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Fifth Third Bank

Grand Rapids,  MI 
United States
http://www.53.com
  • Booth: 1962

Fifth Third Bank, established in 1858 in Cincinnati, Ohio, is among the largest money managers in the Midwest, and as of June, 2018, had $368 billion in assets under care.  We have a dedicated industry focus, relationship oriented approach, and senior level attention across the Gaming, Lodging and Leisure industries.  We possess industry knowledge, creative solutions and superior execution with 20 professionals across Banking, M&A, Capital Markets, Treasury and Credit dedicated to Gaming, Lodging & Leisure.


 Press Releases

  • Key Highlights (a)

    Strong financial performance and momentum

    NIM(b) up 19 bps compared to adjusted 4Q17

    Expenses flat compared to 4Q17

    Adjusted PPNR(b) up 14% compared to 4Q17

    Average loans up 3% compared to 4Q17

    Average core deposits up 4% compared to 4Q17

    Remain on-track to achieve NorthStar targets (b)

    ROTCE – 14.3% (adjusted 15.4%)

    ROA – 1.25% (adjusted 1.34%)

    Efficiency ratio – 58.8% (adjusted 56.8%)

    Record 4Q18 business and credit results

    Record corporate banking revenue

    Record middle market & corporate loan originations

    ~20 year low commercial criticized ratio (3.34%)

    ~20 year low NPA ratio (0.41%)
    Key Financial Data
    $ millions for all balance sheet and income statement items
    4Q18 3Q18 4Q17
    Income Statement Data (a)
    Net income available to common shareholders $432 $421 $504
    Net interest income (U.S. GAAP) 1,081 1,043 956
    Net interest income (FTE) (b) 1,085 1,047 963
    Noninterest income 575 563 577
    Noninterest expense 977 970 975
    Per Share Data (a)
    Earnings per share, basic $0.65 $0.62 $0.71
    Earnings per share, diluted 0.64 0.61 0.70
    Book value per share 23.07 21.70 21.43
    Tangible book value per share (b) 19.17 17.94 17.86
    Balance Sheet & Credit Quality
    Average portfolio loans and leases $94,757 $93,192 $92,250
    Average deposits 107,495 104,666 102,790
    Net charge-off ratio (c) 0.35 % 0.30 % 0.33 %
    Nonperforming asset ratio (d) 0.41 0.48 0.53
    Financial Ratios (a)
    Return on average assets 1.25 % 1.22 % 1.48 %
    Return on average common equity 11.8 11.4 13.3
    Return on average tangible common equity (b) 14.3 13.8 16.0
    CET1 capital (e)(f)(g) 10.24 10.67 10.61
    Net interest margin (b) 3.29 3.23 3.02
    Efficiency (b) 58.8 60.2 63.3

    Other than the Quarterly Financial Review tables beginning on page 14 of the 4Q18 earnings release, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis. Effective in the fourth quarter of 2018, Fifth Third retrospectively applied a change in its accounting policy for investments in affordable housing projects that qualify for low-income housing tax credits (LIHTC) to all prior period amounts presented. As a result, prior period financial results may differ compared to previous disclosures. A summary reconciliation of the change is provided on page 30 of the 4Q18 earnings release.

    CEO Commentary

    “Our fourth quarter and full year results were very strong. In 2018, we produced record results, generated profitable relationship growth, benefited from our improved balance sheet resiliency, and diligently managed our expenses while continuing to invest for future growth. We returned $2 billion to our shareholders through repurchases and dividends, including a nearly 40% increase in the dividend by the end of the year, while maintaining very strong capital ratios.”

    “We recently received the regulatory non-objection related to our re-submitted capital plan, including the pro forma impact of MB Financial. We remain confident in our ability to achieve the expected financial synergies from the pending acquisition, and we continue to expect the transaction to close in the first quarter of 2019.”

    “With the conclusion of Project NorthStar at the end of 2019, the ongoing MB Financial integration efforts, and a clearly-defined set of strategic priorities for the future, we remain very confident in our ability to achieve our long-term financial targets and outperform through the cycle.”

    -Greg D. Carmichael, Chairman, President and CEO

    Effective in the fourth quarter of 2018, Fifth Third retrospectively applied a change in its accounting policy for investments in affordable housing projects that qualify for low-income housing tax credits (LIHTC) to all prior period amounts presented. As a result, prior period financial results may differ compared to previous disclosures. A summary reconciliation of the change is provided on page 30 of the 4Q18 earnings release.

    Income Statement Highlights

    ($ in millions, except per share data) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Condensed Statements of Income (a)
    Net interest income (NII) (b) $1,085 $1,047 $963 4 % 13 %
    Provision for loan and lease losses 95 86 67 10 % 42 %
    Noninterest income 575 563 577 2 % -
    Noninterest expense 977 970 975 1 % -
    Income before income taxes (b) $588 $554 $498 6 % 18 %
    Taxable equivalent adjustment 4 4 7 - (43 %)
    Applicable income tax expense (benefit) 129 114 (36 ) 13 % NM
    Net income $455 $436 $527 4 % (14 %)
    Less: Net income attributable to noncontrolling interests - - - NM NM
    Net income attributable to Bancorp $455 $436 $527 4 % (14 %)
    Dividends on preferred stock 23 15 23 53 % -
    Net income available to common shareholders $432 $421 $504 3 % (14 %)
    Earnings per share, diluted $0.64 $0.61 $0.70 5 % (9 %)

    Fifth Third Bancorp (Nasdaq: FITB) today reported fourth quarter 2018 net income of $455 million compared to net income of $527 million in the year-ago quarter. Net income available to common shareholders was $432 million, or $0.64 per diluted share, compared to $504 million, or $0.70 per diluted share in the year-ago quarter. Prior quarter net income was $436 million and net income available to common shareholders was $421 million, or $0.61 per diluted share.

    Reported full year 2018 net income was $2.2 billion, compared to full year 2017 net income of $2.2 billion. Full year 2018 net income available to common shareholders was $2.1 billion, or $3.06 per diluted share, compared to full year 2017 net income available to common shareholders of $2.1 billion, or $2.81 per diluted share.

    Diluted earnings per share impact of certain items

    ($ in millions, except per share data)
    Merger-related expenses, after-tax (h) $ 21
    GreenSky equity securities losses, after-tax (h) $ 17
    Valuation of Visa total return swap, after-tax (h) ($6 )
    After-tax impact (h) $ 32
    Average diluted common shares outstanding (thousands) 662,966
    Diluted earnings per share impact $ 0.05

    Net Interest Income

    (FTE; $ in millions) (b) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Interest Income
    Interest income $ 1,397 $ 1,319 $ 1,151 6 % 21 %
    Interest expense 312 272 188 15 % 66 %
    Net interest income (NII) $ 1,085 $ 1,047 $ 963 4 % 13 %
    Average Yield/Rate Analysis bps Change
    Yield on interest-earning assets 4.23 % 4.07 % 3.61 % 16 62
    Rate paid on interest-bearing liabilities 1.33 % 1.20 % 0.88 % 13 45
    Ratios
    Net interest rate spread 2.90 % 2.87 % 2.73 % 3 17
    Net interest margin 3.29 % 3.23 % 3.02 % 6 27

    Compared to the year-ago quarter, NII increased $122 million, or 13 percent, which was impacted by a $27 million remeasurement related to the tax treatment of leveraged leases in the year-ago quarter. Excluding the remeasurement, NII increased $95 million, or 10 percent, reflecting higher short-term market rates and growth in interest-earning assets, partially offset by an increase in funding costs. NIM increased 27 bps, which included an 8 bps impact from the remeasurement in the year-ago quarter. Excluding the remeasurement, NIM increased 19 bps, reflecting higher short-term market rates and growth in interest-earning assets.

    Compared to the prior quarter, NII increased $38 million, or 4 percent, reflecting growth in commercial and industrial (C&I) loans, securities portfolio balance growth, and higher short-term market rates. NIM increased 6 bps, primarily driven by higher short-term market rates and growth in C&I loans.

    Noninterest Income

    ($ in millions) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Noninterest Income
    Service charges on deposits $ 135 $ 139 $ 138 (3 %) (2 %)
    Corporate banking revenue 130 100 77 30 % 69 %
    Mortgage banking net revenue 54 49 54 10 % -
    Wealth and asset management revenue 109 114 106 (4 %) 3 %
    Card and processing revenue 84 82 80 2 % 5 %
    Other noninterest income 93 86 123 8 % (24 %)
    Securities (losses) gains, net (32 ) (6 ) 1 433 % NM
    Securities gains (losses), net - non-qualifying
    hedges on mortgage servicing rights 2 (1 ) (2 ) NM NM
    Total noninterest income $ 575 $ 563 $ 577 2 % -

    Reported noninterest income was flat from the year-ago quarter, and increased $12 million, or 2 percent, from the prior quarter. The comparisons reflect the impact of certain significant items in the table below.

    Compared to the year-ago quarter, service charges on deposits decreased $3 million, or 2 percent. Corporate banking revenue increased $53 million, or 69 percent, which was impacted by a $25 million lease remarketing impairment in the year-ago quarter. Excluding this impact, corporate banking revenue increased $28 million, or 27 percent, primarily driven by strong capital markets revenue led by record M&A advisory fees as well as increased syndication revenues. Mortgage banking net revenue was flat primarily driven by lower negative net valuation adjustments and higher gross mortgage servicing fees, partially offset by lower origination fees and gains on loan sales. Mortgage originations of $1.6 billion decreased 18 percent. Wealth and asset management revenue increased $3 million, or 3 percent, primarily driven by higher personal asset management revenue reflecting positive net inflows. Card and processing revenue increased $4 million, or 5 percent, reflecting increases in credit card spend and debit transaction volumes, partially offset by higher rewards.

    Compared to the prior quarter, service charges on deposits decreased $4 million, or 3 percent. Corporate banking revenue increased $30 million, or 30 percent, primarily driven by increases in M&A advisory and syndication revenues. Mortgage banking net revenue increased $5 million, or 10 percent, primarily driven by lower negative net valuation adjustments partially offset by lower origination fees and gains on loan sales. Mortgage originations decreased 16 percent. Wealth and asset management revenue decreased $5 million, or 4 percent, primarily driven by lower institutional trust and brokerage fees. Card and processing revenue increased $2 million, or 2 percent, reflecting increases in credit card spend volumes, partially offset by higher rewards.

    Noninterest Income excluding certain items

    ($ in millions) For the Three Months Ended % Change
    December

    September

    December
    2018 2018 2017 Seq Yr/Yr
    Noninterest Income excluding certain items
    Noninterest income (U.S. GAAP) $575 $563 $577
    Valuation of Visa total return swap (7) 17 11
    GreenSky equity securities losses 21 8 -
    Securities losses / (gains), net (excluding GreenSky) 11 (2) (1)
    Noninterest income excluding certain items (b) $600 $586 $587 2% 2%

    Compared to the year-ago quarter, noninterest income excluding the items in the table above increased $13 million, or 2 percent. Compared to the prior quarter, noninterest income excluding these items increased $14 million, or 2 percent.

    Other noninterest income on a reported basis in the current and previous quarters was impacted by the Visa total return swap valuation adjustments. Excluding this item, other noninterest income of $86 million decreased $48 million, or 36 percent compared to the year-ago quarter, primarily driven by a decrease in the revenue recognized from Worldpay related to the tax receivable agreement and a decline in equity method earnings from the ownership interest in Worldpay. Compared to the prior quarter, other noninterest income excluding the Visa total return swap valuation adjustments decreased $17 million, or 17 percent, primarily driven by lower private equity investment income, partially offset by the revenue recognized from Worldpay related to the tax receivable agreement.

    Noninterest Expense

    ($ in millions) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Noninterest Expense (a)
    Compensation and benefits $ 506 $ 503 $ 500 1 % 1 %
    Net occupancy expense 73 70 74 4 % (1 %)
    Technology and communications 79 71 68 11 % 16 %
    Equipment expense 31 31 29 - 7 %
    Card and processing expense 33 31 34 6 % (3 %)
    Other noninterest expense 255 264 270 (3 %) (6 %)
    Total noninterest expense $ 977 $ 970 $ 975 1 % -

    Compared to the year-ago quarter, noninterest expense was flat, including merger-related expenses in the current quarter. The merger-related expenses primarily impacted other noninterest expense, with a lesser impact on technology and communication expense. Excluding these expenses in the current quarter, as well as one-time employee bonuses following the recently-enacted tax reform and a Fifth Third Foundation contribution in the year-ago quarter, noninterest expense increased $5 million. Results reflected an increase in compensation and benefits resulting from an increase in incentive based payments from record commercial loan originations and capital markets activities, and continued technology investments, offset by the elimination of the FDIC surcharge.

    Compared to the prior quarter, noninterest expense increased $7 million, or 1 percent, reflecting merger-related expenses. Excluding the merger-related expenses in the current quarter, noninterest expense decreased $20 million, or 2 percent, despite elevated incentive based payments reflecting record commercial loan originations and capital markets activities. Results also reflect the elimination of the FDIC surcharge and continued technology investments.

    Average Interest-Earning Assets

    ($ in millions) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Average Portfolio Loans and Leases
    Commercial loans and leases:
    Commercial and industrial loans $ 43,829 $ 42,494 $ 41,438 3 % 6 %
    Commercial mortgage loans 6,864 6,635 6,751 3 % 2 %
    Commercial construction loans 4,885 4,870 4,660 - 5 %
    Commercial leases 3,632 3,738 4,016 (3 %) (10 %)
    Total commercial loans and leases $ 59,210 $ 57,737 $ 56,865 3 % 4 %
    Consumer loans:
    Residential mortgage loans $ 15,520 $ 15,598 $ 15,590 (1 %) -
    Home equity 6,438 6,529 7,066 (1 %) (9 %)
    Automobile loans 8,970 8,969 9,175 - (2 %)
    Credit card 2,373 2,299 2,202 3 % 8 %
    Other consumer loans 2,246 2,060 1,352 9 % 66 %
    Total consumer loans $ 35,547 $ 35,455 $ 35,385 - -
    Portfolio loans and leases $ 94,757 $ 93,192 $ 92,250 2 % 3 %
    Loans held for sale 641 785 615 (18 %) 4 %
    Securities and other short-term investments 35,674 34,822 33,756 2 % 6 %
    Total average interest-earning assets $ 131,072 $ 128,799 $ 126,621 2 % 4 %

    Compared to the year-ago quarter, average portfolio loans and leases increased 3 percent, primarily driven by higher C&I and other consumer loans, partially offset by declines in home equity loans and commercial leases. Period end portfolio loans and leases increased 4 percent year-over-year. Compared to the prior quarter, average portfolio loans and leases increased 2 percent, primarily driven by higher C&I and commercial mortgage loans, partially offset by a decline in commercial leases. Period end portfolio loans and leases increased 2 percent from the prior quarter.

    Compared to the year-ago quarter, average commercial portfolio loans and leases increased 4 percent, primarily driven by higher C&I loans. Compared to the prior quarter, average commercial portfolio loans and leases increased 3 percent, primarily driven by growth in C&I and commercial mortgage loans. Period end commercial line utilization was 36 percent, compared to 34 percent in the year-ago quarter and 35 percent in the prior quarter.

    Compared to the year-ago quarter, average consumer portfolio loans were flat, primarily driven by higher other consumer loans resulting from an increase in unsecured personal loans and growth in credit card loans, offset by declines in home equity and automobile loans. Compared to the prior quarter, average consumer portfolio loans were flat, as higher other consumer loans resulting from an increase in unsecured personal loans and growth in credit card loans were offset by declines in home equity and residential mortgage loans.

    Average securities and other short-term investments were $35.7 billion compared to $33.8 billion in the year-ago quarter and $34.8 billion in the prior quarter. Average available-for-sale debt and other securities of $33.4 billion were up 7 percent compared to the year-ago quarter and up 2 percent compared to the prior quarter.

    Average Deposits

    ($ in millions) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Average Deposits
    Demand $ 31,571 $ 32,333 $ 35,519 (2 %) (11 %)
    Interest checking 32,428 29,681 26,992 9 % 20 %
    Savings 12,933 13,231 13,593 (2 %) (5 %)
    Money market 22,517 21,753 20,023 4 % 12 %
    Foreign office (i) 272 317 323 (14 %) (16 %)
    Total transaction deposits $ 99,721 $ 97,315 $ 96,450 2 % 3 %
    Other time 4,366 4,177 3,792 5 % 15 %
    Total core deposits $ 104,087 $ 101,492 $ 100,242 3 % 4 %
    Certificates - $100,000 and over 2,662 2,596 2,429 3 % 10 %
    Other deposits 746 578 119 29 % 527 %
    Total average deposits $ 107,495 $ 104,666 $ 102,790 3 % 5 %

    Compared to the year-ago quarter, average transaction deposits increased 3 percent and core deposits increased 4 percent. Performance was primarily driven by higher commercial interest checking deposits and consumer money market deposits, partially offset by lower commercial demand deposits reflecting continued migration from demand deposits to interest-bearing accounts. Average commercial transaction deposits increased 4 percent and average consumer transaction deposits increased 3 percent.

    Compared to the prior quarter, average transaction deposits increased 2 percent and core deposits increased 3 percent. Performance continued to partially reflect migration from demand deposits to interest-bearing accounts. Average commercial transaction deposits increased 5 percent, and average consumer transaction deposits were flat.

    Average Wholesale Funding

    ($ in millions) For the Three Months Ended % Change
    December September December
    2018 2018 2017 Seq Yr/Yr
    Average Wholesale Funding
    Certificates - $100,000 and over $ 2,662 $ 2,596 $ 2,429 3 % 10 %
    Other deposits 746 578 119 29 % 527 %
    Federal funds purchased 2,254 1,987 602 13 % 274 %
    Other short-term borrowings 578 1,018 2,316 (43 %) (75 %)
    Long-term debt 14,420 14,434 14,631 - (1 %)
    Total average wholesale funding $ 20,660 $ 20,613 $ 20,097 - 3 %

    Compared to the year-ago quarter, average wholesale funding increased 3 percent reflecting interest-earning asset growth over the past year. Compared to the prior quarter, average wholesale funding was flat reflecting higher federal funds borrowings, offset by a decline in other short-term borrowings.

    Credit Quality Summary

    ($ in millions) For the Three Months Ended
    December September June March December
    2018 2018 2018 2018 2017
    Total nonaccrual portfolio loans and leases (NPLs) $ 348 $ 403 $ 437 $ 452 $ 437
    Repossessed property 10 8 7 9 9
    OREO 37 37 36 43 43
    Total nonperforming portfolio assets (NPAs) $ 395 $ 448 $ 480 $ 504 $ 489
    NPL ratio (j) 0.37 % 0.43 % 0.47 % 0.49 % 0.48 %
    NPA ratio (d) 0.41 % 0.48 % 0.52 % 0.55 % 0.53 %
    Total loans and leases 30-89 days past due (accrual) 297 270 217 299 280
    Total loans and leases 90 days past due (accrual) 93 87 89 107 97
    Allowance for loan and lease losses, beginning $ 1,091 $ 1,077 $ 1,138 $ 1,196 $ 1,205
    Total net losses charged-off (83 ) (72 ) (94 ) (81 ) (76 )
    Provision for loan and lease losses 95 86 33 23 67
    Allowance for loan and lease losses, ending $ 1,103 $ 1,091 $ 1,077 $ 1,138 $ 1,196
    Reserve for unfunded commitments, beginning $ 129 $ 131 $ 151 $ 161 $ 157
    Provision for (benefit from) unfunded commitments 2 (2 ) (20 ) (10 ) 4
    Reserve for unfunded commitments, ending $ 131 $ 129 $ 131 $ 151 $ 161
    Total allowance for credit losses $ 1,234 $ 1,220 $ 1,208 $ 1,289 $ 1,357
    Allowance for loan and lease losses ratio
    As a percent of portfolio loans and leases 1.16 % 1.17 % 1.17 % 1.24 % 1.30 %
    As a percent of nonperforming portfolio loans and leases 317 % 270 % 247 % 252 % 274 %
    As a percent of nonperforming portfolio assets 279 % 243 % 224 % 226 % 245 %
    Total losses charged-off $ (116 ) $ (112 ) $ (118 ) $ (103 ) $ (94 )
    Total recoveries of losses previously charged-off 33 40 24 22 18
    Total net losses charged-off $ (83 ) $ (72 ) $ (94 ) $ (81 ) $ (76 )
    Net charge-off ratio (NCO ratio) (c) 0.35 % 0.30 % 0.41 % 0.36 % 0.33 %
    Commercial NCO ratio 0.19 % 0.19 % 0.34 % 0.21 % 0.22 %
    Consumer NCO ratio 0.61 % 0.50 % 0.52 % 0.60 % 0.51 %

    Compared to the year-ago quarter, NPLs decreased $89 million, or 20 percent, with the resulting NPL ratio of 0.37 percent decreasing 11 bps. NPAs decreased $94 million, or 19 percent, with the resulting NPA ratio of 0.41 percent decreasing 12 bps. Compared to the prior quarter, NPLs decreased $55 million, or 14 percent, with the resulting NPL ratio decreasing 6 bps. NPAs decreased $53 million, or 12 percent, with the resulting NPA ratio decreasing 7 bps.

    The provision for loan and lease losses totaled $95 million in the current quarter compared to $67 million in the year-ago quarter and $86 million in the prior quarter. The resulting allowance for loan and lease loss ratio represented 1.16 percent of total portfolio loans and leases outstanding in the current quarter, compared with 1.30 percent in the year-ago quarter and 1.17 in the prior quarter. The allowance for loan and lease losses represented 317 percent of nonperforming loans and leases and 279 percent of nonperforming assets in the current quarter.

    Net charge-offs totaled $83 million in the current quarter compared to $76 million in the year-ago quarter and $72 million in the prior quarter. The resulting NCO ratio of 0.35 percent in the current quarter increased 2 bps compared to the year-ago quarter and increased 5 bps compared to the prior quarter.

    Capital and Liquidity Position

    For the Three Months Ended
    December September June March December
    2018 2018 2018 2018 2017
    Capital Position (a)
    Average total Bancorp shareholders' equity as a percent of average assets 10.95 % 11.29 % 11.28 % 11.41 % 11.58 %
    Tangible equity (b) 9.63 % 9.97 % 10.19 % 9.98 % 9.79 %
    Tangible common equity (excluding unrealized gains/losses) (b) 8.71 % 9.02 % 9.23 % 9.03 % 8.83 %
    Tangible common equity (including unrealized gains/losses) (b) 8.64 % 8.53 % 8.88 % 8.78 % 8.88 %
    Regulatory Capital and Liquidity Ratios (g)
    CET1 capital (e)(f) 10.24 % 10.67 % 10.91 % 10.82 % 10.61 %
    Tier I risk-based capital (e)(f) 11.32 % 11.78 % 12.02 % 11.95 % 11.74 %
    Total risk-based capital (e)(f) 14.48 % 14.94 % 15.21 % 15.25 % 15.16 %
    Tier I leverage (f) 9.72 % 10.10 % 10.24 % 10.11 % 10.01 %
    Modified liquidity coverage ratio (LCR) 128 % 119 % 116 % 113 % 129 %

    Capital ratios remained strong during the quarter. The CET1 capital ratio was 10.24 percent, the tangible common equity to tangible assets ratio was 8.71 percent (excluding unrealized gains/losses), and 8.64 percent (including unrealized gains/losses). The Tier I risk-based capital ratio was 11.32 percent, the Total risk-based capital ratio was 14.48 percent, and the Tier I leverage ratio was 9.72 percent. Current period capital ratios were impacted by the accounting policy change related to investments in affordable housing projects that qualify for the LIHTC. The change in accounting policy reduced the current CET1 capital ratio by approximately 11 basis points.

    During the fourth quarter of 2018, Fifth Third entered into open market repurchase transactions of 14.9 million shares, or approximately $400 million, of its outstanding common stock, which settled between October 26, 2018, and November 14, 2018.

    Tax Rate

    The effective tax rate was 22.4 percent compared with negative 7.5 percent in the year-ago quarter and 20.7 percent in the prior quarter. The effective tax rates in all periods were impacted by the decision to retrospectively apply a change in accounting policy for investments in affordable housing projects that qualify for the LIHTC.

    Other

    Fifth Third announced on December 28, 2018, that the Board of Governors of the Federal Reserve System (“the Federal Reserve”) did not object to Fifth Third’s Resubmitted Capital Plan for potential capital actions through June 30, 2019.

    The capital actions in Fifth Third’s Resubmitted Capital Plan through June 30, 2019 remain unchanged compared to the originally submitted 2018 CCAR plan. The timing and amount of this activity is subject to market conditions and applicable securities laws. Through December 2018, Fifth Third has executed approximately $900 million of $1.81 billion in share repurchases authorized under the 2018 CCAR process. Additionally, Fifth Third continues to have the authorization to increase the common dividend to $0.24 beginning the second quarter of 2019.

    The pending acquisition of MB Financial, Inc. is expected to close in the first quarter of 2019, subject to regulatory approvals and other customary closing conditions.

    As of December 31, 2018, Fifth Third Bank owned approximately 10.3 million units representing a 3.3 percent interest in Worldpay Holding, LLC, convertible into shares of Worldpay, Inc., a publicly traded firm. Based upon Worldpay’s closing price of $76.43 on December 31, 2018, Fifth Third’s interest in Worldpay was valued at approximately $780 million. The difference between the market value and the book value of Fifth Third’s interest in Worldpay’s shares is not recognized in Fifth Third’s equity or capital.

    Conference Call

    Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor Relations”).

    Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available after the conference call until approximately February 5, 2019 by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 4692779#).

    Corporate Profile

    Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of December 31, 2018, the Company had $146 billion in assets and operates 1,121 full-service Banking Centers, and 2,419 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 52,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of December 31, 2018, Fifth Third also had a 3.3% interest in Worldpay Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2018, had $356 billion in assets under care, of which it managed $37 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. 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.”

    Earnings Release End Notes

    (a) Effective in the fourth quarter of 2018, Fifth Third retrospectively applied a change in its accounting policy for investments in affordable housing projects that qualify for low-income housing tax credits (LIHTC) to all prior period amounts presented. As a result, prior period financial results may differ compared to previous disclosures. See page 30 of the 4Q18 earnings release for the impact of the change in accounting policy.
    (b) Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 26 of the 4Q18 earnings release.
    (c) Net losses charged-off as a percent of average portfolio loans and leases.
    (d) Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO.
    (e) Under the U.S. 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.
    (f) Effective in the fourth quarter of 2018, Fifth Third retrospectively applied a change in its accounting policy for investments in affordable housing projects that qualify for low-income housing tax credits (LIHTC). Prior period regulatory capital ratios reflect amounts filed on the Bancorp’s FR Y-9C filings and were not required to be restated as a result.
    (g) Current period regulatory capital and liquidity ratios are estimated.
    (h) Assumes a 21% tax rate.
    (i) Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.
    (j) Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO.

    IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

    In connection with the proposed merger, Fifth Third Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes the Proxy Statement of MB Financial, Inc. and a Prospectus of Fifth Third Bancorp, as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

    A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Fifth Third Bancorp and MB Financial, Inc., may be obtained at the SEC’s Internet site ( http://www.sec.gov ). You will also be able to obtain these documents, free of charge, from Fifth Third Bancorp at ir.53.com or from MB Financial, Inc. by accessing MB Financial, Inc.’s website at investor.mbfinancial.com.

    Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Fifth Third Investor Relations at Fifth Third Investor Relations, MD 1090QC, 38 Fountain Square Plaza, Cincinnati, OH 45263, by calling (866) 670-0468, or by sending an e-mail to ir@53.com or to MB Financial, Attention: Corporate Secretary, at 6111 North River Road, Rosemont, Illinois 60018, by calling (847) 653-1992 or by sending an e-mail to dkoros@mbfinancial.com .

    Fifth Third Bancorp and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of MB Financial, Inc. in respect of the transaction described in the Proxy Statement/Prospectus. Information regarding Fifth Third Bancorp’s directors and executive officers is contained in Fifth Third Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2017 and its Proxy Statement on Schedule 14A, dated March 6, 2018, which are filed with the SEC. Information regarding MB Financial, Inc.’s directors and executive officers is contained in its Proxy Statement on Schedule 14A filed with the SEC on April 3, 2018. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger. Free copies of this document may be obtained as described in the preceding paragraph.

    FORWARD-LOOKING STATEMENTS

    This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third Bancorp’s and MB Financial, Inc.’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections.

    In addition to factors previously disclosed in Fifth Third Bancorp’s and MB Financial, Inc.’s reports filed with or furnished to the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including the risk that regulatory approvals required for the merger are not obtained or are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating the businesses of MB Financial, Inc. or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of Fifth Third Bancorp’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

    Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

  • CHICAGO--(BUSINESS WIRE)--Fifth Third Bancorp (Nasdaq: FITB) today announced a $2 billion increase in its five-year, companywide Community Commitment, expanding it from $30 billion to $32 billion. The $2 billion increase will be invested entirely in greater Chicago, enlarging the Bank’s local commitment from $3.6 billion to $5.6 billion. The increase in the Commitment reflects Fifth Third’s planned expansion in the Chicago-area market.

    Today’s announcement represents the second increase in the Bank’s Commitment since it was originally communicated in February 2016, having been increased from $27.5 billion to $30 billion in November 2016. The $30 billion plan was developed with the National Community Reinvestment Corporation (NCRC) after in-depth consultative sessions with more than 200 community organizations. At the halfway mark (June 30, 2018), Fifth Third had delivered $17.1 billion under the plan, which runs through 2020.

    “We are committed to all the markets we serve, and we’re especially focused on improving lives in greater Chicago, where we plan to expand significantly in the coming years,” said Greg D. Carmichael, chairman, president & CEO of Fifth Third Bancorp. “The Fifth Third Chicago team has worked closely with local community organizations and business associations to drive positive change for many years. This work -- including the $2.1 billion the team has already delivered as part of our original Commitment announced in 2016 -- is inspiring. We expect to deliver the remaining $1.5 billion, plus this additional $2 billion, within the initial time frame that runs through the end of 2020.”

    Eric S. Smith, regional president for Fifth Third in Chicago, said, “This additional investment reflects leadership’s confidence that we will continue our track record of strong commercial and consumer bank business. It also is a clear expression of our determination to increase and deepen our investment in greater Chicago.”

    The enhanced $32 billion Community Commitment includes:

    • $200 million more in mortgage credit access in the Chicago area, from $1.166 billion to $1.366 billion. That includes the planned offering of Illinois Housing Development Authority (IHDA) loan products that support up to 120 percent area median income (AMI), FHA 203k programs, and the Bank’s own Down Payment Assistance grant program. The increase will mean $11.2 billion in mortgage credit access across the Bank, up from $11 billion.
    • $1.1 billion more in small business lending loans and investments in the Chicago area, increasing from $1.360 billion to $2.460 billion. That includes the launch of a credit platform for financial centers to accelerate and simplify the application process. The platform will include a second-look process for clients that the Bank is unable to accommodate on its balance sheet. The increase means $11.1 billion in small business lending loans and investments across the Bank, up from $10 billion.
    • $600 million more in community development loans in the Chicago area, up from $968 million to $1.568 billion. These are loans that create or retain jobs, revitalize and stabilize neighborhoods, and provide affordable housing and capital for non-profit and municipal entities. The Bank’s total commitment increases to $8.6 billion in community development loans, up from $8 billion.
    • $65 million more in Fifth Third Community Development Corporation (CDC) investments in the Chicago area, up from $148 million to $213 million. That includes an evaluation of the opportunity zone tax credit. The Bank’s total commitment increased to $1.065 billion, up from $1 billion.
    • Additionally, Fifth Third Bank is committing to $54.8 million more in additional facility investments, service and marketing in the Chicago area. These investments include housing- and small business-related support, Community Reinvestment Act (CRA) donations, and investments that support diverse hiring, supplier programs, retail accessibility enhancements and Fifth Third’s L.I.F.E. (Lives Improved through Financial Empowerment®) programs. The Bank’s total commitment is $213.2 million, up from $158.4 million.

    "Chicago is home to a strong civic community that works together across corporate, government and nonprofit organizations to make a difference in the lives of our residents," said Chicago Mayor Rahm Emanuel. "Fifth Third is a great example of a tremendous partner who has supported small business growth, programming for our schools and revitalization efforts that are helping improve neighborhoods across the city. The additional $2 billion further strengthens this commitment and I look forward to the positive outcomes the funding will provide our residents and communities."

    John Taylor, president and founder, National Community Reinvestment Coalition, said, “The NCRC and its member organizations were pleased to be included in development and expansion of Fifth Third’s Community Commitment and its specific plans for the Chicago market. We’ve continued to share our assessment about the critical needs in this community and are eager to continue our collaboration with Fifth Third Bank to achieve the goals we have set.”

    The primary goal of Fifth Third’s Community Commitment is to deliver more access and quality products and services to low- and moderate-income (LMI) and/or minority borrowers to improve lives. In lending to low- and moderate-income borrowers, Fifth Third has increased its CRA loan production in the market by 13 percent, from 28 percent of its total loan production in June 2017 to 32 percent of the same in June 2018. It also has provided $658,000 in down payment assistance to 242 families in the same time period, increases of more than 200 percent in terms of dollar volume and families helped. Fifth Third also made a $3 million investment in Neighborhood Housing Services of Chicago to increase the accessible mortgage loans to LMI borrowers.

    Fifth Third invested $5 million in a revolving loan fund with IFF, a mission-driven lender, real estate consultant and developer, that helps communities thrive by creating opportunities for low-income communities and people with disabilities in Chicago. The Bank also provided financial education to over 10,000 students and invested in Chicago Public Schools to help the district reach its goal of providing equitable financial education for all students. Seventy-seven percent of students in the district come from economically-disadvantaged homes.

    In support of small businesses, Fifth Third has developed a significant collaboration with Accion U.S. Networks, a Chicago-based community development financial institution, that works to expand access to capital and education resources to underserved small businesses. The Bank also recently announced a $2.5 million investment for the Entrepreneurs of Color Fund to provide vital capital access and technical assistance services that fuel business expansion, job growth, and community economic health.

    Kristin Faust, president of Neighborhood Housing Services of Chicago and a member of Fifth Third’s Community Advisory Forum, said, “After many years of working with Fifth Third, I can attest that it stands behind its Community Commitment. It invested $3 million in our loan pool to create more opportunities for homeownership in Chicago, especially in the south and west sides, serving on our neighborhood boards, partnering with us to provide financial empowerment and providing continued support. I am thrilled to hear of its additional investments here in Chicagoland and know it will continue to be a great partner and lend its talents to improving the lives of all residents in greater Chicago.”

    Fifth Third’s planned expansion in Chicago includes its pending merger with MB Financial, which as of today’s date, has received shareholder approval. The transaction awaits regulatory approval. The $2 billion increase in the Community Commitment is contingent upon the closing of the transaction with MB Financial, which is expected in the first quarter of 2019.

    Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of September 30, 2018, the Company had $142 billion in assets and operates 1,152 full-service Banking Centers, and 2,443 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 53,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of September 30, 2018, Fifth Third also had a 3.3% interest in Worldpay Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of September 30, 2018, had $376 billion in assets under care, of which it managed $38 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. 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.”


 Products

  • Currency Processing Solutions (CPS)
    Fifth Third's Currency Processing Solutions is an innovative remote cash capture solution helping automate the cash-handling process beginning with the time clients collect a cash payment to the time the money is deposited & credited into their account....

  • The Currency Processing Solutions provides clients with daily provisional credit, delivering faster access to funds, even while the cash is still in the safe. CPS's daily provisional credit helps clients consolidate banking relationships, helps reduce the risk of fraud and theft, can facilitate the bank reconciliation process by virtually eliminating adjustments and assist improving working capital.  The solution is provided in coordination with a bank-approved armored courier provider. In partnering with an armored courier, Fifth Third is able to lead the industry by leveraging remote payment processing technology in conjunction with our cash solutions. The process begins when employees feed currency directly into the note reader of a smart safe provided by the armored courier. The smart safe verifies the currency, checks for counterfeits, and automatically tracks the cash deposits for fast, easy balancing and reconcilement. Deposit activity is transmitted from the smart safe to the armored courier who forwards the deposit information to Fifth Third Bank for provisional credit to the client's account. Based on the client's business needs, cash will be retrieved from the smart safe by an armored carrier for delivery to the cash vault. 

  • Commercial Card
    Fifth Third's Commercial Card is a MasterCard branded comprehensive commercial card solution....

  • Commercial Card: Designed to handle all of an organization's purchasing, travel, and fleet spending needs through a single card platform. Commercial Card lets employees use one card for every type of company spend and successfully integrates a client's payables processes. The solution can be tailored to include one or more of the following program options*: 

    Cardholder Portal (CHP): Provides cardholders the ability to view and performed limited maintenance to their T&E and Purchasing card accounts and subscribe to alerts & notifications. The CHP is also available via a mobile app, which can be found in the App Store or Google Play under “Fifth Third Commercial Card.”

    Commercial Card Management (CCM): Real-time on-line program maintenance within Fifth Third Direct.

    Smart Data Generation2 (SDG2): On-line expense management and reporting tool with full ERP integration.  

    Fifth Third ePay: Extend the benefits of a Purchasing Card program by leveraging Virtual Card Numbers (VCNs) to improve the security of card information and provide enhanced reconciliation into Accounts Payable (A/P) systems.

    • Extend payment float while leveraging the traditional settlement terms and payment float inherent to commercial card
    • Enhance  payment control through use of VCNs available for one-time use only with defined payment amounts and validity periods
    • Increase payment efficiencies by fully integrating ePayinto current payment approval processes with VCNs requested online, via batch file, or in real time with XML messaging between systems
    • Enhance reconciliation and reporting processes by leveraging up to twenty six custom data elements to create a unique link to specific purchase orders or invoice numbers
  • Paymode X
    Paymode-X is an ACH payment network which enables Fifth Third's payer-clients to make repetitive payments to suppliers or vendors and generate income from the network fees which vendors pay to receive payments on the network....

  • The Paymode-X ACH network allows clients to reduce or even eliminate their check stack and is an ideal component of a company program to automate financial procedures and move from paper to electronic payment methods.

    Paymode-X is a key component of a Payables Optimization strategy. Payables Optimization utilizes a range of solutions (Commercial Card, Paymode-X, Viewpost, traditional ACH and wire transfer) to comprehensively address a client's objectives for working capital management and other financial priorities. A payables optimization consultative sales process starts with questions about the company's financial objectives: does the company aim to extend Days Payable Outstanding (DPO), generate income, eliminate paper and/or manual reconciliation procedures? Depending on the answers to these questions, Paymode-X can be positioned as a standalone service or as a complement to other solutions in our payables suite.

    The value proposition to Fifth Third clients for Paymode-X network participation includes the following:

    • Generation of income through dividend rebates: the network is vendor-funded: the fees assessed are similar to Card interchange as it is based on the value of the payment received (on average, this fee is about 1.25%). The Paymode network rebates 50% of these fees to Fifth Third and we in turn share a portion of that revenue to the paying client.
    • Cost savings versus the use of check disbursements. Checks are a high-cost payment for most companies: generally, the all-in cost is $3.00 or more per check. Not only do clients eliminate these costs by using Paymode-X; they also generate revenue from the payment process (as explained above).
    • Elimination of bank account management tasks: since the Paymode network handles the management of bank account information, A/P personnel have more time to pursue higher value-added tasks. This benefit also accrues to their vendors whose fraud risk is reduced by maintaining tighter controls around the availability of their bank account information.
    • More efficient and comprehensive remittance information and ERP integration to the payment process – the daily Payment Instruction File which the client sends to Fifth Third to initiate payments includes electronic remittance data which travels with the payment and is coordinated with other payments received by that same vendor from other payers on the network to create an integrated AR posting file for the vendor.
  • Expert AP
    An innovative, full-service, B2B payables solution that can cover 100% of a client’s domestic payables and optimizes the payment mix. Helps a client’s AP department run more efficiently and impact their bottom line....

  • Market Problems:  Many clients have a number of pain points in their AP process, and Expert AP looks to help solve the following challenges:

      • Cost and Inefficiency of Paper:  A large number of clients have an AP process built on physical paper and manual processes.  Clients receive paper invoices or emailed as PDFs, and then apply a manual approval workflow process to get appropriate signatures prior to sending out payment.  This process leads to errors, inefficiencies, and missed discount opportunities.  Once the invoice is fully approved the majority of payments are still being sent to suppliers via paper check.  Paper check exposes the client to potential fraud and also creates operational headaches to track the payment while dealing with supplier inquiry as to payment status.

      • Lack of Visibility into Payable Data: Due to the large amounts of paper in the AP process and fragmented payment methods, it has become more and more difficult to gain clear visibility into AP data.  Controllers and AP managers are forced to either maintain paper records or leverage multiple systems to gain clear visibility into AP activity.  This fragmented ecosystem has made auditing, forecasting, and fraud monitoring extremely difficult.

      • Managing Supplier Payment Preference:  In order for a client to support their large number of supplier relationships and reduce the number of paper checks produced, a client must leverage multiple payment methods.  When introducing multiple payment methods complexity is added as the client must now track and maintain supplier payment preference.  This requires continuous supplier communication for enablement and ongoing support, which is timely and costly to an organization.  The client also must handle changes when a supplier changes payment preference and requires additional logic such as, a supplier will accept virtual card up to $5,000, but anything greater must be a paper check.  With each new payment method introduced there is also a technical cost for ensuring the accounting system can support the new method and produce the proper file output to execute the transactions.
    • Features of Expert AP:
      • Electronic invoice capture: Expert AP provides a centralized location to receive both paper and electronic invoices sent to the client.  After being processed they are sent through an automated approval workflow that helps to create visibility and efficiencies, while expediting a client’s approval process.
      • Payment Facilitation:  In a single file a client can send 100% of all domestic payments that will be processed as virtual card, enhanced ACH, or check.
      • Direct Supplier Engagement:  Expert AP will engage with a client’s suppliers to identify and store their preferred payment method.  Upon receiving a client’s payment file Expert AP will leverage the stored supplier payment preference to execute the payment in the preferred method.
      • ERP Connectivity:  Expert AP is capable of integrating with over 130+ ERP systems, with integration ranging between API connectivity to file upload.  The connectivity method depends on the ERP system being leveraged by the client.
      • Expert AP Portal:  Clients are provided with a portal that gives access to all payable activity occurring through the Expert AP solution.  Clients have access to numerous canned reports and can perform searches for any invoices or payments process through the solution.  Clients can also set up user roles and edit approval workflows through the portal.
  • Deposit + (CPS Solution)
    Slot Provisional Credit: Access all CASH across your entire slot floor, day one.
    ...

    • Earn daily provision credit across all slot machines
    • Implemented with no hardware requirements or operational changes
    • Reduce borrowing / borrowing costs and maximize your cash flow
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