2015 Earnings Per Diluted Share of

  • 4Q15 net income available to common shareholders of , or per diluted common share
    • Includes a pre-tax ( after-tax) gain on the sale of shares, an pre-tax ( after-tax) gain on warrant actions taken during the quarter, a pre-tax ( after-tax) payment received from to terminate a portion of its tax receivable agreement, a pre-tax ( after-tax) positive valuation adjustment on the remaining warrant Fifth Third holds in , a pre-tax ( after-tax) charge related to the valuation of the Visa total return swap, and a pre-tax ( after-tax) contribution to , resulting in a net impact on earnings per share
  • 4Q15 return on average assets (ROA) of 1.83%; return on average common equity of 17.2%; return on average tangible common equity** of 20.6%
  • Pre-provision net revenue (PPNR)** of in 4Q15
    • Net interest income (FTE) of was down sequentially and up from 4Q14; net interest margin of 2.85%, down 4 bps sequentially
    • Average portfolio loans of , up sequentially and up from 4Q14; the increase from the prior year was primarily driven by increases in C&I and commercial construction loans
    • Noninterest income of compared with in the prior quarter; primarily driven by the -related items mentioned above
    • Noninterest expense of , up 2% from 3Q15, primarily driven by a contribution to
  • Credit trends
    • 4Q15 net charge-offs of (0.34% of loans and leases) decreased from 3Q15 NCOs of (0.80% of loans and leases) primarily due to the 3Q15 net charge-off related to the restructuring of a student loan backed commercial credit
    • Portfolio NPA ratio of 0.70% up 5 bps from 3Q15, NPL ratio of 0.55% up 6 bps from 3Q15; total nonperforming assets (NPAs) of , including loans held-for-sale (HFS), increased sequentially
    • 4Q15 provision expense of ; in 3Q15 and in 4Q14; decrease from the prior quarter was primarily impacted by the restructuring of a student loan backed commercial credit in 3Q15
  • Strong capital ratios*
    • Common equity Tier 1 (CET1) ratio 9.83%; fully phased-in CET1 ratio of 9.73%
    • Tier 1 risk-based capital ratio 10.93%, Total risk-based capital ratio 14.13%, Leverage ratio 9.54%
    • Tangible common equity ratio** of 8.71%; 8.59% excluding securities portfolio unrealized gains/losses
  • 10 million reduction in common shares outstanding during the quarter
  • Book value per share of ; up 1% from 3Q15 and up 7% from 4Q14; tangible book value per share** of

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

** Non-GAAP measure; see Reg. G reconciliation on page 34 in Exhibit 99.1 of 8-k filing dated 1/21/16.

--(BUSINESS WIRE)--Jan. 21, 2016-- (Nasdaq: FITB) today reported full year 2015 net income of , up 16 percent from net income of in 2014. After preferred dividends, 2015 net income available to common shareholders was , or per diluted share, up 16 percent compared with 2014 net income available to common shareholders of , or per diluted share.

Fourth quarter 2015 net income was , an increase of 72 percent from net income of in the third quarter of 2015 and an increase of 71 percent from net income of in the fourth quarter of 2014. After preferred dividends, net income available to common shareholders was , or per diluted share, in the fourth quarter 2015, compared with , or per diluted share, in the third quarter 2015, and , or per diluted share, in the fourth quarter of 2014.

Fourth quarter 2015 included:

Income

  • gain on the sale of shares
  • gain on warrant actions taken during the quarter
  • payment received from to terminate a portion of its tax receivable agreement
  • positive valuation adjustment on the remaining warrant
  • () charge related to the valuation of the total return swap entered into as part of the 2009 sale of Class B shares

Expenses

  • () in severance expense
  • () contribution to

Results also included a annual payment recognized from pursuant to the tax receivable agreement recorded in other noninterest income.

Third quarter 2015 included:

Income

  • positive valuation adjustment on the warrant
  • () charge related to the valuation of the Visa total return swap

Expenses

  • () charge associated with executive retirement and severance costs

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

Fourth quarter 2014 included:

Income

  • positive valuation adjustment on the warrant
  • () charge related to the valuation of the Visa total return swap

Expenses

  • () in severance expense

Results also included a annual payment recognized from pursuant to the tax receivable agreement recorded in other noninterest income and of provision expense related to the transfer of residential mortgage loans classified as troubled debt restructurings to held-for-sale.

Earnings Highlights
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Earnings ($ in millions)
Net income attributable to Bancorp $ 657 $ 381 $ 315 $ 361 $ 385 72 % 71 %
Net income available to common shareholders $ 634 $ 366 $ 292 $ 346 $ 362 73 % 75 %
Common Share Data
Earnings per share, basic $ 0.80 $ 0.46 $ 0.36 $ 0.42 $ 0.44 74 % 82 %
Earnings per share, diluted 0.79 0.45 0.36 0.42 0.43 76 % 84 %
Cash dividends per common share 0.13 0.13 0.13 0.13 0.13 - -
Financial Ratios
Return on average assets 1.83 % 1.07 % 0.90 % 1.06 % 1.13 % 71 % 62 %
Return on average common equity 17.2 10.0 8.1 9.7 10.0 72 % 72 %
Return on average tangible common equity 20.6 12.0 9.7 11.7 12.1 72 % 70 %
CET1 capital 9.83 9.40 9.42 9.52 N/A 5 % N/A
Tier I risk-based capital 10.93 10.49 10.51 10.62 10.83 4 % N/A
Tier I common equity N/A N/A N/A N/A 9.65 N/A N/A
CET1 capital (fully-phased in) 9.73 9.30 9.31 9.41 N/A 5 % N/A
Net interest margin 2.85 2.89 2.90 2.86 2.96 (1 %) (4 %)
Efficiency 48.0 58.2 65.4 62.3 59.6 (18 %) (19 %)
Common shares outstanding (in thousands) 785,080 795,439 810,054 815,190 824,047 (1 %) (5 %)
Average common shares outstanding
(in thousands):
Basic 784,855 795,793 803,965 810,210 819,057 (1 %) (4 %)
Diluted 794,481 805,023 812,843 818,672 827,831 (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.

'Core fourth quarter results were in line with our expectations,' said , President and CEO of . 'Our fee businesses produced stable results despite lower levels of capital markets activity, and our expenses were up less than one percent relative to the third quarter, excluding the contribution we made to our Foundation in support of our communities. We were also pleased with the low charge-off levels at 34 basis points. We view the Fed's December rate move as a positive first step towards a normalized environment but there is uncertainty around the extent and timing of the future rate decisions.

'Additionally during the quarter, we have taken important steps towards reducing our direct ownership stake in in the best interest of our shareholders while reducing a significant amount of volatility associated with our warrant position. continues to perform well and we were happy to participate in their success. In this quarter we executed on all three pieces of our financial interests, namely the TRA, warrants, and direct ownership in a well-planned manner to maximize the returns to our shareholders. After these transactions, we continue to hold a significant ownership stake in the company which we believe will result in healthy returns for our shareholders.

'We view 2016 as an important transition year tactically and strategically to position our company to achieve operating leverage in a sustainable manner regardless of the rate environment going forward. In 2015 we took significant steps in that direction and we will continue our efforts in 2016. We are working simultaneously on long-term revenue growth as well as expense efficiencies to achieve our goal. We have taken actions to reduce our run-rate expenses and those savings will partially fund the strategic investments and expenses related to our risk and compliance infrastructure which we expect will peak in 2016. Our strategic decisions will continue to result in the re-allocation of our resources to improve profitability with reduced volatility. We are committed to achieving the industry leading level of operational results that our constituents have historically seen from us when it comes to service, efficiency, growth, and returns.'

Income Statement Highlights
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Condensed Statements of Income ($ in millions)
Net interest income (taxable equivalent) $ 904 $ 906 $ 892 $ 852 $ 888 - 2 %
Provision for loan and lease losses 91 156 79 69 99 (42 %) (8 %)
Total noninterest income 1,104 713 556 630 653 55 % 69 %
Total noninterest expense 963 943 947 923 918 2 % 5 %
Income before income taxes (taxable equivalent) $ 954 $ 520 $ 422 $ 490 $ 524 83 % 82 %
Taxable equivalent adjustment 5 5 5 5 5 - -
Applicable income taxes 292 134 108 124 134 NM NM
Net income $ 657 $ 381 $ 309 $ 361 $ 385 72 % 71 %
Less: Net income attributable to noncontrolling interests - - (6 ) - - - -
Net income attributable to Bancorp $ 657 $ 381 $ 315 $ 361 $ 385 72 % 71 %
Dividends on preferred stock 23 15 23 15 23 53 % -
Net income available to common shareholders $ 634 $ 366 $ 292 $ 346 $ 362 73 % 75 %
Earnings per share, diluted $ 0.79 $ 0.45 $ 0.36 $ 0.42 $ 0.43 76 % 84 %
Net Interest Income
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Interest Income ($ in millions)
Total interest income (taxable equivalent) $ 1,035 $ 1,031 $ 1,008 $ 975 $ 1,016 - 2 %
Total interest expense 131 125 116 123 128 5 % 2 %
Net interest income (taxable equivalent) $ 904 $ 906 $ 892 $ 852 $ 888 - 2 %
Average Yield
Yield on interest-earning assets (taxable equivalent) 3.26 % 3.29 % 3.28 % 3.28 % 3.38 % (1 %) (4 %)
Rate paid on interest-bearing liabilities 0.61 % 0.58 % 0.56 % 0.60 % 0.61 % 5 % -
Net interest rate spread (taxable equivalent) 2.65 % 2.71 % 2.72 % 2.68 % 2.77 % (2 %) (4 %)
Net interest margin (taxable equivalent) 2.85 % 2.89 % 2.90 % 2.86 % 2.96 % (1 %) (4 %)
Average Balances ($ in millions)
Loans and leases, including held for sale $ 94,587 $ 94,329 $ 92,739 $ 91,659 $ 91,581 - 3 %
Total securities and other short-term investments 31,256 30,102 30,563 29,038 27,604 4 % 13 %
Total interest-earning assets 125,843 124,431 123,302 120,697 119,185 1 % 6 %
Total interest-bearing liabilities 85,415 85,204 83,512 83,339 82,544 - 3 %
Bancorp shareholders' equity 15,982 15,815 15,841 15,820 15,644 1 % 2 %

Net interest income decreased on a fully taxable equivalent basis from the third quarter, primarily driven by the full quarter impact of of wholesale debt issuances in the third quarter, the auto securitization completed in November, and commercial loan yield compression, partially offset by residential mortgage loan growth.

The net interest margin was 2.85 percent, a decrease of 4 bps from the previous quarter, primarily driven by the impact of debt issuances and the auto securitization above, slower prepayments reducing net discount accretion on the investment portfolio, and an increased short-term cash position during the quarter.

Compared with the fourth quarter of 2014, net interest income increased and the net interest margin decreased 11 bps. The increase in net interest income was driven by the impact of higher investment securities balances, partially offset by a decline due to the changes to the Bancorp's deposit advance product that were effective . The decline in the net interest margin from the prior year was primarily driven by a 7 basis point impact due to the changes to the deposit advance product and loan repricing.

Securities

Average securities and other short-term investments were in the fourth quarter of 2015 compared with in the previous quarter and in the fourth quarter of 2014. Other short-term investments average balances of increased sequentially reflecting higher cash balances held at the Federal Reserve.

Loans
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Average Portfolio Loans and Leases ($ in millions)
Commercial:
Commercial and industrial loans $ 43,154 $ 43,149 $ 42,550 $ 41,426 $ 41,277 - 5 %
Commercial mortgage loans 7,032 7,023 7,148 7,241 7,480 - (6 %)
Commercial construction loans 3,141 2,965 2,549 2,197 1,909 6 % 65 %
Commercial leases 3,839 3,846 3,776 3,715 3,600 - 7 %
Subtotal - commercial loans and leases $ 57,166 $ 56,983 $ 56,023 $ 54,579 $ 54,266 - 5 %
Consumer:
Residential mortgage loans $ 13,504 $ 13,144 $ 12,831 $ 12,433 $ 13,046 3 % 4 %
Home equity 8,360 8,479 8,654 8,802 8,937 (1 %) (6 %)
Automobile loans 11,670 11,877 11,902 11,933 12,073 (2 %) (3 %)
Credit card 2,218 2,277 2,296 2,321 2,324 (3 %) (5 %)
Other consumer loans and leases 676 613 467 440 395 10 % 71 %
Subtotal - consumer loans and leases $ 36,428 $ 36,390 $ 36,150 $ 35,929 $ 36,775 - (1 %)
Total average loans and leases (excluding held for sale) $ 93,594 $ 93,373 $ 92,173 $ 90,508 $ 91,041 - 3 %
Average loans held for sale $ 993 $ 956 $ 566 $ 1,151 $ 540 4 % 84 %

Average loan and lease balances (excluding loans held-for-sale) increased sequentially and increased , or 3 percent, from the fourth quarter of 2014. The year-over-year increase in average loans and leases was driven by increased commercial and industrial (C&I) and commercial construction balances. Period end loans and leases (excluding loans held-for-sale) of decreased , or 1 percent, sequentially and increased , or 3 percent, from a year ago.

Average commercial portfolio loan and lease balances increased sequentially and increased , or 5 percent, from the fourth quarter of 2014. Average C&I loans were flat from the prior quarter and increased , or 5 percent, from the fourth quarter of 2014. Within commercial real estate, average commercial mortgage balances were flat and average commercial construction balances increased . Commercial line usage, on an end of period basis, decreased 77 bps from the third quarter of 2015 and 49 bps from the fourth quarter of 2014.

Average consumer portfolio loan and lease balances increased sequentially and decreased from the fourth quarter of 2014. Average residential mortgage loans increased 3 percent sequentially and 4 percent from a year ago. Average auto loans decreased 2 sequentially and 3 percent from the previous year. Average home equity loans declined 1 percent sequentially and 6 percent from the fourth quarter of 2014. Average credit card loans decreased 3 percent sequentially and 5 percent from the fourth quarter of 2014.

Period end loans held-for-sale balances of decreased sequentially. Period end loans held-for-sale balances decreased compared with the prior year due to the impact of the transfer of certain residential mortgage loans classified as troubled debt restructurings to held-for-sale in the fourth quarter of 2014.

Deposits
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Average Deposits ($ in millions)
Demand $ 36,254 $ 35,231 $ 35,384 $ 33,760 $ 33,301 3 % 9 %
Interest checking 25,296 25,590 26,894 26,885 25,478 (1 %) (1 %)
Savings 14,615 14,868 15,156 15,174 15,173 (2 %) (4 %)
Money market 18,775 18,253 18,071 17,492 17,023 3 % 10 %
Foreign office 736 718 955 861 1,439 3 % (49 %)
Subtotal - Transaction deposits $ 95,676 $ 94,660 $ 96,460 $ 94,172 $ 92,414 1 % 4 %
Other time 4,052 4,057 4,074 4,022 3,936 - 3 %
Subtotal - Core deposits $ 99,728 $ 98,717 $ 100,534 $ 98,194 $ 96,350 1 % 4 %
Certificates - $100,000 and over 3,305 2,924 2,558 2,683 2,998 13 % 10 %
Other 7 222 - - - (97 %) 100 %
Total average deposits $ 103,040 $ 101,863 $ 103,092 $ 100,877 $ 99,348 1 % 4 %

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

Average core deposits increased , or 1 percent, sequentially and increased , or 4 percent, from the fourth quarter of 2014. Average transaction deposits increased , or 1 percent, from the third quarter of 2015 and increased , or 4 percent from the fourth quarter of 2014. Sequential performance was primarily driven by higher demand deposit and money market account balances, partially offset by lower interest checking and savings account balances. Year-over-year growth reflected higher demand and money market account balances, partially offset by lower savings, foreign office, and interest checking account balances. Other time deposits were flat sequentially and increased 3 percent compared with the fourth quarter of 2014.

Average commercial transaction deposits increased 2 percent sequentially and increased 5 percent from the previous year. Sequential performance was primarily driven by seasonally higher demand deposit and money market account balances, partially offset by lower interest checking account balances. Year-over-year growth reflected higher demand deposit and money market account balances, partially offset by lower foreign office and interest checking account balances.

Average consumer transaction deposits were flat sequentially and increased 2 percent from the fourth quarter of 2014. The sequential performance reflected higher interest checking account balances, partially offset by lower savings account balances. Year-over-year growth was driven by increased money market account, interest checking, and demand deposit account balances, partially offset by lower savings account balances.

Wholesale Funding
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Average Wholesale Funding ($ in millions)
Certificates - $100,000 and over $ 3,305 $ 2,924 $ 2,558 $ 2,683 $ 2,998 13 % 10 %
Other deposits 7 222 - - - (97 %) 100 %
Federal funds purchased 1,182 1,978 326 172 161 (40 %) NM
Other short-term borrowings 1,675 1,897 1,705 1,602 1,481 (12 %) 13 %
Long-term debt 15,772 14,697 13,773 14,448 14,855 7 % 6 %
Total average wholesale funding $ 21,941 $ 21,718 $ 18,362 $ 18,905 $ 19,495 1 % 13 %

Average wholesale funding of increased , or 1 percent, sequentially, and increased , or 13 percent, compared with the fourth quarter of 2014. The sequential increase was primarily driven by the full quarter's impact of the issuance of of 5-year holding company debt and of 3-year bank-level debt in the third quarter of 2015, a auto securitization completed in November, and an increase in certificates and over. The year-over-year increase in average wholesale funding reflected an increase in federal funds purchased, an increase in long-term debt due to issuances in 2015, as well as an increase in certificates and over.

Noninterest Income
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Noninterest Income ($ in millions)
Service charges on deposits $ 144 $ 145 $ 139 $ 135 $ 142 (1 %) 1 %
Corporate banking revenue 104 104 113 63 120 - (13 %)
Mortgage banking net revenue 74 71 117 86 61 4 % 21 %
Investment advisory revenue 102 103 105 108 100 (1 %) 2 %
Card and processing revenue 77 77 77 71 76 - 1 %
Other noninterest income 602 213 1 163 150 NM NM
Securities gains, net 1 - 4 4 4 - (75 %)
Total noninterest income $ 1,104 $ 713 $ 556 $ 630 $ 653 55 % 69 %

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

Noninterest Income excluding certain items
For the Three Months Ended % Change
December September December
2015 2015 2014 Seq Yr/Yr
Noninterest Income excluding certain items ($ in millions)
Noninterest income (U.S. GAAP) $ 1,104 $ 713 $ 653
Gain on sale of Vantiv shares (331 ) - -
Gain on Vantiv warrant actions (89 ) - -
Vantiv TRA settlement payment (49 ) - -
Vantiv warrant valuation (21 ) (130 ) (56 )
Valuation of Visa total return swap 10 8 19
Securities (gains) / losses (1 ) - (4 )
Noninterest income excluding certain items $ 623 $ 591 $ 612 5 % 2 %

Excluding the items in the table above, noninterest income of increased , or 5 percent, from the previous quarter and increased , or 2 percent, from the fourth quarter of 2014. The sequential growth was primarily due to an annual payment from pursuant to the tax receivable agreement of recognized in the fourth quarter of 2015. Year-over-year growth was driven by growth in mortgage banking revenue and the annual payment from pursuant to the tax receivable agreement recognized in both quarters, partially offset by a decrease in corporate banking revenue.

Service charges on deposits of decreased 1 percent from the third quarter of 2015 and increased 1 percent compared with the same quarter last year. The sequential decrease was due to a 3 percent decrease in retail service charges. The increase from the fourth quarter of 2014 was due to a 3 percent increase in commercial service charges.

Corporate banking revenue of was flat compared to the third quarter of 2015 and decreased from the fourth quarter of 2014. The sequential comparison reflects higher lease remarketing fees, partially offset by a decrease in institutional sales revenue. The year-over-year decrease was driven by lower loan syndications revenue, foreign exchange fees, and business lending fees, partially offset by higher lease remarketing and institutional sales revenue.

Mortgage banking net revenue was in the fourth quarter of 2015, up from the third quarter of 2015 and up from the fourth quarter of 2014. Fourth quarter 2015 originations were , compared with in the previous quarter and in the fourth quarter of 2014. Fourth quarter 2015 originations resulted in gains of on mortgages sold, compared with gains of during the previous quarter and during the fourth quarter of 2014. Mortgage servicing fees were this quarter, in the third quarter of 2015, and in the fourth 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 in the fourth quarter of 2015 (reflecting MSR amortization of and MSR valuation adjustments of positive ); negative in the third quarter of 2015 (MSR amortization of and MSR valuation adjustments of positive ); and negative in the fourth quarter of 2014 (MSR amortization of and MSR valuation adjustments of negative ). The mortgage servicing asset, net of the valuation reserve, was at quarter end on a servicing portfolio of .

Investment advisory revenue of decreased 1 percent from the third quarter of 2015 and increased 2 percent year-over-year. The increase from the prior year was primarily driven by an increase in private client services revenue.

Card and processing revenue of in the fourth quarter of 2015 was flat sequentially and increased 1 percent from the fourth quarter of 2014.

Other noninterest income totaled in the fourth quarter of 2015, compared with in the previous quarter and in the fourth quarter of 2014. As previously described, the results included the adjustments in the table above with the exception of securities gains in all comparable periods. Excluding these items, other noninterest income of increased approximately , or 34 percent, from the third quarter of 2015 and increased approximately , or 8 percent, from the fourth quarter of 2014. The sequential and year-over-year increases were primarily due to payments from pursuant to the tax receivable agreement of recognized in the fourth quarter of 2015 and recognized in the fourth quarter of 2014.

Net gains on investment securities were in the fourth quarter of 2015, compared with an immaterial gain in the previous quarter and in the fourth quarter of 2014.

Noninterest Expense
For the Three Months Ended % Change
December September June March December
2015 2015 2015 2015 2014 Seq Yr/Yr
Noninterest Expense ($ in millions)
Salaries, wages and incentives $ 386 $ 387 $ 383 $ 369 $ 366 - 5 %
Employee benefits 74 72 78 99 79 3 % (6 %)
Net occupancy expense 83 77 83 79 77 8 % 8 %
Technology and communications 59 56 54 55 54 5 % 9 %
Equipment expense 32 31 31 31 30 3 % 7 %
Card and processing expense 40 40 38 36 36 - 11 %
Other noninterest expense 289 280 280 254 276 3 % 5 %
Total noninterest expense $ 963 $ 943 $ 947 $ 923 $ 918 2 % 5 %

Noninterest expense of increased 2 percent compared with the third quarter of 2015 and increased 5 percent compared with the fourth quarter of 2014. The sequential increase was primarily due to a contribution to the and higher net occupancy expense. The year-over-year increase reflected a contribution to , higher compensation expense, net occupancy expense, and technology and communications expense, partially offset by lower employee benefits expense.

Credit Quality
For the Three Months Ended
December September June March December
2015 2015 2015 2015 2014
Total net losses charged-off ($ in millions)
Commercial and industrial loans ($30 ) ($128 ) ($34 ) ($38 ) ($44 )
Commercial mortgage loans (3 ) (11 ) (11 ) (1 ) (10 )
Commercial construction loans - (3 ) - - -
Commercial leases (1 ) - - - (1 )
Residential mortgage loans (3 ) (3 ) (5 ) (6 ) (94 )
Home equity (9 ) (9 ) (9 ) (14 ) (11 )
Automobile loans (9 ) (7 ) (4 ) (8 ) (7 )
Credit card (19 ) (21 ) (21 ) (21 ) (20 )
Other consumer loans and leases (6 ) (6 ) (2 ) (3 ) (4 )
Total net losses charged-off $ (80 ) $ (188 ) $ (86 ) $ (91 ) $ (191 )
Total losses charged-off $ (105 ) $ (209 ) $ (112 ) $ (115 ) $ (215 )
Total recoveries of losses previously charged-off 25 21 26 24 24
Total net losses charged-off $ (80 ) $ (188 ) $ (86 ) $ (91 ) $ (191 )
Ratios (annualized)
Net losses charged-off as a percent of average portfolio loans and
leases (excluding held for sale) 0.34 % 0.80 % 0.37 % 0.41 % 0.83 %
Commercial 0.24 % 0.99 % 0.32 % 0.29 % 0.40 %
Consumer 0.49 % 0.51 % 0.46 % 0.59 % 1.47 %

Net charge-offs were , or 34 bps of average loans and leases on an annualized basis, in the fourth quarter of 2015 compared with net charge-offs of , or 80 bps, in the third quarter of 2015 and , or 83 bps, in the fourth quarter of 2014. Third quarter 2015 net charge-offs included related to the restructuring of a student loan backed commercial credit. Excluding this credit in the third quarter of 2015 net charge-offs were down sequentially. Fourth quarter 2014 net charge-offs included (38 bps) related to the transfer of residential mortgage loans classified as troubled debt restructurings to held-for-sale.

Commercial net charge-offs were , or 24 bps, and were down sequentially. C&I net charge-offs of decreased from the previous quarter primarily due to the student loan backed credit mentioned above, and commercial real estate net charge-offs decreased from the previous quarter.

Consumer net charge-offs were , or 49 bps, and flat sequentially. Net charge-offs on residential mortgage loans in the portfolio were , flat compared with the previous quarter. Home equity net charge-offs were , in line with the third quarter of 2015, and net charge-offs in the auto portfolio of were up compared with the prior quarter. Net charge-offs on credit card loans were , down from the third quarter of 2015. Net charge-offs on other consumer loans were , consistent with the previous quarter.

For the Three Months Ended
December September June March December
2015 2015 2015 2015 2014
Allowance for Credit Losses ($ in millions)
Allowance for loan and lease losses, beginning $ 1,261 $ 1,293 $ 1,300 $ 1,322 $ 1,414
Total net losses charged-off (80 ) (188 ) (86 ) (91 ) (191 )
Provision for loan and lease losses 91 156 79 69 99
Allowance for loan and lease losses, ending $ 1,272 $ 1,261 $ 1,293 $ 1,300 $ 1,322
Reserve for unfunded commitments, beginning $ 134 $ 132 $ 130 $ 135 $ 134
Provision (benefit) for unfunded commitments 4 2 2 (4 ) 1
Charge-offs - - - (1 ) -
Reserve for unfunded commitments, ending $ 138 $ 134 $ 132 $ 130 $ 135
Components of allowance for credit losses:
Allowance for loan and lease losses $ 1,272 $ 1,261 $ 1,293 $ 1,300 $ 1,322
Reserve for unfunded commitments 138 134 132 130 135
Total allowance for credit losses $ 1,410 $ 1,395 $ 1,425 $ 1,430 $ 1,457
Allowance for loan and lease losses ratio
As a percent of portfolio loans and leases 1.37 % 1.35 % 1.39 % 1.42 % 1.47 %
As a percent of nonperforming loans and leases 252 % 275 % 272 % 247 % 228 %
As a percent of nonperforming assets 197 % 208 % 206 % 188 % 178 %
(a) Excludes nonaccrual loans and leases in loans held for sale.

Provision for loan and lease losses totaled in the fourth quarter of 2015. The allowance represented 1.37 percent of total portfolio loans and leases outstanding as of quarter end, compared with 1.35 percent last quarter, and represented 252 percent of nonperforming loans and leases, and 197 percent of nonperforming assets.

The provision decreased from the third quarter of 2015 and decreased from the fourth quarter of 2014. Provision in the prior quarter included a impact related to the aforementioned student loan backed commercial credit. The allowance for loan and lease losses increased sequentially.

As of
December September June March December
Nonperforming Assets and Delinquent Loans ($ in millions) 2015 2015 2015 2015 2014
Nonaccrual portfolio loans and leases:
Commercial and industrial loans $ 82 $ 47 $ 61 $ 61 $ 86
Commercial mortgage loans 56 60 49 57 64
Commercial construction loans - - - - -
Commercial leases - 2 2 2 3
Residential mortgage loans 28 31 35 40 44
Home equity 62 65 70 71 72
Total nonaccrual portfolio loans and leases (excludes restructured loans) $ 228 $ 205 $ 217 $ 231 $ 269
Restructured loans - commercial (nonaccrual) 203 177 175 205 214
Restructured loans - consumer (nonaccrual) 75 76 83 90 96
Total nonaccrual portfolio loans and leases $ 506 $ 458 $ 475 $ 526 $ 579
Repossessed personal property 18 17 16 20 18
OREO 123 131 i 135 i 145 i 147 i
Total nonperforming assets $ 647 $ 606 $ 626 $ 691 $ 744
Nonaccrual loans held for sale 1 1 1 2 24
Restructured loans - (nonaccrual) held for sale 11 1 - - 15
Total nonperforming assets including loans held for sale $ 659 $ 608 $ 627 $ 693 $ 783
Restructured Consumer loans and leases (accrual) $ 979 $ 973 $ 970 $ 943 $ 905
Restructured Commercial loans and leases (accrual) $ 491 $ 571 $ 769 $ 774 $ 844
Total loans and leases 90 days past due $ 75 $ 70 $ 70 $ 78 $ 87
Nonperforming loans and leases as a percent of portfolio loans,
leases and other assets, including OREO 0.55 % 0.49 % 0.51 % 0.57 % 0.64 %
Nonperforming assets as a percent of portfolio loans, leases
and other assets, including OREO 0.70 % 0.65 % 0.67 % 0.76 % 0.82 %
(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 were reclassified to other receivables rather than OREO upon foreclosure.
(b) Does not include nonaccrual loans held for sale.
(c) Excludes $20 million of restructured nonaccrual loans and $7 million of restructured accruing loans as of December 31, 2015. 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 and December 31, 2014.

Total nonperforming assets, including loans held-for-sale, increased , or 8 percent, from the previous quarter to . Nonperforming loans (NPLs) at quarter-end increased , or 10 percent, from the previous quarter to or 0.55 percent of total loans, leases and OREO.

Commercial NPAs increased , or 13 percent, from the third quarter to , or 0.75 percent of commercial loans, leases and OREO. Commercial NPLs increased from last quarter to , or 0.61 percent of commercial loans and leases. C&I NPAs increased from the prior quarter to . Commercial mortgage NPAs decreased from the previous quarter to . Commercial construction NPAs decreased from the previous quarter to . Commercial lease NPAs were , down from the previous quarter. Commercial NPAs included of nonaccrual troubled debt restructurings (TDRs), compared with last quarter.

Consumer NPAs decreased from the third quarter to , or 0.62 percent of consumer loans, leases and OREO. Consumer NPLs decreased from last quarter to , or 0.45 percent of consumer loans and leases. Residential mortgage NPAs decreased from the second quarter to . Home equity NPAs decreased , sequentially, to . Consumer nonaccrual TDRs were in the fourth quarter of 2015, compared with in the third quarter of 2015.

Fourth quarter OREO balances included in NPA balances were down from the third quarter to , and included in commercial OREO and in consumer OREO. Repossessed personal property increased from the prior quarter to .

Loans over 90 days past due and still accruing increased from the third quarter of 2015 to . Commercial balances over 90 days past due were compared with in the prior quarter, and consumer balances 90 days past due increased from the previous quarter to . Loans 30-89 days past due of were up from the previous quarter. Commercial balances 30-89 days past due increased sequentially to and consumer balances 30-89 days past due were up from the third quarter at . The above delinquency figures exclude nonaccruals described previously.

Capital Position
For the Three Months Ended
December September June March December
2015 2015 2015 2015 2014
Capital Position
Average total Bancorp shareholders' equity to average assets 11.25 % 11.24 % 11.32 % 11.49 % 11.54 %
Tangible equity 9.55 % 9.28 % 9.28 % 9.37 % 9.41 %
Tangible common equity (excluding unrealized gains/losses) 8.59 % 8.32 % 8.33 % 8.40 % 8.43 %
Tangible common equity (including unrealized gains/losses) 8.71 % 8.65 % 8.51 % 8.77 % 8.71 %
Tangible common equity as a percent of risk-weighted assets (excluding unrealized gains/losses) 9.76 % 9.37 % 9.39 % 9.49 % 9.70 %

Regulatory capital ratios:

 Basel III
Transitional Basel I
CET1 capital 9.83 % 9.40 % 9.42 % 9.52 % N/A
Tier I risk-based capital 10.93 % 10.49 % 10.51 % 10.62 % 10.83 %
Total risk-based capital 14.13 % 13.68 % 13.69 % 14.01 % 14.33 %
Tier I leverage 9.54 % 9.38 % 9.44 % 9.59 % 9.66 %
Tier I common equity N/A N/A N/A N/A 9.65 %
CET1 capital (fully phased-in) 9.73 % 9.30 % 9.31 % 9.41 % N/A
Book value per share $ 18.48 $ 18.22 $ 17.62 $ 17.83 $ 17.35
Tangible book value per share $ 15.39 $ 15.18 $ 14.62 $ 14.85 $ 14.40
(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 were strong during the quarter. The common equity Tier 1 ratio was 9.83 percent, the tangible common equity to tangible assets ratio* was 8.59 percent (excluding unrealized gains/losses), and 8.71 percent (including unrealized gains/losses). The Tier 1 risk-based capital ratio was 10.93 percent, the total risk-based capital ratio was 14.13 percent, and the Leverage ratio was 9.54 percent.

Book value per share at was and tangible book value per share* was , compared with the book value per share of and tangible book value per share* of .

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

  • On , Fifth Third settled the forward contract related to the share repurchase agreement. An additional 1.45 million shares were repurchased in connection with the completion of this agreement.
  • On , Fifth Third entered into a share repurchase agreement whereby Fifth Third would purchase approximately of its outstanding stock, which reduced the fourth quarter share count by 9.25 million shares.
  • On , Fifth Third settled the forward contract related to the share repurchase agreement. An additional 1.78 million shares were repurchased in connection with the completion of this agreement.

In total, common shares outstanding decreased by approximately 10 million shares in the fourth quarter of 2015 from the third quarter of 2015.

* Non-GAAP measure; see Reg. G reconciliation on page 34 in Exhibit 99.1 of 8-k filing dated 1/21/16.

Tax Rate

The effective tax rate was 30.7 percent in the fourth quarter of 2015 compared with 26.0 percent in the third quarter of 2015 and 25.9 percent in the fourth quarter of 2014. The sequential and year-over-year increase was primarily driven by the impact of -related transactions during the quarter.

Other

On , entered into an agreement with (NYSE: VNTV) under which a portion of its Tax Receivable Agreement ('TRA') with was terminated and settled in full for consideration of a cash payment in the amount of from . Under the agreement, sold certain TRA cash flows it expected to receive from 2017 to 2030, totaling an estimated . This sale did not impact the TRA payment recognized in the fourth quarter of 2015 and does not impact the TRA payment expected to be recognized in the fourth quarter of 2016. For more detail see the 8-K dated .

On , conducted a secondary offering of 13.4 million shares of its Class A Common Stock on behalf of Fifth Third. The offering was the culmination of a three-step process that included 1) the partial cancellation of the warrant held by Fifth Third to purchase additional ownership in for a cash payment; 2) the net exercise of a portion of the remaining warrant for 5.4 million Class C units; and 3) the exchange of these 5.4 million Class C units and 8 million Class B units for the 13.4 million shares of Class A Common Stock included in the secondary offering. During the fourth quarter, Fifth Third recognized a pre-tax gain of related to the ownership interests included in these transactions. For more detail see the press release dated .

owns approximately 35 million units representing an 18.3 percent interest in , convertible into shares of , a publicly traded firm. Based upon Vantiv's closing price of on , our interest in was valued at approximately . Next month in our 10-K, we will update our disclosure of the carrying value of our interest in stock, which was as of . 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 remaining warrant to purchase approximately 7.8 million additional shares in which is carried as a derivative asset at a fair value of as of .

Conference Call

Fifth Third will host a conference call to discuss these financial results at today. This conference call will be webcast live by 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).

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 by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 96623560#).

Corporate Profile

is a diversified financial services company headquartered in . As of , the Company had in assets and operates 1,254 full-service Banking Centers, including 95 Bank Mart® locations, most open seven days a week, inside select grocery stores and 2,593 ATMs in , , , , , , , , , , and . Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and . Fifth Third also has an 18.3% interest in . Fifth Third is among the largest money managers in the Midwest and, as of , had in assets under care, of which it managed 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 become known during the company's quarterly closing process or as a result of subsequent events that could affect the accuracy of the statements and 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 the economy weaken and become less favorable than expected, particularly in 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; (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 (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 ; (21) loss of income from any sale or potential sale of businesses; (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 , 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.

View source version on businesswire.com:http://www.businesswire.com/news/home/20160121005198/en/

Source:

Fifth Third Bancorp
Jim Eglseder (Investors)
513-534-8424
or
Larry Magnesen (Media)
513-534-8055

Fifth Third Bancorp issued this content on 21 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 28 January 2016 16:13:02 UTC

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