
Yield Analysis
Interest-earning assets:
Commercial and industrial loans(a)			3.14	%			3.29	%			(5	%)
Commercial mortgage loans(a)			3.22	%			3.39	%			(5	%)
Commercial construction loans(a)			3.17	%			3.50	%			(9	%)
Commercial leases(a)			2.82	%			3.03	%			(7	%)
Residential mortgage loans			3.71	%			3.90	%			(5	%)
Home equity			3.64	%			3.71	%			(2	%)
Automobile loans			2.65	%			2.78	%			(5	%)
Credit card			10.31	%			9.94	%			4	%
Other consumer loans and leases			8.45	%			37.48	%			(77	%)
Total loans and leases			3.41	%			3.66	%			(7	%)
Taxable securities			3.24	%			3.33	%			(3	%)
Tax exempt securities(a)			5.08	%			5.16	%			(2	%)
Other short-term investments			0.25	%			0.27	%			(7	%)
Total interest-earning assets			3.28	%			3.53	%			(7	%)
Interest-bearing liabilities:
Interest checking			0.19	%			0.22	%			(14	%)
Savings			0.06	%			0.10	%			(40	%)
Money market			0.25	%			0.33	%			(24	%)
Foreign office			0.16	%			0.29	%			(45	%)
Other time			1.20	%			1.03	%			17	%
Certificates—$100,000 and over			1.19	%			0.81	%			47	%
Other deposits			0.16	%			0.00	%			100	%
Federal funds purchased			0.13	%			0.09	%			44	%
Other short-term borrowings			0.12	%			0.10	%			20	%
Long-term debt			2.07	%			1.90	%			9	%
Total interest-bearing liabilities			0.58	%			0.54	%			7	%
Ratios:
Net interest margin (taxable equivalent)			2.88	%			3.16	%			(9	%)
Net interest rate spread (taxable equivalent)			2.70	%			2.99	%			(10	%)
Interest-bearing liabilities to interest-earning assets			68.41	%			69.93	%			(2	%)

 

(a)	Presented on a fully taxable equivalent basis.

 

27

---

Fifth Third Bancorp and Subsidiaries

Average Balance Sheet and Yield Analysis

$ in millions, except share data

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Assets
Interest-earning assets:
Commercial and industrial loans		$	43,162			$	42,554			$	41,462			$	41,313			$	41,525
Commercial mortgage loans			7,038				7,149				7,248				7,482				7,637
Commercial construction loans			2,966				2,549				2,198				1,911				1,565
Commercial leases			3,847				3,776				3,716				3,601				3,576
Residential mortgage loans			13,976				13,375				13,515				13,526				13,342
Home equity			8,521				8,655				8,802				8,937				9,009
Automobile loans			11,881				11,902				11,933				12,073				12,105
Credit card			2,277				2,296				2,321				2,324				2,295
Other consumer loans and leases			661				483				464				414				374
Taxable securities			28,251				27,344				23,102				22,364				22,594
Tax exempt securities			52				59				59				64				50
Other short-term investments			1,799				3,160				5,877				5,176				2,283
Total interest-earning assets			124,431				123,302				120,697				119,185				116,355
Cash and due from banks			2,503				2,636				2,830				3,008				2,862
Other assets			15,097				15,354				15,446				14,800				14,461
Allowance for loan and lease losses			(1,292	)			(1,300	)			(1,322	)			(1,413	)			(1,458	)
Total Assets		$	140,739			$	139,992			$	137,651			$	135,580			$	132,220
Liabilities
Interest-bearing liabilities:
Interest checking		$	25,590			$	26,894			$	26,885			$	25,478			$	24,926
Savings			14,868				15,156				15,174				15,173				15,759
Money market			18,253				18,071				17,492				17,023				15,222
Foreign office			718				955				861				1,439				1,663
Other time			4,057				4,074				4,022				3,936				3,800
Certificates—$100,000 and over			2,924				2,558				2,683				2,998				3,339
Other deposits			222				—				—				—				—
Federal funds purchased			1,978				326				172				161				520
Other short-term borrowings			1,897				1,705				1,602				1,481				1,973
Long-term debt			14,697				13,773				14,448				14,855				13,955
Total interest-bearing liabilities			85,204				83,512				83,339				82,544				81,157
Demand deposits			35,231				35,384				33,760				33,301				31,790
Other liabilities			4,458				5,215				4,693				4,052				3,749
Total Liabilities			124,893				124,111				121,792				119,897				116,696
Total Equity			15,846				15,881				15,859				15,683				15,524
Total Liabilities and Equity		$	140,739			$	139,992			$	137,651			$	135,580			$	132,220
Yield Analysis
Interest-earning assets:
Commercial and industrial loans(a)			3.11	%			3.14	%			3.16	%			3.21	%			3.25	%
Commercial mortgage loans(a)			3.17	%			3.22	%			3.27	%			3.28	%			3.34	%
Commercial construction loans(a)			3.13	%			3.17	%			3.23	%			3.30	%			3.49	%
Commercial leases(a)			2.72	%			2.83	%			2.90	%			2.96	%			2.96	%
Residential mortgage loans			3.63	%			3.69	%			3.83	%			3.80	%			3.84	%
Home equity			3.61	%			3.66	%			3.66	%			3.68	%			3.69	%
Automobile loans			2.62	%			2.65	%			2.68	%			2.73	%			2.72	%
Credit card			10.38	%			10.33	%			10.22	%			10.08	%			9.87	%
Other consumer loans and leases			6.81	%			8.49	%			10.79	%			31.97	%			36.98	%
Total loans and leases			3.36	%			3.41	%			3.46	%			3.58	%			3.61	%
Taxable securities			3.23	%			3.20	%			3.30	%			3.28	%			3.32	%
Tax exempt securities(a)			5.20	%			4.82	%			5.24	%			4.42	%			5.34	%
Other short-term investments			0.23	%			0.25	%			0.25	%			0.26	%			0.26	%
Total interest-earning assets			3.29	%			3.28	%			3.28	%			3.38	%			3.49	%
Interest-bearing liabilities:
Interest checking			0.18	%			0.19	%			0.20	%			0.22	%			0.22	%
Savings			0.05	%			0.05	%			0.07	%			0.08	%			0.09	%
Money market			0.21	%			0.23	%			0.32	%			0.39	%			0.37	%
Foreign office			0.14	%			0.14	%			0.20	%			0.30	%			0.29	%
Other time			1.19	%			1.24	%			1.17	%			1.14	%			1.07	%
Certificates—$100,000 and over			1.16	%			1.24	%			1.16	%			1.05	%			0.96	%
Other deposits			0.16	%			0.00	%			0.00	%			0.00	%			0.00	%
Federal funds purchased			0.14	%			0.12	%			0.09	%			0.10	%			0.09	%
Other short-term borrowings			0.13	%			0.12	%			0.11	%			0.10	%			0.10	%
Long-term debt			2.15	%			2.04	%			2.02	%			1.94	%			1.80	%
Total interest-bearing liabilities			0.58	%			0.56	%			0.60	%			0.61	%			0.56	%
Ratios:
Net interest margin (taxable equivalent)			2.89	%			2.90	%			2.86	%			2.96	%			3.10	%
Net interest rate spread (taxable equivalent)			2.71	%			2.72	%			2.68	%			2.77	%			2.93	%
Interest-bearing liabilities to interest-earning assets			68.47	%			67.73	%			69.05	%			69.26	%			69.75	%

 

(a)	Presented on a fully taxable equivalent basis.

 

28

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Fifth Third Bancorp and Subsidiaries

Summary of Loans and Leases

$ in millions

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Average Loans and Leases (excluding held for sale)
Commercial:
Commercial and industrial loans		$	43,149			$	42,550			$	41,426			$	41,277			$	41,477
Commercial mortgage loans			7,023				7,148				7,241				7,480				7,633
Commercial construction loans			2,965				2,549				2,197				1,909				1,563
Commercial leases			3,846				3,776				3,715				3,600				3,571
Subtotal—commercial			56,983				56,023				54,579				54,266				54,244
Consumer:
Residential mortgage loans			13,144				12,831				12,433				13,046				12,785
Home equity			8,479				8,654				8,802				8,937				9,009
Automobile loans			11,877				11,902				11,933				12,073				12,105
Credit card			2,277				2,296				2,321				2,324				2,295
Other consumer loans and leases			613				467				440				395				361
Subtotal—consumer			36,390				36,150				35,929				36,775				36,555
Total average loans and leases (excluding held for sale)		$	93,373			$	92,173			$	90,508			$	91,041			$	90,799
Average loans held for sale		$	956			$	566			$	1,151			$	540			$	629
End of Period Loans and Leases
Commercial:
Commercial and industrial loans		$	42,948			$	42,800			$	42,052			$	40,765			$	41,072
Commercial mortgage loans			7,061				7,150				7,209				7,399				7,564
Commercial construction loans			3,101				2,709				2,302				2,069				1,702
Commercial leases			3,898				3,881				3,786				3,720				3,554
Subtotal—commercial			57,008				56,540				55,349				53,953				53,892
Consumer:
Residential mortgage loans			13,392				12,933				12,569				12,389				12,941
Home equity			8,427				8,547				8,714				8,886				8,987
Automobile loans			11,826				11,909				11,873				12,037				12,121
Credit card			2,229				2,278				2,291				2,401				2,317
Other consumer loans and leases			692				496				448				418				366
Subtotal—consumer			36,566				36,163				35,895				36,131				36,732
Total portfolio loans and leases		$	93,574			$	92,703			$	91,244			$	90,084			$	90,624
Total loans held for sale		$	994			$	995			$	724			$	1,261			$	641
Operating lease equipment		$	680			$	670			$	695			$	728			$	732
Loans and Leases Serviced for Others:(a)
Commercial and industrial loans		$	589			$	594			$	609			$	637			$	620
Commercial mortgage loans			260				266				279				270				274
Commercial construction loans			26				25				21				20				22
Commercial leases			252				260				257				283				267
Residential mortgage loans			60,301				61,727				64,178				65,413				66,808
Automobile loans			146				174				203				232				263
Total loans and leases serviced for others			61,574				63,046				65,547				66,855				68,254
Total loans and leases serviced		$	156,822			$	157,414			$	158,210			$	158,928			$	160,251

 

(a)	Fifth Third sells certain loans and leases and obtains servicing responsibilities.

 

29

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Fifth Third Bancorp and Subsidiaries

Regulatory Capital

$ in millions

(unaudited)

 

		Basel III Transitional												Basel I(c)
		As of
		September 2015(a)				June 2015				March 2015				December 2014				September 2014
Tier I capital:
Common stock and related surplus (net of treasury stock)		$	2,147			$	2,419			$	2,565				N/A				N/A
Retained earnings			11,826				11,564				11,380				N/A				N/A
Common equity tier I capital adjustments and deductions			(2,399	)			(2,401	)			(2,402	)			N/A				N/A
CET1 capital			11,574				11,582				11,543				N/A				N/A
Additional tier I capital			1,340				1,340				1,339				N/A				N/A
Tier I capital			12,914				12,922				12,882			$	12,764			$	12,661
Tier II capital			3,935				3,909				4,112				4,131				4,103
Total regulatory capital		$	16,849			$	16,831			$	16,994			$	16,895			$	16,764
Risk-weighted assets		$	123,140	(b)		$	122,986	(b)		$	121,310	(b)		$	117,878			$	116,917
Ratios:
Average shareholders’ equity to average assets			11.24	%			11.32	%			11.49	%			11.54	%			11.71	%
Regulatory capital:
		Basel III Transitional												Basel I(c)
Fifth Third Bancorp
CET1 capital			9.40	%(b)			9.42	%(b)			9.52	%(b)			N/A				N/A
Tier I risk-based capital			10.49	%(b)			10.51	%(b)			10.62	%(b)			10.83	%			10.83	%
Total risk-based capital			13.68	%(b)			13.69	%(b)			14.01	%(b)			14.33	%			14.34	%
Tier I leverage			9.38	%			9.44	%			9.59	%			9.66	%			9.82	%
Tier I common equity			N/A				N/A				N/A				9.65	%(d)			9.64	%(d)
CET1 capital (fully phased-in)			9.30	%(b)(d)			9.31	%(b)(d)			9.41	%(b)(d)			N/A				N/A
Fifth Third Bank
Tier I risk-based capital			11.39	%(b)			11.25	%(b)			11.36	%(b)			11.85	%			11.87	%
Total risk-based capital			12.55	%(b)			12.44	%(b)			12.58	%(b)			13.10	%			13.12	%
Tier I leverage			10.21	%			10.14	%			10.30	%			10.58	%			10.77	%

 

(a)	Current period regulatory capital data and ratios are estimated.

(b)	Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting weighted values are added together resulting in the total risk-weighted assets.

(c)	These capital amounts and ratios were calculated under the Supervisory Agencies general risk-based capital rules (Basel I) which were in effect prior to January 1, 2015.

(d)	This ratio has been included herein to facilitate a greater understanding of the Bancorp’s capital structure and financial condition. Non-GAAP measure; see Reg. G reconciliation on page 33.

 

30

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Fifth Third Bancorp and Subsidiaries

Summary of Credit Loss Experience

$ in millions

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Average loans and leases (excluding held for sale):
Commercial and industrial loans		$	43,149			$	42,550			$	41,426			$	41,277			$	41,477
Commercial mortgage loans			7,023				7,148				7,241				7,480				7,633
Commercial construction loans			2,965				2,549				2,197				1,909				1,563
Commercial leases			3,846				3,776				3,715				3,600				3,571
Residential mortgage loans			13,144				12,831				12,433				13,046				12,785
Home equity			8,479				8,654				8,802				8,937				9,009
Automobile loans			11,877				11,902				11,933				12,073				12,105
Credit card			2,277				2,296				2,321				2,324				2,295
Other consumer loans and leases			613				467				440				395				361
Total average loans and leases (excluding held for sale)		$	93,373			$	92,173			$	90,508			$	91,041			$	90,799
Losses charged-off:
Commercial and industrial loans		($	133	)		($	40	)		($	43	)		($	50	)		($	62	)
Commercial mortgage loans			(13	)			(14	)			(5	)			(12	)			(10	)
Commercial construction loans			(3	)			—				—				—				—
Commercial leases			—				—				—				(1	)			—
Residential mortgage loans			(6	)			(8	)			(9	)			(97	)			(12	)
Home equity			(13	)			(13	)			(17	)			(15	)			(18	)
Automobile loans			(11	)			(9	)			(13	)			(11	)			(11	)
Credit card			(24	)			(24	)			(24	)			(23	)			(26	)
Other consumer loans and leases			(6	)			(4	)			(4	)			(6	)			(7	)
Total losses charged-off		($	209	)		($	112	)		($	115	)		($	215	)		($	146	)
Recoveries of losses previously charged-off:
Commercial and industrial loans		$	5			$	6			$	5			$	6			$	12
Commercial mortgage loans			2				3				4				2				5
Commercial construction loans			—				—				—				—				—
Commercial leases			—				—				—				—				—
Residential mortgage loans			3				3				3				3				3
Home equity			4				4				3				4				4
Automobile loans			4				5				5				4				4
Credit card			3				3				3				3				3
Other consumer loans and leases			—				2				1				2				—
Total recoveries of losses previously charged-off		$	21			$	26			$	24			$	24			$	31
Net losses charged-off:
Commercial and industrial loans		($	128	)		($	34	)		($	38	)		($	44	)		($	50	)
Commercial mortgage loans			(11	)			(11	)			(1	)			(10	)			(5	)
Commercial construction loans			(3	)			—				—				—				—
Commercial leases			—				—				—				(1	)			—
Residential mortgage loans			(3	)			(5	)			(6	)			(94	)			(9	)
Home equity			(9	)			(9	)			(14	)			(11	)			(14	)
Automobile loans			(7	)			(4	)			(8	)			(7	)			(7	)
Credit card			(21	)			(21	)			(21	)			(20	)			(23	)
Other consumer loans and leases			(6	)			(2	)			(3	)			(4	)			(7	)
Total net losses charged-off		($	188	)		($	86	)		($	91	)		($	191	)		($	115	)
Net losses charged-off as a percent of average portfolio loans and leases:
Commercial and industrial loans			1.17	%			0.32	%			0.38	%			0.43	%			0.48	%
Commercial mortgage loans			0.66	%			0.62	%			0.05	%			0.53	%			0.24	%
Commercial construction loans			0.43	%			0.00	%			(0.06	%)			(0.01	%)			(0.11	%)
Commercial leases			0.00	%			(0.01	%)			0.00	%			0.06	%			0.00	%
Residential mortgage loans			0.10	%			0.16	%			0.19	%			2.87	%			0.28	%
Home equity			0.42	%			0.41	%			0.61	%			0.47	%			0.63	%
Automobile loans			0.23	%			0.14	%			0.28	%			0.22	%			0.24	%
Credit card			3.77	%			3.62	%			3.60	%			3.40	%			3.89	%
Other consumer loans and leases			3.52	%			2.45	%			4.02	%			4.57	%			8.13	%
Total net losses charged-off as a percent of average portfolio loans and leases			0.80	%			0.37	%			0.41	%			0.83	%			0.50	%

 

31

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Fifth Third Bancorp and Subsidiaries

Asset Quality

$ in millions

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Allowance for Credit Losses
Allowance for loan and lease losses, beginning		$	1,293			$	1,300			$	1,322			$	1,414			$	1,458
Total net losses charged-off			(188	)			(86	)			(91	)			(191	)			(115	)
Provision for loan and lease losses			156				79				69				99				71
Allowance for loan and lease losses, ending		$	1,261			$	1,293			$	1,300			$	1,322			$	1,414
Reserve for unfunded commitments, beginning		$	132			$	130			$	135			$	134			$	142
Provision (benefit) for unfunded commitments			2				2				(4	)			1				(8	)
Charge-offs			—				—				(1	)			—				—
Reserve for unfunded commitments, ending		$	134			$	132			$	130			$	135			$	134
Components of allowance for credit losses:
Allowance for loan and lease losses		$	1,261			$	1,293			$	1,300			$	1,322			$	1,414
Reserve for unfunded commitments			134				132				130				135				134
Total allowance for credit losses		$	1,395			$	1,425			$	1,430			$	1,457			$	1,548
		As of
		September 2015				June 2015				March 2015				December 2014				September 2014
Nonperforming Assets and Delinquent Loans
Nonaccrual portfolio loans and leases:
Commercial and industrial loans		$	47			$	61			$	61			$	86			$	102
Commercial mortgage loans			60				49				57				64				77
Commercial construction loans			—				—				—				—				2
Commercial leases			2				2				2				3				3
Residential mortgage loans			31				35				40				44				52
Home equity			65				70				71				72				69
Total nonaccrual portfolio loans and leases (excludes restructured loans)			205				217				231				269				305
Restructured loans—commercial (nonaccrual)			177				175				205				214				201
Restructured loans—consumer (nonaccrual)			76				83				90				96				114
Total nonaccrual portfolio loans and leases			458				475				526				579				620
Repossessed property			17				16				20				18				19
OREO(b)			131				135				145				147				157
Total nonperforming portfolio assets			606				626				691				744				796
Nonaccrual loans held for sale			1				1				2				24				4
Restructured loans—(nonaccrual) held for sale			1				—				—				15				3
Total nonperforming assets including loans held for sale		$	608			$	627			$	693			$	783			$	803
Restructured portfolio consumer loans and leases (accrual)		$	973			$	970			$	943			$	905			$	1,610
Restructured portfolio commercial loans and leases (accrual)		$	571			$	769			$	774			$	844			$	885
Ninety days past due loans and leases:
Commercial and industrial loans		$	3			$	2			$	2			$	—			$	—
Commercial mortgage loans			2				—				1				—				1
Commercial construction loans			—				—				—				—				—
Commercial leases			—				—				—				—				—
Total commercial loans and leases			5				2				3				—				1
Residential mortgage loans			40				43				48				56				57
Home equity			—				—				—				—				—
Automobile loans			8				8				7				8				8
Credit card			17				17				20				23				21
Other consumer loans and leases			—				—				—				—				—
Total consumer loans and leases			65				68				75				87				86
Total ninety days past due loans and leases(c)		$	70			$	70			$	78			$	87			$	87
Ratios
Net losses charged-off as a percent of average portfolio loans and leases			0.80	%			0.37	%			0.41	%			0.83	%			0.50	%
Allowance for loan and lease losses:
As a percent of portfolio loans and leases			1.35	%			1.39	%			1.42	%			1.47	%			1.56	%
As a percent of nonperforming loans and leases(a)			275	%			272	%			247	%			228	%			228	%
As a percent of nonperforming assets(a)			208	%			206	%			188	%			178	%			178	%
Nonperforming loans and leases as a percent of portfolio loans, leases and other assets, including OREO(a)			0.49	%			0.51	%			0.57	%			0.64	%			0.68	%
Nonperforming assets as a percent of portfolio loans, leases and other assets, including OREO(a)			0.65	%			0.67	%			0.76	%			0.82	%			0.88	%
Nonperforming assets as a percent of total loans, leases and other assets, including OREO			0.64	%			0.67	%			0.75	%			0.86	%			0.88	%
Allowance for credit losses as a percent of nonperforming assets			230	%			228	%			207	%			196	%			195	%

 

(a)	Does not include nonaccrual loans held for sale.

(b)

Excludes $18, $28, $42, $71 and $85 of OREO related to government insured loans at September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, respectively. The Bancorp has historically excluded government guaranteed loans classified in OREO from its nonperforming asset disclosures. Upon the prospective adoption on January 1, 2015 of ASU 2014-14 “Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure,” government guaranteed loans meeting certain criteria will be reclassified to other receivables rather than OREO upon foreclosure. The Bancorp had $40, $37 and $21 of government guaranteed loans classified as other receivables as of September 30, 2015, June 30, 2015 and March 31, 2015, respectively.

(c)	Does not include loans held for sale.

 

32

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Fifth Third Bancorp and Subsidiaries

Regulation G Non-GAAP Reconciliation

$ and shares in millions

(unaudited)

 

		For the Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014
Income before income taxes (U.S. GAAP)		$	515			$	417			$	485			$	519			$	464
Add: Provision expense (U.S. GAAP)			156				79				69				99				71
Pre-provision net revenue			671				496				554				618				535
Net income available to common shareholders (U.S. GAAP)			366				292				346				362				328
Add: Intangible amortization, net of tax			—				—				—				1				1
Tangible net income available to common shareholders			366				292				346				363				329
Tangible net income available to common shareholders (annualized) (a)			1,452				1,171				1,403				1,440				1,305
Average Bancorp shareholders’ equity (U.S. GAAP)			15,815				15,841				15,820				15,644				15,486
Less: Average preferred stock			(1,331	)			(1,331	)			(1,331	)			(1,331	)			(1,331	)
Average goodwill			(2,416	)			(2,416	)			(2,416	)			(2,416	)			(2,416	)
Average intangible assets and other servicing rights			(14	)			(15	)			(15	)			(17	)			(16	)
Average tangible common equity (b)			12,054				12,079				12,058				11,880				11,723
Total Bancorp shareholders’ equity (U.S. GAAP)			15,826				15,605				15,864				15,626				15,404
Less: Preferred stock			(1,331	)			(1,331	)			(1,331	)			(1,331	)			(1,331	)
Goodwill			(2,416	)			(2,416	)			(2,416	)			(2,416	)			(2,416	)
Intangible assets and other servicing rights			(13	)			(14	)			(15	)			(16	)			(16	)
Tangible common equity, including unrealized gains / losses (c)			12,066				11,844				12,102				11,863				11,641
Less: Accumulated other comprehensive income			(522	)			(291	)			(588	)			(429	)			(301	)
Tangible common equity, excluding unrealized gains / losses (d)			11,544				11,553				11,514				11,434				11,340
Add: Preferred stock			1,331				1,331				1,331				1,331				1,331
Tangible equity (e)			12,875				12,884				12,845				12,765				12,671
Total assets (U.S. GAAP)			141,918				141,658				140,470				138,706				134,188
Less: Goodwill			(2,416	)			(2,416	)			(2,416	)			(2,416	)			(2,416	)
Intangible assets and other servicing rights			(13	)			(14	)			(15	)			(16	)			(16	)
Tangible assets, including unrealized gains / losses (f)			139,489				139,228				138,039				136,274				131,756
Less: Accumulated other comprehensive income / loss, before tax			(803	)			(448	)			(905	)			(660	)			(463	)
Tangible assets, excluding unrealized gains / losses (g)		$	138,686			$	138,780			$	137,134				135,614				131,293
Total Bancorp shareholders’ equity (U.S. GAAP)			N/A				N/A				N/A				15,626				15,404
Less: Goodwill and certain other intangibles			N/A				N/A				N/A				(2,476	)			(2,484	)
Unrealized gains			N/A				N/A				N/A				(429	)			(301	)
Qualifying trust preferred securities			N/A				N/A				N/A				60				60
Other			N/A				N/A				N/A				(17	)			(18	)
Tier I capital			N/A				N/A				N/A				12,764				12,661
Less: Preferred stock			N/A				N/A				N/A				(1,331	)			(1,331	)
Qualifying trust preferred securities			N/A				N/A				N/A				(60	)			(60	)
Qualifying noncontrolling interests in consolidated subsidiaries			N/A				N/A				N/A				(1	)			(1	)
Tier I common equity (h)			N/A	(2)			N/A	(2)			N/A	(2)		$	11,372			$	11,269
Common shares outstanding (i)			795				810				815				824				834
		Basel III Transitional												Basel I
Risk-weighted assets (actual) (j) (1)		$	123,140			$	122,986			$	121,310			$	117,878			$	116,917
Ratios:
Return on average tangible common equity (a) / (b)			12.0	%			9.7	%			11.7	%			12.1	%			11.1	%
Tangible equity (e) / (g)			9.28	%			9.28	%			9.37	%			9.41	%			9.65	%
Tangible common equity (excluding unrealized gains/losses) (d) / (g)			8.32	%			8.33	%			8.40	%			8.43	%			8.64	%
Tangible common equity (including unrealized gains/losses) (c) / (f)			8.65	%			8.51	%			8.77	%			8.71	%			8.84	%
Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses) (d) / (j)			9.38	%			9.39	%			9.49	%			9.70	%			9.70	%
Tangible book value per share (c) / (i)		$	15.18			$	14.62			$	14.85			$	14.40			$	13.95
Tier I common equity (h) / (j)			N/A	(2)			N/A	(2)			N/A	(2)			9.65	%			9.64	%
Basel III Final Rule—Transition to fully phased-in
		September 2015				June 2015				March 2015				December 2014				September 2014
CET1 capital (transitional)		$	11,574			$	11,582			$	11,543				N/A				N/A
Less: Adjustments to CET1 capital from transitional to fully phased-in (3)			(11	)			(12	)			(13	)			N/A				N/A
CET1 capital (fully phased-in) (k)			11,563				11,570				11,530				N/A				N/A
Risk-weighted assets (transitional)			123,140				122,986				121,310				N/A				N/A
Add: Adjustments to risk-weighted assets from transitional to fully phased-in (4)			1,136				1,280				1,182				N/A				N/A
Risk-weighted assets (fully phased-in) (l)		$	124,276			$	124,266			$	122,492				N/A				N/A
Estimated CET1 capital ratio under Basel III Final Rule (fully phased-in) (k)/(l)			9.30	%			9.31	%			9.41	%			N/A				N/A

 

(1)

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, along with the measure for market risk, resulting in the Bancorp’s total risk-weighted assets.

(2)	The Bancorp became subject to the Basel III Final Rule on January 1, 2015. This codified in the federal banking regulations the risk-based capital ratios the Bancorp is now subject to, as such these ratios are no longer considered Non-GAAP measures.

(3)	Primarily relates to disallowed intangible assets (other than goodwill and MSRs, net of associated deferred tax liabilities).

(4)	Primarily relates to higher risk-weighting for MSRs.

 

33

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Fifth Third Bancorp and Subsidiaries

Segment Presentation

$ in millions

(unaudited)

 

For the three months ended September 30, 2015		Commercial Banking				Branch Banking				Consumer Lending				Investment Advisors				Other/ Eliminations				Total
Net interest income(a)		$	418			$	395			$	62			$	33			($	2	)		$	906
Provision for loan and lease losses			(138	)			(39	)			(11	)			—				32				(156	)
Net interest income after provision for loan and lease losses			280				356				51				33				30				750
Total noninterest income			228				197				76				102				110				713
Total noninterest expense			(342	)			(396	)			(106	)			(112	)			13				(943	)
Income before income taxes			166				157				21				23				153				520
Applicable income tax expense(a)			(13	)			(55	)			(8	)			(8	)			(55	)			(139	)
Net income			153				102				13				15				98				381
Less: Net income attributable to noncontrolling interests			—				—				—				—				—				—
Net income attributable to Bancorp			153				102				13				15				98				381
Dividends on preferred stock			—				—				—				—				15				15
Net income available to common shareholders		$	153			$	102			$	13			$	15			$	83			$	366
For the three months ended June 30, 2015		Commercial Banking				Branch Banking				Consumer Lending				Investment Advisors				Other/ Eliminations				Total
Net interest income(a)		$	407			$	376			$	63			$	29			$	17			$	892
Provision for loan and lease losses			(38	)			(38	)			(8	)			(2	)			7				(79	)
Net interest income after provision for loan and lease losses			369				338				55				27				24				813
Total noninterest income			232				94				122				103				5				556
Total noninterest expense			(356	)			(396	)			(112	)			(115	)			32				(947	)
Income before income taxes			245				36				65				15				61				422
Applicable income tax expense(a)			(39	)			(13	)			(23	)			(6	)			(32	)			(113	)
Net income			206				23				42				9				29				309
Less: Net income attributable to noncontrolling interests			—				—				—				—				(6	)			(6	)
Net income attributable to Bancorp			206				23				42				9				35				315
Dividends on preferred stock			—				—				—				—				23				23
Net income available to common shareholders		$	206			$	23			$	42			$	9			$	12			$	292
For the three months ended March 31, 2015		Commercial Banking				Branch Banking				Consumer Lending				Investment Advisors				Other/ Eliminations				Total
Net interest income(a)		$	397			$	377			$	63			$	29			($	14	)		$	852
Provision for loan and lease losses			(33	)			(42	)			(14	)			(2	)			22				(69	)
Net interest income after provision for loan and lease losses			364				335				49				27				8				783
Total noninterest income			174				176				129				107				44				630
Total noninterest expense			(357	)			(392	)			(104	)			(115	)			45				(923	)
Income before income taxes			181				119				74				19				97				490
Applicable income tax expense(a)			(18	)			(42	)			(26	)			(7	)			(36	)			(129	)
Net income			163				77				48				12				61				361
Less: Net income attributable to noncontrolling interests			—				—				—				—				—				—
Net income attributable to Bancorp			163				77				48				12				61				361
Dividends on preferred stock			—				—				—				—				15				15
Net income available to common shareholders		$	163			$	77			$	48			$	12			$	46			$	346
For the three months ended December 31, 2014(b)		Commercial Banking				Branch Banking				Consumer Lending				Investment Advisors				Other/ Eliminations				Total
Net interest income(a)		$	420			$	402			$	64			$	31			($	29	)		$	888
Provision for loan and lease losses			(50	)			(40	)			(100	)			(1	)			92				(99	)
Net interest income after provision for loan and lease losses			370				362				(36	)			30				63				789
Total noninterest income			237				188				69				102				57				653
Total noninterest expense			(331	)			(386	)			(107	)			(111	)			17				(918	)
Income (loss) before income taxes			276				164				(74	)			21				137				524
Applicable income tax expense(a)			(55	)			(58	)			26				(7	)			(45	)			(139	)
Net income (loss)			221				106				(48	)			14				92				385
Less: Net income attributable to noncontrolling interests			—				—				—				—				—				—
Net income (loss) attributable to Bancorp			221				106				(48	)			14				92				385
Dividends on preferred stock			—				—				—				—				23				23
Net income (loss) available to common shareholders		$	221			$	106			($	48	)		$	14			$	69			$	362
For the three months ended September 30, 2014(b)		Commercial Banking				Branch Banking				Consumer Lending				Investment Advisors				Other/ Eliminations				Total
Net interest income(a)		$	416			$	396			$	64			$	30			$	2			$	908
Provision for loan and lease losses			(47	)			(50	)			(17	)			(1	)			44				(71	)
Net interest income after provision for loan and lease losses			369				346				47				29				46				837
Total noninterest income			218				194				71				102				(65	)			520
Total noninterest expense			(323	)			(392	)			(114	)			(111	)			52				(888	)
Income before income taxes			264				148				4				20				33				469
Applicable income tax expense(a)			(52	)			(52	)			(1	)			(7	)			(17	)			(129	)
Net income			212				96				3				13				16				340
Less: Net income attributable to noncontrolling interests			—				—				—				—				—				—
Net income attributable to Bancorp			212				96				3				13				16				340
Dividends on preferred stock			—				—				—				—				12				12
Net income available to common shareholders		$	212			$	96			$	3			$	13			$	4			$	328

 

(a)	Includes taxable equivalent adjustments of $5 million for the three months ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014.

(b)	Prior period balances have been adjusted for changes in the structure of the reporting units.

 

34

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Exhibit 99.3

October 2015

 

QUARTERLY FINANCIAL SUPPLEMENT

Investment Community Member:

To assist in your financial analysis, the following supplement of most requested information concerning Fifth Third Bancorp is provided.

Numbers are unaudited for quarterly information.

If you need further information, please fax or e-mail your request to Fifth Third’s Investor Relations Department at (513) 534-0629 or [email protected]

Jim Eglseder

SVP / Investor Relations

(513) 534-8424

 

Page 1

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Quarterly Data		Three Months Ended
		September				June				March				December				September				June				March				December
		2015				2015				2015				2014				2014				2014				2014				2013
Ratios (percent)
Return on average assets			1.07				0.90				1.06				1.13				1.02				1.34				1.00				1.24
Return on average common equity			10.0				8.1				9.7				10.0				9.2				11.9				9.0				10.8
Average total Bancorp shareholders’ equity as a percent of average assets			11.24				11.32				11.49				11.54				11.71				11.57				11.53				11.51
Net interest margin(a)			2.89				2.90				2.86				2.96				3.10				3.15				3.22				3.21
Efficiency(a)			58.2				65.4				62.3				59.6				62.1				58.2				64.9				61.5
Net losses charged-off as a percent of average portfolio loans and leases			0.80				0.37				0.41				0.83				0.50				0.45				0.76				0.67
ALLL as a percent of portfolio loans and leases			1.35				1.39				1.42				1.47				1.56				1.61				1.65				1.79
Allowance for credit losses as a percent of portfolio loans and leases			1.49				1.54				1.57				1.62				1.71				1.77				1.82				1.97
Nonperforming assets as a percent of portfolio loans, leases and other assets, including OREO(b)			0.65				0.67				0.76				0.82				0.88				0.92				1.05				1.10
Allowance for loan and lease losses as a percent of nonperforming assets(b)			208				206				188				178				178				175				157				161
Allowance for credit losses as a percent of nonperforming assets(b)			230				228				207				196				195				192				173				178
Common Share Data
Earnings per share—basic		$	0.46			$	0.36			$	0.42			$	0.44			$	0.39			$	0.49			$	0.36			$	0.44
Earnings per share—diluted		$	0.45			$	0.36			$	0.42			$	0.43			$	0.39			$	0.49			$	0.36			$	0.43
Cash dividends per common share			0.13				0.13				0.13				0.13				0.13				0.13				0.12				0.12
Book value per share			18.22				17.62				17.83				17.35				16.87				16.74				16.27				15.85
Common shares outstanding, excluding treasury			795,439,309				810,054,148				815,190,210				824,046,952				834,261,897				844,488,849				847,568,728				855,305,745
Market price per share:
High		$	21.71			$	21.69			$	20.21			$	20.69			$	21.75			$	23.19			$	23.39			$	21.04
Low			18.23				18.91				17.22				17.74				19.52				20.03				20.50				17.50
End of period			18.91				20.82				18.85				20.38				20.02				21.35				22.96				21.03
Supplemental Data
Common dividends declared ($ in millions)		$	103			$	105			$	106			$	107			$	108			$	110			$	102			$	103
Full-time equivalent employees			18,311				18,527				18,471				18,351				18,503				18,732				19,080				19,446
Banking centers			1,295				1,299				1,303				1,302				1,308				1,309				1,311				1,320
ATMs			2,650				2,630				2,637				2,638				2,639				2,619				2,614				2,586

 

(a)	Presented on a fully taxable equivalent basis (FTE).

(b)	Excludes nonperforming assets held for sale.

 

Page 2

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Quarterly Data		Three Months Ended
		September				June				March				December				September				June				March				December
		2015				2015				2015				2014				2014				2014				2014				2013
Income Statement ($ in millions)
Interest income (FTE)		$	1,031			$	1,008			$	975			$	1,016			$	1,023			$	1,013			$	998			$	1,007
Interest expense			125				116				123				128				115				108				100				102
Net interest income (FTE)			906				892				852				888				908				905				898				905
Provision for loan and lease losses			156				79				69				99				71				76				69				53
Noninterest income:
Service charges on deposits			145				139				135				142				145				139				133				142
Investment advisory revenue			103				105				108				100				103				102				102				98
Corporate banking revenue			104				113				63				120				100				107				104				94
Mortgage banking net revenue			71				117				86				61				61				78				109				126
Card and processing revenue			77				77				71				76				75				76				68				71
Other noninterest income			213				1				163				150				33				226				41				170
Securities gains, net			—				4				4				4				3				8				7				2
Total noninterest income			713				556				630				653				520				736				564				703
Noninterest expense:
Salaries, wages and incentives			387				383				369				366				357				368				359				388
Employee benefits			72				78				99				79				75				79				101				78
Net occupancy expense			77				83				79				77				78				79				80				77
Technology and communications			56				54				55				54				53				52				53				53
Equipment expense			31				31				31				30				30				30				30				29
Card and processing expense			40				38				36				36				37				37				31				37
Other noninterest expense			280				280				254				276				258				309				296				327
Total noninterest expense			943				947				923				918				888				954				950				989
Income before income taxes (FTE)			520				422				490				524				469				611				443				566
Taxable equivalent adjustment			5				5				5				5				5				5				5				5
Income before income taxes			515				417				485				519				464				606				438				561
Applicable income tax expense			134				108				124				134				124				167				119				159
Net income		$	381			$	309			$	361			$	385			$	340			$	439			$	319			$	402
Less: Net income attributable to noncontrolling interests			—				(6	)			—				—				—				—				1				—
Net income attributable to Bancorp		$	381			$	315			$	361			$	385			$	340			$	439			$	318			$	402
Dividends on preferred stock			15				23				15				23				12				23				9				19
Net income available to common shareholders		$	366			$	292			$	346			$	362			$	328			$	416			$	309			$	383
		Basel III Transitional												Basel I
Regulatory Capital Data ($ in millions)(a)
CET1 capital		$	11,574			$	11,582			$	11,543				N/A				N/A				N/A				N/A				N/A
Additional tier I capital			1,340				1,340				1,339				N/A				N/A				N/A				N/A				N/A
Tier I capital		$	12,914			$	12,922			$	12,882			$	12,764			$	12,661			$	12,644			$	12,182			$	12,094
Tier II capital			3,935				3,909				4,112				4,131				4,103				4,101				4,174				4,337
Total regulatory capital		$	16,849			$	16,831			$	16,994			$	16,895			$	16,764			$	16,745			$	16,356			$	16,431
Risk-weighted assets		$	123,140	(b)		$	122,986	(b)		$	121,310	(b)		$	117,878			$	116,917			$	117,117			$	116,622			$	115,969
CET1 capital ratio			9.40	%(b)			9.42	%(b)			9.52	%(b)			N/A				N/A				N/A				N/A				N/A
Tier I risk-based capital ratio			10.49	%(b)			10.51	%(b)			10.62	%(b)			10.83	%			10.83	%			10.80	%			10.45	%			10.43	%
Total risk-based capital ratio			13.68	%(b)			13.69	%(b)			14.01	%(b)			14.33	%			14.34	%			14.30	%			14.02	%			14.17	%
Tier I leverage ratio			9.38	%			9.44	%			9.59	%			9.66	%			9.82	%			9.86	%			9.71	%			9.73	%
Tier I common equity ratio			N/A				N/A				N/A				9.65	%(c)			9.64	%(c)			9.61	%(c)			9.51	%(c)			9.45	%(c)
CET1 capital ratio (fully phased-in)			9.30	%(b)(c)			9.31	%(b)(c)			9.41	%(b)(c)			N/A				N/A				N/A				N/A				N/A

 

(a)	Current period regulatory capital data and ratios are estimated.

(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, along with the measure for market risk, resulting in the Bancorp’s total risk-weighted assets.

(c)	This ratio has been included herein to facilitate a greater understanding of the Bancorp’s capital structure and financial condition. This is a Non-GAAP measure.

 

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Quarterly Data		As of
		September 2015				June 2015				March 2015				December 2014				September 2014				June 2014				March 2014				December 2013
Balance Sheet ($ in millions, except share data)
Assets
Cash and due from banks		$	2,455			$	2,785			$	2,920			$	3,091			$	3,125			$	3,312			$	3,153			$	3,178
Available-for-sale and other securities			28,799				27,987				26,409				22,408				22,912				22,814				20,749				18,597
Held-to-maturity securities			157				157				177				187				191				194				195				208
Trading securities			374				370				392				360				389				361				347				343
Other short-term investments			1,994				3,451				4,919				7,914				3,637				2,386				2,202				5,116
Total cash and securities			33,779				34,750				34,817				33,960				30,254				29,067				26,646				27,442
Loans held for sale			994				995				724				1,261				641				682				780				944
Portfolio loans and leases			93,574				92,703				91,244				90,084				90,624				90,484				89,705				88,614
Total loans and leases			94,568				93,698				91,968				91,345				91,265				91,166				90,485				89,558
Allowance for loan and lease losses			(1,261	)			(1,293	)			(1,300	)			(1,322	)			(1,414	)			(1,458	)			(1,483	)			(1,582	)
Bank premises and equipment			2,264				2,298				2,433				2,465				2,467				2,491				2,528				2,531
Operating lease equipment			680				670				695				728				732				667				714				730
Goodwill			2,416				2,416				2,416				2,416				2,416				2,416				2,416				2,416
Intangible assets			13				13				14				15				16				17				18				19
Servicing rights			757				854				789				858				935				931				975				971
Other real estate owned(a)			149				163				187				217				242				266				291				299
Other assets			8,553				8,089				8,451				8,024				7,275				6,999				7,064				8,059
Total assets		$	141,918			$	141,658			$	140,470			$	138,706			$	134,188			$	132,562			$	129,654			$	130,443
Liabilities
Deposits:
Demand		$	34,832			$	35,449			$	35,343			$	34,809			$	32,258			$	32,140			$	31,234			$	32,634
Interest checking			24,832				27,074				27,191				26,800				24,930				24,744				25,472				25,875
Savings			14,632				14,976				15,355				15,051				15,355				16,087				16,867				17,045
Money market			18,887				17,900				18,105				17,083				16,199				14,216				13,208				11,644
Foreign office			754				728				811				1,114				1,577				1,418				1,922				1,976
Other time			4,041				4,050				4,044				3,960				3,856				3,724				3,660				3,530
Certificates—$100,000 and over			2,915				2,846				2,566				2,895				3,117				3,623				4,511				6,571
Total deposits			100,893				103,023				103,415				101,712				97,292				95,952				96,874				99,275
Federal funds purchased			132				126				200				144				148				153				268				284
Other short-term borrowings			4,904				4,136				1,413				1,556				2,730				3,146				2,717				1,380
Other liabilities			4,604				5,214				5,483				4,662				4,239				3,842				3,698				5,245
Long-term debt			15,527				13,521				14,055				14,967				14,336				13,961				11,233				9,633
Total liabilities		$	126,060			$	126,020			$	124,566			$	123,041			$	118,745			$	117,054			$	114,790			$	115,817
Equity
Common and preferred equity		$	17,867			$	17,578			$	17,421			$	17,169			$	16,889			$	16,661			$	16,122			$	15,802
Net unrealized gains:
Available-for-sale securities			528				327				608				475				338				410				231				121
Qualifying cash flow hedges			58				29				47				23				12				22				16				13
Accumulated other comprehensive income related to employee benefit plans			(64	)			(65	)			(67	)			(69	)			(49	)			(50	)			(51	)			(52	)
Treasury stock, at cost			(2,563	)			(2,264	)			(2,145	)			(1,972	)			(1,786	)			(1,574	)			(1,492	)			(1,295	)
Total Bancorp shareholders’ equity			15,826				15,605				15,864				15,626				15,404				15,469				14,826				14,589
Noncontrolling interests			32				33				40				39				39				39				38				37
Total equity		$	15,858			$	15,638			$	15,904			$	15,665			$	15,443			$	15,508			$	14,864			$	14,626
Total liabilities and equity		$	141,918			$	141,658			$	140,470			$	138,706			$	134,188			$	132,562			$	129,654			$	130,443
Share Data
Preferred shares outstanding—Series H			24,000				24,000				24,000				24,000				24,000				24,000				24,000				24,000
Preferred shares outstanding—Series I			18,000				18,000				18,000				18,000				18,000				18,000				18,000				18,000
Preferred shares outstanding—Series J			12,000				12,000				12,000				12,000				12,000				12,000				—				—
Common shares outstanding, excluding treasury			795,439,309				810,054,148				815,190,210				824,046,952				834,261,897				844,488,849				847,568,728				855,305,745
Treasury shares held			128,453,272				113,838,433				108,702,371				99,845,629				89,630,684				79,403,732				76,323,853				68,586,836

 

(a)

Includes OREO related to government insured loans. Upon the prospective adoption on January 1, 2015 of ASU 2014-14 “Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure,” government guaranteed loans meeting certain criteria were reclassified to other receivables rather than OREO upon foreclosure.

 

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Quarterly Data
		Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014				June 2014				March 2014				December 2013
Average Balance Sheet ($ in millions, except share data)
Assets
Interest-earning assets:
Loans and leases		$	94,329			$	92,739			$	91,659			$	91,581			$	91,428			$	91,241				90,238			$	88,865
Taxable securities			28,251				27,344				23,102				22,364				22,594				21,706				20,385				18,383
Tax exempt securities			52				59				59				64				50				52				46				48
Other short-term investments			1,799				3,160				5,877				5,176				2,283				2,182				2,509				4,612
Total interest-earning assets			124,431				123,302				120,697				119,185				116,355				115,181				113,178				111,908
Cash and due from banks			2,503				2,636				2,830				3,008				2,862				2,847				2,850				2,956
Other assets			15,097				15,354				15,446				14,800				14,461				14,417				14,478				14,986
Allowance for loan and lease losses			(1,292	)			(1,300	)			(1,322	)			(1,413	)			(1,458	)			(1,480	)			(1,576	)			(1,671	)
Total assets		$	140,739			$	139,992			$	137,651			$	135,580			$	132,220			$	130,965			$	128,930			$	128,179
Liabilities
Interest-bearing liabilities:
Interest checking		$	25,590			$	26,894			$	26,885			$	25,478			$	24,926			$	25,222			$	25,911			$	24,650
Savings			14,868				15,156				15,174				15,173				15,759				16,509				16,903				17,323
Money market			18,253				18,071				17,492				17,023				15,222				13,942				12,439				11,285
Foreign office			718				955				861				1,439				1,663				2,200				2,017				1,717
Other time			4,057				4,074				4,022				3,936				3,800				3,693				3,616				3,529
Certificates—$100,000 and over			2,924				2,558				2,683				2,998				3,339				3,840				5,576				7,456
Other deposits			222				—				—				—				—				—				—				—
Federal funds purchased			1,978				326				172				161				520				606				547				301
Other short-term borrowings			1,897				1,705				1,602				1,481				1,973				2,234				1,808				2,177
Long-term debt			14,697				13,773				14,448				14,855				13,955				12,524				10,313				9,135
Total interest-bearing liabilities			85,204				83,512				83,339				82,544				81,157				80,770				79,130				77,573
Demand deposits			35,231				35,384				33,760				33,301				31,790				31,275				30,626				30,765
Other liabilities			4,458				5,215				4,693				4,052				3,749				3,724				4,274				5,045
Total liabilities			124,893				124,111				121,792				119,897				116,696				115,769				114,030				113,383
Equity			15,846				15,881				15,859				15,683				15,524				15,196				14,900				14,796
Total liabilities and equity		$	140,739			$	139,992			$	137,651			$	135,580			$	132,220			$	130,965			$	128,930			$	128,179
Average loans and leases (excluding held for sale)		$	93,373			$	92,173			$	90,508			$	91,041			$	90,799			$	90,549			$	89,530			$	87,895
Share Data
Average common shares outstanding - basic			795,792,825				803,965,057				810,209,585				819,057,247				829,391,505				838,492,046				845,860,065				868,077,089
Average common shares outstanding - diluted			805,022,588				812,842,540				818,672,259				827,831,317				838,324,420				848,245,111				857,923,596				877,510,663

 

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Quarterly Data		Three Months Ended
		September 2015				June 2015				March 2015				December 2014				September 2014				June 2014				March 2014				December 2013
End of Period Loans and Leases ($ in millions) (net of unearned discount)
Commercial:
Commercial and industrial loans		$	42,970			$	42,812			$	42,062			$	40,801			$	41,111			$	41,364			$	40,692			$	39,347
Commercial mortgage loans			7,084				7,165				7,210				7,410				7,566				7,807				7,959				8,069
Commercial construction loans			3,101				2,709				2,303				2,071				1,704				1,426				1,220				1,041
Commercial leases			3,901				3,882				3,787				3,721				3,555				3,572				3,577				3,626
Subtotal - commercial			57,056				56,568				55,362				54,003				53,936				54,169				53,448				52,083
Consumer:
Residential mortgage loans			14,197				13,792				13,258				13,582				13,520				13,250				13,275				13,570
Home equity			8,460				8,591				8,714				8,886				8,987				9,056				9,125				9,246
Automobile loans			11,829				11,914				11,873				12,037				12,121				12,050				12,088				11,984
Credit card			2,330				2,278				2,291				2,401				2,317				2,261				2,177				2,294
Other consumer loans and leases			696				555				470				436				384				380				372				381
Subtotal - consumer			37,512				37,130				36,606				37,342				37,329				36,997				37,037				37,475
Total loans and leases		$	94,568			$	93,698			$	91,968			$	91,345			$	91,265			$	91,166			$	90,485			$	89,558
Average Loans and Leases ($ in millions) (net of unearned discount)
Commercial:
Commercial and industrial loans		$	43,162			$	42,554			$	41,462			$	41,313			$	41,525			$	41,451			$	40,409			$	38,846
Commercial mortgage loans			7,038				7,149				7,248				7,482				7,637				7,886				7,983				8,051
Commercial construction loans			2,966				2,549				2,198				1,911				1,565				1,364				1,118				955
Commercial leases			3,847				3,776				3,716				3,601				3,576				3,556				3,607				3,579
Subtotal - commercial			57,013				56,028				54,624				54,307				54,303				54,257				53,117				51,431
Consumer:
Residential mortgage loans			13,976				13,375				13,515				13,526				13,342				13,202				13,304				13,544
Home equity			8,521				8,655				8,802				8,937				9,009				9,101				9,194				9,296
Automobile loans			11,881				11,902				11,933				12,073				12,105				12,070				12,023				12,019
Credit card			2,277				2,296				2,321				2,324				2,295				2,232				2,230				2,202
Other consumer loans and leases			661				483				464				414				374				379				370				373
Subtotal - consumer			37,316				36,711				37,035				37,274				37,125				36,984				37,121				37,434
Total average loans and leases		$	94,329			$	92,739			$	91,659			$	91,581			$	91,428			$	91,241			$	90,238			$	88,865
Asset Quality ($ in millions)
Nonaccrual portfolio loans and leases		$	205			$	217			$	231			$	269			$	305			$	323			$	398			$	387
Nonaccrual loans held for sale			1				1				2				24				4				5				3				6
Restructured loans - (nonaccrual) held for sale			1				—				—				15				3				—				—				—
Restructured loans and leases (nonaccrual) portfolio			253				258				295				310				315				317				335				364
OREO and other repossessed property(a)			148				151				165				165				176				192				213				229
Total nonperforming assets		$	608			$	627			$	693			$	783			$	803			$	837			$	949			$	986
Ninety days past due loans and leases		$	70			$	70			$	78			$	87			$	87			$	94			$	94			$	103
Nonperforming Loans ($ in millions)(nonaccrual plus renegotiated)
Commercial and industrial loans and leases		$	171			$	182			$	200			$	241			$	267			$	249			$	301			$	287
Commercial mortgage loans			110				106				126				146				121				141				147				146
Commercial construction loans			6				—				1				2				4				10				19				31
Residential mortgage loans			54				62				70				94				111				117				141				165
Home equity			82				88				90				93				85				93				94				93
Other consumer loans and leases			37				38				41				42				39				35				34				35
Total nonperforming loans and leases (including held for sale)		$	460			$	476			$	528			$	618			$	627			$	645			$	736			$	757
Credit Charge-Offs ($ in millions)
Losses charged-off		($	209	)		($	112	)		($	115	)		($	215	)		($	146	)		($	127	)		($	190	)		($	183	)
Recoveries of losses previously charged-off			21				26				24				24				31				26				22				35
Net losses charged-off		($	188	)		($	86	)		($	91	)		($	191	)		($	115	)		($	101	)		($	168	)		($	148	)

 

(a)

Excludes OREO related to government insured loans. The Bancorp has historically excluded government guaranteed loans classified in OREO from its nonperforming asset disclosures. Upon the prospective adoption on January 1, 2015 of ASU 2014-14 “Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure,” government guaranteed loans meeting certain criteria will be reclassified to other receivables rather than OREO upon foreclosure.

 

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