Fifth Third Bancorp Announces First Quarter 2012 Net Income to Common Shareholders of $421 Million

April 19, 2012 06:30 AM Eastern Daylight Time 

• 1Q12 net income available to common shareholders of $421 million, or $0.45 per diluted common share, vs. $305 million, or $0.33 per share, in 4Q11 and $88 million, or $0.10 per share in 1Q11
  • Included benefit of $115 million pre-tax (approximately $75 million or $0.08 per share after-tax), from gains associated with Vantiv, Inc’s. initial public offering (IPO), as well as the previously disclosed $36 million estimated pre-tax charge (approximately $23 million after-tax, or $0.02 per share), from Vantiv debt termination-related charges recorded in equity method earnings
  • Also included benefit of $46 million pre-tax (approximately $30 million after-tax, or $0.03 per share), from gains on the higher valuation of the warrant Fifth Third holds in Vantiv
  • 1Q12 return on assets (ROA) of 1.49%; ROA 1.20% excluding above items
  • 1Q12 return on average common equity of 13.1%; return on average tangible common equity* of 16.2%
• Pre-provision net revenue (PPNR)* of $694 million, or $569 million excluding above items
  • Net interest income (FTE) of $903 million, down 2% sequentially; net interest margin 3.61%; average portfolio loans up 2% sequentially driven by 5% growth in C&I loans
  • Noninterest income of $769 million compared with $550 million in prior quarter; increase largely driven by Vantiv IPO and warrant gains and lower charges related to the Visa total return swap. Other drivers included higher mortgage banking, corporate banking, and investment advisory revenue
  • Noninterest expense of $973 million, down 2% sequentially; benefit from certain outstanding disputes for non-income tax related assessments, largely offset by seasonally higher employee benefits expense, additions to litigation reserves, debt termination charges, and severance expense
• Credit trends remain favorable
  • 1Q12 net charge-offs of $220 million (1.08% of loans and leases) vs. 4Q11 NCOs of $239 million and 1Q11 NCOs of $367 million; lowest NCO level since 4Q07; 1Q12 provision expense of $91 million compared with 4Q11 provision of $55 million and 1Q11 provision of $168 million
  • Loan loss allowance declined $129 million sequentially reflecting continued improvement in credit trends; allowance to loan ratio of 2.59%, 127% of nonperforming assets, 157% of nonperforming loans and leases, and 2.4 times 1Q12 annualized net charge-offs
  • Total nonperforming assets (NPAs) of $1.8 billion including loans held-for-sale (HFS) declined $164 million or 8% sequentially; NPAs excluding loans HFS of $1.7 billion declined $143 million or 8%; lowest levels since 1Q08
  • NPA ratio of 2.03% down 20 bps from 4Q11, NPL ratio of 1.64% down 12 bps from 4Q11; gross NPL inflows of $352 million down 11% sequentially
  • Total delinquencies (includes loans 30-89 days past due and over 90 days past due) down 11% sequentially, lowest levels since 3Q05
  • No direct European sovereign exposure; total exposure to European peripheral borrowers less than $0.2 billion; total exposure to European banks less than $0.1 billion**
• Strong capital ratios; exceed fully phased-in Basel III proposed standards
  • Tier 1 common ratio 9.64%*, up 29 bps sequentially (pro forma*** ~10.0% on a fully-phased in Basel III-adjusted basis, estimated among highest of large cap U.S. banks)
  • Tier 1 capital ratio 12.19%, Total capital ratio 16.06%, Leverage ratio 11.31%
  • Tangible common equity ratio* of 9.02% excluding unrealized gains/losses; 9.37% including them
• Book value per share of $14.30; tangible book value per share* of $11.64 up 3% from 4Q11 and 15% from 1Q11

* Non-GAAP measure; See Reg. G reconciliation on page 32 in Exhibit 99.1 of 8-k filing dated 4/19/12

** “European” includes non-Eurozone countries; “European peripheral” includes Greece, Ireland, Italy, Portugal, Spain

*** Current estimate (non-GAAP), subject to final rule-making and clarification by U.S. banking regulators; currently assumes unrealized securities gains are included in common equity for purposes of this calculation

CINCINNATI--(BUSINESS WIRE)--Fifth Third Bancorp (Nasdaq: FITB) today reported first quarter 2012 net income of $430 million, compared with net income of $314 million in the fourth quarter of 2011 and net income of $265 million in the first quarter of 2011. After preferred dividends, first quarter 2012 net income available to common shareholders was $421 million or $0.45 per diluted share, compared with fourth quarter net income of $305 million or $0.33 per diluted share, and net income of $88 million or $0.10 per diluted share in the first quarter of 2011.

“That was the case with or without the earnings benefit from Vantiv. We continue to see solid growth in commercial lending volumes and fee income results were particularly strong in the mortgage banking, corporate banking, and investment advisory businesses.”

As previously announced, first quarter 2012 results included $115 million in pre-tax gains on the initial public offering of Vantiv, Inc., as well as the estimated $36 million of charges recorded in equity method earnings in other noninterest income related to Vantiv’s bank debt refinancing and debt termination charges. First quarter 2012 results also included $46 million in positive valuation adjustments on the Vantiv warrant and put option. In total, these items generated first quarter earnings of $125 million pre-tax, or approximately $81 million after-tax (approximately $0.09 per diluted share).

Additionally, first quarter results included the impact of $23 million in income from an agreement reached on certain outstanding disputes for non-income tax related assessments and a $19 million charge related to the increase in fair value of the liability related to a change in value of the total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares, as well as investment securities gains of $9 million, additions to litigation reserves of $13 million, debt termination charges of $9 million, and severance expense of $6 million.

Fourth quarter 2011 results included $10 million in positive valuation adjustments on the Vantiv warrant and put option, a $54 million charge related to the Visa total return swap, additions to litigation reserves of $19 million, and $5 million of investment securities gains. First quarter 2011 results included $2 million in negative valuation adjustments on the Vantiv warrant and put option, a $9 million charge related to the Visa total return swap, and $8 million in investment securities gains.

Earnings Highlights

		For the Three Months Ended										% Change
		March		December		September		June		March
		2012		2011		2011		2011		2011		Seq		Yr/Yr
Earnings ($ in millions)
Net income attributable to Bancorp		$430		$314		$381		$337		$265		37%		62%
Net income available to common shareholders		$421		$305		$373		$328		$88		38%		377%
Common Share Data
Earnings per share, basic		0.46		0.33		0.41		0.36		0.10		39%		360%
Earnings per share, diluted		0.45		0.33		0.40		0.35		0.10		36%		350%
Cash dividends per common share		0.08		0.08		0.08		0.06		0.06		-		33%
Financial Ratios
Return on average assets		1.49%		1.08%		1.34%		1.22%		0.97%		38%		54%
Return on average common equity		13.1		9.5		11.9		11.0		3.1		38%		323%
Return on average tangible common equity		16.2		11.9		14.9		14.0		4.2		36%		286%
Tier I capital		12.19		11.91		11.96		11.93		12.20		2%		-
Tier I common equity		9.64		9.35		9.33		9.20		8.99		3%		7%
Net interest margin (a)		3.61		3.67		3.65		3.62		3.71		(2%)		(3%)
Efficiency (a)		58.3		67.5		60.4		59.1		62.5		(14%)		(7%)
Common shares outstanding (in thousands)		920,056		919,804		919,779		919,818		918,728		-		-
Average common shares outstanding (in thousands):
Basic		915,226		914,997		914,947		914,601		880,830		-		4%
Diluted		957,416		956,349		955,490		955,478		894,841		-		7%

(a) Presented on a fully taxable equivalent basis

The percentages in all of the tables in this earning release are calculated on actual dollar amounts not the rounded dollar amounts.