FIFTH THIRD BANCORP
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
Commission File Number 001-33653
(Exact Name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
Registrant’s telephone number, including area code: (800 ) 972-3030
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
Trading Symbol(s): |
Name of each exchange on which registered: | ||
The | ||||
Depositary Shares Representing a 1/1000th Ownership Interest in a Share of |
The | |||
Depositary Shares Representing a 1/40th Ownership Interest in a Share of |
The | |||
Depositary Shares Representing a 1/1000th Ownership Interest in a Share of |
The |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes :
☒
No: ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes: No :
☐
☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes :
☒
No: ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation Yes :
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
No: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2
of the Exchange Act.☒
Accelerated filer ☐
Non-accelerated
filer ☐
Smaller reporting company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule ☒
12b-2
of the Act). Yes: ☐
No: There were 709,552,415 shares of the Bancorp’s Common Stock, without par value, outstanding as of January 31, 2020. The Aggregate Market Value of the Voting Stock held by 18,260,843,027 as of June 30, 2019.
non-affiliates
of the Bancorp was $17 Fifth Third Bancorp
DOCUMENTS INCORPORATED BY REFERENCE
This report incorporates into a single document the requirements of the U.S. Securities and Exchange Commission (the “SEC”) with respect to annual reports on Form
10-K
and annual reports to shareholders. Sections of the Bancorp’s Proxy Statement for the 2020 Annual Meeting of Shareholders are incorporated by reference into Part III of this report. Only those sections of this 2019 Annual Report to Shareholders that are specified in this Cross Reference Index constitute part of the registrant’s Form
10-K
for the year ended December 31, 2019. No other information contained in this 2019 Annual Report to Shareholders shall be deemed to constitute any part of this Form 10-K
nor shall any such information be incorporated into the Form 10-K
and shall not be deemed “filed” as part of the registrant’s Form 10-K.
10-K
Cross Reference Index PART I |
||||||
Item 1. |
19-26 |
|||||
58 |
||||||
61-69, 192-195 |
||||||
54 |
||||||
53-55 |
||||||
73-75, 126-127 |
||||||
72-73, 128-129 |
||||||
79-93 |
||||||
75-77 |
||||||
43 |
||||||
77, 152 |
||||||
Item 1A. |
27-37 |
|||||
Item 1B. |
37 |
|||||
Item 2. |
37 |
|||||
Item 3. |
37 |
|||||
Item 4. |
37 |
|||||
38 |
||||||
PART II |
||||||
Item 5. |
39 |
|||||
Item 6. |
43 |
|||||
Item 7. |
44-104 |
|||||
Item 7A. |
104 |
|||||
Item 8. |
104-196 |
|||||
Item 9. |
197 |
|||||
Item 9A. |
197 |
|||||
Item 9B. |
199 |
|||||
PART III |
||||||
Item 10. |
199 |
|||||
Item 11. |
199 |
|||||
Item 12. |
199 |
|||||
Item 13. |
199 |
|||||
Item 14. |
199 |
|||||
PART IV |
||||||
Item 15. |
199-204 |
|||||
Item 16. |
204 |
|||||
SIGNATURES |
205 |
|||||
FORWARD-LOOKING STATEMENTS
This report contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule
3b-6
promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “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 the Risk Factors section in Item 1A in this Annual Report on Form 10-K.
When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) deteriorating credit quality; (2) loan concentration by location or industry of borrowers or collateral; (3) problems encountered by other financial institutions; (4) inadequate sources of funding or liquidity; (5) unfavorable actions of rating agencies; (6) inability to maintain or grow deposits; (7) limitations on the ability to receive dividends from subsidiaries; (8) cyber-security risks; (9) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (10) failures by third-party service providers; (11) inability to manage strategic initiatives and/or organizational changes; (12) inability to implement technology system enhancements; (13) failure of internal controls and other risk management systems; (14) losses related to fraud, theft or violence; (15) inability to attract and retain skilled personnel; (16) adverse impacts of government regulation; (17) governmental or regulatory changes or other actions; (18) failures to meet applicable capital requirements; (19) regulatory objections to Fifth Third’s capital plan; (20) regulation of Fifth Third’s derivatives activities; (21) deposit insurance premiums; (22) assessments for the orderly liquidation fund; (23) replacement of LIBOR; (24) weakness in the national or local economies; (25) global political and economic uncertainty or negative actions; (26) changes in interest rates; (27) changes and trends in capital markets; (28) fluctuation of Fifth Third’s stock price; (29) volatility in mortgage banking revenue; (30) litigation, investigations, and enforcement proceedings by governmental authorities; (31) breaches of contractual covenants, representations and warranties; (32) competition and changes in the financial services industry; (33) changing retail distribution strategies, customer preferences and behavior; (34) risks relating to Fifth Third’s ability to realize the anticipated benefits of the merger with MB Financial, Inc.; (35) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (36) potential dilution from future acquisitions; (37) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (38) results of investments or acquired entities; (39) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (40) inaccuracies or other failures from the use of models; (41) effects of critical accounting policies and judgments or the use of inaccurate estimates; (42) weather-related events or other natural disasters; and (43) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity. 18 Fifth Third Bancorp
19 Fifth Third Bancorp
20 Fifth Third Bancorp
21 Fifth Third Bancorp
22 Fifth Third Bancorp
The following table presents the minimum regulatory capital ratios, minimum ratio plus capital conservation buffer, and well-capitalized minimums compared with the Bancorp’s and the Bank’s regulatory capital ratios as of December 31, 2019, calculated using the regulatory capital methodology applicable during 2019:
| Regulatory Capital Ratios: |
||||||||||||||||
| Minimum Regulatory Capital Ratio |
Minimum Ratio + Capital Conservation (a) |
Well-Capitalized Minimums (b) |
Actual at December 31, 2019 |
|||||||||||||
| CET1 risk-based capital ratio: |
||||||||||||||||
| Fifth Third Bancorp |
4.50 |
% | 7.00 |
N/A |
9.75 |
|||||||||||
| Fifth Third Bank, National Association |
4.50 |
7.00 |
6.50 |
11.86 |
||||||||||||
| Tier I risk-based capital ratio: |
||||||||||||||||
| Fifth Third Bancorp |
6.00 |
8.50 |
6.00 |
10.99 |
||||||||||||
| Fifth Third Bank, National Association |
6.00 |
8.50 |
8.00 |
11.86 |
||||||||||||
| Total risk-based capital ratio: |
||||||||||||||||
| Fifth Third Bancorp |
8.00 |
10.50 |
10.00 |
13.84 |
||||||||||||
| Fifth Third Bank, National Association |
8.00 |
10.50 |
10.00 |
13.46 |
||||||||||||
| Tier I leverage ratio: |
||||||||||||||||
| Fifth Third Bancorp |
4.00 |
N/A |
N/A |
9.54 |
||||||||||||
| Fifth Third Bank, National Association |
4.00 |
N/A |
5.00 |
10.36 |
||||||||||||
(a) |
Reflects the fully phased-in capital conservation buffer of 2.5% applicable during 2019. |
(b) |
Reflects the well-capitalized standard applicable to the Bancorp under FRB Regulation Y and the well-capitalized standard applicable to the Bank. |
23 Fifth Third Bancorp
24 Fifth Third Bancorp
25 Fifth Third Bancorp
26 Fifth Third Bancorp
27 Fifth Third Bancorp
28 Fifth Third Bancorp
29 Fifth Third Bancorp
30 Fifth Third Bancorp
31 Fifth Third Bancorp
32 Fifth Third Bancorp
33 Fifth Third Bancorp
34 Fifth Third Bancorp
35 Fifth Third Bancorp
36 Fifth Third Bancorp
37 Fifth Third Bancorp
38 Fifth Third Bancorp
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Bancorp’s common stock is traded in the
over-the-counter
market and is listed under the symbol “FITB” on the NASDAQ®
Global Select Market System.See a discussion of dividend limitations that the subsidiaries can pay to the Bancorp discussed in Note 4 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference. Additionally, as of December 31, 2019, the Bancorp had 37,873 shareholders of record.
| Issuer Purchases of Equity Securities |
||||||||||||||||||||
| Period |
Total Number of Shares Purchased (a) |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (b) |
||||||||||||||||
| October 2019 |
9,243,819 |
$ | 29.53 |
9,020,163 |
77,586,469 |
|||||||||||||||
| November 2019 |
141,014 |
30.08 |
- |
77,586,469 |
||||||||||||||||
| December 2019 |
1,229,677 |
28.94 |
1,149,121 |
76,437,348 |
||||||||||||||||
| Total |
10,614,510 |
$ | 29.47 |
10,169,284 |
76,437,348 |
|||||||||||||||
(a) |
Includes 445,226 shares repurchased during the fourth quarter of 2019 in connection with various employee compensation plans of the Bancorp. These purchases do not count against the maximum number of shares that may yet be purchased under the Board of Directors’ authorization. |
(b) |
During the second quarter of 2019, the Bancorp announced that its Board of Directors had authorized management to purchase 100 million shares of the Bancorp’s common stock through the open market or in any private transactions. The authorization does not include specific price targets or an expiration date. This share repurchase authorization replaces the Board’s previous authorization pursuant to which approximately 20 million shares remained available for repurchase by the Bancorp. |
See further discussion on share repurchase transactions and stock-based compensation in Note 25 and Note 26 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference.
39 Fifth Third Bancorp
The following performance graphs do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Bancorp specifically incorporates the performance graphs by reference therein.
Total Return Analysis
The graphs below summarize the cumulative return experienced by the Bancorp’s shareholders over the years 2014 through 2019, and 2009 through 2019, respectively, compared to the S&P 500 Stock and the S&P Banks indices.
FIFTH THIRD BANCORP VS. MARKET INDICES
40 Fifth Third Bancorp
2019 ANNUAL REPORT
FINANCIAL CONTENTS
42 |
||||
43 |
||||
44 |
||||
48 |
||||
50 |
||||
50 |
||||
53 |
||||
61 |
||||
70 |
||||
72 |
||||
78 |
||||
79 |
||||
93 |
||||
98 |
||||
99 |
||||
100 |
||||
101 |
||||
103 |
||||
104 |
||||
105 |
||||
Financial Statements |
||||
107 |
||||
108 |
||||
109 |
||||
110 |
||||
111 |
Notes to Consolidated Financial Statements |
||||||||||
112 |
153 |
|||||||||
122 |
156 |
|||||||||
122 |
160 |
|||||||||
125 |
162 |
|||||||||
126 |
164 |
|||||||||
128 |
166 |
|||||||||
130 |
170 |
|||||||||
138 |
172 |
|||||||||
138 |
174 |
|||||||||
139 |
178 |
|||||||||
141 |
179 |
|||||||||
141 |
180 |
|||||||||
142 |
189 |
|||||||||
145 |
190 |
|||||||||
147 |
192 |
|||||||||
152 |
196 |
|||||||||
152 |
||||||||||
197 |
||||||||||
198 |
||||||||||
206 |
||||||||||
207 |
||||||||||
Corporate Information |
41 Fifth Third Bancorp
GLOSSARY OF ABBREVIATIONS AND ACRONYMS
Fifth Third Bancorp provides the following list of abbreviations and acronyms as a tool for the reader that are used in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Consolidated Financial Statements and the Notes to Consolidated Financial Statements.
ALCO: ALLL: AOCI: APR: ARM: ASF: ASU: ATM: BCBS BHC: BOLI: BPO: bps: CCAR: CDC: CECL: CET1: CFPB: C&I: DCF: DTCC: DTI: Debt-to-Income RatioERM: ERMC: EVE: FASB: FDIC: FHA: FHLB: FHLMC: FICO: FINRA: FNMA: FOMC: FRB: FTE: FTP: FTS: GNMA: GSE: HQLA: IPO: IRC: IRLC: |
IRS: ISDA: LCR: LIBOR: LIHTC: Low-Income Housing Tax CreditLLC: LTV: Loan-to-Value RatioMD&A: MSR: N/A: NAV: NII: NM: NPR: NSFR: OAS: OCC: OCI: OREO: OTTI: PCI: PSA: RCC: ROU: Right-of-Use RSA: RSF: RSU: SAR: SBA: SEC: SOFR: TBA: TCJA: TDR: TILA: TRA: TruPS: U.S.: U.S. GAAP: VA: VIE: VRDN: |
42 Fifth Third Bancorp
SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
As of and for the years ended December 31 ($ in millions, except for per share data) |
2019 |
2018 |
2017 |
2016 |
2015 |
||||||||||||||||
Income Statement Data |
|||||||||||||||||||||
Net interest income (U.S. GAAP) |
$ |
4,797 |
4,140 |
3,798 |
3,615 |
3,533 |
|||||||||||||||
Net interest income (FTE) (a)(b) |
4,814 |
4,156 |
3,824 |
3,640 |
3,554 |
||||||||||||||||
Noninterest income |
3,536 |
2,790 |
3,224 |
2,696 |
3,003 |
||||||||||||||||
Total revenue (a) |
8,350 |
6,946 |
7,048 |
6,336 |
6,557 |
||||||||||||||||
Provision for credit losses (c) |
471 |
207 |
261 |
366 |
400 |
||||||||||||||||
Noninterest expense |
4,660 |
3,958 |
3,782 |
3,737 |
3,643 |
||||||||||||||||
Net income attributable to Bancorp |
2,512 |
2,193 |
2,180 |
1,547 |
1,685 |
||||||||||||||||
Net income available to common shareholders |
2,419 |
2,118 |
2,105 |
1,472 |
1,610 |
||||||||||||||||
Common Share Data |
|||||||||||||||||||||
Earnings per share - basic |
$ |
3.38 |
3.11 |
2.86 |
1.92 |
2.00 |
|||||||||||||||
Earnings per share - diluted |
3.33 |
3.06 |
2.81 |
1.91 |
1.97 |
||||||||||||||||
Cash dividends declared per common share |
0.94 |
0.74 |
0.60 |
0.53 |
0.52 |
||||||||||||||||
Book value per share |
27.41 |
23.07 |
21.43 |
19.62 |
18.31 |
||||||||||||||||
Market value per share |
30.74 |
23.53 |
30.34 |
26.97 |
20.10 |
||||||||||||||||
Financial Ratios |
|||||||||||||||||||||
Return on average assets |
1.53 |
% |
1.54 |
1.55 |
1.09 |
1.20 |
|||||||||||||||
Return on average common equity |
13.1 |
14.5 |
13.9 |
9.7 |
11.2 |
||||||||||||||||
Return on average tangible common equity (including AOCI) (b) |
17.1 |
17.5 |
16.6 |
11.6 |
13.5 |
||||||||||||||||
Return on average tangible common equity (excluding AOCI) (b) |
18.2 |
16.7 |
16.9 |
12.2 |
13.9 |
||||||||||||||||
Dividend payout |
27.8 |
23.8 |
21.0 |
27.6 |
26.0 |
||||||||||||||||
Average total Bancorp shareholders’ equity as a percent of average assets |
12.14 |
11.23 |
11.69 |
11.57 |
11.24 |
||||||||||||||||
Tangible common equity as a percent of tangible assets (excluding AOCI) (b) |
8.44 |
8.71 |
8.83 |
8.77 |
8.50 |
||||||||||||||||
Net interest margin (a)(b) |
3.31 |
3.22 |
3.03 |
2.88 |
2.88 |
||||||||||||||||
Net interest rate spread (a)(b) |
2.92 |
2.87 |
2.76 |
2.66 |
2.69 |
||||||||||||||||
Efficiency (a)(b) |
55.8 |
57.0 |
53.7 |
59.0 |
55.6 |
||||||||||||||||
Credit Quality |
|||||||||||||||||||||
Net losses charged-off |
$ |
369 |
330 |
298 |
362 |
446 |
|||||||||||||||
Net losses charged-off as a percent of average portfolio loans and leases |
0.35 |
% |
0.35 |
0.32 |
0.39 |
0.48 |
|||||||||||||||
ALLL as a percent of portfolio loans and leases |
1.10 |
1.16 |
1.30 |
1.36 |
1.37 |
||||||||||||||||
Allowance for credit losses as a percent of portfolio loans and leases (d) |
1.23 |
1.30 |
1.48 |
1.54 |
1.52 |
||||||||||||||||
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO |
0.62 |
0.41 |
0.53 |
0.80 |
0.70 |
||||||||||||||||
Average Balances |
|||||||||||||||||||||
Loans and leases, including held for sale |
$ |
107,794 |
93,876 |
92,731 |
94,320 |
93,339 |
|||||||||||||||
Securities and other short-term investments |
37,610 |
35,029 |
33,562 |
31,965 |
30,245 |
||||||||||||||||
Assets |
163,936 |
142,183 |
140,527 |
142,173 |
139,999 |
||||||||||||||||
Transaction deposits (e) |
111,130 |
97,914 |
96,052 |
95,371 |
95,244 |
||||||||||||||||
Core deposits (f) |
116,600 |
102,020 |
99,823 |
99,381 |
99,295 |
||||||||||||||||
Wholesale funding (g) |
22,451 |
20,573 |
20,360 |
21,813 |
20,210 |
||||||||||||||||
Bancorp shareholders’ equity |
19,902 |
15,970 |
16,424 |
16,453 |
15,742 |
||||||||||||||||
Regulatory Capital Ratios |
|||||||||||||||||||||
CET1 capital (h) |
9.75 |
% |
10.24 |
10.61 |
10.39 |
9.82 |
|||||||||||||||
Tier I risk-based capital (h) |
10.99 |
11.32 |
11.74 |
11.50 |
10.93 |
||||||||||||||||
Total risk-based capital (h) |
13.84 |
14.48 |
15.16 |
15.02 |
14.13 |
||||||||||||||||
Tier I leverage |
9.54 |
9.72 |
10.01 |
9.90 |
9.54 |
||||||||||||||||
(a) |
Amounts presented on an FTE basis. The FTE adjustment for the years ended December 31, 2019 $17 |
(b) |
These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A. |
(c) |
The provision for credit losses is the sum of the provision for loan and lease losses and the provision for (benefit from) the reserve for unfunded commitments. |
(d) |
The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments. |
(e) |
Includes demand deposits, interest checking deposits, savings deposits, money market deposits and foreign office deposits. |
(f) |
Includes transaction deposits and other time deposits. |
(g) |
Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt. |
(h) |
Under the U.S. banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting values are added together in the Bancorp’s total risk-weighted assets. |
43 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
The following is Management’s Discussion and Analysis of Financial Condition and Results of Operations of certain significant factors that have affected Fifth Third Bancorp’s (the “Bancorp” or “Fifth Third”) financial condition and results of operations during the periods included in the Consolidated Financial Statements, which are a part of this filing. Reference to the Bancorp incorporates the parent holding company and all consolidated subsidiaries. The Bancorp’s banking subsidiary is referred to as the Bank.
OVERVIEW
44 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 1: SUMMARY OF ACCELERATED SHARE REPURCHASE TRANSACTIONS
| Repurchase Date |
Amount ($ in millions) |
Shares Repurchased on Repurchase Date |
Shares Received from Forward Contract Settlement |
Total Shares Repurchased |
Settlement Date |
|||||||||||||||
| March 27, 2019 (a) |
913 |
31,779,280 |
2,026,584 |
33,805,864 |
June 28, 2019 |
|||||||||||||||
| April 29, 2019 (b) |
200 |
6,015,570 |
1,217,805 |
7,233,375 |
May 23, 2019 - May 24, 2019 |
|||||||||||||||
| August 7, 2019 |
100 |
3,150,482 |
694,238 |
3,844,720 |
August 16, 2019 |
|||||||||||||||
| August 9, 2019 (b) |
200 |
6,405,426 |
1,475,487 |
7,880,913 |
August 28, 2019 |
|||||||||||||||
| October 25, 2019 |
300 |
9,020,163 |
1,149,121 |
10,169,284 |
December 17, 2019 |
|||||||||||||||
(a) |
This accelerated share repurchase transaction consisted of two supplemental confirmations each with a notional amount of $456.5 million. |
(b) |
This accelerated share repurchase transaction consisted of two supplemental confirmations each with a notional amount of $100 million. |
45 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
46 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 2: CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| For the years ended December 31 ($ in millions, except per share data) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Interest income (FTE) (a) |
$ |
6,271 |
5,199 |
4,515 |
4,218 |
4,049 |
||||||||||||||
| Interest expense |
1,457 |
1,043 |
691 |
578 |
495 |
|||||||||||||||
| Net Interest Income (FTE) (a) |
4,814 |
4,156 |
3,824 |
3,640 |
3,554 |
|||||||||||||||
| Provision for credit losses |
471 |
207 |
261 |
366 |
400 |
|||||||||||||||
| Net Interest Income After Provision for Credit Losses (FTE) (a) |
4,343 |
3,949 |
3,563 |
3,274 |
3,154 |
|||||||||||||||
| Noninterest income |
3,536 |
2,790 |
3,224 |
2,696 |
3,003 |
|||||||||||||||
| Noninterest expense |
4,660 |
3,958 |
3,782 |
3,737 |
3,643 |
|||||||||||||||
| Income Before Income Taxes (FTE) (a) |
3,219 |
2,781 |
3,005 |
2,233 |
2,514 |
|||||||||||||||
| Fully taxable equivalent adjustment |
17 |
16 |
26 |
25 |
21 |
|||||||||||||||
| Applicable income tax expense |
690 |
572 |
799 |
665 |
814 |
|||||||||||||||
| Net Income |
2,512 |
2,193 |
2,180 |
1,543 |
1,679 |
|||||||||||||||
| Less: Net income attributable to noncontrolling interests |
- |
- |
- |
(4 |
) | (6) |
||||||||||||||
| Net Income Attributable to Bancorp |
2,512 |
2,193 |
2,180 |
1,547 |
1,685 |
|||||||||||||||
| Dividends on preferred stock |
93 |
75 |
75 |
75 |
75 |
|||||||||||||||
| Net Income Available to Common Shareholders |
$ |
2,419 |
2,118 |
2,105 |
1,472 |
1,610 |
||||||||||||||
| Earnings per share - basic |
$ |
3.38 |
3.11 |
2.86 |
1.92 |
2.00 |
||||||||||||||
| Earnings per share - diluted |
$ |
3.33 |
3.06 |
2.81 |
1.91 |
1.97 |
||||||||||||||
| Cash dividends declared per common share |
$ |
0.94 |
0.74 |
0.60 |
0.53 |
0.52 |
||||||||||||||
(a) |
These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A. |
47 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NON-GAAP
FINANCIAL MEASURES The following table reconciles the
non-GAAP
financial measures of net interest income on an FTE basis, interest income on an FTE basis, net interest margin, net interest rate spread and the efficiency ratio to U.S. GAAP:TABLE 3:
NON-GAAP
FINANCIAL MEASURES - FINANCIAL MEASURES AND RATIOS ON AN FTE BASIS | For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Net interest income (U.S. GAAP) |
$ |
4,797 |
4,140 |
3,798 |
||||||||
| Add: FTE adjustment |
17 |
16 |
26 |
|||||||||
| Net interest income on an FTE basis (1) |
$ |
4,814 |
4,156 |
3,824 |
||||||||
| Interest income (U.S. GAAP) |
$ |
6,254 |
5,183 |
4,489 |
||||||||
| Add: FTE adjustment |
17 |
16 |
26 |
|||||||||
| Interest income on an FTE basis (2) |
$ |
6,271 |
5,199 |
4,515 |
||||||||
| Interest expense (3) |
$ |
1,457 |
1,043 |
691 |
||||||||
| Noninterest income (4) |
3,536 |
2,790 |
3,224 |
|||||||||
| Noninterest expense (5) |
4,660 |
3,958 |
3,782 |
|||||||||
| Average interest-earning assets (6) |
145,404 |
128,905 |
126,293 |
|||||||||
| Average interest-bearing liabilities (7) |
104,708 |
89,959 |
85,090 |
|||||||||
| Ratios: |
||||||||||||
| Net interest margin on an FTE basis (1) / (6) |
3.31 |
% |
3.22 |
3.03 |
||||||||
| Net interest rate spread on an FTE basis ((2) / (6)) - ((3) / (7)) |
2.92 |
2.87 |
2.76 |
|||||||||
| Efficiency ratio on an FTE basis (5) / ((1) + (4)) |
55.8 |
57.0 |
53.7 |
|||||||||
48 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table reconciles the
non-GAAP
financial measure of return on average tangible common equity to U.S. GAAP:TABLE 4:
NON-GAAP
FINANCIAL MEASURE - RETURN ON AVERAGE TANGIBLE COMMON EQUITY | For the years ended December 31 ($ in millions) |
2019 |
2018 |
||||||
| Net income available to common shareholders (U.S. GAAP) |
$ |
2,419 |
2,118 |
|||||
| Add: Intangible amortization, net of tax |
35 |
4 |
||||||
| Tangible net income available to common shareholders (1) |
$ |
2,454 |
2,122 |
|||||
| Average Bancorp shareholders’ equity (U.S. GAAP) |
$ |
19,902 |
15,970 |
|||||
| Less: Average preferred stock |
(1,470 |
) |
(1,331 |
) | ||||
| Average goodwill |
(3,888 |
) |
(2,462 |
) | ||||
| Average intangible assets |
(169 |
) |
(29 |
) | ||||
| |
|
|
||||||
| Average tangible common equity, including AOCI (2) |
$ |
14,375 |
12,148 |
|||||
| Less: Average AOCI |
(875 |
) |
575 |
|||||
| |
|
|
||||||
| Average tangible common equity, excluding AOCI (3) |
$ |
13,500 |
12,723 |
|||||
| Return on average tangible common equity, including AOCI (1) / (2) |
17.1 |
% |
17.5 |
|||||
| Return on average tangible common equity, excluding AOCI (1) / (3) |
18.2 |
16.7 |
||||||
The following table reconciles
non-GAAP
capital ratios to U.S. GAAP:TABLE 5:
NON-GAAP
FINANCIAL MEASURES - CAPITAL RATIOS | As of December 31 ($ in millions) |
2019 |
2018 |
||||||
| Total Bancorp Shareholders’ Equity (U.S. GAAP) |
$ |
21,203 |
16,250 |
|||||
| Less: Preferred stock |
(1,770 |
) |
(1,331 |
) | ||||
| Goodwill |
(4,252 |
) |
(2,478 |
) | ||||
| Intangible assets |
(201 |
) |
(40 |
) | ||||
| AOCI |
(1,192 |
) |
112 |
|||||
| Tangible common equity, excluding unrealized gains / losses (1) |
13,788 |
12,513 |
||||||
| Add: Preferred stock |
1,770 |
1,331 |
||||||
| Tangible equity (2) |
$ |
15,558 |
13,844 |
|||||
| Total Assets (U.S. GAAP) |
$ |
169,369 |
146,069 |
|||||
| Less: Goodwill |
(4,252 |
) |
(2,478 |
) | ||||
| Intangible assets |
(201 |
) |
(40 |
) | ||||
| AOCI, before tax |
(1,509 |
) |
142 |
|||||
| Tangible assets, excluding unrealized gains / losses (3) |
$ |
163,407 |
143,693 |
|||||
| Ratios: |
||||||||
| Tangible equity as a percentage of tangible assets (2) / (3) |
9.52 |
% |
9.63 |
|||||
| Tangible common equity as a percentage of tangible assets (1) / (3) |
8.44 |
8.71 |
||||||
49 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT ACCOUNTING STANDARDS
CRITICAL ACCOUNTING POLICIES
50 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 6: FAIR VALUE SUMMARY
| As of ($ in millions) |
December 31, 2019 |
December 31, 2018 |
||||||||||||||||
| Balance |
Level 3 |
Balance |
Level 3 |
|||||||||||||||
| Assets carried at fair value |
$ |
40,446 |
1,194 |
35,792 |
1,124 |
|||||||||||||
| As a percent of total assets |
24 |
% |
1 |
25 |
1 |
|||||||||||||
| Liabilities carried at fair value |
$ |
890 |
171 |
1,012 |
133 |
|||||||||||||
| As a percent of total liabilities |
1 |
% |
- |
1 |
- |
|||||||||||||
51 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
52 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
STATEMENTS OF INCOME ANALYSIS
53 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 7: CONSOLIDATED AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME ON AN FTE BASIS
| For the years ended December 31 |
2019 |
2018 |
2017 |
|||||||||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||||||||||
| ($ in millions) |
Average Balance |
Revenue/ Cost |
Average Yield/ Rate |
Average Balance |
Revenue/ Cost |
Average Yield/ Rate |
Average Balance |
Revenue/ Cost |
Average Yield/ Rate |
|||||||||||||||||||||||||||
| Assets: |
||||||||||||||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||||||||||||||
| Loans and leases: (a) |
||||||||||||||||||||||||||||||||||||
| Commercial and industrial loans |
$ |
50,168 |
2,313 |
4.61% |
$ | 42,668 |
1,826 |
4.28% |
$ | 41,577 |
1,514 |
3.64% |
||||||||||||||||||||||||
| Commercial mortgage loans |
9,905 |
476 |
4.81 |
6,661 |
298 |
4.47 |
6,844 |
256 |
3.74 |
|||||||||||||||||||||||||||
| Commercial construction loans |
5,174 |
278 |
5.37 |
4,793 |
240 |
5.01 |
4,374 |
179 |
4.09 |
|||||||||||||||||||||||||||
| Commercial leases |
3,578 |
119 |
3.31 |
3,795 |
108 |
2.84 |
4,011 |
82 |
2.04 |
|||||||||||||||||||||||||||
| Total commercial loans and leases |
68,825 |
3,186 |
4.63 |
57,917 |
2,472 |
4.27 |
56,806 |
2,031 |
3.58 |
|||||||||||||||||||||||||||
| Residential mortgage loans |
17,337 |
635 |
3.66 |
16,150 |
580 |
3.59 |
16,053 |
566 |
3.53 |
|||||||||||||||||||||||||||
| Home equity |
6,286 |
324 |
5.16 |
6,631 |
326 |
4.92 |
7,308 |
310 |
4.24 |
|||||||||||||||||||||||||||
| Indirect secured consumer loans |
10,345 |
423 |
4.08 |
8,993 |
304 |
3.38 |
9,407 |
275 |
2.92 |
|||||||||||||||||||||||||||
| Credit card |
2,437 |
304 |
12.49 |
2,280 |
279 |
12.25 |
2,141 |
253 |
11.84 |
|||||||||||||||||||||||||||
| Other consumer loans |
2,564 |
196 |
7.63 |
1,905 |
132 |
6.94 |
1,016 |
68 |
6.68 |
|||||||||||||||||||||||||||
| Total consumer loans |
38,969 |
1,882 |
4.83 |
35,959 |
1,621 |
4.51 |
35,925 |
1,472 |
4.10 |
|||||||||||||||||||||||||||
| Total loans and leases |
$ |
107,794 |
5,068 |
4.70% |
$ | 93,876 |
4,093 |
4.36% |
$ | 92,731 |
3,503 |
3.78% |
||||||||||||||||||||||||
| Securities: |
||||||||||||||||||||||||||||||||||||
| Taxable |
$ |
35,429 |
1,160 |
3.28% |
$ | 33,487 |
1,079 |
3.22% |
$ | 32,106 |
993 |
3.09% |
||||||||||||||||||||||||
| Exempt from income taxes (a) |
41 |
2 |
3.97 |
66 |
2 |
3.37 |
66 |
4 |
5.45 |
|||||||||||||||||||||||||||
| Other short-term investments |
2,140 |
41 |
1.91 |
1,476 |
25 |
1.68 |
1,390 |
15 |
1.04 |
|||||||||||||||||||||||||||
| Total interest-earning assets |
$ |
145,404 |
6,271 |
4.31% |
$ | 128,905 |
5,199 |
4.03% |
$ | 126,293 |
4,515 |
3.57% |
||||||||||||||||||||||||
| Cash and due from banks |
2,748 |
2,200 |
2,224 |
|||||||||||||||||||||||||||||||||
| Other assets |
16,903 |
12,203 |
13,236 |
|||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses |
(1,119 |
) |
(1,125 |
) | (1,226 |
) | ||||||||||||||||||||||||||||||
| Total assets |
$ |
163,936 |
$ | 142,183 |
$ | 140,527 |
||||||||||||||||||||||||||||||
| Liabilities and Equity: |
||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
| Interest checking deposits |
$ |
36,658 |
396 |
1.08% |
$ | 29,818 |
252 |
0.85% |
$ | 26,382 |
109 |
0.41% |
||||||||||||||||||||||||
| Savings deposits |
14,041 |
22 |
0.16 |
13,330 |
14 |
0.10 |
13,958 |
8 |
0.06 |
|||||||||||||||||||||||||||
| Money market deposits |
25,879 |
272 |
1.05 |
21,769 |
162 |
0.74 |
20,231 |
74 |
0.37 |
|||||||||||||||||||||||||||
| Foreign office deposits |
209 |
1 |
0.63 |
363 |
1 |
0.33 |
388 |
1 |
0.20 |
|||||||||||||||||||||||||||
| Other time deposits |
5,470 |
98 |
1.79 |
4,106 |
59 |
1.44 |
3,771 |
46 |
1.23 |
|||||||||||||||||||||||||||
| Total interest-bearing core deposits |
82,257 |
789 |
0.96 |
69,386 |
488 |
0.70 |
64,730 |
238 |
0.37 |
|||||||||||||||||||||||||||
| Certificates $100,000 and over |
4,504 |
97 |
2.14 |
2,426 |
41 |
1.69 |
2,564 |
36 |
1.38 |
|||||||||||||||||||||||||||
| Other deposits |
265 |
6 |
2.27 |
476 |
9 |
1.94 |
277 |
3 |
1.05 |
|||||||||||||||||||||||||||
| Federal funds purchased |
1,267 |
29 |
2.26 |
1,509 |
30 |
1.97 |
557 |
6 |
1.01 |
|||||||||||||||||||||||||||
| Other short-term borrowings |
1,046 |
28 |
2.67 |
1,611 |
29 |
1.82 |
3,158 |
30 |
0.96 |
|||||||||||||||||||||||||||
| Long-term debt |
15,369 |
508 |
3.30 |
14,551 |
446 |
3.06 |
13,804 |
378 |
2.74 |
|||||||||||||||||||||||||||
| Total interest-bearing liabilities |
$ |
104,708 |
1,457 |
1.39% |
$ | 89,959 |
1,043 |
1.16% |
$ | 85,090 |
691 |
0.81% |
||||||||||||||||||||||||
| Demand deposits |
34,343 |
32,634 |
35,093 |
|||||||||||||||||||||||||||||||||
| Other liabilities |
4,897 |
3,603 |
3,897 |
|||||||||||||||||||||||||||||||||
| Total liabilities |
$ |
143,948 |
$ | 126,196 |
$ | 124,080 |
||||||||||||||||||||||||||||||
| Total equity |
$ |
19,988 |
$ | 15,987 |
$ | 16,447 |
||||||||||||||||||||||||||||||
| Total liabilities and equity |
$ |
163,936 |
$ | 142,183 |
$ | 140,527 |
||||||||||||||||||||||||||||||
| Net interest income (FTE) (b) |
$ |
4,814 |
$ | 4,156 |
$ | 3,824 |
||||||||||||||||||||||||||||||
| Net interest margin (FTE) (b) |
3.31% |
3.22% |
3.03% |
|||||||||||||||||||||||||||||||||
| Net interest rate spread (FTE) (b) |
2.92 |
2.87 |
2.76 |
|||||||||||||||||||||||||||||||||
| Interest-bearing liabilities to interest-earning assets |
72.01 |
69.79 |
67.37 |
|||||||||||||||||||||||||||||||||
(a) |
The FTE adjustments included in the above table were $17 December 31, 2019 |
(b) |
Net interest income (FTE), net interest margin (FTE) and net interest rate spread (FTE) are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A. |
54 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 8: CHANGES IN NET INTEREST INCOME ATTRIBUTABLE TO VOLUME AND YIELD/RATE (a) |
||||||||||||||||||||||||
| For the years ended December 31 |
2019 Compared to 2018 |
2018 Compared to 2017 |
||||||||||||||||||||||
| ($ in millions) |
Volume |
Yield/Rate |
Total |
Volume |
Yield/Rate |
Total |
||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||
| Loans and leases: |
||||||||||||||||||||||||
| Commercial and industrial loans |
$ |
338 |
149 |
487 |
41 |
271 |
312 |
|||||||||||||||||
| Commercial mortgage loans |
154 |
24 |
178 |
(7 |
) | 49 |
42 |
|||||||||||||||||
| Commercial construction loans |
20 |
18 |
38 |
18 |
43 |
61 |
||||||||||||||||||
| Commercial leases |
(6 |
) |
17 |
11 |
(4 |
) | 30 |
26 |
||||||||||||||||
| Total commercial loans and leases |
506 |
208 |
714 |
48 |
393 |
441 |
||||||||||||||||||
| Residential mortgage loans |
43 |
12 |
55 |
3 |
11 |
14 |
||||||||||||||||||
| Home equity |
(17 |
) |
15 |
(2 |
) |
(31 |
) | 47 |
16 |
|||||||||||||||
| Indirect secured consumer loans |
50 |
69 |
119 |
(12 |
) | 41 |
29 |
|||||||||||||||||
| Credit card |
20 |
5 |
25 |
17 |
9 |
26 |
||||||||||||||||||
| Other consumer loans |
50 |
14 |
64 |
61 |
3 |
64 |
||||||||||||||||||
| Total consumer loans |
146 |
115 |
261 |
38 |
111 |
149 |
||||||||||||||||||
| Total loans and leases |
$ |
652 |
323 |
975 |
86 |
504 |
590 |
|||||||||||||||||
| Securities: |
||||||||||||||||||||||||
| Taxable |
63 |
18 |
81 |
44 |
42 |
86 |
||||||||||||||||||
| Exempt from income taxes |
- |
- |
- |
(1 |
) | (1 |
) | (2) |
||||||||||||||||
| Other short-term investments |
12 |
4 |
16 |
1 |
9 |
10 |
||||||||||||||||||
| Total change in interest income |
$ |
727 |
345 |
1,072 |
130 |
554 |
684 |
|||||||||||||||||
| Liabilities: |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Interest checking deposits |
$ |
65 |
79 |
144 |
15 |
128 |
143 |
|||||||||||||||||
| Savings deposits |
- |
8 |
8 |
- |
6 |
6 |
||||||||||||||||||
| Money market deposits |
35 |
75 |
110 |
7 |
81 |
88 |
||||||||||||||||||
| Foreign office deposits |
(1 |
) |
1 |
- |
- |
- |
- |
|||||||||||||||||
| Other time deposits |
22 |
17 |
39 |
5 |
8 |
13 |
||||||||||||||||||
| Total interest-bearing core deposits |
121 |
180 |
301 |
27 |
223 |
250 |
||||||||||||||||||
| Certificates $100,000 and over |
43 |
13 |
56 |
(2 |
) | 7 |
5 |
|||||||||||||||||
| Other deposits |
(4 |
) |
1 |
(3 |
) |
3 |
3 |
6 |
||||||||||||||||
| Federal funds purchased |
(5 |
) |
4 |
(1 |
) |
15 |
9 |
24 |
||||||||||||||||
| Other short-term borrowings |
(12 |
) |
11 |
(1 |
) |
(20 |
) | 19 |
(1) |
|||||||||||||||
| Long-term debt |
25 |
37 |
62 |
22 |
46 |
68 |
||||||||||||||||||
| Total change in interest expense |
$ |
168 |
246 |
414 |
45 |
307 |
352 |
|||||||||||||||||
| Total change in net interest income |
$ |
559 |
99 |
658 |
85 |
247 |
332 |
|||||||||||||||||
(a) |
Changes in interest not solely due to volume or yield/rate are allocated in proportion to the absolute dollar amount of change in volume and yield/rate. |
55 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Noninterest Income
Noninterest income increased $746 million for the year ended December 31, 2019 compared to the year ended December 31, 2018. The following table presents the components of noninterest income:
TABLE 9: COMPONENTS OF NONINTEREST INCOME
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
||||||||||||||||
| Corporate banking revenue |
$ |
570 |
438 |
353 |
432 |
384 |
|||||||||||||||
| Service charges on deposits |
565 |
549 |
554 |
558 |
563 |
||||||||||||||||
| Wealth and asset management revenue |
487 |
444 |
419 |
404 |
418 |
||||||||||||||||
| Card and processing revenue |
360 |
329 |
313 |
319 |
302 |
||||||||||||||||
| Mortgage banking net revenue |
287 |
212 |
224 |
285 |
348 |
||||||||||||||||
| Other noninterest income |
1,224 |
887 |
1,357 |
688 |
979 |
||||||||||||||||
| Securities gains (losses), net |
40 |
(54 |
) | 2 |
10 |
9 |
|||||||||||||||
| Securities gains (losses), net - non-qualifying hedges on MSRs |
3 |
(15 |
) | 2 |
- |
- |
|||||||||||||||
| Total noninterest income |
$ |
3,536 |
2,790 |
3,224 |
2,696 |
3,003 |
|||||||||||||||
The following table presents the components of mortgage banking net revenue:
TABLE 10: COMPONENTS OF MORTGAGE BANKING NET REVENUE
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
||||||||||
| Origination fees and gains on loan sales |
$ |
175 |
100 |
138 |
|||||||||
| Net mortgage servicing revenue: |
|||||||||||||
| Gross mortgage servicing fees |
267 |
216 |
206 |
||||||||||
| Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs |
(155 |
) |
(104 |
) | (120 |
) | |||||||
| Net mortgage servicing revenue |
112 |
112 |
86 |
||||||||||
| Total mortgage banking net revenue |
$ |
287 |
212 |
224 |
|||||||||
56 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 11: COMPONENTS OF NET VALUATION ADJUSTMENTS ON MSRs
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
||||||||||
| Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio |
$ |
221 |
(21 |
) | 2 |
||||||||
| Changes in fair value: |
|||||||||||||
| Due to changes in inputs or assumptions |
(203 |
) |
42 |
(1 |
) | ||||||||
| Other changes in fair value |
(173 |
) |
(125 |
) | (121 |
) | |||||||
| Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs |
$ |
(155 |
) |
(104 |
) | (120 |
) | ||||||
Other noninterest income
The following table presents the components of other noninterest income:
TABLE 12: COMPONENTS OF OTHER NONINTEREST INCOME
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Gain on sale of Worldpay, Inc. shares |
$ |
562 |
205 |
1,037 |
||||||||
| Income from the TRA associated with Worldpay, Inc. |
346 |
20 |
44 |
|||||||||
| Operating lease income |
151 |
84 |
96 |
|||||||||
| Private equity investment income |
65 |
63 |
36 |
|||||||||
| BOLI income |
60 |
56 |
52 |
|||||||||
| Cardholder fees |
58 |
56 |
54 |
|||||||||
| Consumer loan and lease fees |
23 |
23 |
23 |
|||||||||
| Banking center income |
22 |
21 |
20 |
|||||||||
| Insurance income |
19 |
20 |
8 |
|||||||||
| Net gains (losses) on loan sales |
3 |
2 |
(2) |
|||||||||
| Equity method income from interest in Worldpay Holding, LLC |
2 |
1 |
47 |
|||||||||
| Loss on swap associated with the sale of Visa, Inc. Class B Shares |
(107 |
) |
(59 |
) | (80) |
|||||||
| Net losses on disposition and impairment of bank premises and equipment |
(23 |
) |
(43 |
) | - |
|||||||
| Loss on sale of business |
(4 |
) |
- |
- |
||||||||
| Gain related to Vantiv, Inc.’s acquisition of Worldpay Group plc. |
- |
414 |
- |
|||||||||
| Other, net |
47 |
24 |
22 |
|||||||||
| Total other noninterest income |
$ |
1,224 |
887 |
1,357 |
||||||||
57 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table presents the components of noninterest expense:
TABLE 13: COMPONENTS OF NONINTEREST EXPENSE
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
||||||||||||||||
| Salaries, wages and incentives |
$ |
2,001 |
1,783 |
1,633 |
1,612 |
1,525 |
|||||||||||||||
| Employee benefits |
417 |
332 |
356 |
339 |
323 |
||||||||||||||||
| Technology and communications |
422 |
285 |
245 |
234 |
224 |
||||||||||||||||
| Net occupancy expense |
332 |
292 |
295 |
299 |
321 |
||||||||||||||||
| Card and processing expense |
130 |
123 |
129 |
132 |
153 |
||||||||||||||||
| Equipment expense |
129 |
123 |
117 |
118 |
124 |
||||||||||||||||
| Other noninterest expense |
1,229 |
1,020 |
1,007 |
1,003 |
973 |
||||||||||||||||
| Total noninterest expense |
$ |
4,660 |
3,958 |
3,782 |
3,737 |
3,643 |
|||||||||||||||
| Efficiency ratio on an FTE basis (a) |
55.8 |
% |
57.0 |
53.7 |
59.0 |
55.6 |
|||||||||||||||
(a) |
This is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A. |
The following table provides a summary of merger-related expenses recorded in noninterest expense:
TABLE 14: MERGER-RELATED EXPENSES
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
||||||
| Salaries, wages and incentives |
$ |
87 |
1 |
|||||
| Employee benefits |
3 |
- |
||||||
| Technology and communications |
71 |
6 |
||||||
| Net occupancy expense |
13 |
- |
||||||
| Card and processing expense |
1 |
1 |
||||||
| Equipment expense |
1 |
- |
||||||
| Other noninterest expense |
46 |
23 |
||||||
| Total |
$ |
222 |
31 |
|||||
58 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table presents the components of other noninterest expense:
TABLE 15: COMPONENTS OF OTHER NONINTEREST EXPENSE
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Marketing |
$ |
162 |
147 |
114 |
||||||||
| Loan and lease |
142 |
112 |
102 |
|||||||||
| Operating lease |
124 |
76 |
87 |
|||||||||
| Losses and adjustments |
102 |
61 |
59 |
|||||||||
| FDIC insurance and other taxes |
81 |
119 |
127 |
|||||||||
| Professional service fees |
70 |
67 |
83 |
|||||||||
| Data processing |
70 |
57 |
58 |
|||||||||
| Travel |
68 |
52 |
46 |
|||||||||
| Intangible amortization |
45 |
5 |
2 |
|||||||||
| Postal and courier |
38 |
35 |
42 |
|||||||||
| Donations |
30 |
21 |
28 |
|||||||||
| Recruitment and education |
28 |
32 |
35 |
|||||||||
| Supplies |
14 |
13 |
14 |
|||||||||
| Insurance |
14 |
13 |
12 |
|||||||||
| Loss (gain) on partnership investments |
2 |
(4 |
) | 14 |
||||||||
| Other, net |
239 |
214 |
184 |
|||||||||
| Total other noninterest expense |
$ |
1,229 |
1,020 |
1,007 |
||||||||
59 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Bancorp’s income before income taxes, applicable income tax expense and effective tax rate are as follows:
TABLE 16: APPLICABLE INCOME TAXES
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Income before income taxes |
$ |
3,202 |
2,765 |
2,979 |
2,208 |
2,493 |
||||||||||||||
| Applicable income tax expense |
690 |
572 |
799 |
665 |
814 |
|||||||||||||||
| Effective tax rate |
21.6 |
% |
20.7 |
26.8 |
30.1 |
32.6 |
||||||||||||||
60 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS SEGMENT REVIEW
The following table summarizes net income (loss) by business segment:
| TABLE 17: NET INCOME (LOSS) BY BUSINESS SEGMENT |
||||||||||||
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Income Statement Data |
||||||||||||
| Commercial Banking |
$ |
1,424 |
1,139 |
827 |
||||||||
| Branch Banking |
860 |
702 |
455 |
|||||||||
| Consumer Lending |
92 |
(1 |
) | 17 |
||||||||
| Wealth and Asset Management |
112 |
97 |
65 |
|||||||||
| General Corporate and Other |
24 |
256 |
816 |
|||||||||
| Net income |
$ |
2,512 |
2,193 |
2,180 |
||||||||
61 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Commercial Banking
The following table contains selected financial data for the Commercial Banking segment:
TABLE 18: COMMERCIAL BANKING
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Income Statement Data |
||||||||||||
| Net interest income (FTE) (a) |
$ |
2,377 |
1,729 |
1,678 |
||||||||
| Provision for (benefit from) credit losses |
183 |
(26 |
) | 38 |
||||||||
| Noninterest income: |
|
|||||||||||
| Corporate banking revenue |
565 |
432 |
348 |
|||||||||
| Service charges on deposits |
308 |
273 |
287 |
|||||||||
| Other noninterest income |
314 |
212 |
203 |
|||||||||
| Noninterest expense: |
||||||||||||
| Personnel costs |
466 |
344 |
294 |
|||||||||
| Other noninterest expense |
1,155 |
919 |
940 |
|||||||||
| Income before income taxes (FTE) |
1,760 |
1,409 |
1,244 |
|||||||||
| Applicable income tax expense (a)(b) |
336 |
270 |
417 |
|||||||||
| Net income |
$ |
1,424 |
1,139 |
827 |
||||||||
| Average Balance Sheet Data |
||||||||||||
| Commercial loans and leases, including held for sale |
$ |
65,475 |
54,748 |
53,743 |
||||||||
| Demand deposits |
16,424 |
16,560 |
19,519 |
|||||||||
| Interest checking deposits |
18,259 |
12,203 |
9,080 |
|||||||||
| Savings and money market deposits |
4,904 |
4,128 |
5,337 |
|||||||||
| Other time deposits and certificates $100,000 and over |
332 |
377 |
899 |
|||||||||
| Foreign office deposits |
209 |
362 |
372 |
|||||||||
(a) |
Includes FTE adjustments of $17 , $16 and $26 for the years ended December 31, 2019, 2018 and 2017, respectively. |
(b) |
Applicable income tax expense for all periods includes the tax benefit from tax-exempt income, tax-advantaged investments and tax credits partially offset by the effect of certain nondeductible expenses. Refer to the Applicable Income Taxes subsection of the Statements of Income Analysis section of MD&A for additional information. |
62 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
63 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table contains selected financial data for the Branch Banking segment:
TABLE 19: BRANCH BANKING
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Income Statement Data |
||||||||||||
| Net interest income |
$ |
2,371 |
2,034 |
1,782 |
||||||||
| Provision for credit losses |
224 |
171 |
153 |
|||||||||
| Noninterest income: |
|
|||||||||||
| Card and processing revenue |
285 |
266 |
251 |
|||||||||
| Service charges on deposits |
260 |
275 |
265 |
|||||||||
| Wealth and asset management revenue |
158 |
150 |
141 |
|||||||||
| Other noninterest income |
99 |
63 |
99 |
|||||||||
| Noninterest expense: |
||||||||||||
| Personnel costs |
601 |
536 |
526 |
|||||||||
| Net occupancy and equipment expense |
221 |
225 |
228 |
|||||||||
| Card and processing expense |
123 |
121 |
127 |
|||||||||
| Other noninterest expense |
915 |
846 |
800 |
|||||||||
| Income before income taxes |
1,089 |
889 |
704 |
|||||||||
| Applicable income tax expense |
229 |
187 |
249 |
|||||||||
| Net income |
$ |
860 |
702 |
455 |
||||||||
| Average Balance Sheet Data |
||||||||||||
| Consumer loans |
$ |
13,200 |
13,034 |
13,008 |
||||||||
| Commercial loans |
2,170 |
1,938 |
1,918 |
|||||||||
| Demand deposits |
15,802 |
14,336 |
13,895 |
|||||||||
| Interest checking deposits |
10,716 |
10,187 |
10,226 |
|||||||||
| Savings and money market deposits |
33,173 |
29,473 |
27,603 |
|||||||||
| Other time deposits and certificates $100,000 and over |
7,532 |
5,348 |
4,965 |
|||||||||
64 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
65 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table contains selected financial data for the Consumer Lending segment:
TABLE 20: CONSUMER LENDING
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Income Statement Data |
||||||||||||
| Net interest income |
$ |
325 |
237 |
240 |
||||||||
| Provision for credit losses |
49 |
42 |
40 |
|||||||||
| Noninterest income: |
||||||||||||
| Mortgage banking net revenue |
279 |
206 |
217 |
|||||||||
| Other noninterest income |
17 |
(1 |
) | 20 |
||||||||
| Noninterest expense: |
||||||||||||
| Personnel costs |
196 |
192 |
189 |
|||||||||
| Other noninterest expense |
259 |
210 |
222 |
|||||||||
| Income (loss) before income taxes |
117 |
(2 |
) | 26 |
||||||||
| Applicable income tax expense (benefit) |
25 |
(1 |
) | 9 |
||||||||
| Net income (loss) |
$ |
92 |
(1 |
) | 17 |
|||||||
| Average Balance Sheet Data |
||||||||||||
| Residential mortgage loans, including held for sale |
$ |
13,027 |
11,803 |
11,494 |
||||||||
| Home equity |
220 |
243 |
293 |
|||||||||
| Indirect secured consumer loans |
10,109 |
8,676 |
8,939 |
|||||||||
66 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table contains selected financial data for the Wealth and Asset Management segment:
TABLE 21: WEALTH AND ASSET MANAGEMENT
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Income Statement Data |
||||||||||||
| Net interest income |
$ |
182 |
182 |
154 |
||||||||
| Provision for credit losses |
- |
12 |
6 |
|||||||||
| Noninterest income: |
||||||||||||
| Wealth and asset management revenue |
469 |
429 |
407 |
|||||||||
| Other noninterest income |
20 |
27 |
12 |
|||||||||
| Noninterest expense: |
||||||||||||
| Personnel costs |
217 |
202 |
181 |
|||||||||
| Other noninterest expense |
312 |
302 |
287 |
|||||||||
| Income before income taxes |
142 |
122 |
99 |
|||||||||
| Applicable income tax expense |
30 |
25 |
34 |
|||||||||
| Net income |
$ |
112 |
97 |
65 |
||||||||
| Average Balance Sheet Data |
||||||||||||
| Loans and leases, including held for sale |
$ |
3,580 |
3,421 |
3,277 |
||||||||
| Core deposits |
9,701 |
9,332 |
8,782 |
|||||||||
67 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
68 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
69 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOURTH QUARTER REVIEW
70 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 22: QUARTERLY INFORMATION (unaudited)
| 2019 |
2018 |
|||||||||||||||||||||||||||||||||||
| For the three months ended ($ in millions, except per share data) |
12/31 |
9/30 |
6/30 |
3/31 |
12/31 |
9/30 |
6/30 |
3/31 |
||||||||||||||||||||||||||||
| Net interest income (a) |
$ |
1,232 |
1,246 |
1,250 |
1,086 |
1,085 |
1,047 |
1,024 |
999 |
|||||||||||||||||||||||||||
| Provision for credit losses |
162 |
134 |
85 |
90 |
97 |
84 |
14 |
13 |
||||||||||||||||||||||||||||
| Noninterest income |
1,035 |
740 |
660 |
1,101 |
575 |
563 |
743 |
909 |
||||||||||||||||||||||||||||
| Noninterest expense |
1,160 |
1,159 |
1,243 |
1,097 |
975 |
972 |
1,001 |
1,010 |
||||||||||||||||||||||||||||
| Net income attributable to Bancorp |
734 |
549 |
453 |
775 |
455 |
436 |
602 |
701 |
||||||||||||||||||||||||||||
| Net income available to common shareholders |
701 |
530 |
427 |
760 |
432 |
421 |
579 |
686 |
||||||||||||||||||||||||||||
| Earnings per share, basic |
0.97 |
0.72 |
0.57 |
1.14 |
0.65 |
0.62 |
0.84 |
0.98 |
||||||||||||||||||||||||||||
| Earnings per share, diluted |
0.96 |
0.71 |
0.57 |
1.12 |
0.64 |
0.61 |
0.82 |
0.96 |
||||||||||||||||||||||||||||
(a) |
Amounts presented on an FTE basis. The FTE adjustment was $4 for both the three months ended December 31, 2019 and September 30, 2019 $ 5 June 30, 2019 and $4 for the three months ended March 31, 2019 The FTE adjustment was $4 for the three months ended December 31, 2018, September 30, 2018 and June 30, 2018 and $3 for the three months ended March 31, 2018. |
71 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BALANCE SHEET ANALYSIS
| TABLE 23: COMPONENTS OF LOANS AND LEASES (INCLUDING LOANS AND LEASES HELD FOR SALE) |
||||||||||||||||||||
| As of December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Commercial loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ |
50,677 |
44,407 |
41,170 |
41,736 |
42,151 |
||||||||||||||
| Commercial mortgage loans |
10,964 |
6,977 |
6,610 |
6,904 |
6,991 |
|||||||||||||||
| Commercial construction loans |
5,090 |
4,657 |
4,553 |
3,903 |
3,214 |
|||||||||||||||
| Commercial leases |
3,363 |
3,600 |
4,068 |
3,974 |
3,854 |
|||||||||||||||
| Total commercial loans and leases |
70,094 |
59,641 |
56,401 |
56,517 |
56,210 |
|||||||||||||||
| Consumer loans: |
||||||||||||||||||||
| Residential mortgage loans |
17,988 |
16,041 |
16,077 |
15,737 |
14,424 |
|||||||||||||||
| Home equity |
6,083 |
6,402 |
7,014 |
7,695 |
8,336 |
|||||||||||||||
| Indirect secured consumer loans (a) |
11,538 |
8,976 |
9,112 |
9,983 |
11,497 |
|||||||||||||||
| Credit card |
2,532 |
2,470 |
2,299 |
2,237 |
2,360 |
|||||||||||||||
| Other consumer loans |
2,723 |
2,342 |
1,559 |
680 |
658 |
|||||||||||||||
| Total consumer loans |
40,864 |
36,231 |
36,061 |
36,332 |
37,275 |
|||||||||||||||
| Total loans and leases |
$ |
110,958 |
95,872 |
92,462 |
92,849 |
93,485 |
||||||||||||||
| Total portfolio loans and leases (excluding loans and leases held for sale) |
$ |
109,558 |
95,265 |
91,970 |
92,098 |
92,582 |
||||||||||||||
(a) |
The Bancorp acquired indirect motorcycle, powersport, recreational vehicle and marine loans in the acquisition of MB Financial, Inc. These loans are included in addition to automobile loans in the line item “indirect secured consumer loans.” |
| TABLE 24: LOANS AND LEASES ACQUIRED |
||||
| ($ in millions) |
||||
| Commercial loans and leases: |
||||
| Commercial and industrial loans |
$ | 6,546 |
||
| Commercial mortgage loans |
3,586 |
|||
| Commercial construction loans |
495 |
|||
| Commercial leases |
444 |
|||
| Total commercial loans and leases |
11,071 |
|||
| Consumer loans: |
||||
| Residential mortgage loans |
1,319 |
|||
| Home equity |
170 |
|||
| Indirect secured consumer loans |
800 |
|||
| Credit card |
19 |
|||
| Other consumer loans |
44 |
|||
| Total consumer loans |
2,352 |
|||
| Total loans and leases |
$ | 13,423 |
||
| Total portfolio loans and leases (excluding loans and leases held for sale) |
$ | 13,411 |
||
72 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 25: COMPONENTS OF AVERAGE LOANS AND LEASES (INCLUDING LOANS AND LEASES HELD FOR SALE) |
||||||||||||||||||||
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Commercial loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ |
50,168 |
42,668 |
41,577 |
43,184 |
42,594 |
||||||||||||||
| Commercial mortgage loans |
9,905 |
6,661 |
6,844 |
6,899 |
7,121 |
|||||||||||||||
| Commercial construction loans |
5,174 |
4,793 |
4,374 |
3,648 |
2,717 |
|||||||||||||||
| Commercial leases |
3,578 |
3,795 |
4,011 |
3,916 |
3,796 |
|||||||||||||||
| Total commercial loans and leases |
68,825 |
57,917 |
56,806 |
57,647 |
56,228 |
|||||||||||||||
| Consumer loans: |
||||||||||||||||||||
| Residential mortgage loans |
17,337 |
16,150 |
16,053 |
15,101 |
13,798 |
|||||||||||||||
| Home equity |
6,286 |
6,631 |
7,308 |
7,998 |
8,592 |
|||||||||||||||
| Indirect secured consumer loans |
10,345 |
8,993 |
9,407 |
10,708 |
11,847 |
|||||||||||||||
| Credit card |
2,437 |
2,280 |
2,141 |
2,205 |
2,303 |
|||||||||||||||
| Other consumer loans |
2,564 |
1,905 |
1,016 |
661 |
571 |
|||||||||||||||
| Total consumer loans |
38,969 |
35,959 |
35,925 |
36,673 |
37,111 |
|||||||||||||||
| Total average loans and leases |
$ |
107,794 |
93,876 |
92,731 |
94,320 |
93,339 |
||||||||||||||
| Total average portfolio loans and leases (excluding loans and leases held for sale) |
$ |
106,840 |
93,216 |
92,068 |
93,426 |
92,423 |
||||||||||||||
73 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the end of period components of investment securities:
| TABLE 26: COMPONENTS OF INVESTMENT SECURITIES |
||||||||||||||||||||
| As of December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Available-for-sale debt and other securities (amortized cost basis): |
||||||||||||||||||||
| U.S. Treasury and federal agencies securities |
$ |
74 |
98 |
98 |
547 |
1,155 |
||||||||||||||
| Obligations of states and political subdivisions securities |
18 |
2 |
43 |
44 |
50 |
|||||||||||||||
| Mortgage-backed securities: |
||||||||||||||||||||
| Agency residential mortgage-backed securities (a) |
13,746 |
16,403 |
15,281 |
15,525 |
14,811 |
|||||||||||||||
| Agency commercial mortgage-backed securities |
15,141 |
10,770 |
10,113 |
9,029 |
7,795 |
|||||||||||||||
| Non-agency commercial mortgage-backed securities |
3,242 |
3,305 |
3,247 |
3,076 |
2,801 |
|||||||||||||||
| Asset-backed securities and other debt securities |
2,189 |
1,998 |
2,183 |
2,106 |
1,363 |
|||||||||||||||
| Other securities (b) |
556 |
552 |
612 |
607 |
604 |
|||||||||||||||
| Total available-for-sale debt and other securities |
$ |
34,966 |
33,128 |
31,577 |
30,934 |
28,579 |
||||||||||||||
| Held-to-maturity securities (amortized cost basis): |
||||||||||||||||||||
| Obligations of states and political subdivisions securities |
$ |
15 |
16 |
22 |
24 |
68 |
||||||||||||||
| Asset-backed securities and other debt securities |
2 |
2 |
2 |
2 |
2 |
|||||||||||||||
| Total held-to-maturity securities |
$ |
17 |
18 |
24 |
26 |
70 |
||||||||||||||
| Trading debt securities (fair value): |
||||||||||||||||||||
| U.S. Treasury and federal agencies securities |
$ |
2 |
16 |
12 |
23 |
19 |
||||||||||||||
| Obligations of states and political subdivisions securities |
9 |
35 |
22 |
39 |
9 |
|||||||||||||||
| Agency residential mortgage-backed securities |
55 |
68 |
395 |
8 |
6 |
|||||||||||||||
| Asset-backed securities and other debt securities |
231 |
168 |
63 |
15 |
19 |
|||||||||||||||
| Total trading debt securities |
$ |
297 |
287 |
492 |
85 |
53 |
||||||||||||||
| Total equity securities (fair value) |
$ |
564 |
452 |
439 |
416 |
432 |
||||||||||||||
(a) |
Includes interest-only mortgage-backed securities recorded at fair value with fair value changes recorded in securities gains (losses), net in the Consolidated Statements of Income. |
(b) |
Other securities consist of FHLB, FRB and DTCC restricted stock holdings that are carried at cost. |
74 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 27: CHARACTERISTICS OF AVAILABLE-FOR-SALE DEBT AND OTHER SECURITIES |
||||||||||||||||
| As of December 31, 2019 ($ in millions) |
Amortized Cost |
Fair Value |
Weighted-Average Life (in years) |
Weighted-Average Yield |
||||||||||||
| U.S. Treasury and federal agencies securities: |
||||||||||||||||
| Average life 1 – 5 years |
$ | 74 |
75 |
3.1 |
2.12 |
|||||||||||
| Total |
$ | 74 |
75 |
3.1 |
2.12 % |
|||||||||||
| Obligations of states and political subdivisions securities: (a) |
||||||||||||||||
| Average life of 1 year or less |
- |
- |
0.1 |
7.47 |
||||||||||||
| Average life 1 – 5 years |
18 |
18 |
3.2 |
1.74 |
||||||||||||
| Total |
$ | 18 |
18 |
3.2 |
1.76 % |
|||||||||||
| Agency residential mortgage-backed securities: |
||||||||||||||||
| Average life 1 – 5 years |
5,259 |
5,376 |
3.9 |
3.28 |
||||||||||||
| Average life 5 – 10 years |
7,592 |
7,823 |
6.8 |
3.11 |
||||||||||||
| Average life greater than 10 years |
895 |
916 |
13.9 |
3.21 |
||||||||||||
| Total |
$ | 13,746 |
14,115 |
6.1 |
3.18 % |
|||||||||||
| Agency commercial mortgage-backed securities: (b) |
||||||||||||||||
| Average life of 1 year or less |
195 |
199 |
0.3 |
2.82 |
||||||||||||
| Average life 1 – 5 years |
3,833 |
3,962 |
3.2 |
3.14 |
||||||||||||
| Average life 5 – 10 years |
7,915 |
8,212 |
7.5 |
3.13 |
||||||||||||
| Average life greater than 10 years |
3,198 |
3,320 |
13.5 |
3.27 |
||||||||||||
| Total |
$ | 15,141 |
15,693 |
7.6 |
3.16 % |
|||||||||||
| Non-agency commercial mortgage-backed securities: |
|
|||||||||||||||
| Average life of 1 year or less |
1 |
1 |
0.4 |
3.83 |
||||||||||||
| Average life 1 – 5 years |
1,421 |
1,470 |
3.9 |
3.32 |
||||||||||||
| Average life 5 – 10 years |
1,820 |
1,894 |
5.8 |
3.25 |
||||||||||||
| Total |
$ | 3,242 |
3,365 |
5.0 |
3.28 % |
|||||||||||
| Asset-backed securities and other debt securities: |
|
|
||||||||||||||
| Average life of 1 year or less |
36 |
36 |
0.8 |
3.57 |
||||||||||||
| Average life 1 – 5 years |
1,175 |
1,192 |
2.8 |
3.99 |
||||||||||||
| Average life 5 – 10 years |
935 |
933 |
7.0 |
3.68 |
||||||||||||
| Average life greater than 10 years |
43 |
45 |
11.5 |
3.43 |
||||||||||||
| Total |
$ | 2,189 |
2,206 |
4.7 |
3.84 % |
|||||||||||
| Other securities |
556 |
556 |
||||||||||||||
| Total available-for-sale debt and other securities |
$ | 34,966 |
36,028 |
6.6 |
3.22 % |
|||||||||||
(a) |
Taxable-equivalent yield adjustments included in the above table are 1.57%, 0.00% and 0.01% for securities with an average life of 1 year or less, 1-5 years and in total, respectively. |
(b) |
Taxable-equivalent yield adjustments included in the above table are 0.00%, 0.00%, 0.00%, 0.03% and 0.01% for securities with an average life of 1 year or less, 1-5 years, 5-10 years, greater than 10 years and in total, respectively. |
The following table presents the end of period components of deposits:
| TABLE 28: COMPONENTS OF DEPOSITS |
||||||||||||||||||||
| As of December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Demand |
$ |
35,968 |
32,116 |
35,276 |
35,782 |
36,267 |
||||||||||||||
| Interest checking |
40,409 |
34,058 |
27,703 |
26,679 |
26,768 |
|||||||||||||||
| Savings |
14,248 |
12,907 |
13,425 |
13,941 |
14,601 |
|||||||||||||||
| Money market |
27,277 |
22,597 |
20,097 |
20,749 |
18,494 |
|||||||||||||||
| Foreign office |
221 |
240 |
484 |
426 |
464 |
|||||||||||||||
| Transaction deposits |
118,123 |
101,918 |
96,985 |
97,577 |
96,594 |
|||||||||||||||
| Other time |
5,237 |
4,490 |
3,775 |
3,866 |
4,019 |
|||||||||||||||
| Core deposits |
123,360 |
106,408 |
100,760 |
101,443 |
100,613 |
|||||||||||||||
| Certificates $100,000 and over (a) |
3,702 |
2,427 |
2,402 |
2,378 |
2,592 |
|||||||||||||||
| Total deposits |
$ |
127,062 |
108,835 |
103,162 |
103,821 |
103,205 |
||||||||||||||
(a) |
Includes $2.1 billion, December 31, 2019 |
75 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 29: DEPOSITS ASSUMED |
||||
| ($ in millions) |
||||
| Demand |
$ | 6,010 |
||
| Interest checking |
2,408 |
|||
| Savings |
1,175 |
|||
| Money market |
2,571 |
|||
| Total transaction deposits |
12,164 |
|||
| Other time |
546 |
|||
| Total core deposits |
12,710 |
|||
| Certificates $100,000 and over |
1,779 |
|||
| Total deposits |
$ | 14,489 |
||
The following table presents the components of average deposits for the years ended December 31:
| TABLE 30: COMPONENTS OF AVERAGE DEPOSITS |
||||||||||||||||||||
| ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Demand |
$ |
34,343 |
32,634 |
35,093 |
35,862 |
35,164 |
||||||||||||||
| Interest checking |
36,658 |
29,818 |
26,382 |
25,143 |
26,160 |
|||||||||||||||
| Savings |
14,041 |
13,330 |
13,958 |
14,346 |
14,951 |
|||||||||||||||
| Money market |
25,879 |
21,769 |
20,231 |
19,523 |
18,152 |
|||||||||||||||
| Foreign office |
209 |
363 |
388 |
497 |
817 |
|||||||||||||||
| Transaction deposits |
111,130 |
97,914 |
96,052 |
95,371 |
95,244 |
|||||||||||||||
| Other time |
5,470 |
4,106 |
3,771 |
4,010 |
4,051 |
|||||||||||||||
| Core deposits |
116,600 |
102,020 |
99,823 |
99,381 |
99,295 |
|||||||||||||||
| Certificates $100,000 and over (a) |
4,504 |
2,426 |
2,564 |
2,735 |
2,869 |
|||||||||||||||
| Other |
265 |
476 |
277 |
333 |
57 |
|||||||||||||||
| Total average deposits |
$ |
121,369 |
104,922 |
102,664 |
102,449 |
102,221 |
||||||||||||||
(a) |
Includes $2.6 billion December 31, 2019 |
Contractual Maturities
The contractual maturities of certificates $100,000 and over as of December 31, 2019 are summarized in the following table:
| TABLE 31: CONTRACTUAL MATURITIES OF CERTIFICATES $100,000 AND OVER |
||||
| ($ in millions) |
||||
| Next 3 months |
$ | 1,884 |
||
| 3-6 months |
806 |
|||
| 6-12 months |
525 |
|||
| After 12 months |
487 |
|||
| Total certificates $100,000 and over |
$ | 3,702 |
||
76 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The contractual maturities of other time deposits and certificates $100,000 and over as of December 31, 2019 are summarized in the following table:
| TABLE 32: CONTRACTUAL MATURITIES OF OTHER TIME DEPOSITS AND CERTIFICATES $100,000 AND OVER |
||||
| ($ in millions) |
||||
| Next 12 months |
$ | 7,714 |
||
| 13-24 months |
914 |
|||
| 25-36 months |
186 |
|||
| 37-48 months |
52 |
|||
| 49-60 months |
66 |
|||
| After 60 months |
7 |
|||
| Total other time deposits and certificates $100,000 and over |
$ | 8,939 |
||
The following table summarizes the end of period components of borrowings:
| TABLE 33: COMPONENTS OF BORROWINGS |
||||||||||||||||||||
| As of December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Federal funds purchased |
$ |
260 |
1,925 |
174 |
132 |
151 |
||||||||||||||
| Other short-term borrowings |
1,011 |
573 |
4,012 |
3,535 |
1,507 |
|||||||||||||||
| Long-term debt |
14,970 |
14,426 |
14,904 |
14,388 |
15,810 |
|||||||||||||||
| Total borrowings |
$ |
16,241 |
16,924 |
19,090 |
18,055 |
17,468 |
||||||||||||||
The following table summarizes the components of average borrowings:
| TABLE 34: COMPONENTS OF AVERAGE BORROWINGS |
||||||||||||||||||||
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Federal funds purchased |
$ |
1,267 |
1,509 |
557 |
506 |
920 |
||||||||||||||
| Other short-term borrowings |
1,046 |
1,611 |
3,158 |
2,845 |
1,721 |
|||||||||||||||
| Long-term debt |
15,369 |
14,551 |
13,804 |
15,394 |
14,644 |
|||||||||||||||
| Total average borrowings |
$ |
17,682 |
17,671 |
17,519 |
18,745 |
17,285 |
||||||||||||||
77 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RISK MANAGEMENT - OVERVIEW
78 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
79 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables provide a summary of potential problem portfolio loans and leases:
| TABLE 35: POTENTIAL PROBLEM PORTFOLIO LOANS AND LEASES |
||||||||||||
| As of December 31, 2019 ($ in millions) |
Carrying Value (a) |
Unpaid Principal Balance |
Exposure |
|||||||||
| Commercial and industrial loans |
$ |
1,100 |
1,120 |
1,488 |
||||||||
| Commercial mortgage loans |
342 |
390 |
342 |
|||||||||
| Commercial construction loans |
75 |
82 |
84 |
|||||||||
| Commercial leases |
61 |
61 |
61 |
|||||||||
| Total potential problem portfolio loans and leases |
$ |
1,578 |
1,653 |
1,975 |
||||||||
| (a) Includes $287 million of PCI and $363 million of non-PCI loans and leases as of December 31, 2019 acquired in the MB Financial, Inc. acquisition. |
||||||||||||
| TABLE 36: POTENTIAL PROBLEM PORTFOLIO LOANS AND LEASES |
||||||||||||
| As of December 31, 2018 ($ in millions) |
Carrying Value |
Unpaid Principal Balance |
Exposure |
|||||||||
| Commercial and industrial loans |
$ | 646 |
647 |
854 |
||||||||
| Commercial mortgage loans |
152 |
152 |
152 |
|||||||||
| Commercial leases |
31 |
31 |
31 |
|||||||||
| Total potential problem portfolio loans and leases |
$ | 829 |
830 |
1,037 |
||||||||
80 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides detail on commercial loans and leases by industry classification (as defined by the North American Industry Classification System), by loan size and by state, illustrating the diversity and granularity of the Bancorp’s commercial loans and leases:
| TABLE 37: COMMERCIAL LOAN AND LEASE PORTFOLIO (EXCLUDING LOANS AND LEASES HELD FOR SALE) |
||||||||||||||||||||||||
| 2019 |
2018 |
|||||||||||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
Exposure |
Nonaccrual |
Outstanding |
Exposure |
Nonaccrual |
||||||||||||||||||
| By Industry: |
||||||||||||||||||||||||
| Manufacturing |
$ |
11,996 |
22,079 |
87 |
10,387 |
19,290 |
48 |
|||||||||||||||||
| Real estate |
11,320 |
16,993 |
9 |
8,327 |
13,055 |
10 |
||||||||||||||||||
| Financial services and insurance |
7,214 |
15,398 |
- |
6,805 |
13,192 |
1 |
||||||||||||||||||
| Business services |
5,170 |
8,579 |
75 |
4,426 |
7,161 |
17 |
||||||||||||||||||
| Healthcare |
4,984 |
7,206 |
38 |
4,343 |
6,198 |
36 |
||||||||||||||||||
| Wholesale trade |
4,502 |
7,715 |
17 |
3,127 |
5,481 |
14 |
||||||||||||||||||
| Retail trade |
3,948 |
8,255 |
39 |
3,726 |
7,496 |
6 |
||||||||||||||||||
| Accommodation and food |
3,745 |
6,525 |
21 |
3,435 |
5,626 |
28 |
||||||||||||||||||
| Communication and information |
3,166 |
5,567 |
2 |
2,923 |
5,111 |
- |
||||||||||||||||||
| Mining |
3,046 |
4,966 |
37 |
2,427 |
4,363 |
38 |
||||||||||||||||||
| Transportation and warehousing |
2,880 |
4,996 |
12 |
2,807 |
4,729 |
19 |
||||||||||||||||||
| Construction |
2,526 |
5,327 |
4 |
2,498 |
4,718 |
4 |
||||||||||||||||||
| Entertainment and recreation |
1,905 |
3,327 |
40 |
1,798 |
3,354 |
1 |
||||||||||||||||||
| Other services |
1,224 |
1,662 |
4 |
855 |
1,104 |
4 |
||||||||||||||||||
| Utilities |
991 |
2,672 |
- |
835 |
2,531 |
- |
||||||||||||||||||
| Public administration |
782 |
1,107 |
- |
465 |
669 |
- |
||||||||||||||||||
| Agribusiness |
344 |
554 |
9 |
323 |
511 |
2 |
||||||||||||||||||
| Other |
151 |
153 |
3 |
- |
- |
- |
||||||||||||||||||
| Individuals |
64 |
128 |
- |
64 |
130 |
- |
||||||||||||||||||
| Total |
$ |
69,958 |
123,209 |
397 |
59,571 |
104,719 |
228 |
|||||||||||||||||
| By Loan Size: |
||||||||||||||||||||||||
| Less than $200,000 |
1 % |
1 |
4 |
1 |
1 |
5 |
||||||||||||||||||
| $200,000 to $1 million |
3 |
3 |
6 |
2 |
2 |
9 |
||||||||||||||||||
| $1 million to $5 million |
9 |
7 |
22 |
6 |
6 |
18 |
||||||||||||||||||
| $5 million to $10 million |
7 |
6 |
11 |
6 |
5 |
19 |
||||||||||||||||||
| $10 million to $25 million |
20 |
17 |
27 |
19 |
16 |
38 |
||||||||||||||||||
| Greater than $25 million |
60 |
66 |
30 |
66 |
70 |
11 |
||||||||||||||||||
| Total |
100 % |
100 |
100 |
100 |
100 |
100 |
||||||||||||||||||
| By State: |
||||||||||||||||||||||||
| Illinois |
15 % |
12 |
18 |
6 |
5 |
8 |
||||||||||||||||||
| Ohio |
10 |
11 |
6 |
13 |
14 |
10 |
||||||||||||||||||
| Florida |
7 |
7 |
6 |
8 |
8 |
21 |
||||||||||||||||||
| Michigan |
6 |
6 |
7 |
7 |
6 |
10 |
||||||||||||||||||
| Indiana |
4 |
4 |
2 |
4 |
4 |
8 |
||||||||||||||||||
| Georgia |
3 |
4 |
11 |
5 |
5 |
11 |
||||||||||||||||||
| North Carolina |
3 |
3 |
10 |
3 |
3 |
- |
||||||||||||||||||
| Tennessee |
3 |
3 |
1 |
3 |
3 |
- |
||||||||||||||||||
| Kentucky |
2 |
2 |
9 |
2 |
3 |
2 |
||||||||||||||||||
| Other |
47 |
48 |
30 |
49 |
49 |
30 |
||||||||||||||||||
| Total |
100 % |
100 |
100 |
100 |
100 |
100 |
||||||||||||||||||
81 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 38: COMMERCIAL MORTGAGE LOANS OUTSTANDING BY LTV, LOANS GREATER THAN $1 MILLION |
||||||||||||
| As of December 31, 2019 ($ in millions) |
LTV > 100% |
LTV 80-100% |
LTV < 80% |
|||||||||
| Commercial mortgage owner-occupied loans |
$ |
126 |
393 |
3,199 |
||||||||
| Commercial mortgage nonowner-occupied loans |
58 |
107 |
4,562 |
|||||||||
| Total |
$ |
184 |
500 |
7,761 |
||||||||
| TABLE 39: COMMERCIAL MORTGAGE LOANS OUTSTANDING BY LTV, LOANS GREATER THAN $1 MILLION |
||||||||||||
| As of December 31, 2018 ($ in millions) |
LTV > 100% |
LTV 80-100% |
LTV < 80% |
|||||||||
| Commercial mortgage owner-occupied loans |
$ | 126 |
172 |
2,119 |
||||||||
| Commercial mortgage nonowner-occupied loans |
40 |
29 |
2,731 |
|||||||||
| Total |
$ | 166 |
201 |
4,850 |
||||||||
The following tables provide an analysis of nonowner-occupied commercial real estate loans by state (excluding loans held for sale):
| TABLE 40: NONOWNER-OCCUPIED COMMERCIAL REAL ESTATE (EXCLUDING LOANS HELD FOR SALE) (a) |
||||||||||||||||||||
| As of December 31, 2019 ($ in millions) |
For the Year Ended December 31, 2019 |
|||||||||||||||||||
| 90 Days |
||||||||||||||||||||
| Outstanding |
Exposure |
Past Due |
Nonaccrual |
Net Charge-offs |
||||||||||||||||
| By State: |
||||||||||||||||||||
| Illinois |
$ |
3,097 |
3,639 |
6 |
- |
2 |
||||||||||||||
| Ohio |
1,402 |
1,861 |
- |
1 |
- |
|||||||||||||||
| Florida |
951 |
1,605 |
- |
- |
- |
|||||||||||||||
| Michigan |
714 |
849 |
- |
- |
- |
|||||||||||||||
| North Carolina |
635 |
1,040 |
- |
- |
- |
|||||||||||||||
| Indiana |
582 |
865 |
- |
- |
- |
|||||||||||||||
| Georgia |
351 |
897 |
- |
- |
- |
|||||||||||||||
| All other states |
2,883 |
4,569 |
- |
- |
- |
|||||||||||||||
| Total |
$ |
10,615 |
15,325 |
6 |
1 |
2 |
||||||||||||||
(a) |
Included in commercial mortgage loans and commercial construction loans in the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A. |
| TABLE 41: NONOWNER-OCCUPIED COMMERCIAL REAL ESTATE (EXCLUDING LOANS HELD FOR SALE) (a) |
||||||||||||||||||||
| As of December 31, 2018 ($ in millions) |
For the Year Ended December 31, 2018 |
|||||||||||||||||||
| 90 Days |
||||||||||||||||||||
| Outstanding |
Exposure |
Past Due |
Nonaccrual |
Net Charge-offs |
||||||||||||||||
| By State: |
||||||||||||||||||||
| Illinois |
$ | 750 |
1,076 |
- |
- |
- |
||||||||||||||
| Ohio |
1,574 |
1,918 |
- |
- |
- |
|||||||||||||||
| Florida |
978 |
1,536 |
- |
- |
- |
|||||||||||||||
| Michigan |
657 |
771 |
- |
- |
- |
|||||||||||||||
| North Carolina |
646 |
872 |
- |
- |
- |
|||||||||||||||
| Indiana |
528 |
853 |
- |
- |
- |
|||||||||||||||
| Georgia |
357 |
729 |
- |
- |
- |
|||||||||||||||
| All other states |
2,590 |
4,187 |
- |
2 |
1 |
|||||||||||||||
| Total |
$ | 8,080 |
11,942 |
- |
2 |
1 |
||||||||||||||
(a) |
Included in commercial mortgage loans and commercial construction loans in the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A. |
82 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides an analysis of the residential mortgage portfolio loans outstanding by LTV at origination:
| TABLE 42: RESIDENTIAL MORTGAGE PORTFOLIO LOANS BY LTV AT ORIGINATION |
||||||||||||||||
| 2019 |
2018 |
|||||||||||||||
| Weighted- |
Weighted- |
|||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
Average LTV |
Outstanding |
Average LTV |
||||||||||||
| LTV ≤ 80% |
$ |
12,100 |
66.3 |
% |
$ | 11,540 |
66.7 % |
|||||||||
| LTV > 80%, with mortgage insurance (a) |
2,373 |
95.2 |
2,010 |
95.1 |
||||||||||||
| LTV > 80%, no mortgage insurance |
2,251 |
93.1 |
1,954 |
94.2 |
||||||||||||
| Total |
$ |
16,724 |
74.3 |
% |
$ | 15,504 |
74.3 % |
|||||||||
(a) |
Includes loans with both borrower and lender paid mortgage insurance. |
The following tables provide an analysis of the residential mortgage portfolio loans outstanding by state with a greater than 80% LTV and no mortgage insurance:
| TABLE 43: RESIDENTIAL MORTGAGE PORTFOLIO LOANS, LTV GREATER THAN 80%, NO MORTGAGE INSURANCE |
||||||||||||||||
| As of December 31, 2019 ($ in millions) |
For the Year Ended December 31, 2019 |
|||||||||||||||
| |
||||||||||||||||
| 90 Days |
Net Charge-offs |
|||||||||||||||
| Outstanding |
Past Due |
Nonaccrual |
(Recoveries) |
|||||||||||||
| By State: |
||||||||||||||||
| Ohio |
$ |
482 |
3 |
4 |
1 |
|||||||||||
| Illinois |
468 |
2 |
3 |
1 |
||||||||||||
| Florida |
305 |
2 |
1 |
(1) |
||||||||||||
| Michigan |
217 |
2 |
1 |
- |
||||||||||||
| Indiana |
175 |
1 |
1 |
- |
||||||||||||
| North Carolina |
139 |
- |
2 |
- |
||||||||||||
| Kentucky |
93 |
- |
- |
- |
||||||||||||
| All other states |
372 |
3 |
3 |
1 |
||||||||||||
| Total |
$ |
2,251 |
13 |
15 |
2 |
|||||||||||
83 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 44: RESIDENTIAL MORTGAGE PORTFOLIO LOANS, LTV GREATER THAN 80%, NO MORTGAGE INSURANCE |
||||||||||||||||
| As of December 31, 2018 ($ in millions) |
For the Year Ended December 31, 2018 |
|||||||||||||||
| 90 Days |
||||||||||||||||
| Outstanding |
Past Due |
Nonaccrual |
Net Charge-offs |
|||||||||||||
| |
||||||||||||||||
| By State: |
||||||||||||||||
| Ohio |
$ | 436 |
2 |
3 |
1 |
|||||||||||
| Illinois |
390 |
1 |
1 |
- |
||||||||||||
| Florida |
284 |
1 |
2 |
- |
||||||||||||
| Michigan |
217 |
1 |
1 |
- |
||||||||||||
| Indiana |
144 |
1 |
1 |
- |
||||||||||||
| North Carolina |
92 |
- |
1 |
- |
||||||||||||
| Kentucky |
81 |
- |
- |
- |
||||||||||||
| All other states |
310 |
3 |
2 |
1 |
||||||||||||
| Total |
$ | 1,954 |
9 |
11 |
2 |
|||||||||||
84 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides an analysis of home equity portfolio loans outstanding disaggregated based upon refreshed FICO score:
| TABLE 45: HOME EQUITY PORTFOLIO LOANS OUTSTANDING BY REFRESHED FICO SCORE |
||||||||||||||||
| 2019 |
2018 |
|||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
% of Total |
Outstanding |
% of Total |
||||||||||||
| Senior Liens: |
||||||||||||||||
| FICO ≤ 659 |
$ |
219 |
4 % |
$ | 218 |
4 % |
||||||||||
| FICO 660-719 |
330 |
5 |
318 |
5 |
||||||||||||
| FICO ≥ 720 |
1,732 |
28 |
1,791 |
28 |
||||||||||||
| Total senior liens |
2,281 |
37 |
2,327 |
37 |
||||||||||||
| Junior Liens: |
||||||||||||||||
| FICO ≤ 659 |
446 |
7 |
469 |
7 |
||||||||||||
| FICO 660-719 |
716 |
12 |
769 |
12 |
||||||||||||
| FICO ≥ 720 |
2,640 |
44 |
2,837 |
44 |
||||||||||||
| Total junior liens |
3,802 |
63 |
4,075 |
63 |
||||||||||||
| Total |
$ |
6,083 |
100 % |
$ | 6,402 |
100 % |
||||||||||
| The Bancorp believes that home equity portfolio loans with a greater than 80% combined LTV present a higher level of risk. The following table provides an analysis of the home equity portfolio loans outstanding in a senior and junior lien position by LTV at origination: |
||||||||||||||||
| TABLE 46: HOME EQUITY PORTFOLIO LOANS OUTSTANDING BY LTV AT ORIGINATION |
||||||||||||||||
| 2019 |
2018 |
|||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
Weighted- Average LTV |
Outstanding |
Weighted- Average LTV |
||||||||||||
| Senior Liens: |
||||||||||||||||
| LTV ≤ 80% |
$ |
1,964 |
53.8 % |
$ | 2,022 |
54.5 % |
||||||||||
| LTV > 80% |
317 |
88.8 |
305 |
88.8 |
||||||||||||
| Total senior liens |
2,281 |
58.9 |
2,327 |
59.2 |
||||||||||||
| Junior Liens: |
||||||||||||||||
| LTV ≤ 80% |
2,213 |
66.8 |
2,367 |
67.2 |
||||||||||||
| LTV > 80% |
1,589 |
89.7 |
1,708 |
90.1 |
||||||||||||
| Total junior liens |
3,802 |
77.4 |
4,075 |
78.0 |
||||||||||||
| Total |
$ |
6,083 |
70.3 % |
$ | 6,402 |
70.9 % |
||||||||||
The following tables provide an analysis of home equity portfolio loans outstanding by state with a combined LTV greater than 80%:
| TABLE 47: HOME EQUITY PORTFOLIO LOANS OUTSTANDING WITH AN LTV GREATER THAN 80% |
||||||||||||||||||||
| As of December 31, 2019 ($ in millions) |
For the Year Ended December 31, 2019 |
|||||||||||||||||||
| Outstanding |
Exposure |
90 Days Past Due |
Nonaccrual |
Net Charge-offs |
||||||||||||||||
| By State: |
||||||||||||||||||||
| Ohio |
$ |
1,145 |
2,431 |
- |
11 |
3 |
||||||||||||||
| Michigan |
239 |
413 |
- |
6 |
1 |
|||||||||||||||
| Illinois |
169 |
279 |
- |
5 |
3 |
|||||||||||||||
| Indiana |
105 |
196 |
- |
5 |
1 |
|||||||||||||||
| Kentucky |
95 |
191 |
- |
2 |
- |
|||||||||||||||
| Florida |
50 |
78 |
- |
2 |
1 |
|||||||||||||||
| All other states |
103 |
162 |
- |
4 |
1 |
|||||||||||||||
| Total |
$ |
1,906 |
3,750 |
- |
35 |
10 |
||||||||||||||
85 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 48: HOME EQUITY PORTFOLIO LOANS OUTSTANDING WITH AN LTV GREATER THAN 80% |
||||||||||||||||||||
| As of December 31, 2018 ($ in millions) |
For the Year Ended December 31, 2018 |
|||||||||||||||||||
| Outstanding |
Exposure |
90 Days Past Due |
Nonaccrual |
Net Charge-offs |
||||||||||||||||
| By State: |
||||||||||||||||||||
| Ohio |
$ | 1,082 |
2,146 |
- |
8 |
2 |
||||||||||||||
| Michigan |
297 |
492 |
- |
4 |
1 |
|||||||||||||||
| Illinois |
200 |
321 |
- |
4 |
2 |
|||||||||||||||
| Indiana |
133 |
231 |
- |
2 |
- |
|||||||||||||||
| Kentucky |
118 |
224 |
- |
2 |
- |
|||||||||||||||
| Florida |
59 |
86 |
- |
2 |
- |
|||||||||||||||
| All other states |
124 |
188 |
- |
3 |
1 |
|||||||||||||||
| Total |
$ | 2,013 |
3,688 |
- |
25 |
6 |
||||||||||||||
The following table provides an analysis of indirect secured consumer portfolio loans outstanding disaggregated based upon FICO score:
| TABLE 49: INDIRECT SECURED CONSUMER PORTFOLIO LOANS OUTSTANDING BY FICO SCORE AT ORIGINATION |
||||||||||||||||
| 2019 |
2018 |
|||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
% of Total |
Outstanding |
% of Total |
||||||||||||
| FICO ≤ 690 |
$ |
1,681 |
15 % |
$ | 1,604 |
18 % |
||||||||||
| FICO > 690 |
9,857 |
85 |
7,372 |
82 |
||||||||||||
| Total |
$ |
11,538 |
100 % |
$ | 8,976 |
100 % |
||||||||||
The following table provides an analysis of indirect secured consumer portfolio loans outstanding by LTV at origination:
| TABLE 50: INDIRECT SECURED CONSUMER PORTFOLIO LOANS OUTSTANDING BY LTV AT ORIGINATION |
||||||||||||||||
| 2019 |
2018 |
|||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
Weighted- Average LTV |
Outstanding |
Weighted- Average LTV |
||||||||||||
| LTV ≤ 100% |
$ |
7,420 |
81.3 % |
$ | 5,591 |
82.3 % |
||||||||||
| LTV > 100% |
4,118 |
113.4 |
3,385 |
112.9 |
||||||||||||
| Total |
$ |
11,538 |
93.1 % |
$ | 8,976 |
94.2 % |
||||||||||
The following table provides an analysis of the Bancorp’s indirect secured consumer portfolio loans outstanding with an LTV at origination greater than 100% as of and for the years ended:
| TABLE 51: INDIRECT SECURED CONSUMER PORTFOLIO LOANS OUTSTANDING WITH AN LTV GREATER THAN 100% |
||||||||||||||||
| ($ in millions) |
Outstanding |
90 Days Past Due and Accruing |
Nonaccrual |
Net Charge-offs |
||||||||||||
| December 31, 2019 |
$ |
4,118 |
7 |
4 |
37 |
|||||||||||
| December 31, 2018 |
3,385 |
7 |
1 |
28 |
||||||||||||
86 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides an analysis of credit card portfolio loans outstanding disaggregated based upon FICO score at origination:
| TABLE 52: CREDIT CARD PORTFOLIO LOANS OUTSTANDING BY FICO SCORE AT ORIGINATION |
||||||||||||||||
| |
2019 |
2018 |
||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
% of Total |
Outstanding |
% of Total |
||||||||||||
| FICO ≤ 659 |
$ |
107 |
4 % |
$ | 82 |
3 % |
||||||||||
| FICO 660-719 |
834 |
33 |
711 |
29 |
||||||||||||
| FICO ≥ 720 |
1,591 |
63 |
1,677 |
68 |
||||||||||||
| Total |
$ |
2,532 |
100 % |
$ | 2,470 |
100 % |
||||||||||
The following table provides an analysis of other consumer portfolio loans outstanding by product type at origination:
| TABLE 53: OTHER CONSUMER PORTFOLIO LOANS OUTSTANDING BY PRODUCT TYPE AT ORIGINATION |
||||||||||||||||
| |
2019 |
2018 |
||||||||||||||
| As of December 31 ($ in millions) |
Outstanding |
% of Total |
Outstanding |
% of Total |
||||||||||||
| Unsecured |
$ |
783 |
29 % |
$ | 610 |
26 % |
||||||||||
| Other secured |
530 |
19 |
510 |
22 |
||||||||||||
| Point-of-sale |
1,410 |
52 |
1,222 |
52 |
||||||||||||
| Total |
$ |
2,723 |
100 % |
$ | 2,342 |
100 % |
||||||||||
87 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 54: SUMMARY OF NONPERFORMING ASSETS AND DELINQUENT LOANS
| As of December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
||||||||||||||||
| Nonaccrual portfolio loans and leases: |
|||||||||||||||||||||
| Commercial and industrial loans |
$ |
118 |
54 |
144 |
302 |
82 |
|||||||||||||||
| Commercial mortgage loans |
21 |
9 |
12 |
27 |
56 |
||||||||||||||||
| Commercial construction loans |
1 |
- |
- |
- |
- |
||||||||||||||||
| Commercial leases |
26 |
18 |
- |
2 |
- |
||||||||||||||||
| Residential mortgage loans (a) |
12 |
10 |
17 |
17 |
28 |
||||||||||||||||
| Home equity |
55 |
56 |
56 |
55 |
62 |
||||||||||||||||
| Indirect secured consumer loans |
1 |
- |
- |
- |
- |
||||||||||||||||
| Other consumer loans |
2 |
1 |
- |
- |
- |
||||||||||||||||
| Nonaccrual portfolio restructured loans and leases: |
|||||||||||||||||||||
| Commercial and industrial loans |
220 |
139 |
132 |
176 |
177 |
||||||||||||||||
| Commercial mortgage loans |
9 |
4 |
14 |
14 |
25 |
||||||||||||||||
| Commercial leases |
2 |
4 |
4 |
2 |
1 |
||||||||||||||||
| Residential mortgage loans (a) |
79 |
12 |
13 |
17 |
23 |
||||||||||||||||
| Home equity |
39 |
13 |
18 |
18 |
17 |
||||||||||||||||
| Indirect secured consumer loans |
6 |
1 |
1 |
2 |
2 |
||||||||||||||||
| Credit card |
27 |
27 |
26 |
28 |
33 |
||||||||||||||||
| Total nonaccrual portfolio loans and leases (b) |
618 |
348 |
437 |
660 |
506 |
||||||||||||||||
| OREO and other repossessed property (c) |
62 |
47 |
52 |
78 |
141 |
||||||||||||||||
| Total nonperforming portfolio loans and leases and OREO |
680 |
395 |
489 |
738 |
647 |
||||||||||||||||
| Nonaccrual loans held for sale |
- |
- |
5 |
4 |
1 |
||||||||||||||||
| Nonaccrual restructured loans held for sale |
7 |
16 |
1 |
9 |
11 |
||||||||||||||||
| Total nonperforming assets |
$ |
687 |
411 |
495 |
751 |
659 |
|||||||||||||||
| Portfolio loans and leases 90 days past due and still accruing: |
|||||||||||||||||||||
| Commercial and industrial loans |
$ |
11 |
4 |
3 |
4 |
7 |
|||||||||||||||
| Commercial mortgage loans |
15 |
2 |
- |
- |
- |
||||||||||||||||
| Residential mortgage loans (a) |
50 |
38 |
57 |
49 |
40 |
||||||||||||||||
| Home equity |
1 |
- |
- |
- |
- |
||||||||||||||||
| Indirect secured consumer loans |
10 |
12 |
10 |
9 |
10 |
||||||||||||||||
| Credit card |
42 |
37 |
27 |
22 |
18 |
||||||||||||||||
| Other consumer loans |
1 |
- |
- |
- |
- |
||||||||||||||||
| Total portfolio loans and leases 90 days past due and still accruing |
$ |
130 |
93 |
97 |
84 |
75 |
|||||||||||||||
| Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO |
0.62 |
% |
0.41 |
0.53 |
0.80 |
0.70 |
|||||||||||||||
| ALLL as a percent of nonperforming portfolio assets |
177 |
279 |
245 |
170 |
197 |
||||||||||||||||
(a) |
Information for all periods presented excludes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. These advances were $261 December 31, 2019 $4 December 31, 2019 |
(b) |
Includes $16 December 31, 2019 $11, December 31, 2019 |
(c) |
Upon completion of Fifth Third Bank’s conversion to a national charter, the Bancorp conformed to OCC guidance with regard to branch-related real estate no longer intended to be used for banking purposes. The impact of the change resulted in an increase to OREO of approximately $30 million with an offsetting reduction to bank premises and equipment. |
88 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides a rollforward of portfolio nonaccrual loans and leases, by portfolio segment:
| TABLE 55: ROLLFORWARD OF PORTFOLIO NONACCRUAL LOANS AND LEASES |
||||||||||||||||
| For the year ended December 31, 2019 ($ in millions) |
Commercial |
Residential Mortgage |
Consumer |
Total |
||||||||||||
| Balance, beginning of period |
$ |
228 |
22 |
98 |
348 |
|||||||||||
| Transfers to nonaccrual status |
456 |
107 |
176 |
739 |
||||||||||||
| Acquired nonaccrual loans |
8 |
- |
- |
8 |
||||||||||||
| Transfers to accrual status |
- |
(20) |
(72) |
(92) |
||||||||||||
| Transfers to held for sale |
(17) |
- |
- |
(17) |
||||||||||||
| Loan paydowns/payoffs |
(165) |
(9) |
(30) |
(204) |
||||||||||||
| Transfers to OREO |
(5) |
(7) |
(4) |
(16) |
||||||||||||
| Charge-offs |
(127) |
(2) |
(38) |
(167) |
||||||||||||
| Draws/other extensions of credit |
19 |
- |
- |
19 |
||||||||||||
| Balance, end of period |
$ |
397 |
91 |
130 |
618 |
|||||||||||
| For the year ended December 31, 2018 ($ in millions) |
||||||||||||||||
| Balance, beginning of period |
$ | 306 |
30 |
101 |
437 |
|||||||||||
| Transfers to nonaccrual status |
252 |
34 |
139 |
425 |
||||||||||||
| Transfers to accrual status |
(3) |
(22) |
(67) |
(92) |
||||||||||||
| Transfers to held for sale |
(28) |
- |
- |
(28) |
||||||||||||
| Loan paydowns/payoffs |
(175) |
(8) |
(32) |
(215) |
||||||||||||
| Transfers to OREO |
(3) |
(10) |
(7) |
(20) |
||||||||||||
| Charge-offs |
(157) |
(2) |
(36) |
(195) |
||||||||||||
| Draws/other extensions of credit |
36 |
- |
- |
36 |
||||||||||||
| Balance, end of period |
$ | 228 |
22 |
98 |
348 |
|||||||||||
The following tables summarize portfolio TDRs by loan type and delinquency status:
| TABLE 56: ACCRUING AND NONACCRUING PORTFOLIO TDRs |
||||||||||||||||||||||||
| Accruing |
||||||||||||||||||||||||
| As of December 31, 2019 ($ in millions) |
Current |
30-89 DaysPast Due |
90 Days or More Past Due |
Nonaccruing |
Total |
|||||||||||||||||||
| Commercial loans (a) |
$ |
|
23 |
- |
- |
231 |
254 |
|||||||||||||||||
| Residential mortgage loans (b) |
552 |
49 |
134 |
79 |
814 |
|||||||||||||||||||
| Home equity |
199 |
8 |
- |
39 |
246 |
|||||||||||||||||||
| Indirect secured consumer loans |
6 |
- |
- |
6 |
12 |
|||||||||||||||||||
| Credit card |
14 |
3 |
- |
27 |
44 |
|||||||||||||||||||
| Total (c) |
$ |
794 |
60 |
134 |
382 |
1,370 |
||||||||||||||||||
(a) |
Excludes restructured nonaccrual loans held for sale. |
(b) |
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2019 $321 $40 30-89 days past due loans and $109 |
(c) |
Upon completion of Fifth Third Bank’s conversion to a national charter, the Bancorp conformed to OCC guidance with regard to non-reaffirmed loans included in Chapter 7 bankruptcy filings to be accounted for as TDRs and collateral dependent loans regardless of payment history and capacity to pay in the future. The impact of the change resulted in an increase to TDRs of approximately $105, of which $83 were transferred to nonaccrual status. |
89 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 57: ACCRUING AND NONACCRUING PORTFOLIO TDRs |
|||||||||||||||||||||||||
| Accruing |
|||||||||||||||||||||||||
| As of December 31, 2018 ($ in millions) |
Current |
30-89 DaysPast Due |
90 Days or More Past Due |
Nonaccruing |
Total |
||||||||||||||||||||
| Commercial loans (a) |
$ | 60 |
- |
- |
147 |
207 |
|||||||||||||||||||
| Residential mortgage loans (b) |
552 |
52 |
120 |
12 |
736 |
||||||||||||||||||||
| Home equity |
203 |
12 |
- |
13 |
228 |
||||||||||||||||||||
| Indirect secured consumer loans |
5 |
- |
- |
1 |
6 |
||||||||||||||||||||
| Credit card |
14 |
3 |
- |
27 |
44 |
||||||||||||||||||||
| Total |
$ | 834 |
67 |
120 |
200 |
1,221 |
|||||||||||||||||||
(a) |
Excludes restructured nonaccrual loans held for sale. |
(b) |
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2018, these advances represented $321 of current loans, $42 of 30-89 days past due loans and $101 of 90 days or more past due loans. |
90 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 58: SUMMARY OF CREDIT LOSS EXPERIENCE |
||||||||||||||||||||||||
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||||||
| Losses charged-off: |
||||||||||||||||||||||||
| Commercial and industrial loans |
$ |
(120 |
) |
(151 |
) | (136 |
) | (205 |
) | (253 |
) | |||||||||||||
| Commercial mortgage loans |
- |
(5 |
) | (16 |
) | (22 |
) | (39 |
) | |||||||||||||||
| Commercial construction loans |
- |
- |
- |
- |
(4 |
) | ||||||||||||||||||
| Commercial leases |
(7 |
) |
(1 |
) | (2 |
) | (5 |
) | (2 |
) | ||||||||||||||
| Residential mortgage loans |
(9 |
) |
(13 |
) | (15 |
) | (19 |
) | (28 |
) | ||||||||||||||
| Home equity |
(28 |
) |
(23 |
) | (32 |
) | (41 |
) | (55 |
) | ||||||||||||||
| Indirect secured consumer loans |
(81 |
) |
(63 |
) | (58 |
) | (54 |
) | (46 |
) | ||||||||||||||
| Credit card |
(156 |
) |
(125 |
) | (94 |
) | (89 |
) | (94 |
) | ||||||||||||||
| Other consumer loans (a) |
(109 |
) |
(69 |
) | (28 |
) | (21 |
) | (21 |
) | ||||||||||||||
| Total losses charged-off |
(510 |
) |
(450 |
) | (381 |
) | (456 |
) | (542 |
) | ||||||||||||||
| Recoveries of losses previously charged-off: |
||||||||||||||||||||||||
| Commercial and industrial loans |
17 |
19 |
25 |
33 |
24 |
|||||||||||||||||||
| Commercial mortgage loans |
2 |
6 |
4 |
7 |
12 |
|||||||||||||||||||
| Commercial construction loans |
- |
- |
- |
1 |
1 |
|||||||||||||||||||
| Commercial leases |
- |
- |
- |
1 |
- |
|||||||||||||||||||
| Residential mortgage loans |
5 |
6 |
8 |
9 |
11 |
|||||||||||||||||||
| Home equity |
10 |
11 |
13 |
14 |
16 |
|||||||||||||||||||
| Indirect secured consumer loans |
31 |
23 |
21 |
19 |
18 |
|||||||||||||||||||
| Credit card |
22 |
24 |
10 |
9 |
12 |
|||||||||||||||||||
| Other consumer loans (a) |
54 |
31 |
2 |
1 |
2 |
|||||||||||||||||||
| Total recoveries of losses previously charged-off |
141 |
120 |
83 |
94 |
96 |
|||||||||||||||||||
| Net losses charged-off: |
||||||||||||||||||||||||
| Commercial and industrial loans |
(103 |
) |
(132 |
) | (111 |
) | (172 |
) | (229 |
) | ||||||||||||||
| Commercial mortgage loans |
2 |
1 |
(12 |
) | (15 |
) | (27 |
) | ||||||||||||||||
| Commercial construction loans |
- |
- |
- |
1 |
(3 |
) | ||||||||||||||||||
| Commercial leases |
(7 |
) |
(1 |
) | (2 |
) | (4 |
) | (2 |
) | ||||||||||||||
| Residential mortgage loans |
(4 |
) |
(7 |
) | (7 |
) | (10 |
) | (17 |
) | ||||||||||||||
| Home equity |
(18 |
) |
(12 |
) | (19 |
) | (27 |
) | (39 |
) | ||||||||||||||
| Indirect secured consumer loans |
(50 |
) |
(40 |
) | (37 |
) | (35 |
) | (28 |
) | ||||||||||||||
| Credit card |
(134 |
) |
(101 |
) | (84 |
) | (80 |
) | (82 |
) | ||||||||||||||
| Other consumer loans |
(55 |
) |
(38 |
) | (26 |
) | (20 |
) | (19 |
) | ||||||||||||||
| Total net losses charged-off |
$ |
(369 |
) |
(330 |
) | (298 |
) | (362 |
) | (446 |
) | |||||||||||||
| Net losses charged-off as a percent of average portfolio loans and leases: |
||||||||||||||||||||||||
| Commercial and industrial loans |
0.20 |
% |
0.31 |
0.27 |
0.40 |
0.54 |
||||||||||||||||||
| Commercial mortgage loans |
(0.02 |
) |
(0.01 |
) | 0.17 |
0.23 |
0.38 |
|||||||||||||||||
| Commercial construction loans |
- |
- |
- |
(0.01 |
) | 0.11 |
||||||||||||||||||
| Commercial leases |
0.21 |
0.03 |
0.06 |
0.10 |
0.04 |
|||||||||||||||||||
| Total commercial loans and leases |
0.16 |
0.23 |
0.22 |
0.33 |
0.46 |
|||||||||||||||||||
| Residential mortgage loans |
0.03 |
0.04 |
0.04 |
0.07 |
0.13 |
|||||||||||||||||||
| Home equity |
0.28 |
0.17 |
0.26 |
0.33 |
0.46 |
|||||||||||||||||||
| Indirect secured consumer loans |
0.48 |
0.45 |
0.39 |
0.33 |
0.24 |
|||||||||||||||||||
| Credit card |
5.49 |
4.44 |
3.93 |
3.69 |
3.60 |
|||||||||||||||||||
| Other consumer loans |
2.16 |
1.93 |
2.57 |
2.93 |
3.26 |
|||||||||||||||||||
| Total consumer loans |
0.68 |
0.56 |
0.49 |
0.48 |
0.51 |
|||||||||||||||||||
| Total net losses charged-off as a percent of average portfolio loans and leases |
0.35 |
% |
0.35 |
0.32 |
0.39 |
0.48 |
||||||||||||||||||
(a) |
For the years ended December 31, 2019 $48 charged-off and recoveries of losses charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements. |
91 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 59: CHANGES IN ALLOWANCE FOR CREDIT LOSSES |
||||||||||||||||||||||||
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||||||
| ALLL: |
||||||||||||||||||||||||
| Balance, beginning of period |
$ |
1,103 |
1,196 |
1,253 |
1,272 |
1,322 |
||||||||||||||||||
| Losses charged-off (a) |
(510 |
) |
(450 |
) | (381 |
) | (456 |
) | (542 |
) | ||||||||||||||
| Recoveries of losses previously charged-off (a) |
141 |
120 |
83 |
94 |
96 |
|||||||||||||||||||
| Provision for loan and lease losses |
468 |
237 |
261 |
343 |
396 |
|||||||||||||||||||
| Deconsolidation of a VIE |
- |
- |
(20 |
) | - |
- |
||||||||||||||||||
| Balance, end of period |
$ |
1,202 |
1,103 |
1,196 |
1,253 |
1,272 |
||||||||||||||||||
| Reserve for unfunded commitments: |
||||||||||||||||||||||||
| Balance, beginning of period |
$ |
131 |
161 |
161 |
138 |
135 |
||||||||||||||||||
| Reserve for acquired unfunded commitments |
8 |
- |
- |
- |
- |
|||||||||||||||||||
| Provision for (benefit from) the reserve for unfunded commitments |
5 |
(30 |
) | - |
23 |
4 |
||||||||||||||||||
| Losses charged-off |
- |
- |
- |
- |
(1 |
) | ||||||||||||||||||
| Balance, end of period |
$ |
144 |
131 |
161 |
161 |
138 |
(a) |
For the years ended December 31, 2019 $48 |
92 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 60: ATTRIBUTION OF ALLOWANCE FOR LOAN AND LEASE LOSSES TO PORTFOLIO LOANS AND LEASES |
||||||||||||||||||||
| As of December 31 ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||||
| Attributed ALLL: |
||||||||||||||||||||
| Commercial and industrial loans |
$ |
561 |
515 |
651 |
718 |
652 |
||||||||||||||
| Commercial mortgage loans |
87 |
80 |
65 |
82 |
117 |
|||||||||||||||
| Commercial construction loans |
45 |
32 |
23 |
16 |
24 |
|||||||||||||||
| Commercial leases |
17 |
18 |
14 |
15 |
47 |
|||||||||||||||
| Residential mortgage loans |
73 |
81 |
89 |
96 |
100 |
|||||||||||||||
| Home equity |
37 |
36 |
46 |
58 |
67 |
|||||||||||||||
| Indirect secured consumer loans |
53 |
42 |
38 |
42 |
40 |
|||||||||||||||
| Credit card |
168 |
156 |
117 |
102 |
99 |
|||||||||||||||
| Other consumer loans |
40 |
33 |
33 |
12 |
11 |
|||||||||||||||
| Unallocated |
121 |
110 |
120 |
112 |
115 |
|||||||||||||||
| Total attributed ALLL |
$ |
1,202 |
1,103 |
1,196 |
1,253 |
1,272 |
||||||||||||||
| Portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
$ |
50,542 |
44,340 |
41,170 |
41,676 |
42,131 |
||||||||||||||
| Commercial mortgage loans |
10,963 |
6,974 |
6,604 |
6,899 |
6,957 |
|||||||||||||||
| Commercial construction loans |
5,090 |
4,657 |
4,553 |
3,903 |
3,214 |
|||||||||||||||
| Commercial leases |
3,363 |
3,600 |
4,068 |
3,974 |
3,854 |
|||||||||||||||
| Residential mortgage loans |
16,724 |
15,504 |
15,591 |
15,051 |
13,716 |
|||||||||||||||
| Home equity |
6,083 |
6,402 |
7,014 |
7,695 |
8,301 |
|||||||||||||||
| Indirect secured consumer loans |
11,538 |
8,976 |
9,112 |
9,983 |
11,493 |
|||||||||||||||
| Credit card |
2,532 |
2,470 |
2,299 |
2,237 |
2,259 |
|||||||||||||||
| Other consumer loans |
2,723 |
2,342 |
1,559 |
680 |
657 |
|||||||||||||||
| Total portfolio loans and leases |
$ |
109,558 |
95,265 |
91,970 |
92,098 |
92,582 |
||||||||||||||
| Attributed ALLL as a percent of respective portfolio loans and leases: |
||||||||||||||||||||
| Commercial and industrial loans |
1.11 |
% |
1.16 |
1.58 |
1.72 |
1.55 |
||||||||||||||
| Commercial mortgage loans |
0.79 |
1.15 |
0.98 |
1.19 |
1.68 |
|||||||||||||||
| Commercial construction loans |
0.88 |
0.69 |
0.51 |
0.41 |
0.75 |
|||||||||||||||
| Commercial leases |
0.51 |
0.50 |
0.34 |
0.38 |
1.22 |
|||||||||||||||
| Residential mortgage loans |
0.44 |
0.52 |
0.57 |
0.64 |
0.73 |
|||||||||||||||
| Home equity |
0.61 |
0.56 |
0.66 |
0.75 |
0.81 |
|||||||||||||||
| Indirect secured consumer loans |
0.46 |
0.47 |
0.42 |
0.42 |
0.35 |
|||||||||||||||
| Credit card |
6.64 |
6.32 |
5.09 |
4.56 |
4.38 |
|||||||||||||||
| Other consumer loans |
1.47 |
1.41 |
2.12 |
1.76 |
1.67 |
|||||||||||||||
| Unallocated (as a percent of portfolio loans and leases) |
0.11 |
0.12 |
0.13 |
0.12 |
0.12 |
|||||||||||||||
| Attributed ALLL as a percent of portfolio loans and leases |
1.10 |
% |
1.16 |
1.30 |
1.36 |
1.37 |
||||||||||||||
93 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table shows the Bancorp’s estimated NII sensitivity profile and ALCO policy limits as of December 31:
| TABLE 61: ESTIMATED NII SENSITIVITY PROFILE AND ALCO POLICY LIMITS |
||||||||||||||||||||||||||||||||
| 2019 |
2018 |
|||||||||||||||||||||||||||||||
| % Change in NII (FTE) |
ALCO Policy Limits |
% Change in NII (FTE) |
ALCO Policy Limits |
|||||||||||||||||||||||||||||
| Change in Interest Rates (bps) |
12 Months |
13-24 Months |
12 Months |
13-24 Months |
12 Months |
13-24 Months |
12 Months |
13-24 Months |
||||||||||||||||||||||||
| + 200 Ramp over 12 months |
(0.22 |
) % |
3.94 |
(4.00) |
(6.00) |
(0.01 |
)% | 2.11 |
(4.00) |
(6.00) |
||||||||||||||||||||||
| + 100 Ramp over 12 months |
(0.16 |
) |
2.07 |
N/A |
N/A |
0.09 |
1.34 |
N/A |
N/A |
|||||||||||||||||||||||
| - 100 Ramp over 12 months |
(2.66 |
) |
(7.90 |
) |
(8.00 |
) |
(12.00 |
) |
(2.83 |
) | (6.70 |
) | N/A |
N/A |
||||||||||||||||||
| - 150 Ramp over 12 months |
N/A |
N/A |
N/A |
N/A |
(4.34 |
) | (10.58 |
) | (8.00) |
(12.00) |
||||||||||||||||||||||
94 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table includes the Bancorp’s estimated NII sensitivity profile with an immediate $1 billion decrease and an immediate $1 billion increase in demand deposit balances as of December 31, 2019:
| TABLE 62: ESTIMATED NII SENSITIVITY ASSUMING A $1 BILLION CHANGE IN DEMAND DEPOSIT BALANCES |
||||||||||||||||||
| % Change in NII (FTE) |
||||||||||||||||||
| Immediate $1 Billion Balance Decrease |
|
Immediate $1 Billion Balance Increase |
||||||||||||||||
| Change in Interest Rates (bps) |
12 Months |
13-24 Months |
12 Months |
13-24 Months |
||||||||||||||
| + 200 Ramp over 12 months |
(0.43) |
% | 3.54 |
(0.02 |
) | 4.34 |
||||||||||||
| + 100 Ramp over 12 months |
(0.26) |
1.87 |
(0.05 |
) | 2.27 |
|||||||||||||
| - 100 Ramp over 12 months |
(2.77) |
(8.10 |
) | (2.56 |
) | (7.70 |
) | |||||||||||
| The following table includes the Bancorp’s estimated NII sensitivity profile with a 25% increase and a 25% decrease to the corresponding deposit beta assumptions as of December 31, 2019. The resulting weighted-average rising-rate interest-bearing deposit betas included in this analysis were approximately 88% and 53%, respectively, and 51% and 31%, respectively, for falling rates as of December 31, 2019: |
||||||||||||||||||
| TABLE 63: ESTIMATED NII SENSITIVITY WITH DEPOSIT BETA ASSUMPTION CHANGES |
||||||||||||||||||
| % Change in NII (FTE) |
||||||||||||||||||
| Betas 25% Higher |
|
Betas 25% Lower |
||||||||||||||||
| Change in Interest Rates (bps) |
12 Months |
13-24 Months |
12 Months |
13-24 Months |
||||||||||||||
| + 200 Ramp over 12 months |
(3.52) |
% | (2.27 |
) | 3.07 |
10.15 |
||||||||||||
| + 100 Ramp over 12 months |
(1.80) |
(1.01 |
) | 1.48 |
5.15 |
|||||||||||||
| - 100 Ramp over 12 months |
(1.73) |
(6.16 |
) | (3.60 |
) | (9.64 |
) | |||||||||||
The following table shows the Bancorp’s estimated EVE sensitivity profile as of December 31:
| TABLE 64: ESTIMATED EVE SENSITIVITY PROFILE | ||||||||||
| 2019 |
2018 | |||||||||
| Change in Interest Rates (bps) |
Change in EVE |
ALCO Policy Limit |
|
Change in EVE |
ALCO Policy Limit | |||||
| + 200 Shock |
(5.12) % |
(12.00) |
(7.09) |
(12.00) | ||||||
| + 100 Shock |
(2.01) |
N/A |
(3.21) |
N/A | ||||||
| - 100 Shock |
N/A |
N/A |
(1.01) |
N/A | ||||||
| - 150 Shock |
(6.07) |
(12.00) |
N/A |
N/A | ||||||
| - 200 Shock |
N/A |
N/A |
(5.27) |
(12.00) | ||||||
95 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables present additional information about the interest rate swaps and floors used in Fifth Third’s asset and liability management activities:
| TABLE 65: WEIGHTED-AVERAGE MATURITY, RECEIVE RATE AND PAY RATE ON QUALIFYING HEDGING INSTRUMENTS |
||||||||||||||||||||
| Notional |
Fair |
Remaining |
Receive |
LIBOR Index / |
||||||||||||||||
| As of December 31, 2019 ($ in millions) |
Amount |
Value |
(years) |
Rate |
Strike |
|||||||||||||||
| Interest rate swaps – cash flow – receive-fixed |
$ |
7,000 |
(2) |
3.9 |
3.0 |
% |
1 ML |
|||||||||||||
| Interest rate swaps – cash flow – receive-fixed – forward starting (a) |
1,000 |
- |
5.0 |
3.2 |
1 ML |
|||||||||||||||
| Interest rate swaps – fair value – receive-fixed |
2,705 |
393 |
6.8 |
4.4 |
1 ML / 3 ML |
|||||||||||||||
| Total interest rate swaps |
$ |
10,705 |
391 |
|||||||||||||||||
| Interest rate floors – cash flow – receive-fixed |
$ |
3,000 |
115 |
5.0 |
1.7 |
1 ML / 2.25% |
||||||||||||||
| (a) Forward starting swaps will become effective January 2, 2020. |
||||||||||||||||||||
| TABLE 66: WEIGHTED-AVERAGE MATURITY, RECEIVE RATE AND PAY RATE ON QUALIFYING HEDGING INSTRUMENTS |
||||||||||||||||||||
| Notional |
Fair |
Remaining |
Receive |
LIBOR Index / |
||||||||||||||||
| As of December 31, 2018 ($ in millions) |
Amount |
Value |
(years) |
Rate |
Strike |
|||||||||||||||
| Interest rate swaps – cash flow – receive-fixed |
$ | 5,000 |
(13) |
4.6 |
3.0 |
% | 1 ML |
|||||||||||||
| Interest rate swaps – cash flow – receive-fixed – forward starting (a) |
3,000 |
1 |
5.7 |
3.1 |
1 ML |
|||||||||||||||
| Interest rate swaps – fair value – receive-fixed |
3,455 |
260 |
6.3 |
3.8 |
1 ML / 3 ML |
|||||||||||||||
| Total interest rate swaps |
$ | 11,455 |
248 |
|||||||||||||||||
| Interest rate floors – cash flow – forward starting (b) |
$ | 3,000 |
69 |
6.0 |
N/A |
1 ML / 2.25% |
||||||||||||||
(a) |
Forward starting swaps will become effective January 2, 2020. |
(b) |
Forward starting floors became effective December 16, 2019. |
96 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the carrying value of the Bancorp’s portfolio loans and leases expected cash flows, excluding interest receivable, as of December 31, 2019:
| TABLE 67: PORTFOLIO LOANS AND LEASES EXPECTED CASH FLOWS |
||||||||||||||||
| ($ in millions) |
Less than 1 year |
1-5 years |
Over 5 years |
Total |
||||||||||||
| Commercial and industrial loans |
$ | 29,675 |
20,144 |
723 |
50,542 |
|||||||||||
| Commercial mortgage loans |
4,143 |
6,038 |
782 |
10,963 |
||||||||||||
| Commercial construction loans |
2,452 |
2,499 |
139 |
5,090 |
||||||||||||
| Commercial leases |
925 |
1,647 |
791 |
3,363 |
||||||||||||
| Total commercial loans and leases |
37,195 |
30,328 |
2,435 |
69,958 |
||||||||||||
| Residential mortgage loans |
3,290 |
7,469 |
5,965 |
16,724 |
||||||||||||
| Home equity |
1,924 |
3,306 |
853 |
6,083 |
||||||||||||
| Indirect secured consumer loans |
4,266 |
6,590 |
682 |
11,538 |
||||||||||||
| Credit card |
506 |
2,026 |
- |
2,532 |
||||||||||||
| Other consumer loans |
1,433 |
1,117 |
173 |
2,723 |
||||||||||||
| Total consumer loans |
11,419 |
20,508 |
7,673 |
39,600 |
||||||||||||
| Total portfolio loans and leases |
$ | 48,614 |
50,836 |
10,108 |
109,558 |
|||||||||||
Additionally, the following table displays a summary of expected cash flows, excluding interest receivable, occurring after one year for both fixed and floating/adjustable-rate loans and leases as of December 31, 2019:
| TABLE 68: PORTFOLIO LOANS AND LEASES EXPECTED CASH FLOWS OCCURRING AFTER 1 YEAR |
||||||||
| Interest Rate |
||||||||
| ($ in millions) |
Fixed |
Floating or Adjustable |
||||||
| Commercial and industrial loans |
$ |
3,162 |
17,705 |
|||||
| Commercial mortgage loans |
1,542 |
5,278 |
||||||
| Commercial construction loans |
35 |
2,603 |
||||||
| Commercial leases |
2,438 |
- |
||||||
| Total commercial loans and leases |
7,177 |
25,586 |
||||||
| Residential mortgage loans |
9,880 |
3,554 |
||||||
| Home equity |
485 |
3,674 |
||||||
| Indirect secured consumer loans |
7,254 |
18 |
||||||
| Credit card |
472 |
1,554 |
||||||
| Other consumer loans |
1,037 |
253 |
||||||
| Total consumer loans |
19,128 |
9,053 |
||||||
| Total portfolio loans and leases |
$ |
26,305 |
34,639 |
|||||
97 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
98 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 69: AGENCY RATINGS |
| As of March 2, 2020 |
Moody’s |
Standard and Poor’s |
Fitch |
DBRS |
||||||||||||
| Fifth Third Bancorp: |
||||||||||||||||
| Short-term borrowings |
No rating |
A-2 |
F1 |
R-1L |
||||||||||||
| Senior debt |
Baa1 |
BBB+ |
A- |
A |
||||||||||||
| Subordinated debt |
Baa1 |
BBB |
BBB+ |
AL |
||||||||||||
| Fifth Third Bank, National Association: |
||||||||||||||||
| Short-term borrowings |
P-2 |
A-2 |
F1 |
R-1M |
||||||||||||
| Short-term deposit |
P-1 |
No rating |
F1 |
No rating |
||||||||||||
| Long-term deposit |
Aa3 |
No rating |
A |
AH |
||||||||||||
| Senior debt |
A3 |
A- |
A- |
AH |
||||||||||||
| Subordinated debt |
Baa1 |
BBB+ |
BBB+ |
A |
||||||||||||
| Rating Agency Outlook for Fifth Third Bancorp and Fifth Third Bank, National Association: |
Stable |
Stable |
Stable |
Stable |
||||||||||||
99 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
100 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| TABLE 70: PRESCRIBED CAPITAL RATIOS | ||||||
| Minimum |
Well-Capitalized | |||||
| CET1 capital: |
||||||
| Fifth Third Bancorp |
4.50 |
% | N/A | |||
| Fifth Third Bank, National Association |
4.50 |
6.50 | ||||
| Tier I risk-based capital: |
||||||
| Fifth Third Bancorp |
6.00 |
6.00 | ||||
| Fifth Third Bank, National Association |
6.00 |
8.00 | ||||
| Total risk-based capital: |
||||||
| Fifth Third Bancorp |
8.00 |
10.00 | ||||
| Fifth Third Bank, National Association |
8.00 |
10.00 | ||||
| Tier I leverage: |
||||||
| Fifth Third Bancorp |
4.00 |
N/A | ||||
| Fifth Third Bank, National Association |
4.00 |
5.00 | ||||
The following table summarizes the Bancorp’s capital ratios as of December 31:
| TABLE 71: CAPITAL RATIOS |
||||||||||||||||||
| ($ in millions) |
2019 |
2018 |
2017 |
2016 |
2015 |
|||||||||||||
| Average total Bancorp shareholders’ equity as a percent of average assets |
12.14 % |
11.23 |
11.69 |
11.57 |
11.24 |
|||||||||||||
| Tangible equity as a percent of tangible assets (a)(c) |
9.52 |
9.63 |
9.79 |
9.72 |
9.46 |
|||||||||||||
| Tangible common equity as a percent of tangible assets (a)(c) |
8.44 |
8.71 |
8.83 |
8.77 |
8.50 |
|||||||||||||
| Regulatory capital: |
||||||||||||||||||
| CET1 capital |
$ 13,847 |
12,534 |
12,517 |
12,426 |
11,917 |
|||||||||||||
| Tier I capital |
15,616 |
13,864 |
13,848 |
13,756 |
13,260 |
|||||||||||||
| Total regulatory capital |
19,661 |
17,723 |
17,887 |
17,972 |
17,134 |
|||||||||||||
| Risk-weighted assets (b) |
142,065 |
122,432 |
117,997 |
119,632 |
121,290 |
|||||||||||||
| Regulatory capital ratios: |
||||||||||||||||||
| CET1 capital |
9.75 % |
10.24 |
10.61 |
10.39 |
9.82 |
|||||||||||||
| Tier I risk-based capital |
10.99 |
11.32 |
11.74 |
11.50 |
10.93 |
|||||||||||||
| Total risk-based capital |
13.84 |
14.48 |
15.16 |
15.02 |
14.13 |
|||||||||||||
| Tier I leverage |
9.54 |
9.72 |
10.01 |
9.90 |
9.54 |
|||||||||||||
(a) |
These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A. |
(b) |
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. |
(c) |
Excludes AOCI. |
101 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table summarizes shares authorized for repurchase as part of publicly announced plans or programs:
| TABLE 72: SHARE REPURCHASES |
||||||||
| For the years ended December 31 |
2019 |
2018 |
||||||
| Shares authorized for repurchase at January 1 |
60,564,282 |
23,147,891 |
||||||
| Additional authorizations (a) |
80,474,957 |
87,383,525 |
||||||
| Share repurchases (b) |
(64,601,891) |
(49,967,134) |
||||||
| Shares authorized for repurchase at December 31 |
76,437,348 |
60,564,282 |
||||||
| Average price paid per share (b) |
$ |
26.05 |
29.44 |
|||||
(a) |
During the second quarter of 2019, the Bancorp announced that its Board of Directors had authorized management to purchase 100 million shares of the Bancorp’s common stock through the open market or in any private party transactions. The authorization does not include specific price targets or an expiration date. This share repurchase authorization replaces the Board’s previous authorization pursuant to which approximately 20 million shares remained available for repurchase by the Bancorp. |
(b) |
Excludes 2,693,318 December 31, 2019 |
102 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OFF-BALANCE
SHEET ARRANGEMENTS 103 Fifth Third Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Contractual Obligations and Other Commitments
| TABLE 73: CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS |
||||||||||||||||||||
| As of December 31, 2019 ($ in millions) |
Less than 1 year |
1-3 years |
3-5 years |
Greater than 5 years |
Total |
|||||||||||||||
| Contractually obligated payments due by period: |
||||||||||||||||||||
| Deposits with no stated maturity (a)(b) |
$ | 118,123 |
- |
- |
- |
118,123 |
||||||||||||||
| Long-term debt (a)(c) |
2,172 |
5,271 |
2,853 |
4,674 |
14,970 |
|||||||||||||||
| Time deposits (a)(d) |
7,714 |
1,100 |
118 |
7 |
8,939 |
|||||||||||||||
| Short-term borrowings (a)(e) |
1,271 |
- |
- |
- |
1,271 |
|||||||||||||||
| Forward contracts related to residential mortgage loans held for sale (f) |
2,901 |
- |
- |
- |
2,901 |
|||||||||||||||
| Operating lease obligations (g) |
90 |
157 |
125 |
280 |
652 |
|||||||||||||||
| Partnership investment commitments (h) |
230 |
131 |
28 |
39 |
428 |
|||||||||||||||
| Pension benefit payments (i) |
16 |
34 |
33 |
70 |
153 |
|||||||||||||||
| Purchase obligations and capital expenditures (j) |
133 |
58 |
6 |
- |
197 |
|||||||||||||||
| Finance lease obligations (g) |
6 |
10 |
4 |
26 |
46 |
|||||||||||||||
| Total contractually obligated payments due by period |
$ | 132,656 |
6,761 |
3,167 |
5,096 |
147,680 |
||||||||||||||
| Other commitments by expiration period: |
||||||||||||||||||||
| Commitments to extend credit (k) |
$ | 28,673 |
16,263 |
22,654 |
8,181 |
75,771 |
||||||||||||||
| Letters of credit (l) |
1,022 |
518 |
592 |
5 |
2,137 |
|||||||||||||||
| Total other commitments by expiration period |
$ | 29,695 |
16,781 |
23,246 |
8,186 |
77,908 |
||||||||||||||
(a) |
Interest-bearing obligations are principally used to fund interest-earning assets. Interest charges on contractual obligations were excluded from reported amounts, as the potential cash outflows would have corresponding cash inflows from interest-earning assets. |
(b) |
Includes demand, interest checking, savings, money market and foreign office deposits. For additional information, refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A. |
(c) |
Includes debt obligations with an original maturity of greater than one year. Refer to Note 18 of the Notes to Consolidated Financial Statements for additional information on these debt instruments. |
(d) |
Includes other time deposits and certificates $100,000 and over. For additional information, refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A. |
(e) |
Includes federal funds purchased and borrowings with an original maturity of less than one year. For additional information, refer to Note 17 of the Notes to Consolidated Financial Statements. |
(f) |
Refer to Note 15 of the Notes to Consolidated Financial Statements for additional information on forward contracts to sell residential mortgage loans. |
(g) |
Refer to Note 10 of the Notes to Consolidated Financial Statements for additional information on lease obligations. |
(h) |
Includes LIHTC and New Markets Tax Credit investments. For additional information, refer to Note 13 of the Notes to Consolidated Financial Statements. |
(i) |
Refer to Note 23 of the Notes to Consolidated Financial Statements for additional information on pension obligations. |
(j) |
Represents agreements to purchase goods or services and includes commitments to various general contractors for work related to banking center construction. |
(k) |
Commitments to extend credit are agreements to lend, typically having fixed expiration dates or other termination clauses that may require payment of a fee. Many of the commitments to extend credit may expire without being drawn upon. The total commitment amounts include capital commitments for private equity investments and do not necessarily represent future cash flow requirements. For additional information, refer to Note 19 of the Notes to Consolidated Financial Statements. |
(l) |
Letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. For additional information, refer to Note 19 of the Notes to Consolidated Financial Statements. |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is set forth in the Market Risk Management section of Item 7 of this Report on pages
93-
98 and is incorporated herein by reference.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
104 Fifth Third Bancorp
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of Fifth Third Bancorp:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Fifth Third Bancorp and subsidiaries (the “Bancorp”) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bancorp as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Bancorp’s internal control over financial reporting as of December 31, 2019, based on the criteria established in issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2020 expressed an unqualified opinion on the Bancorp’s internal control over financial reporting.
Internal Control—Integrated Framework (2013)
Basis for Opinion
These financial statements are the responsibility of the Bancorp’s management. Our responsibility is to express an opinion on the Bancorp’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Bancorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Loan and Lease Losses (“ALLL”) — Commercial Portfolio Segment Qualitative Factors — Refer to Note 1 and Note 7 of the Notes to Consolidated Financial Statements
Critical Audit Matter Description
The Bancorp maintains the ALLL to absorb probable loan and lease losses inherent in its portfolio segments.
The Bancorp’s current methodology for determining the ALLL is based on historical loss rates, current credit grades, impaired commercial credits, and adjusted for qualitative factors. Historical credit loss rates are applied to commercial loans that are not impaired or are not subject to specific allowance allocations. The key qualitative factors include adjustments for changes in policies or procedures in underwriting, monitoring or collections, economic conditions, estimated loss emergence period, and specific portfolio loans backed by enterprise valuations and private equity sponsors.
The ALLL for the commercial portfolio segment was $710 million at December 31, 2019, which includes adjustments for the qualitative factors noted above.
Considering the estimation and judgment in determining adjustments for qualitative factors, our audit of the ALLL and the related disclosures involved subjective judgment with regard to the qualitative adjustments to the commercial portfolio segment ALLL.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the qualitative adjustments for the commercial portfolio segment ALLL included the following, among others:
● |
We tested the effectiveness of the Bancorp’s controls over the qualitative adjustments to the ALLL for the commercial portfolio segment. |
● |
We assessed the reasonableness of, and evaluated support for, key qualitative adjustments based on market conditions and/or commercial portfolio performance metrics. |
105 Fifth Third Bancorp
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
● |
We tested the completeness and accuracy and evaluated the relevance of the key data used as inputs to the qualitative adjustment estimation process, including: |
¡ |
Commercial portfolio segment loan balances by class |
¡ |
Commercial portfolio segment net losses charged-off |
¡ |
Relevant macroeconomic indicators |
¡ |
Relevant internal loan portfolio data |
● |
With the assistance of our credit specialists, we tested the mathematical accuracy of the underlying support used as a basis for the qualitative adjustments to the historical loss rates. |
● |
We evaluated the Bancorp’s historical qualitative factor estimation process by comparing actual commercial loan losses to the ALLL recorded in historical periods for the commercial portfolio segment, inclusive of these qualitative adjustments. |
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
March 2, 2020
We have served as the Company’s auditor since 1970.
106 Fifth Third Bancorp
CONSOLIDATED BALANCE SHEETS
As of December 31 ($ in millions, except share data) |
2019 |
2018 |
||||||
Assets |
||||||||
Cash and due from banks |
$ |
|||||||
Other short-term investments (a) |
||||||||
Available-for-sale debt and other securities(b) |
||||||||
Held-to-maturity securities(c) |
||||||||
Trading debt securities |
||||||||
Equity securities |
||||||||
Loans and leases held for sale (d) |
||||||||
Portfolio loans and leases (a)(e) |
||||||||
Allowance for loan and lease losses (a) |
( |
( |
||||||
Portfolio loans and leases, net |
||||||||
Bank premises and equipment (f) |
||||||||
Operating lease equipment |
||||||||
Goodwill |
||||||||
Intangible assets |
||||||||
Servicing rights |
||||||||
Other assets (a) |
||||||||
Total Assets |
$ |
|||||||
Liabilities |
||||||||
Deposits: |
||||||||
Noninterest-bearing deposits |
$ |
|||||||
Interest-bearing deposits |
||||||||
Total deposits |
||||||||
Federal funds purchased |
||||||||
Other short-term borrowings |
||||||||
Accrued taxes, interest and expenses |
||||||||
Other liabilities (a) |
||||||||
Long-term debt (a) |
||||||||
Total Liabilities |
$ |
|||||||
Equity |
||||||||
Common stock (g) |
$ |
|||||||
Preferred stock (h) |
||||||||
Capital surplus |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive income (loss) |
( |
|||||||
Treasury stock (g) |
( |
( |
||||||
Total Bancorp shareholders’ equity |
$ |
|||||||
Noncontrolling interests |
||||||||
Total Equity |
||||||||
Total Liabilities and Equity |
$ |
|||||||
(a) |
Includes $ $ $( $ $ $ December 31, 2019 |
(b) |
Amortized cost of $ December 31, 2019 |
(c) |
Fair value of $ December 31, 2019 |
(d) |
Includes $ $ December 31, 2019 |
(e) |
Includes $ December 31, 2019 |
(f) |
Includes $ December 31, 2019 |
(g) |
Common shares: Stated value $ December 31, 2019 – |
(h) |
December 31, 2019 December 31, 2019 December 31, 2019 December 31, 2019 |
Refer to the Notes to Consolidated Financial Statements.
107 Fifth Third Bancorp
CONSOLIDATED STATEMENTS OF INCOME
| For the years ended December 31 ($ in millions, except share data) |
2019 |
2018 |
2017 |
|||||||||
| Interest Income |
||||||||||||
| Interest and fees on loans and leases |
$ |
|
|
|
||||||||
| Interest on securities |
|
|
|
|||||||||
| Interest on other short-term investments |
|
|
|
|||||||||
| Total interest income |
|
|
|
|||||||||
| Interest Expense |
||||||||||||
| Interest on deposits |
|
|
|
|||||||||
| Interest on federal funds purchased |
|
|
|
|||||||||
| Interest on other short-term borrowings |
|
|
|
|||||||||
| Interest on long-term debt |
|
|
|
|||||||||
| Total interest expense |
|
|
|
|||||||||
| Net Interest Income |
|
|
|
|||||||||
| Provision for credit losses |
|
|
|
|||||||||
| Net Interest Income After Provision for Credit Losses |
|
|
|
|||||||||
| Noninterest Income |
||||||||||||
| Corporate banking revenue |
|
|
|
|||||||||
| Service charges on deposits |
|
|
|
|||||||||
| Wealth and asset management revenue |
|
|
|
|||||||||
| Card and processing revenue |
|
|
|
|||||||||
| Mortgage banking net revenue |
|
|
|
|||||||||
| Other noninterest income |
|
|
|
|||||||||
| Securities gains (losses), net |
|
( |
) | |
||||||||
| Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights |
|
( |
) | |
||||||||
| Total noninterest income |
|
|
|
|||||||||
| Noninterest Expense |
||||||||||||
| Salaries, wages and incentives |
|
|
|
|||||||||
| Employee benefits |
|
|
|
|||||||||
| Technology and communications |
|
|
|
|||||||||
| Net occupancy expense |
|
|
|
|||||||||
| Card and processing expense |
|
|
|
|||||||||
| Equipment expense |
|
|
|
|||||||||
| Other noninterest expense |
|
|
|
|||||||||
| Total noninterest expense |
|
|
|
|||||||||
| Income Before Income Taxes |
|
|
|
|||||||||
| Applicable income tax expense |
|
|
|
|||||||||
| Net Income |
|
|
|
|||||||||
| Less: Net income attributable to noncontrolling interests |
|
|
|
|||||||||
| Net Income Attributable to Bancorp |
|
|
|
|||||||||
| Dividends on preferred stock |
|
|
|
|||||||||
| Net Income Available to Common Shareholders |
$ |
|
|
|
||||||||
| Earnings per share - basic |
$ |
|
|
|
||||||||
| Earnings per share - diluted |
$ |
|
|
|
||||||||
| Average common shares outstanding - basic |
|
|
|
|||||||||
| Average common shares outstanding - diluted |
|
|
|
|||||||||
Refer to the Notes to Consolidated Financial Statements.
108 Fifth Third Bancorp
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
| Net Income |
$ |
|
|
|
||||||||
| Other Comprehensive Income (Loss), Net of Tax: |
||||||||||||
| Unrealized gains (losses) on available-for-sale debt securities: |
||||||||||||
| Unrealized holding gains (losses) arising during the year |
|
( |
) | |
||||||||
| Reclassification adjustment for net (gains) losses included in net income |
( |
) |
|
|
||||||||
| Unrealized gains (losses) on cash flow hedge derivatives: |
||||||||||||
| Unrealized holding gains (losses) arising during the year |
|
|
( |
) | ||||||||
| Reclassification adjustment for net (gains) losses included in net income |
( |
) |
|
( |
||||||||
| Defined benefit pension plans, net: |
||||||||||||
| Net actuarial (loss) gain arising during the year |
( |
) |
|
|
||||||||
| Reclassification of amounts to net periodic benefit costs |
|
|
|
|||||||||
| Other comprehensive income (loss), net of tax |
|
( |
) | |
||||||||
| Comprehensive Income |
|
|
|
|||||||||
| Less: Comprehensive income attributable to noncontrolling interests |
|
|
|
|||||||||
| Comprehensive Income Attributable to Bancorp |
$ |
|
|
|
||||||||
Refer to the Notes to Consolidated Financial Statements.
109 Fifth Third Bancorp
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Bancorp Shareholders’ Equity |
||||||||||||||||||||||||||||||||||||
| ($ in millions, except per share data) |
Common Stock |
Preferred Stock |
Capital Surplus |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Bancorp Shareholders’ Equity |
Non- Controlling Interests |
Total Equity |
|||||||||||||||||||||||||||
| Balance at December 31, 2016 |
$ |
|
|
|
|
|
( |
) | |
|
|
|||||||||||||||||||||||||
| Net income |
|
|
|
|||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax |
|
|
|
|||||||||||||||||||||||||||||||||
| Cash dividends declared: |
||||||||||||||||||||||||||||||||||||
| Common stock (a) |
( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||||
| Preferred stock (b) |
( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||||
| Shares acquired for treasury |
( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||
| Impact of stock transactions under stock compensation plans, net |
|
|
|
|
||||||||||||||||||||||||||||||||
| Other |
( |
) | |
|
( |
) | ( |
|||||||||||||||||||||||||||||
| Balance at December 31, 2017 |
$ | |
|
|
|
|
( |
) | |
|
|
|||||||||||||||||||||||||
| Impact of cumulative effect of change in accounting principles |
|
( |
) | |
|
|||||||||||||||||||||||||||||||
| Balance at January 1, 2018 |
|
|
|
|
|
( |
) | |
|
|
||||||||||||||||||||||||||
| Net income |
|
|
|
|||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax |
( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||||
| Cash dividends declared: |
||||||||||||||||||||||||||||||||||||
| Common stock (a) |
( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||||
| Preferred stock (b) |
( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||||
| Shares acquired for treasury |
|
( |
) | ( |
) | ( |
||||||||||||||||||||||||||||||
| Impact of stock transactions under stock compensation plans, net |
|
|
|
|
||||||||||||||||||||||||||||||||
| Other |
( |
) | |
( |
) | ( |
) | ( |
||||||||||||||||||||||||||||
| Balance at December 31, 2018 |
$ | |
|
|
|
( |
) | ( |
) | |
|
|
||||||||||||||||||||||||
| Impact of cumulative effect of change in accounting principle (c) |
|
|
|
|||||||||||||||||||||||||||||||||
| Balance at January 1, 2019 |
|
|
|
|
( |
) |
( |
) |
|
|
|
|||||||||||||||||||||||||
| Net income |
|
|
|
|||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax |
|
|
|
|||||||||||||||||||||||||||||||||
| Cash dividends declared: |
||||||||||||||||||||||||||||||||||||
| Common stock (a) |
( |
) |
( |
) |
( |
|||||||||||||||||||||||||||||||
| Preferred stock (b) |
( |
) |
( |
) |
( |
|||||||||||||||||||||||||||||||
| Shares acquired for treasury |
( |
) |
( |
) |
( |
|||||||||||||||||||||||||||||||
| Issuance of preferred stock |
|
|
|
|||||||||||||||||||||||||||||||||
| Conversion of outstanding preferred stock issued by a Bancorp subsidiary |
|
|
( |
) |
|
|||||||||||||||||||||||||||||||
| Impact of MB Financial, Inc. acquisition |
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Impact of stock transactions under stock compensation plans, net |
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Other |
( |
) |
|
|
|
|||||||||||||||||||||||||||||||
| Balance at December 31, 2019 |
$ |
|
|
|
|
|
( |
) |
|
|
|
|||||||||||||||||||||||||
(a) |
For the years ended December 31, 2019 $ |
(b) |
For the years ended December 31, 2019 $ $ December 31, 2019 $ December 31, 2019 $ $ $ |
(c) |
Related to the adoption of ASU 2016-02 as of January 1, 2019. Refer to Note 1 for additional information. |
Refer to the Notes to Consolidated Financial Statements.
110 Fifth Third Bancorp
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Operating Activities |
||||||||||||
Net income |
$ |
|||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Provision for credit losses |
||||||||||||
Depreciation, amortization and accretion |
||||||||||||
Stock-based compensation expense |
||||||||||||
(Benefit from) provision for deferred income taxes |
( |
) |
( |
|||||||||
Securities (gains) losses, net |
( |
) |
( |
|||||||||
Securities (gains) losses, net-non-qualifying hedges on mortgage servicing rights |
( |
) |
( |
|||||||||
MSR fair value adjustment |
||||||||||||
Net gains on sales of loans and fair value adjustments on loans held for sale |
( |
) |
( |
) | ( |
|||||||
Net losses on disposition and impairment of bank premises and equipment |
||||||||||||
Net losses (gains) on disposition and impairment of operating lease equipment |
( |
) | ||||||||||
Gain related to Vantiv, Inc.’s acquisition of Worldpay Group plc. |
( |
) | ||||||||||
Gain on sale of Worldpay, Inc. shares |
( |
) |
( |
) | ( |
|||||||
Gain on the TRA associated with Worldpay, Inc. |
( |
) |
( |
) | ( |
|||||||
Proceeds from sales of loans held for sale |
||||||||||||
Loans originated or purchased for sale, net of repayments |
( |
) |
( |
) | ( |
|||||||
Dividends representing return on equity investments |
||||||||||||
Net change in: |
||||||||||||
Trading debt and equity securities |
( |
) |
( |
|||||||||
Other assets |
( |
|||||||||||
Accrued taxes, interest and expenses |
( |
) |
( |
|||||||||
Other liabilities |
( |
) |
||||||||||
Net Cash Provided by Operating Activities |
||||||||||||
Investing Activities |
||||||||||||
Proceeds from sales: |
||||||||||||
Available-for-sale securities and other investments |
||||||||||||
Loans and leases |
||||||||||||
Bank premises and equipment |
||||||||||||
Proceeds from repayments / maturities: |
||||||||||||
Available-for-sale securities and other investments |
||||||||||||
Held-to-maturity securities |
||||||||||||
Purchases: |
||||||||||||
Available-for-sale securities and other investments |
( |
) |
( |
) | ( |
|||||||
Bank premises and equipment |
( |
) |
( |
) | ( |
|||||||
MSRs |
( |
) |
( |
) | ( |
|||||||
Proceeds from settlement of BOLI |
||||||||||||
Proceeds from sales and dividends representing return of equity investments |
||||||||||||
Net cash received (paid) on acquisitions |
( |
) | ( |
|||||||||
Net change in: |
||||||||||||
Federal funds sold |
||||||||||||
Other short-term investments |
( |
) |
||||||||||
Loans and leases |
( |
) |
( |
) | ( |
|||||||
Operating lease equipment |
( |
) |
( |
|||||||||
Net Cash (Used in) Provided by Investing Activities |
( |
) |
( |
) | ||||||||
Financing Activities |
||||||||||||
Net change in: |
||||||||||||
Deposits |
( |
|||||||||||
Federal funds purchased |
( |
) |
||||||||||
Other short-term borrowings |
( |
) | ||||||||||
Dividends paid on common stock |
( |
) |
( |
) | ( |
|||||||
Dividends paid on preferred stock |
( |
) |
( |
) | ( |
|||||||
Proceeds from issuance of long-term debt |
||||||||||||
Repayment of long-term debt |
( |
) |
( |
) | ( |
|||||||
Repurchases of treasury stock and related forward contracts |
( |
) |
( |
) | ( |
|||||||
Issuance of preferred stock |
||||||||||||
Other |
( |
) |
( |
) | ( |
|||||||
Net Cash (Used in) Provided by Financing Activities |
( |
) |
( |
|||||||||
Increase in Cash and Due from Banks |
||||||||||||
Cash and Due from Banks at Beginning of Period |
||||||||||||
Cash and Due from Banks at End of Period |
$ |
|||||||||||
Refer to the Notes to Consolidated Financial Statements. Note 2 contains cash payments related to interest and income taxes in addition to
non-cash
investing and financing activities. 111 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
112 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
113 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
114 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
115 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
116 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
117 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
118 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
119 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
120 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
121 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUPPLEMENTAL CASH FLOW INFORMATION |
Cash payments related to interest and income taxes in addition to
non-cash
investing and financing activities are presented in the following table for the years ended December 31:($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Cash Payments: |
||||||||||||
Interest |
$ |
|||||||||||
Income taxes |
||||||||||||
Transfers: |
||||||||||||
Portfolio loans to loans held for sale |
||||||||||||
Loans held for sale to portfolio loans |
||||||||||||
Portfolio loans to OREO |
||||||||||||
Supplemental Disclosures: |
||||||||||||
Conversion of outstanding preferred stock issued by a Bancorp subsidiary |
||||||||||||
Additions to right-of-use assets under operating leases |
||||||||||||
Additions to right-of-use assets under finance leases |
||||||||||||
Right-of-use assets recognized at adoption of ASU 2016-02 |
||||||||||||
3. BUSINESS COMBINATION |
122 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table reflects consideration paid and the noncontrolling interest recognized for MB Financial, Inc.’s net assets and the amounts of acquired identifiable assets and liabilities assumed at their estimated fair value as of the acquisition date:
($ in millions) |
||||||||||||
Consideration paid |
||||||||||||
Cash payments |
$ |
|||||||||||
Fair value of common stock issued |
||||||||||||
Stock-based awards |
||||||||||||
Dividend receivable from MB Financial, Inc. |
( |
|||||||||||
Total consideration paid |
$ |
|||||||||||
Fair value of noncontrolling interest in acquiree |
$ |
|||||||||||
Net Identifiable Assets Acquired, at Fair Value: |
||||||||||||
Assets |
||||||||||||
Cash and due from banks |
$ |
|||||||||||
Federal funds sold |
||||||||||||
Other short-term investments |
||||||||||||
Available-for-sale debt and other securities |
||||||||||||
Held-to-maturity securities |
||||||||||||
Equity securities |
||||||||||||
Loans and leases held for sale |
||||||||||||
Portfolio loans and leases (a) |
||||||||||||
Bank premises and equipment (a) |
||||||||||||
Operating lease equipment (a) |
||||||||||||
Intangible assets (a) |
||||||||||||
Servicing rights |
||||||||||||
Other assets (a) |
||||||||||||
Total assets acquired |
$ |
|||||||||||
Liabilities |
||||||||||||
Deposits |
$ |
|||||||||||
Other short-term borrowings (a) |
||||||||||||
Accrued taxes, interest and expenses (a) |
||||||||||||
Other liabilities (a) |
||||||||||||
Long-term debt (a) |
||||||||||||
Total liabilities assumed |
$ |
|||||||||||
Net identifiable assets acquired |
||||||||||||
Goodwill |
$ |
|||||||||||
(a) Fair values have been updated from the estimates reported in the March 31, 2019 quarterly report on Form
10-Q.
123 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides a summary of merger-related expenses recorded in noninterest expense:
For the years ended December 31, |
||||||||
($ in millions) |
2019 |
2018 |
||||||
Salaries, wages and incentives |
$ |
|||||||
Employee benefits |
||||||||
Technology and communications |
||||||||
Net occupancy expense |
||||||||
Card and processing expense |
||||||||
Equipment expense |
||||||||
Other noninterest expense |
||||||||
Total |
$ |
|||||||
Unaudited Pro Forma Information |
||||||||
For the years ended December 31, |
||||||||
($ in millions) |
2019 |
2018 |
||||||
Net interest income |
$ |
|||||||
Noninterest income |
| |||||||
Net income available to common shareholders |
||||||||
124 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table reflects the contractually required payments receivable, cash flows expected to be collected and estimated fair value of loans identified as PCI loans on the acquisition date of MB Financial, Inc. These fair value estimates are considered preliminary as of December 31, 2019.
($ in millions) |
March 22, 2019 |
|||
Contractually required payments including interest |
$ | |||
Less: Nonaccretable difference |
||||
Cash flows expected to be collected |
||||
Less: Accretable yield |
||||
Fair value of loans acquired |
$ | |||
A summary of activity related to accretable yield is as follows: |
||||
($ in millions) |
Accretable Yield |
|||
Balance as of December 31, 2018 |
$ |
|||
Additions |
||||
Accretion |
( |
|||
Reclassifications (to) from nonaccretable difference |
( |
|||
Balance as of December 31, 2019 |
$ |
|||
4. RESTRICTIONS ON CASH, DIVIDENDS AND OTHER CAPITAL ACTIONS |
125 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
5. INVESTMENT SECURITIES
The following table provides the amortized cost, fair value and unrealized gains and losses for the major categories of the
available-for-sale
debt and other securities and held-to-maturity
securities portfolios as of December 31:2019 |
2018 |
|||||||||||||||||||||||||||||||
Amortized |
Unrealized |
Unrealized |
Fair |
Amortized |
Unrealized |
Unrealized |
Fair |
|||||||||||||||||||||||||
($ in millions) |
Cost |
Gains |
Losses |
Value |
Cost |
Gains |
Losses |
Value |
||||||||||||||||||||||||
Available-for-sale debt and other securities: |
||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies securities |
$ |
( |
||||||||||||||||||||||||||||||
Obligations of states and political subdivisions securities |
||||||||||||||||||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||||||||||||||
Agency residential mortgage-backed securities |
( |
( |
||||||||||||||||||||||||||||||
Agency commercial mortgage-backed securities |
( |
( |
||||||||||||||||||||||||||||||
Non-agency commercial mortgage-backed securities |
( |
|||||||||||||||||||||||||||||||
Asset-backed securities and other debt securities |
( |
( |
||||||||||||||||||||||||||||||
Other securities (a) |
||||||||||||||||||||||||||||||||
Total available-for-sale debt and other securities |
$ |
( |
( |
|||||||||||||||||||||||||||||
Held-to-maturity securities: |
||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions securities |
$ |
|||||||||||||||||||||||||||||||
Asset-backed securities and other debt securities |
||||||||||||||||||||||||||||||||
Total held-to-maturity securities |
$ |
|||||||||||||||||||||||||||||||
(a) |
Other securities consist of FHLB, FRB and DTCC restricted stock holdings of $ $ $ December 31, 2019 |
The following table provides the fair value of trading debt securities and equity securities as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Trading debt securities |
$ |
|||||||
Equity securities |
||||||||
The following table presents securities gains (losses) recognized in the Consolidated Statements of Income as of December 31:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Available-for-sale debt and other securities: |
||||||||||||
Realized gains |
$ |
|||||||||||
Realized losses |
( |
) |
( |
) | ( |
|||||||
OTTI |
( |
) |
( |
|||||||||
Net realized gains (losses) on available-for-sale debt and other securities |
$ |
( |
) | ( |
||||||||
Total trading debt securities gains (losses) |
$ |
( |
) | |||||||||
Total equity securities gains (losses) (a) |
$ |
( |
) | |||||||||
Total gains (losses) recognized in income from available-for-sale debt and other securities, trading debt securities and equity securities(b) |
$ |
( |
) | |||||||||
(a) |
Includes $ December 31, 2019 |
(b) |
Excludes $ December 31, 2019 and an insignificant amount of net securities gains (losses) for both the years ended December 31, 2018 and 2017 included in corporate banking revenue and wealth and asset management revenue in the Consolidated Statements of Income related to securities held by FTS to facilitate the timely execution of customer transactions. |
126 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The expected maturity distribution of the Bancorp’s mortgage-backed securities and the contractual maturity distribution of the remainder of the Bancorp’s
available-for-sale
debt and other securities and held-to-maturity
investment securities as of December 31, 2019 are shown in the following table:Available-for-Sale Debt and Other |
Held-to-Maturity |
|||||||||||||||||
($ in millions) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
||||||||||||||
Debt securities: (a) |
||||||||||||||||||
Less than 1 year |
$ | |||||||||||||||||
1-5 years |
||||||||||||||||||
5-10 years |
||||||||||||||||||
Over 10 years |
||||||||||||||||||
Other securities |
||||||||||||||||||
Total |
$ | |||||||||||||||||
(a) |
Actual maturities may differ from contractual maturities when a right to call or prepay obligations exists with or without call or prepayment penalties. |
The following table provides the fair value and gross unrealized losses on
available-for-sale
debt and other securities in an unrealized loss position, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31:Less than 12 months |
12 months or more |
Total |
||||||||||||||||||||||
($ in millions) |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
||||||||||||||||||
2019 |
||||||||||||||||||||||||
Agency residential mortgage-backed securities |
$ |
( |
( |
|||||||||||||||||||||
Agency commercial mortgage-backed securities |
( |
( |
||||||||||||||||||||||
Asset-backed securities and other debt securities |
( |
( |
( |
|||||||||||||||||||||
Total |
$ |
( |
( |
( |
||||||||||||||||||||
2018 |
||||||||||||||||||||||||
U.S. Treasury and federal agencies securities |
$ | ( |
( |
|||||||||||||||||||||
Agency residential mortgage-backed securities |
( |
( |
( |
|||||||||||||||||||||
Agency commercial mortgage-backed securities |
( |
( |
( |
|||||||||||||||||||||
Non-agency commercial mortgage-backed securities |
( |
( |
( |
|||||||||||||||||||||
Asset-backed securities and other debt securities |
( |
( |
( |
|||||||||||||||||||||
Total |
$ | ( |
( |
( |
||||||||||||||||||||
127 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS AND LEASES
The following table provides a summary of commercial loans and leases classified by primary purpose and consumer loans classified based upon product or collateral as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Loans and leases held for sale: |
||||||||
Commercial and industrial loans |
$ |
|||||||
Commercial mortgage loans |
||||||||
Residential mortgage loans |
||||||||
Total loans and leases held for sale |
$ |
|||||||
Portfolio loans and leases: |
||||||||
Commercial and industrial loans |
$ |
|||||||
Commercial mortgage loans |
||||||||
Commercial construction loans |
||||||||
Commercial leases |
||||||||
Total commercial loans and leases |
||||||||
Residential mortgage loans |
||||||||
Home equity |
||||||||
Indirect secured consumer loans |
||||||||
Credit card |
||||||||
Other consumer loans |
||||||||
Total consumer loans |
||||||||
Total portfolio loans and leases |
$ |
|||||||
The following table presents a summary of the total loans and leases owned by the Bancorp and net charge-offs (recoveries) as of and for the years ended December 31:
90 Days Past Due |
Net |
|||||||||||||||||||||||||
Carrying Value |
and Still Accruing |
Charge-Offs (Recoveries) |
||||||||||||||||||||||||
($ in millions) |
2019 |
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||||||
Commercial and industrial loans |
$ |
|||||||||||||||||||||||||
Commercial mortgage loans |
( |
( |
||||||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||||||||
Commercial leases |
||||||||||||||||||||||||||
Residential mortgage loans |
||||||||||||||||||||||||||
Home equity |
||||||||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||||||||
Credit card |
||||||||||||||||||||||||||
Other consumer loans |
||||||||||||||||||||||||||
Total loans and leases |
$ |
|||||||||||||||||||||||||
Less: Loans and leases held for sale |
$ |
|||||||||||||||||||||||||
Total portfolio loans and leases |
$ |
|||||||||||||||||||||||||
128 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the components of the net investment in leases as of:
($ in millions) |
December 31, 2019 (a) |
|||
Net investment in direct financing leases: |
||||
Lease payment receivable (present value) |
$ | |||
Unguaranteed residual assets (present value) |
||||
Net discount on acquired leases |
( |
|||
Deferred selling profits |
||||
Net investment in sales-type leases: |
||||
Lease payment receivable (present value) |
||||
Unguaranteed residual assets (present value) |
||||
Net discount on acquired leases |
||||
(a) |
Excludes $ |
The following table provides the components of the commercial lease financing portfolio as of:
($ in millions) |
December 31, 2018 |
|||
Rentals receivable, net of principal and interest on nonrecourse debt |
$ | |||
Estimated residual value of leased assets |
||||
Initial direct cost, net of amortization |
||||
Gross investment in commercial lease financing |
||||
Unearned income |
( |
|||
Net investment in commercial lease financing |
$ | |||
The following table presents undiscounted cash flows for both direct financing and sales-type leases for 2020 through 2024 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:
As of December 31, 2019 ($ in millions) |
Direct Financing Leases |
Sales-Type Leases |
||||
2020 |
$ |
|||||
2021 |
||||||
2022 |
||||||
2023 |
||||||
2024 |
||||||
Thereafter |
||||||
Total undiscounted cash flows |
$ |
|||||
Less: Difference between undiscounted cash flows and discounted cash flows |
||||||
Present value of lease payments (recognized as lease receivables) |
$ |
|||||
129 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. CREDIT QUALITY AND THE ALLOWANCE FOR LOAN AND LEASE LOSSES
The Bancorp disaggregates ALLL balances and transactions in the ALLL by portfolio segment. Credit quality related disclosures for loans and leases are further disaggregated by class.
Allowance for Loan and Lease Losses
The following tables summarize transactions in the ALLL by portfolio segment for the years ended December 31:
Residential |
||||||||||||||
2019 ($ in millions) |
Commercial |
Mortgage |
Consumer |
Unallocated |
Total |
|||||||||
Balance, beginning of period |
$ |
|||||||||||||
Losses charged-off (a) |
( |
( |
( |
( |
||||||||||
Recoveries of losses previously charged-off (a) |
||||||||||||||
Provision for (benefit from) loan and lease losses |
( |
|||||||||||||
Balance, end of period |
$ |
|||||||||||||
(a) For the year ended , the Bancorp recorded in both losses
December 31, 2019
$48
charged-off
and recoveries of losses charged-off
related to customer defaults on point-of-sale
consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements. Residential |
||||||||||||||
2018 ($ in millions) |
Commercial |
Mortgage |
Consumer |
Unallocated |
Total |
|||||||||
Balance, beginning of period |
$ | |||||||||||||
Losses charged-off (a) |
( |
( |
( |
( |
||||||||||
Recoveries of losses previously charged-off (a) |
||||||||||||||
Provision for (benefit from) loan and lease losses |
( |
( |
||||||||||||
Balance, end of period |
$ | |||||||||||||
(a) For the year ended December 31, 2018, the Bancorp recorded $29
charged-off
and recoveries of losses charged-off
related to customer defaults on point-of-sale
consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements. Residential |
||||||||||||||
2017 ($ in millions) |
Commercial |
Mortgage |
Consumer |
Unallocated |
Total |
|||||||||
Balance, beginning of period |
$ | |||||||||||||
Losses charged-off |
( |
( |
( |
( |
||||||||||
Recoveries of losses previously charged-off |
||||||||||||||
Provision for loan and lease losses |
||||||||||||||
Deconsolidation of a VIE |
( |
( |
( |
|||||||||||
Balance, end of period |
$ | |||||||||||||
The following tables provide a summary of the ALLL and related loans and leases classified by portfolio segment:
Residential |
||||||||||||||
As of December 31, 2019 ($ in millions) |
Commercial |
Mortgage |
Consumer |
Unallocated |
Total |
|||||||||
ALLL: (a) |
||||||||||||||
Individually evaluated for impairment |
$ |
|||||||||||||
Collectively evaluated for impairment |
||||||||||||||
Unallocated |
||||||||||||||
Total ALLL |
$ |
|||||||||||||
Portfolio loans and leases: (b) |
||||||||||||||
Individually evaluated for impairment |
$ |
|||||||||||||
Collectively evaluated for impairment |
||||||||||||||
Purchased credit impaired |
||||||||||||||
Total portfolio loans and leases |
$ |
|||||||||||||
(a) |
Includes $ December 31, 2019 |
(b) |
Excludes $ $ December 31, 2019 |
130 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Residential |
||||||||||||||||||||
As of December 31, 2018 ($ in millions) |
Commercial |
Mortgage |
Consumer |
Unallocated |
Total |
|||||||||||||||
ALLL: (a) |
||||||||||||||||||||
Individually evaluated for impairment |
$ | |||||||||||||||||||
Collectively evaluated for impairment |
||||||||||||||||||||
Unallocated |
||||||||||||||||||||
Total ALLL |
$ | |||||||||||||||||||
Portfolio loans and leases: (b) |
||||||||||||||||||||
Individually evaluated for impairment |
$ | |||||||||||||||||||
Collectively evaluated for impairment |
||||||||||||||||||||
Total portfolio loans and leases |
$ | |||||||||||||||||||
(a) |
Includes $ |
(b) |
Excludes $ |
The following tables summarize the credit risk profile of the Bancorp’s commercial portfolio segment, by class:
Special |
||||||||||||||||||||
As of December 31, 2019 ($ in millions) |
Pass |
Mention |
Substandard |
Doubtful |
Total |
|||||||||||||||
Commercial and industrial loans |
$ |
|||||||||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||
Commercial leases |
||||||||||||||||||||
Total commercial loans and leases |
$ |
|||||||||||||||||||
Special |
||||||||||||||||||||
As of December 31, 2018 ($ in millions) |
Pass |
Mention |
Substandard |
Doubtful |
Total |
|||||||||||||||
Commercial and industrial loans |
$ | |||||||||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||
Commercial leases |
||||||||||||||||||||
Total commercial loans and leases |
$ | |||||||||||||||||||
131 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents a summary of the Bancorp’s residential mortgage and consumer portfolio segments, by class, disaggregated into performing versus nonperforming status as of December 31:
2019 |
2018 |
|||||||||||||||||||
($ in millions) |
Performing |
Nonperforming |
Performing |
Nonperforming |
||||||||||||||||
Residential mortgage loans (a) |
$ |
|||||||||||||||||||
Home equity |
||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||
Credit card |
||||||||||||||||||||
Other consumer loans |
||||||||||||||||||||
Total residential mortgage and consumer loans (a) |
$ |
|||||||||||||||||||
(a) |
Excludes $ December 31, 2019 |
Age Analysis of Past Due Loans and Leases
The following tables summarize the Bancorp’s recorded investment in portfolio loans and leases, by age and class:
Current |
Past Due |
90 Days Past |
||||||||||||||||||||||
Loans and |
30-89 |
90 Days |
Total |
Total Loans |
Due and Still |
|||||||||||||||||||
As of December 31, 2019 ($ in millions) |
Leases (b)(c) |
Days (c) |
or More (c) |
Past Due |
and Leases |
Accruing |
||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||||||
Commercial and industrial loans |
$ |
|||||||||||||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||||||
Commercial leases |
||||||||||||||||||||||||
Residential mortgage loans (a) |
||||||||||||||||||||||||
Consumer loans: |
||||||||||||||||||||||||
Home equity |
||||||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||||||
Credit card |
||||||||||||||||||||||||
Other consumer loans |
||||||||||||||||||||||||
Total portfolio loans and leases (a) |
$ |
|||||||||||||||||||||||
(a) |
Excludes $ December 31, 2019 |
(b) |
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2019 $ 30-89 days past due and $ $ December 31, 2019 |
(c) |
Includes accrual and nonaccrual loans and leases. |
132 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Current |
Past Due |
90 Days Past |
||||||||||||||||||||||
Loans and |
30-89 |
90 Days |
Total |
Total Loans |
Due and Still |
|||||||||||||||||||
As of December 31, 2018 ($ in millions) |
Leases (b)(c) |
Days (c) |
or More (c) |
Past Due |
and Leases |
Accruing |
||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||||||
Commercial and industrial loans |
$ | |||||||||||||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||||||
Commercial leases |
||||||||||||||||||||||||
Residential mortgage loans (a) |
||||||||||||||||||||||||
Consumer loans: |
||||||||||||||||||||||||
Home equity |
||||||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||||||
Credit card |
||||||||||||||||||||||||
Other consumer loans |
||||||||||||||||||||||||
Total portfolio loans and leases (a) |
$ | |||||||||||||||||||||||
(a) |
Excludes $ |
(b) |
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2018, $ 30-89 days past due and $ |
(c) |
Includes accrual and nonaccrual loans and leases. |
The following tables summarize the Bancorp’s impaired portfolio loans and leases, by class, that were subject to individual review, which includes all portfolio loans and leases restructured in a TDR as of December 31:
2019 ($ in millions) |
Unpaid Principal Balance |
Recorded Investment |
ALLL |
|||||||||||||||||
With a related ALLL: |
||||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ |
|||||||||||||||||||
Commercial mortgage owner-occupied loans |
- |
|||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
- |
- |
||||||||||||||||||
Commercial leases |
||||||||||||||||||||
Restructured residential mortgage loans |
||||||||||||||||||||
Restructured consumer loans: |
||||||||||||||||||||
Home equity |
||||||||||||||||||||
Indirect secured consumer loans |
- |
|||||||||||||||||||
Credit card |
||||||||||||||||||||
Total impaired portfolio loans and leases with a related ALLL |
$ |
|||||||||||||||||||
With no related ALLL: |
||||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
$ |
- |
||||||||||||||||||
Commercial mortgage owner-occupied loans |
- |
|||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
- |
|||||||||||||||||||
Commercial leases |
- |
|||||||||||||||||||
Restructured residential mortgage loans |
- |
|||||||||||||||||||
Restructured consumer loans: |
||||||||||||||||||||
Home equity |
- |
|||||||||||||||||||
Indirect secured consumer loans |
- |
|||||||||||||||||||
Total impaired portfolio loans and leases with no related ALLL |
$ |
- |
||||||||||||||||||
Total impaired portfolio loans and leases |
$ |
(a) |
||||||||||||||||||
(a) |
Includes $ $ $ $ $ $ December 31, 2019 |
133 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2018 ($ in millions) |
Unpaid Principal Balance |
Recorded Investment |
ALLL |
|||||||||
With a related ALLL: |
||||||||||||
Commercial loans and leases: |
||||||||||||
Commercial and industrial loans |
$ | |||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||
Commercial mortgage nonowner-occupied loans |
- |
|||||||||||
Commercial leases |
||||||||||||
Restructured residential mortgage loans |
||||||||||||
Restructured consumer loans: |
||||||||||||
Home equity |
||||||||||||
Indirect secured consumer loans |
||||||||||||
Credit card |
||||||||||||
Total impaired portfolio loans and leases with a related ALLL |
$ | |||||||||||
With no related ALLL: |
||||||||||||
Commercial loans and leases: |
||||||||||||
Commercial and industrial loans |
$ | - |
||||||||||
Commercial mortgage owner-occupied loans |
- |
|||||||||||
Commercial mortgage nonowner-occupied loans |
- |
|||||||||||
Restructured residential mortgage loans |
- |
|||||||||||
Restructured consumer loans: |
||||||||||||
Home equity |
- |
|||||||||||
Indirect secured consumer loans |
- |
|||||||||||
Total impaired portfolio loans and leases with no related ALLL |
$ | - |
||||||||||
Total impaired portfolio loans and leases |
$ | (a) |
||||||||||
(a) |
Includes $ |
The following table summarizes the Bancorp’s average impaired portfolio loans and leases, by class, and interest income, by class, for the years ended December 31:
2019 |
2018 |
2017 |
||||||||||||||||||||||
($ in millions) |
Average Recorded Investment |
Interest Income Recognized |
Average Recorded Investment |
Interest Income Recognized |
Average Recorded Investment |
Interest Income Recognized |
||||||||||||||||||
Commercial loans and leases: |
||||||||||||||||||||||||
Commercial and industrial loans |
$ |
|||||||||||||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||||||||||
Commercial leases |
||||||||||||||||||||||||
Restructured residential mortgage loans |
||||||||||||||||||||||||
Restructured consumer loans: |
||||||||||||||||||||||||
Home equity |
||||||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||||||
Credit card |
||||||||||||||||||||||||
Total average impaired portfolio loans and leases |
$ |
|||||||||||||||||||||||
134 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the Bancorp’s nonaccrual loans and leases, by class, and OREO and other repossessed property as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Commercial loans and leases: |
||||||||
Commercial and industrial loans |
$ |
|||||||
Commercial mortgage owner-occupied loans |
||||||||
Commercial mortgage nonowner-occupied loans |
||||||||
Commercial construction loans |
||||||||
Commercial leases |
||||||||
Total nonaccrual portfolio commercial loans and leases |
||||||||
Residential mortgage loans |
||||||||
Consumer loans: |
||||||||
Home equity |
||||||||
Indirect secured consumer loans |
||||||||
Credit card |
||||||||
Other consumer loans |
||||||||
Total nonaccrual portfolio consumer loans |
||||||||
Total nonaccrual portfolio loans and leases (a)(b) |
$ |
|||||||
OREO and other repossessed property |
||||||||
Total nonperforming portfolio assets (a)(b) |
$ |
|||||||
(a) |
Excludes $ December 31, 2019 |
(b) |
Includes $ December 31, 2019 $ December 31, 2019 |
135 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables provide a summary of loans and leases, by class, modified in a TDR by the Bancorp during the years ended December 31:
2019 ($ in millions) (a)(b) |
Number of Loans Modified in a TDR During the Year (c) |
Recorded Investment in Loans Modified in a TDR During the Year |
(Decrease) Increase to ALLL Upon Modification |
Charge-offs Recognized Upon Modification |
||||||||||||
Commercial loans and leases: |
||||||||||||||||
Commercial and industrial loans |
$ |
( |
) |
|||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||
Residential mortgage loans |
||||||||||||||||
Consumer loans: |
||||||||||||||||
Home equity |
||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||
Credit card |
||||||||||||||||
Total portfolio loans and leases |
$ |
( |
) |
|||||||||||||
(a) |
Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool. |
(b) |
Excludes loans classified as TDRs as a result of the Bancorp’s conformance to OCC guidance with regard to non-reaffirmed loans included in Chapter 7 bankruptcy filings. |
(c) |
Represents number of loans post-modification and excludes loans previously modified in a TDR. |
2018 ($ in millions) (a) |
Number of Loans Modified in a TDR During the Year (b) |
Recorded Investment in Loans Modified in a TDR During the Year |
Increase (Decrease) to ALLL Upon Modification |
Charge-offs Recognized Upon Modification |
||||||||||||
Commercial loans and leases: |
||||||||||||||||
Commercial and industrial loans |
$ | |||||||||||||||
Commercial mortgage owner-occupied loans |
( |
) | ||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||
Residential mortgage loans |
||||||||||||||||
Consumer loans: |
||||||||||||||||
Home equity |
||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||
Credit card |
||||||||||||||||
Total portfolio loans and leases |
$ | |||||||||||||||
(a) |
Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool. |
(b) |
Represents number of loans post-modification and excludes loans previously modified in a TDR. |
2017 ($ in millions) (a) |
Number of Loans Modified in a TDR During the Year (b) |
Recorded Investment in Loans Modified in a TDR During the Year |
Increase (Decrease) to ALLL Upon Modification |
Charge-offs Recognized Upon Modification |
||||||||||||
Commercial loans and leases: |
||||||||||||||||
Commercial and industrial loans |
$ | ( |
) | |||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||||
Commercial leases |
||||||||||||||||
Residential mortgage loans |
||||||||||||||||
Consumer loans: |
||||||||||||||||
Home equity |
||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||
Credit card |
||||||||||||||||
Total portfolio loans and leases |
$ | |||||||||||||||
(a) |
Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool. |
(b) |
Represents number of loans post-modification and excludes loans previously modified in a TDR. |
136 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables provide a summary of TDRs that subsequently defaulted during the years ended December 31, 2019, 2018 and 2017 and were within twelve months of the restructuring date:
December 31, 2019 ($ in millions) (a)(b) |
Number of Contracts |
Recorded Investment |
||||||||||||
Commercial loans and leases: |
||||||||||||||
Commercial and industrial loans |
$ |
|||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||
Commercial mortgage nonowner-occupied loans |
||||||||||||||
Residential mortgage loans |
||||||||||||||
Consumer loans: |
||||||||||||||
Home equity |
||||||||||||||
Credit card |
||||||||||||||
Total portfolio loans and leases |
$ |
|||||||||||||
(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality. (b) Excludes loans classified as TDRs as a result of the Bancorp’s conformance to OCC guidance with regard to non-reaffirmed loans included in Chapter 7 bankruptcy filings. | ||||||||||||||
December 31, 2018 ($ in millions) (a) |
Number of Contracts |
Recorded Investment |
||||||||||||
Commercial loans and leases: |
||||||||||||||
Commercial and industrial loans |
$ | |||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||
Residential mortgage loans |
||||||||||||||
Consumer loans: |
||||||||||||||
Home equity |
||||||||||||||
Credit card |
||||||||||||||
Total portfolio loans and leases |
$ | |||||||||||||
(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality. | ||||||||||||||
December 31, 2017 ($ in millions) (a) |
Number of Contracts |
Recorded Investment |
||||||||||||
Commercial loans and leases: |
||||||||||||||
Commercial and industrial loans |
$ | |||||||||||||
Commercial mortgage owner-occupied loans |
||||||||||||||
Residential mortgage loans |
||||||||||||||
Consumer loans: |
||||||||||||||
Home equity |
||||||||||||||
Credit card |
||||||||||||||
Total portfolio loans and leases |
$ | |||||||||||||
(a) Excludes all loans and leases held for sale and loans acquired with deteriorated credit quality. | ||||||||||||||
137 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. BANK PREMISES AND EQUIPMENT
The following table provides a summary of bank premises and equipment as of December 31:
($ in millions) |
Estimated Useful Life |
2019 |
2018 |
|||||||||
Land and improvements (a) |
$ |
|||||||||||
Buildings (a) |
||||||||||||
Equipment |
||||||||||||
Leasehold improvements |
||||||||||||
Construction in progress (a) |
||||||||||||
Bank premises and equipment held for sale: |
||||||||||||
Land and improvements |
||||||||||||
Buildings |
||||||||||||
Equipment |
||||||||||||
Accumulated depreciation and amortization |
( |
) |
( |
) | ||||||||
Total bank premises and equipment |
$ |
|||||||||||
(a) |
At December 31, 2019 $ |
9. OPERATING LEASE EQUIPMENT
The following table presents undiscounted future lease payments for operating leases for the years ending December 31:
As of December 31, 2019 ($ in millions) |
Undiscounted Cash Flows |
|||
2020 |
$ | |||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
Thereafter |
||||
Total operating lease payments |
$ | |||
138 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. LEASE OBLIGATIONS - LESSEE
The following table provides a summary of lease assets and lease liabilities as of:
($ in millions) |
Consolidated Balance Sheets Caption |
December 31, 2019 |
||||
Assets |
||||||
Operating lease right-of-use assets |
Other assets |
$ | ||||
Finance lease right-of-use assets |
Bank premises and equipment |
|||||
Total right-of-use assets(a) |
$ | |||||
Liabilities |
||||||
Operating lease liabilities |
Accrued taxes, interest and expenses |
$ | ||||
Finance lease liabilities |
Long-term debt |
|||||
Total lease liabilities |
$ | |||||
(a) |
Operating and finance lease right-of-use assets are recorded net of accumulated amortization of $ |
The following table presents the components of lease costs:
($ in millions) |
Consolidated Statements of Income Caption |
For the year ended December 31, 2019 |
||||
Lease costs: |
||||||
Amortization of right-of-use assets |
Net occupancy and equipment expense |
$ | ||||
Interest on lease liabilities |
Interest on long-term debt |
|||||
Total finance lease costs |
$ | |||||
Operating lease cost |
Net occupancy expense |
$ | ||||
Short-term lease cost |
Net occupancy expense |
|||||
Variable lease cost |
Net occupancy expense |
|||||
Sublease income |
Net occupancy expense |
( |
||||
Total operating lease costs |
$ | |||||
Total lease costs |
$ | |||||
The following table presents undiscounted cash flows for both operating leases and finance leases for 2020 through 2024 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease liabilities as follows:
As of December 31, 2019 ($ in millions) |
Operating Leases |
Finance Leases |
Total |
|||||||||
2020 |
$ | |||||||||||
2021 |
||||||||||||
2022 |
||||||||||||
2023 |
||||||||||||
2024 |
||||||||||||
Thereafter |
||||||||||||
Total undiscounted cash flows |
$ | |||||||||||
Less: Difference between undiscounted cash flows and discounted cash flows |
||||||||||||
Present value of lease liabilities |
$ | |||||||||||
The following table presents the weighted-average remaining lease term and weighted-average discount rate as of:
December 31, 2019 |
||||
Weighted-average remaining lease term (years): |
||||
Operating leases |
||||
Finance leases |
||||
Weighted-average discount rate: |
||||
Operating leases |
||||
Finance leases |
||||
139 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents information related to lease transactions for the year ended:
($ in millions) |
December 31, 2019 |
|||
Cash paid for amounts included in the measurement of lease liabilities: (a) |
||||
Operating cash flows from operating leases |
$ | |||
Operating cash flows from finance leases |
||||
Financing cash flows from finance leases |
||||
Gains on sale and leaseback transactions |
||||
(a) |
The cash flows related to the short-term and variable lease payments are not included in the amounts in the table as they were not included in the measurement of lease liabilities. |
140 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. GOODWILL
Changes in the net carrying amount of goodwill, by reporting unit, for the years ended December 31, 2019 and 2018 were as follows:
($ in millions) |
Commercial Banking |
Branch Banking |
Consumer Lending |
Wealth and Asset Management |
Total |
|||||||||||||||
Goodwill |
$ |
|||||||||||||||||||
Accumulated impairment losses |
( |
( |
( |
|||||||||||||||||
Net carrying amount as of December 31, 2017 |
$ | |||||||||||||||||||
Acquisition activity |
||||||||||||||||||||
Net carrying amount as of December 31, 2018 |
$ | |||||||||||||||||||
Acquisition activity |
||||||||||||||||||||
Sale of business |
( |
( |
||||||||||||||||||
Net carrying amount as of December 31, 2019 |
$ |
|||||||||||||||||||
12. INTANGIBLE ASSETS
The details of the Bancorp’s intangible assets are shown in the following table:
($ in millions) |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||
As of December 31, 2019 |
||||||||||||
Core deposit intangibles |
$ |
( |
||||||||||
Customer relationships |
( |
|||||||||||
Operating leases |
( |
|||||||||||
Non-compete agreements |
( |
|||||||||||
Other |
( |
|||||||||||
Total intangible assets |
$ |
( |
||||||||||
As of December 31, 2018 |
||||||||||||
Core deposit intangibles |
$ | ( |
||||||||||
Customer relationships |
( |
|||||||||||
Non-compete agreements |
( |
|||||||||||
Other |
( |
|||||||||||
Total intangible assets |
$ | ( |
||||||||||
141 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Estimated amortization expense for the years ending December 31, 2020 through 2024 is as follows:
| ($ in millions) |
Total |
|||
| 2020 |
$ |
|
||
| 2021 |
|
|||
| 2022 |
|
|||
| 2023 |
|
|||
| 2024 |
|
|||
13. VARIABLE INTEREST ENTITIES
Consolidated VIEs
The following table provide
s
a summary of the classifications of consolidated VIE assets, liabilities
and noncontrolling interests included in the Consolidated Balance Sheets as of: | ($ in millions) |
December 31, 2019 |
December 31, 2018 |
||||||
| Assets: |
||||||||
| Other short-term investments |
$ |
|
|
|||||
| Indirect secured consumer loans |
|
|
||||||
| ALLL |
( |
) |
( |
|||||
| Other assets |
|
|
||||||
| Total assets |
$ |
|
|
|||||
| Liabilities: |
||||||||
| Other liabilities |
$ |
|
|
|||||
| Long-term debt |
|
|
||||||
| Total liabilities |
$ |
|
|
|||||
142 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Non-consolidated
VIEs The following tables provide a summary of assets and liabilities carried on the Consolidated Balance Sheets related to
non-consolidated
VIEs for which the Bancorp holds an interest, but is not the primary beneficiary of the VIE, as well as the Bancorp’s maximum exposure to losses associated with its interests in the entities as of:| December 31, 2019 ($ in millions) |
Total Assets |
Total Liabilities |
Maximum Exposure |
|||||||||
| CDC investments |
$ |
|
|
|
||||||||
| Private equity investments |
|
|
|
|||||||||
| Loans provided to VIEs |
|
|
|
|||||||||
| Lease pool entities |
|
|
|
|||||||||
| December 31, 2018 ($ in millions) |
Total Assets |
Total Liabilities |
Maximum Exposure |
|||||||||
| CDC investments |
$ | |
|
|
||||||||
| Private equity investments |
|
|
|
|||||||||
| Loans provided to VIEs |
|
|
|
|||||||||
The Bancorp has accounted for all of its qualifying LIHTC investments using the proportional amortization method of accounting. The following table summarizes the impact to the Consolidated Statements of Income related to these investments:
| For the years ended December 31 ($ in millions) |
Consolidated Statements of Income Caption (a) |
2019 |
2018 |
2017 |
||||||||||||
| Proportional amortization |
Applicable income tax expense |
$ |
|
|
|
|||||||||||
| Tax credits and other benefits |
Applicable income tax expense |
( |
( |
( |
||||||||||||
(a) |
The Bancorp did not recognize impairment losses resulting from the forfeiture or ineligibility of tax credits or other circumstances during the years ended December 31, 2019, |
143 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
144 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. SALES OF RECEIVABLES AND SERVICING RIGHTS
Information related to residential mortgage loan sales and the Bancorp’s mortgage banking activity, which is included in mortgage banking net revenue in the Consolidated Statements of Income, for the years ended December 31 is as follows:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Residential mortgage loan sales (a) |
$ |
|||||||||||
Origination fees and gains on loan sales |
||||||||||||
Gross mortgage servicing fees |
||||||||||||
(a) |
Represents the unpaid principal balance at the time of the sale. |
The following table presents changes in the servicing rights related to residential mortgage loans for the years ended December 31:
($ in millions) |
2019 |
2018 |
||||||||||
Balance, beginning of period |
$ |
|||||||||||
Servicing rights originated |
||||||||||||
Servicing rights purchased |
||||||||||||
Servicing rights obtained in acquisition |
||||||||||||
Changes in fair value: |
||||||||||||
Due to changes in inputs or assumptions (a) |
( |
) |
||||||||||
Other changes in fair value (b) |
( |
) |
( |
) | ||||||||
Balance, end of period |
$ |
|||||||||||
(a) |
Primarily reflects changes in prepayment speed and OAS assumptions which are updated based on market interest rates. |
(b) |
Primarily reflects changes due to collection of contractual cash flows and the passage of time. |
The following table presents activity related to valuations of the MSR portfolio and the impact of the
non-qualifying
hedging strategy for the years ended December 31:($ in millions) |
2019 |
2018 |
2017 |
|||||||||||||
Securities gains (losses), net - non-qualifying hedges on MSRs |
$ |
( |
||||||||||||||
Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio (a) |
( |
|||||||||||||||
MSR fair value adjustment due to changes in inputs or assumptions (a) |
( |
) |
( |
) | ||||||||||||
(a) |
Included in mortgage banking net revenue in the Consolidated Statements of Income. |
The key economic assumptions used in measuring the interests in residential mortgage loans that continued to be held by the Bancorp at the date of sale, securitization, or purchase resulting from transactions completed during the years ended December 31 were as follows:
2019 |
2018 |
|||||||||||||||||||||||||||||
Rate |
Weighted- Average Life (in years) |
Prepayment Speed (annual) |
OAS (bps) |
Weighted- Average Life (in years) |
Prepayment Speed (annual) |
OAS (bps) |
||||||||||||||||||||||||
Residential mortgage loans: |
||||||||||||||||||||||||||||||
Servicing rights |
Fixed |
% |
% | |||||||||||||||||||||||||||
Servicing rights |
Adjustable |
- |
- |
- |
||||||||||||||||||||||||||
145 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2019, the sensitivity of the current fair value of residual cash flows to immediate 10%, 20% and 50% adverse changes in prepayment speed assumptions and immediate 10% and 20% adverse changes in OAS are as follows:
Prepayment Speed Assumption |
OAS Assumption |
|||||||||||||||||||||||||||||||||||||||
($ in millions) (a) |
Rate |
Fair Value |
Weighted- Average Life (in years) |
Impact of Adverse Change on Fair Value |
OAS (bps) |
Impact of Adverse Change on Fair Value |
||||||||||||||||||||||||||||||||||
Rate |
10% |
20% |
50% |
10% |
20% |
|||||||||||||||||||||||||||||||||||
Residential mortgage loans: |
||||||||||||||||||||||||||||||||||||||||
Servicing rights |
Fixed |
$ |
% | $ |
( |
( |
) | ( |
$ | ( |
) | ( |
||||||||||||||||||||||||||||
Servicing rights |
Adjustable |
( |
( |
) | ( |
|||||||||||||||||||||||||||||||||||
(a) |
The impact of the weighted-average default rate on the current fair value of residual cash flows for all scenarios is immaterial. |
146 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. DERIVATIVE FINANCIAL INSTRUMENTS
147 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables reflect the notional amounts and fair values for all derivative instruments included in the Consolidated Balance Sheets as of:
Fair Value |
||||||||||||||||
December 31, 2019 ($ in millions) |
Notional Amount |
Derivative Assets |
Derivative Liabilities |
|||||||||||||
Derivatives Designated as Qualifying Hedging Instruments |
||||||||||||||||
Fair value hedges: |
||||||||||||||||
Interest rate swaps related to long-term debt |
$ |
|||||||||||||||
Total fair value hedges |
||||||||||||||||
Cash flow hedges: |
||||||||||||||||
Interest rate floors related to C&I loans |
||||||||||||||||
Interest rate swaps related to C&I loans |
||||||||||||||||
Total cash flow hedges |
||||||||||||||||
Total derivatives designated as qualifying hedging instruments |
||||||||||||||||
Derivatives Not Designated as Qualifying Hedging Instruments |
||||||||||||||||
Free-standing derivatives - risk management and other business purposes: |
||||||||||||||||
Interest rate contracts related to MSR portfolio |
||||||||||||||||
Forward contracts related to residential mortgage loans held for sale |
||||||||||||||||
Swap associated with the sale of Visa, Inc. Class B Shares |
||||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Total free-standing derivatives - risk management and other business purposes |
||||||||||||||||
Free-standing derivatives - customer accommodation: |
||||||||||||||||
Interest rate contracts (a) |
||||||||||||||||
Interest rate lock commitments |
||||||||||||||||
Commodity contracts |
||||||||||||||||
TBA securities |
||||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Total free-standing derivatives - customer accommodation |
||||||||||||||||
Total derivatives not designated as qualifying hedging instruments |
||||||||||||||||
Total |
$ |
|||||||||||||||
(a) |
Derivative assets and liabilities are presented net of variation margin of $ |
Fair Value |
||||||||||||||||
December 31, 2018 ($ in millions) |
Notional Amount |
Derivative Assets |
Derivative Liabilities |
|||||||||||||
Derivatives Designated as Qualifying Hedging Instruments |
||||||||||||||||
Fair value hedges: |
||||||||||||||||
Interest rate swaps related to long-term debt |
$ | |||||||||||||||
Total fair value hedges |
||||||||||||||||
Cash flow hedges: |
||||||||||||||||
Interest rate floors related to C&I loans |
||||||||||||||||
Interest rate swaps related to C&I loans |
||||||||||||||||
Total cash flow hedges |
||||||||||||||||
Total derivatives designated as qualifying hedging instruments |
||||||||||||||||
Derivatives Not Designated as Qualifying Hedging Instruments |
||||||||||||||||
Free-standing derivatives - risk management and other business purposes: |
||||||||||||||||
Interest rate contracts related to MSR portfolio |
||||||||||||||||
Forward contracts related to residential mortgage loans held for sale |
||||||||||||||||
Swap associated with the sale of Visa, Inc. Class B Shares |
||||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Total free-standing derivatives - risk management and other business purposes |
||||||||||||||||
Free-standing derivatives - customer accommodation: |
||||||||||||||||
Interest rate contracts |
||||||||||||||||
Interest rate lock commitments |
||||||||||||||||
Commodity contracts |
||||||||||||||||
TBA securities |
||||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Total free-standing derivatives - customer accommodation |
||||||||||||||||
Total derivatives not designated as qualifying hedging instruments |
||||||||||||||||
Total |
$ | |||||||||||||||
148 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table reflects the change in fair value of interest rate contracts, designated as fair value hedges, as well as the change in fair value of the related hedged items attributable to the risk being hedged, included in the Consolidated Statements of Income:
For the years ended December 31 ($ in millions) |
Consolidated Statements of Income Caption |
2019 |
2018 |
2017 |
||||||||||||
Change in fair value of interest rate swaps hedging long-term debt |
Interest on long-term debt |
$ |
|
( |
|
( |
||||||||||
Change in fair value of hedged long-term debt attributable to the risk being hedged |
Interest on long-term debt |
( |
||||||||||||||
The following amounts were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of:
($ in millions) |
Consolidated Balance Sheets Caption |
December 31, 2019 |
||||
Carrying amount of the hedged items |
Long-term debt |
$ | ||||
Cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged items |
Long-term debt |
|||||
The following table presents the
pre-tax
net gains (losses) recorded in the Consolidated Statements of Income and in the Consolidated Statements of Comprehensive Income relating to derivative instruments designated as cash flow hedges:For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Amount of pre-tax net gains (losses) recognized in OCI |
$ |
( |
||||||||||
Amount of pre-tax net gains (losses) reclassified from OCI into net income |
( |
|||||||||||
149 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net gains (losses) recorded in the Consolidated Statements of Income relating to free-standing derivative instruments used for risk management and other business purposes are summarized in the following table:
For the years ended December 31 ($ in millions) |
Consolidated Statements of Income Caption |
2019 |
2018 |
2017 |
||||||||||
Interest rate contracts: |
||||||||||||||
Forward contracts related to residential mortgage loans held for sale |
Mortgage banking net revenue |
$ |
( |
) | ( |
|||||||||
Interest rate contracts related to MSR portfolio |
Mortgage banking net revenue |
( |
) | |||||||||||
Foreign exchange contracts: |
||||||||||||||
Foreign exchange contracts for risk management purposes |
Other noninterest income |
( |
( |
|||||||||||
Equity contracts: |
||||||||||||||
Stock warrant |
Other noninterest income |
( |
||||||||||||
Swap associated with sale of Visa, Inc. Class B Shares |
Other noninterest income |
( |
( |
) | ( |
|||||||||
Risk ratings of the notional amount of risk participation agreements under this risk rating system are summarized in the following table:
At December 31 ($ in millions) |
2019 |
2018 |
||||||
Pass |
$ |
|||||||
Special mention |
||||||||
Substandard |
||||||||
Total |
$ |
|||||||
150 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net gains (losses) recorded in the Consolidated Statements of Income relating to free-standing derivative instruments used for customer accommodation are summarized in the following table:
For the years ended December 31 ($ in millions) |
Consolidated Statements of Income Caption |
2019 |
2018 |
2017 |
||||||||||
Interest rate contracts: |
||||||||||||||
Interest rate contracts for customers (contract revenue) |
Corporate banking revenue |
$ |
||||||||||||
Interest rate contracts for customers (credit losses) |
Other noninterest expense |
( |
||||||||||||
Interest rate contracts for customers (credit portion of fair value adjustment) |
Other noninterest expense |
( |
) |
|||||||||||
Interest rate lock commitments |
Mortgage banking net revenue |
|||||||||||||
Commodity contracts: |
||||||||||||||
Commodity contracts for customers (contract revenue) |
Corporate banking revenue |
|||||||||||||
Commodity contracts for customers (credit losses) |
Other noninterest expense |
|||||||||||||
Commodity contracts for customers (credit portion of fair value adjustment) |
Other noninterest expense |
( |
) | |||||||||||
Foreign exchange contracts: |
||||||||||||||
Foreign exchange contracts for customers (contract revenue) |
Corporate banking revenue |
|||||||||||||
Foreign exchange contracts for customers (contract revenue) |
Other noninterest income |
|||||||||||||
Foreign exchange contracts for customers (credit losses) |
Other noninterest expense |
|||||||||||||
Foreign exchange contracts for customers (credit portion of fair value adjustment) |
Other noninterest expense |
|||||||||||||
The following tables provide a summary of offsetting derivative financial instruments:
Gross Amount Recognized in the Consolidated Balance Sheets (a) |
Gross Amounts Not Offset in the Consolidated Balance Sheets |
|||||||||||||||
As of December 31, 2019 ($ in millions) |
Derivatives |
Collateral (b) |
Net Amount |
|||||||||||||
Assets: |
||||||||||||||||
Derivatives |
$ |
( |
) |
( |
||||||||||||
Total assets |
( |
) |
( |
|||||||||||||
Liabilities: |
||||||||||||||||
Derivatives |
( |
) |
( |
|||||||||||||
Total liabilities |
$ |
( |
) |
( |
||||||||||||
(a) Amount does not include IRLCs because these instruments are not subject to master netting or similar arrangements. (b) Amount of collateral received as an offset to asset positions or pledged as an offset to liability positions. Collateral values in excess of related derivative amounts recognized in the Consolidated Balance Sheets were excluded from this table. |
||||||||||||||||
Gross Amount Recognized in the Consolidated Balance Sheets (a) |
Gross Amounts Not Offset in the Consolidated Balance Sheets |
|||||||||||||||
As of December 31, 2018 ($ in millions) |
Derivatives |
Collateral (b) |
Net Amount |
|||||||||||||
Assets: |
||||||||||||||||
Derivatives |
$ | ( |
) | ( |
||||||||||||
Total assets |
( |
) | ( |
|||||||||||||
Liabilities: |
||||||||||||||||
Derivatives |
( |
) | ( |
|||||||||||||
Total liabilities |
$ | ( |
) | ( |
||||||||||||
(a) |
Amount does not include IRLCs because these instruments are not subject to master netting or similar arrangements. |
(b) |
Amount of collateral received as an offset to asset positions or pledged as an offset to liability positions. Collateral values in excess of related derivative amounts recognized in the Consolidated Balance Sheets were excluded from this table. |
151 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. OTHER ASSETS
The following table provides the components of other assets included in the Consolidated Balance Sheets as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Accounts receivable and drafts-in-process |
$ |
|||||||
Bank owned life insurance |
||||||||
Partnership investments |
||||||||
Derivative instruments |
||||||||
Operating lease right-of-use assets |
||||||||
Accrued interest and fees receivable |
||||||||
Worldpay, Inc. TRA receivable |
||||||||
Prepaid expenses |
||||||||
OREO and other repossessed personal property |
||||||||
Income tax receivable |
||||||||
Investment in Worldpay Holding, LLC |
||||||||
Other |
||||||||
Total other assets |
$ |
|||||||
17. SHORT-TERM BORROWINGS
The following table summarizes short-term borrowings and weighted-average rates:
2019 |
2018 |
|||||||||||||||
($ in millions) |
Amount |
Rate |
Amount |
Rate |
||||||||||||
As of December 31: |
||||||||||||||||
Federal funds purchased |
$ |
$ | ||||||||||||||
Other short-term borrowings |
||||||||||||||||
Average for the years ended December 31: |
||||||||||||||||
Federal funds purchased |
$ |
$ | ||||||||||||||
Other short-term borrowings |
||||||||||||||||
Maximum month-end balance for the years ended December 31: |
||||||||||||||||
Federal funds purchased |
$ |
$ |
||||||||||||||
Other short-term borrowings |
||||||||||||||||
The following table presents a summary of the Bancorp’s other short-term borrowings as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Securities sold under repurchase agreements |
$ |
|||||||
Derivative collateral |
||||||||
Total other short-term borrowings |
$ |
|||||||
152 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. LONG-TERM DEBT
The following table is a summary of the Bancorp’s long-term borrowings at December 31:
($ in millions) |
Maturity |
Interest Rate |
2019 |
2018 |
||||||||||||
Parent Company |
||||||||||||||||
Senior: |
||||||||||||||||
Fixed-rate notes |
2019 |
$ |
||||||||||||||
Fixed-rate notes |
2020 |
|||||||||||||||
Floating-rate notes (b) |
2021 |
|||||||||||||||
Fixed-rate notes |
2022 |
|||||||||||||||
Fixed-rate notes |
2022 |
|||||||||||||||
Fixed-rate notes |
2024 |
|||||||||||||||
Fixed-rate notes |
2025 |
|||||||||||||||
Fixed-rate notes |
2028 |
|||||||||||||||
Subordinated: (a) |
||||||||||||||||
Fixed-rate notes |
2024 |
|||||||||||||||
Fixed-rate notes |
2038 |
|||||||||||||||
Subsidiaries |
||||||||||||||||
Senior: |
||||||||||||||||
Fixed-rate notes |
2019 |
|||||||||||||||
Fixed-rate notes |
2019 |
|||||||||||||||
Fixed-rate notes |
2019 |
|||||||||||||||
Floating-rate notes (c) |
2019 |
|||||||||||||||
Fixed-rate notes |
2020 |
|||||||||||||||
Floating-rate notes (b) |
2020 |
|||||||||||||||
Fixed-rate notes |
2021 |
|||||||||||||||
Fixed-rate notes |
2021 |
|||||||||||||||
Fixed-rate notes |
2021 |
|||||||||||||||
Floating-rate notes (b) |
2021 |
|||||||||||||||
Floating-rate notes (b) |
2022 |
|||||||||||||||
Fixed-rate notes |
2025 |
|||||||||||||||
Subordinated: (a) |
||||||||||||||||
Fixed-rate bank notes |
2026 |
|||||||||||||||
Fixed-rate bank notes |
2027 |
|||||||||||||||
Junior subordinated: |
||||||||||||||||
Floating-rate debentures (b) |
2035 |
- |
||||||||||||||
FHLB advances |
2020 - 2047 |
- |
||||||||||||||
Notes associated with consolidated VIEs: |
||||||||||||||||
Automobile loan securitizations: |
||||||||||||||||
Fixed-rate notes |
2022 - 2026 |
- |
||||||||||||||
Floating-rate notes (b) |
2022 |
|||||||||||||||
Other |
2020 - 2040 |
Varies |
||||||||||||||
Total |
$ |
|||||||||||||||
(a) |
In aggregate, $ December 31, 2019 |
(b) |
These rates reflect the floating rates as of December 31, 2019. |
(c) |
These rates reflect the floating rates as of December 31, 2018. |
The Bancorp pays down long-term debt in accordance with contractual terms over maturity periods summarized in the above table. The aggregate annual maturities of long-term debt obligations (based on final maturity dates) as of December 31, 2019 are presented in the following table:
($ in millions) |
Parent |
Subsidiaries |
Total |
|||||||||
2020 |
$ |
|||||||||||
2021 |
||||||||||||
2022 |
||||||||||||
2023 |
||||||||||||
2024 |
||||||||||||
Thereafter |
||||||||||||
Total |
$ | |||||||||||
153 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
154 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
155 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES
Commitments
The Bancorp has certain commitments to make future payments under contracts. The following table reflects a summary of significant commitments as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Commitments to extend credit |
$ |
|||||||
Letters of credit |
||||||||
Forward contracts related to residential mortgage loans held for sale |
||||||||
Purchase obligations |
||||||||
Capital commitments for private equity investments |
||||||||
Capital expenditures |
||||||||
Risk ratings of outstanding commitments to extend credit under this risk rating system are summarized in the following table as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Pass |
$ |
|||||||
Special mention |
||||||||
Substandard |
||||||||
Doubtful |
||||||||
Total commitments to extend credit |
$ |
|||||||
Letters of credit
Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party and expire as summarized in the following table as of December 31, 2019:
($ in millions) |
||||
Less than 1 year (a) |
$ |
|||
1 - 5 years (a) |
||||
Over 5 years |
||||
Total letters of credit |
$ | |||
(a) |
Includes $ |
156 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Risk ratings of letters of credit under this risk rating system are summarized in the following table as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Pass |
$ |
|||||||
Special mention |
||||||||
Substandard |
||||||||
Doubtful |
||||||||
Total letters of credit |
$ |
|||||||
157 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes activity in the reserve for representation and warranty provisions for the years ended December 31:
($ in millions) |
2019 |
2018 |
||||||
Balance, beginning of period |
$ |
|||||||
Net reductions to the reserve |
( |
|||||||
Balance, end of period |
$ |
|||||||
The following tables provide a rollforward of unresolved claims by claimant type for the years ended December 31:
GSE |
Private Label |
|||||||||||||||
2019 ($ in millions) |
Units |
Dollars |
Units |
Dollars |
||||||||||||
Balance, beginning of period |
$ |
$ |
||||||||||||||
New demands |
||||||||||||||||
Loan paydowns/payoffs |
( |
) |
||||||||||||||
Resolved demands |
( |
) |
( |
( |
) |
( |
||||||||||
Balance, end of period |
$ |
$ |
||||||||||||||
GSE |
Private Label |
|||||||||||||||
2018 ($ in millions) |
Units |
Dollars |
Units |
Dollars |
||||||||||||
Balance, beginning of period |
$ | $ | ||||||||||||||
New demands |
||||||||||||||||
Resolved demands |
( |
) | ( |
|||||||||||||
Balance, end of period |
$ | $ |
||||||||||||||
158 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period ($ in millions) |
Visa Funding Amount |
Bancorp Cash Payment Amount | ||||
Q2 2010 |
$ |
|||||
Q4 2010 |
||||||
Q2 2011 |
||||||
Q1 2012 |
||||||
Q3 2012 |
||||||
Q3 2014 |
||||||
Q2 2018 |
||||||
Q3 2019 |
||||||
159 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. LEGAL AND REGULATORY PROCEEDINGS
160 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
161 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. RELATED PARTY TRANSACTIONS
The following table summarizes the Bancorp’s lending activities with its principal shareholders, directors, executives and their related interests at December 31:
($ in millions) |
2019 |
2018 |
||||||
Commitments to lend, net of participations: |
||||||||
Directors and their affiliated companies |
$ |
|||||||
Executive officers |
||||||||
Total |
$ |
|||||||
Outstanding balance on loans, net of participations and undrawn commitments |
$ |
|||||||
The following table provides a summary of the transactions that impacted the Bancorp’s ownership interest in Worldpay Holding, LLC after the initial IPO:
($ in millions) |
Gain on Transactions |
Remaining Ownership Percentage |
||||||
Q4 2012 |
$ | |||||||
Q2 2013 |
||||||||
Q3 2013 |
||||||||
Q2 2014 |
||||||||
Q4 2015 |
||||||||
Q3 2017 |
||||||||
Q1 2018 |
||||||||
Q2 2018 |
||||||||
Q1 2019 |
||||||||
162 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides the estimated cash flows expected to be received subsequent to December 31, 2019 associated with the TRA for the years ending December 31, 2020 and thereafter:
($ in millions) |
Cash Flows to be Received from Put/Call Options Exercised in the First Quarter of 2020 |
Cash Flows to be Received from Put/Call Options Expected to be Exercised |
Estimated Cash Flows to be Received not Subject to Put/Call Option (a) |
|||||||||||||
2020 |
$ | |||||||||||||||
2021 |
||||||||||||||||
2022 |
||||||||||||||||
2023 |
||||||||||||||||
2024 |
||||||||||||||||
2025 |
||||||||||||||||
Total |
$ | |||||||||||||||
(a) |
The 2020 cash flow of $1 million was agreed upon with Worldpay, Inc. and recognized as a gain in other noninterest income during the fourth quarter of 2019 with payment received by the Bancorp in January 2020. The remaining estimated cash flows in this column will be recognized in future periods when the related uncertainties are resolved. |
163 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. INCOME TAXES
The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of applicable income taxes included in the Consolidated Statements of Income for the years ended December 31:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Current income tax expense (benefit): |
||||||||||||
U.S. Federal income taxes |
$ |
|||||||||||
State and local income taxes |
||||||||||||
Foreign income taxes |
( |
|||||||||||
Total current income tax expense |
||||||||||||
Deferred income tax (benefit) expense: |
||||||||||||
U.S. Federal income taxes |
( |
( |
||||||||||
State and local income taxes |
( |
|||||||||||
Foreign income taxes |
||||||||||||
Total deferred income tax (benefit) expense |
( |
( |
||||||||||
Applicable income tax expense |
$ |
|||||||||||
The following is a reconciliation between the federal statutory corporate tax rate and the Bancorp’s effective tax rate for the years ended December 31:
2019 |
2018 |
2017 |
||||||||||
Statutory tax rate |
% |
|||||||||||
Increase (decrease) resulting from: |
||||||||||||
State taxes, net of federal benefit |
||||||||||||
Tax-exempt income |
( |
) |
( |
) | ( |
) | ||||||
LIHTC investment and other tax benefits |
( |
) |
( |
) | ( |
) | ||||||
LIHTC investment proportional amortization |
||||||||||||
Other tax credits |
( |
) |
( |
) | ( |
) | ||||||
U.S. tax legislation impact on deferred taxes |
( |
) | ||||||||||
Other, net |
( |
) |
( |
) | ( |
) | ||||||
Effective tax rate |
% |
|||||||||||
The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Unrecognized tax benefits at January 1 |
$ |
|||||||||||
Gross increases for tax positions taken during prior period |
||||||||||||
Gross decreases for tax positions taken during prior period |
( |
( |
( |
|||||||||
Gross increases for tax positions taken during current period |
||||||||||||
Settlements with taxing authorities |
( |
( |
( |
|||||||||
Lapse of applicable statute of limitations |
( |
( |
( |
|||||||||
Unrecognized tax benefits at December 31 (a) |
$ |
|||||||||||
(a) |
With the exception of $ 2019 |
164 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred income taxes are comprised of the following items at December 31:
($ in millions) |
2019 |
2018 |
||||||
Deferred tax assets: |
||||||||
Allowance for loan and lease losses |
$ |
|||||||
Deferred compensation |
||||||||
Other comprehensive income |
||||||||
Reserve for unfunded commitments |
||||||||
Reserves |
||||||||
State net operating loss carryforwards |
||||||||
Other |
||||||||
Total deferred tax assets |
$ |
|||||||
Deferred tax liabilities: |
||||||||
Lease financing |
$ |
|||||||
Investments in joint ventures and partnership interests |
||||||||
MSRs and related economic hedges |
||||||||
State deferred taxes |
||||||||
Bank premises and equipment |
||||||||
Other comprehensive income |
||||||||
Other |
||||||||
Total deferred tax liabilities |
$ |
|||||||
Total net deferred tax liability |
$ |
( |
( |
|||||
165 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23. RETIREMENT AND BENEFIT PLANS
The overfunded and underfunded amounts recognized in other assets and accrued taxes, interest and expense, respectively, on the Consolidated Balance Sheets were as follows as of December 31:
($ in millions) |
2019 |
2018 |
||||||
Prepaid benefit cost |
$ |
|||||||
Accrued benefit liability |
( |
) |
( |
) | ||||
Net underfunded status |
$ |
( |
) |
( |
) | |||
The following tables summarize the defined benefit retirement plans as of and for the years ended December 31:
Plans with an overfunded status
(a)
($ in millions) |
2019 |
2018 |
||||||
Fair value of plan assets at January 1 |
$ |
- |
||||||
Actual return on assets |
- |
( |
) | |||||
Settlement |
- |
( |
) | |||||
Benefits paid |
- |
( |
) | |||||
Fair value of plan assets at December 31 |
$ |
- |
||||||
Projected benefit obligation at January 1 |
$ |
- |
||||||
Interest cost |
- |
|||||||
Settlement |
- |
( |
) | |||||
Actuarial gain |
- |
( |
) | |||||
Benefits paid |
- |
( |
) | |||||
Projected benefit obligation at December 31 |
$ |
- |
||||||
Overfunded projected benefit obligation at December 31 |
$ |
- |
||||||
Accumulated benefit obligation at December 31 (b) |
$ |
- |
||||||
(a) |
The Bancorp’s qualified defined benefit plan had an underfunded status at December 31, 2019 |
(b) |
Since the Plan’s benefits are frozen, the rate of compensation increase is no longer an assumption used to calculate the accumulated benefit obligation. Therefore, the accumulated benefit obligation was the same as the projected benefit obligation at December 31, 2018. |
Plans with an underfunded status
($ in millions) |
2019 |
2018 |
||||||
Fair value of plan assets at January 1 |
$ |
- |
||||||
Actual return on assets |
||||||||
Contributions |
||||||||
Settlement |
( |
) |
||||||
Benefits paid |
( |
) |
( |
) | ||||
Fair value of plan assets at December 31 |
$ |
- |
||||||
Projected benefit obligation at January 1 |
$ |
|||||||
Interest cost |
||||||||
Settlement |
( |
) |
||||||
Actuarial loss (gain) |
( |
) | ||||||
Benefits paid |
( |
) |
( |
) | ||||
Projected benefit obligation at December 31 |
$ |
|||||||
Underfunded projected benefit obligation at December 31 |
$ |
( |
) |
( |
) | |||
Accumulated benefit obligation at December 31 (a) |
$ |
|||||||
(a) |
Since the Plan’s benefits are frozen, the rate of compensation increase is no longer an assumption used to calculate the accumulated benefit obligation. Therefore, the accumulated benefit obligation was the same as the projected benefit obligation at both December 31, 2019 |
166 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes net periodic benefit cost and other changes in the Plan’s assets and benefit obligations recognized in OCI for the years ended December 31:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Components of net periodic benefit cost: |
||||||||||||
Interest cost |
$ |
|||||||||||
Expected return on assets |
( |
) |
( |
) | ( |
) | ||||||
Amortization of net actuarial loss |
||||||||||||
Settlement |
||||||||||||
Net periodic benefit cost |
$ |
|||||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive income: |
||||||||||||
Net actuarial loss (gain) |
$ |
( |
) | ( |
) | |||||||
Amortization of net actuarial loss |
( |
) |
( |
) | ( |
) | ||||||
Settlement |
( |
) |
( |
) | ( |
) | ||||||
Total recognized in other comprehensive income |
( |
) |
( |
) | ( |
) | ||||||
Total recognized in net periodic benefit cost and other comprehensive income |
$ |
( |
) | ( |
) | |||||||
Fair Value Measurements of Plan Assets
The following tables summarize Plan assets measured at fair value on a recurring basis as of December 31:
Fair Value Measurements Using (a) |
||||||||||||||||
2019 ($ in millions) |
Level 1 (c) |
Level 2 (c) |
Level 3 |
Total Fair Value |
||||||||||||
Cash equivalents |
$ |
|||||||||||||||
Mutual and exchange-traded funds |
||||||||||||||||
Debt securities: |
||||||||||||||||
U.S. Treasury and federal agencies securities |
||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||
Non-agency commercial mortgage-backed securities |
||||||||||||||||
Asset-backed securities and other debt securities (b) |
||||||||||||||||
Total debt securities |
$ |
|||||||||||||||
Total Plan assets |
$ |
|||||||||||||||
(a) |
For further information on fair value hierarchy levels, refer to Note 1. |
(b) |
Includes corporate bonds. |
(c) |
During the year ended December 31, 2019, no assets or liabilities were transferred between Level 1 and Level 2. |
Fair Value Measurements Using (a) |
||||||||||||||||
2018 ($ in millions) |
Level 1 (d) |
Level 2 (d) |
Level 3 |
Total Fair Value |
||||||||||||
Cash equivalents |
$ | |||||||||||||||
Mutual and exchange-traded funds |
||||||||||||||||
Debt securities: |
||||||||||||||||
U.S. Treasury and federal agencies securities |
||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||
Non-agency commercial mortgage-backed securities |
||||||||||||||||
Asset-backed securities and other debt securities (b) |
||||||||||||||||
Total debt securities |
$ | |||||||||||||||
Total Plan assets, excluding collective funds |
$ | |||||||||||||||
Collective funds (NAV) (c) |
||||||||||||||||
Total Plan assets |
$ | |||||||||||||||
(a) |
For further information on fair value hierarchy levels, refer to Note 1. |
(b) |
Includes corporate bonds. |
(c) |
Certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of Plan assets presented elsewhere within this footnote. |
(d) |
During the year ended December 31, 2018, no assets or liabilities were transferred between Level 1 and Level 2. |
167 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the weighted-average plan assumptions for the years ended December 31:
2019 |
2018 |
2017 |
||||||||||
For measuring benefit obligations at year end: (a) |
||||||||||||
Discount rate |
% |
|||||||||||
For measuring net periodic benefit cost: (a) |
||||||||||||
Discount rate |
||||||||||||
Expected return on plan assets |
||||||||||||
(a) |
Since the Plan’s benefits were frozen, except for grandfathered employees, the rate of compensation increase is no longer applicable beginning in 2014 since minimal grandfathered employees are still accruing benefits. |
The following table provides the Bancorp’s targeted and actual weighted-average asset allocations by asset category for the years ended December 31:
Targeted Range (b) |
2019 |
2018 |
||||||||||
Equity securities (a) |
0-55 % |
|||||||||||
Fixed-income securities |
50-100 |
|||||||||||
Alternative strategies |
0-5 |
- |
||||||||||
Cash or cash equivalents |
0-100 |
|||||||||||
Total |
||||||||||||
(a) |
Includes mutual and exchange-traded funds. |
(b) |
These reflect the targeted ranges for the year ended December 31, 2019. |
168 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
169 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24. ACCUMULATED OTHER COMPREHENSIVE INCOME
The tables below present the activity of the components of OCI and AOCI for the years ended December 31:
Total OCI |
Total AOCI |
|||||||||||||||||||||||||||||||||
2019 ($ in millions) |
Pre-tax Activity |
Tax Effect |
Net Activity |
Beginning Balance |
Net Activity |
Ending Balance |
||||||||||||||||||||||||||||
Unrealized holding gains on available-for-sale debt securities arising during the year |
$ |
( |
) |
|||||||||||||||||||||||||||||||
Reclassification adjustment for net gains on available-for-sale debt securities included in net income |
( |
) |
( |
) |
||||||||||||||||||||||||||||||
Net unrealized gains on available-for-sale debt securities |
( |
) |
( |
) |
||||||||||||||||||||||||||||||
Unrealized holding gains on cash flow hedge derivatives arising during the year |
( |
) |
||||||||||||||||||||||||||||||||
Reclassification adjustment for net gains on cash flow hedge derivatives included in net income |
( |
) |
( |
) |
||||||||||||||||||||||||||||||
Net unrealized gains on cash flow hedge derivatives |
( |
) |
||||||||||||||||||||||||||||||||
Net actuarial loss arising during the year |
( |
) |
- |
( |
) |
|||||||||||||||||||||||||||||
Reclassification of amounts to net periodic benefit costs |
( |
) |
||||||||||||||||||||||||||||||||
Defined benefit pension plans, net |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||||
Total |
$ |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Total OCI |
Total AOCI |
|||||||||||||||||||||||||||||||||
2018 ($ in millions) |
Pre-tax Activity |
Tax Effect |
Net Activity |
Beginning Balance |
Net Activity |
Ending Balance |
||||||||||||||||||||||||||||
Unrealized holding losses on available-for-sale debt securities arising during the year |
$ |
( |
) | ( |
) | |||||||||||||||||||||||||||||
Reclassification adjustment for net losses on available-for-sale debt securities included in net income |
( |
) | ||||||||||||||||||||||||||||||||
Net unrealized losses on available-for-sale debt securities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Unrealized holding gains on cash flow hedge derivatives arising during the year |
( |
) | ||||||||||||||||||||||||||||||||
Reclassification adjustment for net losses on cash flow hedge derivatives included in net income |
||||||||||||||||||||||||||||||||||
Net unrealized gains on cash flow hedge derivatives |
( |
) | ( |
) | ||||||||||||||||||||||||||||||
Net actuarial gain arising during the year |
- |
|||||||||||||||||||||||||||||||||
Reclassification of amounts to net periodic benefit costs |
( |
) | ||||||||||||||||||||||||||||||||
Defined benefit pension plans, net |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Total |
$ |
( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
Total OCI |
Total AOCI |
|||||||||||||||||||||||||||||||||
2017 ($ in millions) |
Pre-tax Activity |
Tax Effect |
Net Activity |
Beginning Balance |
Net Activity |
Ending Balance |
||||||||||||||||||||||||||||
Unrealized holding gains on available-for-sale securities arising during the year |
$ |
|||||||||||||||||||||||||||||||||
Reclassification adjustment for net losses on available-for-sale securities included in net income |
||||||||||||||||||||||||||||||||||
Net unrealized gains on available-for-sale securities |
||||||||||||||||||||||||||||||||||
Unrealized holding losses on cash flow hedge derivatives arising during the year |
( |
) | ( |
) | ||||||||||||||||||||||||||||||
Reclassification adjustment for net gains on cash flow hedge derivatives included in net income |
( |
) | ( |
) | ||||||||||||||||||||||||||||||
Net unrealized losses on cash flow hedge derivatives |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Net actuarial gain arising during the year |
- |
|||||||||||||||||||||||||||||||||
Reclassification of amounts to net periodic benefit costs |
( |
) | ||||||||||||||||||||||||||||||||
Defined benefit pension plans, net |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Total |
$ |
( |
) | |||||||||||||||||||||||||||||||
170 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below presents reclassifications out of AOCI for the years ended December 31:
Components of AOCI: ($ in millions) |
Consolidated Statements of Income Caption |
2019 |
2018 |
2017 |
||||||||||||
Net unrealized gains (losses) on available-for-sale debt securities:(b) |
||||||||||||||||
Net gains (losses) included in net income |
Securities gains (losses), net |
$ |
( |
) | ( |
|||||||||||
Income before income taxes |
( |
) | ( |
|||||||||||||
Applicable income tax expense |
( |
) |
( |
|||||||||||||
Net income |
( |
) | ( |
|||||||||||||
Net unrealized gains (losses) on cash flow hedge derivatives: (b) |
||||||||||||||||
Interest rate contracts related to C&I loans |
Interest and fees on loans and leases |
( |
) | |||||||||||||
Income before income taxes |
( |
) | ||||||||||||||
Applicable income tax expense |
( |
) |
( |
|||||||||||||
Net income |
( |
) | ||||||||||||||
Net periodic benefit costs: (b) |
||||||||||||||||
Amortization of net actuarial loss |
Employee benefits expense (a) |
( |
) |
( |
) | ( |
||||||||||
Settlements |
Employee benefits expense (a) |
( |
) |
( |
) | ( |
||||||||||
Income before income taxes |
( |
) |
( |
) | ( |
|||||||||||
Applicable income tax expense |
||||||||||||||||
Net income |
( |
) |
( |
) | ( |
|||||||||||
Total reclassifications for the period |
Net income |
$ |
( |
) | ||||||||||||
(a) |
This AOCI component is included in the computation of net periodic benefit cost. Refer to Note 23 for information on the computation of net periodic benefit cost. |
(b) |
Amounts in parentheses indicate reductions to net income. |
171 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
25. COMMON, PREFERRED AND TREASURY STOCK
The table presents a summary of the share activity within common, preferred and treasury stock for the years ended:
Common Stock |
Preferred Stock |
Treasury Stock |
||||||||||||||||||||||
($ in millions, except share data) |
Value |
Shares |
Value |
Shares |
Value |
Shares |
||||||||||||||||||
December 31, 2016 |
$ | $ | $ | ( |
||||||||||||||||||||
Shares acquired for treasury |
- |
- |
- |
- |
( |
|||||||||||||||||||
Impact of stock transactions under stock compensation plans, net |
- |
- |
- |
- |
( |
|||||||||||||||||||
Other |
- |
- |
- |
- |
( |
|||||||||||||||||||
December 31, 2017 |
$ | $ | $ | ( |
||||||||||||||||||||
Shares acquired for treasury |
- |
- |
- |
- |
( |
|||||||||||||||||||
Impact of stock transactions under stock compensation plans, net |
- |
- |
- |
- |
( |
|||||||||||||||||||
Other |
- |
- |
- |
- |
( |
|||||||||||||||||||
December 31, 2018 |
$ | $ | $ | ( |
||||||||||||||||||||
Shares acquired for treasury |
- |
- |
- |
- |
( |
|||||||||||||||||||
Issuance of preferred shares, Series K |
- |
- |
- |
- |
||||||||||||||||||||
Conversion of outstanding preferred stock issued by a Bancorp subsidiary |
- |
- |
- |
- |
||||||||||||||||||||
Impact of MB Financial, Inc. acquisition |
- |
- |
- |
- |
( |
|||||||||||||||||||
Impact of stock transactions under stock compensation plans, net |
- |
- |
- |
- |
( |
|||||||||||||||||||
Other |
- |
- |
- |
- |
||||||||||||||||||||
December 31, 2019 |
$ |
$ |
$ |
( |
||||||||||||||||||||
172 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents a summary of the Bancorp’s accelerated share repurchase transactions that were entered into or settled during the years ended December 31, 2019 and 2018:
Shares Repurchased on |
Shares Received from |
Total Shares |
||||||||||||||||||
Repurchase Date |
Amount ($ in millions) |
Repurchase Date |
Forward Contract |
Repurchased |
Settlement Date |
|||||||||||||||
(a) |
||||||||||||||||||||
(b) |
- |
|||||||||||||||||||
(b) |
||||||||||||||||||||
(a) |
This accelerated share repurchase transaction consisted of two supplemental confirmations each with a notional amount of $ |
(b) |
This accelerated share repurchase transaction consisted of two supplemental confirmations each with a notional amount of $ |
173 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26. STOCK-BASED COMPENSATION
The weighted-average assumptions were as follows for the years ended December 31:
2019 |
2018 |
2017 |
||||||||||
Expected life (in years) |
||||||||||||
Expected volatility |
% |
|||||||||||
Expected dividend yield |
||||||||||||
Risk-free interest rate |
||||||||||||
174 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2019 |
2018 |
2017 |
||||||||||||||||||||||||||
SARs (in thousands, except per share data) |
Number of SARs |
Weighted- Average Grant Price Per Share |
Number of SARs |
Weighted- Average Grant Price Per Share |
Number of SARs |
Weighted- Average Grant Price Per Share |
||||||||||||||||||||||
Outstanding at January 1 |
$ |
$ | $ | |||||||||||||||||||||||||
Granted |
||||||||||||||||||||||||||||
Exercised |
( |
( |
( |
|||||||||||||||||||||||||
Forfeited or expired |
( |
( |
( |
|||||||||||||||||||||||||
Outstanding at December 31 |
$ |
$ | $ | |||||||||||||||||||||||||
Exercisable at December 31 |
$ |
$ | $ | |||||||||||||||||||||||||
The following table summarizes outstanding and exercisable SARs by grant price per share at December 31, 2019:
Outstanding SARs |
Exercisable SARs |
|||||||||||||||||||||||||||
SARs (in thousands, except per share data) |
Number of SARs |
Weighted- Average Grant Price Per Share |
Weighted- Average Remaining Contractual Life (in years) |
Number of SARs |
Weighted- Average Grant Price Per Share |
Weighted- Average Remaining Contractual Life (in years) |
||||||||||||||||||||||
$10.01-$20.00 |
$ | $ | ||||||||||||||||||||||||||
$20.01-$30.00 |
||||||||||||||||||||||||||||
$30.01-$40.00 |
||||||||||||||||||||||||||||
All SARs |
$ | $ | ||||||||||||||||||||||||||
2019 |
2018 |
2017 |
||||||||||||||||||||||
RSAs (in thousands, except per share data) |
Shares |
Weighted-Average Grant-Date Fair Value Per Share |
Shares |
Weighted-Average Grant-Date Fair Value Per Share |
Shares |
Weighted-Average Grant-Date Fair Value Per Share |
||||||||||||||||||
Outstanding at January 1 |
$ |
$ | $ | |||||||||||||||||||||
Granted |
||||||||||||||||||||||||
Assumed |
||||||||||||||||||||||||
Released |
( |
) |
( |
) | ( |
) | ||||||||||||||||||
Forfeited |
( |
) |
( |
) | ( |
) | ||||||||||||||||||
Outstanding at December 31 |
$ |
$ | $ | |||||||||||||||||||||
175 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2019 |
2018 |
2017 |
||||||||||||||||||||||
RSUs (in thousands, except per unit data) |
Units |
Weighted-Average Grant-Date Fair Value Per Unit |
Units |
Weighted-Average Grant-Date Fair Value Per Unit |
Units |
Weighted-Average Grant-Date Fair Value Per Unit |
||||||||||||||||||
Outstanding at January 1 |
$ |
$ | $ | |||||||||||||||||||||
Granted |
||||||||||||||||||||||||
Assumed |
||||||||||||||||||||||||
Released |
( |
) |
( |
) | ( |
) | ||||||||||||||||||
Forfeited |
( |
) |
( |
) | ( |
) | ||||||||||||||||||
Outstanding at December 31 |
$ |
$ | $ | |||||||||||||||||||||
The following table summarizes outstanding RSUs by grant-date fair value per unit at December 31, 2019:
Outstanding RSUs |
||||||||
RSUs (in thousands) |
Units |
Weighted-Average Remaining Contractual Life (in years) |
||||||
$15.01-$20.00 |
||||||||
$20.01-$25.00 |
||||||||
$25.01-$30.00 |
||||||||
$30.01-$35.00 |
||||||||
All RSUs |
||||||||
2019 |
2018 |
2017 |
||||||||||||||||||||||
Stock Options (in thousands, except per share data) |
Number of Options |
Weighted-Average Exercise Price Per Share |
Number of Options |
Weighted-Average Exercise Price Per Share |
Number of Options |
Weighted-Average Exercise Price Per Share |
||||||||||||||||||
Outstanding at January 1 |
$ |
$ | $ | |||||||||||||||||||||
Assumed |
||||||||||||||||||||||||
Exercised |
( |
( |
( |
|||||||||||||||||||||
Forfeited or expired |
( |
( |
( |
|||||||||||||||||||||
Outstanding at December 31 |
$ |
$ | $ | |||||||||||||||||||||
Exercisable at December 31 |
$ |
$ | $ | |||||||||||||||||||||
The following table summarizes outstanding and exercisable stock options by exercise price per share at December 31, 2019:
Outstanding Stock Options |
Exercisable Stock Options |
|||||||||||||||||||||||||||
Stock Options (in thousands, except per share data) |
Number of Options |
Weighted- Exercise Price Per Share |
Weighted- Average Contractual Life (in years) |
Number of Options |
Weighted- Exercise Price Per Share |
Weighted- Average Contractual Life (in years) |
||||||||||||||||||||||
Under $10.00 |
$ | $ | ||||||||||||||||||||||||||
$10.01-$20.00 |
||||||||||||||||||||||||||||
$20.01-$30.00 |
||||||||||||||||||||||||||||
All stock options |
$ | $ | ||||||||||||||||||||||||||
176 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
177 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
27. OTHER NONINTEREST INCOME AND OTHER NONINTEREST EXPENSE
The following table presents the major components of other noninterest income and other noninterest expense for the years ended December 31:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Other noninterest income: |
||||||||||||
Gain on sale of Worldpay, Inc. shares |
$ |
|||||||||||
Income from the TRA associated with Worldpay, Inc. |
||||||||||||
Operating lease income |
||||||||||||
Private equity investment income |
||||||||||||
BOLI income |
||||||||||||
Cardholder fees |
||||||||||||
Consumer loan and lease fees |
||||||||||||
Banking center income |
||||||||||||
Insurance income |
||||||||||||
Net gains (losses) on loan sales |
( |
|||||||||||
Equity method income from interest in Worldpay Holding, LLC |
||||||||||||
Loss on swap associated with the sale of Visa, Inc. Class B Shares |
( |
( |
( |
|||||||||
Net losses on disposition and impairment of bank premises and equipment |
( |
( |
||||||||||
Loss on sale of business |
( |
- |
- |
|||||||||
Gain related to Vantiv, Inc.’s acquisition of Worldpay Group plc. |
||||||||||||
Other, net |
||||||||||||
Total other noninterest income |
$ |
|||||||||||
Other noninterest expense: |
||||||||||||
Marketing |
$ |
|||||||||||
Loan and lease |
||||||||||||
Operating lease |
||||||||||||
Losses and adjustments |
||||||||||||
FDIC insurance and other taxes |
||||||||||||
Professional service fees |
||||||||||||
Data processing |
||||||||||||
Travel |
||||||||||||
Intangible amortization |
||||||||||||
Postal and courier |
||||||||||||
Donations |
||||||||||||
Recruitment and education |
||||||||||||
Supplies |
||||||||||||
Insurance |
||||||||||||
Loss (gain) on partnership investments |
( |
|||||||||||
Other, net |
||||||||||||
Total other noninterest expense |
$ |
|||||||||||
178 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
28. EARNINGS PER SHARE
The following table provides the calculation of earnings per share and the reconciliation of earnings per share and earnings per diluted share for the years ended December 31:
2019 |
2018 |
2017 |
||||||||||||||||||||||||||||||||||||
($ in millions, except per share data) |
Income |
Average Shares |
Per Share Amount |
Income |
Average Shares |
Per Share Amount |
Income |
Average Shares |
Per Share Amount |
|||||||||||||||||||||||||||||
Earnings Per Share: |
||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders |
$ |
|||||||||||||||||||||||||||||||||||||
Less: Income allocated to participating securities |
||||||||||||||||||||||||||||||||||||||
Net income allocated to common shareholders |
$ |
|||||||||||||||||||||||||||||||||||||
Earnings Per Diluted Share: |
||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders |
$ |
|||||||||||||||||||||||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||||||||||||||||||||||||
Stock-based awards |
||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders plus assumed conversions |
||||||||||||||||||||||||||||||||||||||
Less: Income allocated to participating securities |
||||||||||||||||||||||||||||||||||||||
Net income allocated to common shareholders plus assumed conversions |
$ |
|||||||||||||||||||||||||||||||||||||
179 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
29. FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables summarize assets and liabilities measured at fair value on a recurring basis as of:
Fair Value Measurements Using |
||||||||||||||||
December 31, 2019 ($ in millions) |
Level 1 (c) |
Level 2 (c) |
Level 3 |
Total Fair Value |
||||||||||||
Assets: |
||||||||||||||||
Available-for-sale debt and other securities: |
||||||||||||||||
U.S. Treasury and federal agency securities |
$ |
|||||||||||||||
Obligations of states and political subdivisions securities |
||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||
Agency residential mortgage-backed securities |
||||||||||||||||
Agency commercial mortgage-backed securities |
||||||||||||||||
Non-agency commercial mortgage-backed securities |
||||||||||||||||
Asset-backed securities and other debt securities |
||||||||||||||||
Available-for-sale debt and other securities(a) |
||||||||||||||||
Trading debt securities: |
||||||||||||||||
U.S. Treasury and federal agency securities |
||||||||||||||||
Obligations of states and political subdivisions securities |
||||||||||||||||
Agency residential mortgage-backed securities |
||||||||||||||||
Asset-backed securities and other debt securities |
||||||||||||||||
Trading debt securities |
||||||||||||||||
Equity securities |
||||||||||||||||
Residential mortgage loans held for sale |
||||||||||||||||
Residential mortgage loans (b) |
||||||||||||||||
Servicing rights |
||||||||||||||||
Derivative assets: |
||||||||||||||||
Interest rate contracts |
||||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Commodity contracts |
||||||||||||||||
Derivative assets (d) |
||||||||||||||||
Total assets |
$ |
|||||||||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities: |
||||||||||||||||
Interest rate contracts |
$ |
|||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Equity contracts |
||||||||||||||||
Commodity contracts |
||||||||||||||||
Derivative liabilities (e) |
||||||||||||||||
Short positions (e) |
||||||||||||||||
Total liabilities |
$ |
|||||||||||||||
(a) |
Excludes FHLB, FRB and DTCC restricted stock holdings totaling $ $ $ December 31, 2019 |
(b) |
Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment. |
(c) |
During the year ended December 31, 2019 |
(d) |
Included in other assets in the Consolidated Balance Sheets. |
(e) |
Included in other liabilities in the Consolidated Balance Sheets. |
180 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value Measurements Using |
||||||||||||||||
December 31, 2018 ($ in millions) |
Level 1 (c) |
Level 2 (c) |
Level 3 |
Total Fair Value |
||||||||||||
Assets: |
||||||||||||||||
Available-for-sale debt and other securities: |
||||||||||||||||
U.S. Treasury and federal agency securities |
$ | |||||||||||||||
Obligations of states and political subdivisions securities |
||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||
Agency residential mortgage-backed securities |
||||||||||||||||
Agency commercial mortgage-backed securities |
||||||||||||||||
Non-agency commercial mortgage-backed securities |
||||||||||||||||
Asset-backed securities and other debt securities |
||||||||||||||||
Available-for-sale debt and other securities(a) |
||||||||||||||||
Trading debt securities: |
||||||||||||||||
U.S. Treasury and federal agency securities |
||||||||||||||||
Obligations of states and political subdivisions securities |
||||||||||||||||
Agency residential mortgage-backed securities |
||||||||||||||||
Asset-backed securities and other debt securities |
||||||||||||||||
Trading debt securities |
||||||||||||||||
Equity securities |
||||||||||||||||
Residential mortgage loans held for sale |
||||||||||||||||
Residential mortgage loans (b) |
- |
|||||||||||||||
Commercial loans held for sale |
||||||||||||||||
Servicing rights |
||||||||||||||||
Derivative assets: |
||||||||||||||||
Interest rate contracts |
||||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Commodity contracts |
||||||||||||||||
Derivative assets (d) |
||||||||||||||||
Total assets |
$ | |||||||||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities: |
||||||||||||||||
Interest rate contracts |
$ | |||||||||||||||
Foreign exchange contracts |
||||||||||||||||
Equity contracts |
||||||||||||||||
Commodity contracts |
||||||||||||||||
Derivative liabilities (e) |
||||||||||||||||
Short positions (e) |
||||||||||||||||
Total liabilities |
$ | |||||||||||||||
(a) |
Excludes FHLB, FRB and DTCC restricted stock holdings totaling $ |
(b) |
Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment. |
(c) |
During the year ended December 31, 2018, no assets or liabilities were transferred between Level 1 and Level 2. |
(d) |
Included in other assets in the Consolidated Balance Sheets. |
(e) |
Included in other liabilities in the Consolidated Balance Sheets. |
181 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
182 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables are a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
||||||||||||||||||||
Residential |
Interest Rate |
|||||||||||||||||||
Mortgage |
Servicing |
Derivatives, |
Equity |
Total |
||||||||||||||||
For the year ended December 31, 2019 ($ in millions) |
Loans |
Rights |
Net (a) |
Derivatives |
Fair Value |
|||||||||||||||
Balance, beginning of period |
$ |
( |
( |
|||||||||||||||||
Total (losses) gains (realized/unrealized): |
||||||||||||||||||||
Included in earnings |
( |
( |
( |
( |
||||||||||||||||
Purchases/originations |
( |
|||||||||||||||||||
Settlements |
( |
( |
( |
|||||||||||||||||
Transfers into Level 3 (b) |
||||||||||||||||||||
Balance, end of period |
$ |
( |
||||||||||||||||||
The amount of total (losses) gains for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at December 31, 2019 (c) |
$ |
( |
( |
( |
( |
|||||||||||||||
(a) |
Net interest rate derivatives include derivative assets and liabilities of $ and $ , respectively, as of December 31, 2019 . |
(b) |
Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment. |
(c) |
Includes interest income and expense. |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
||||||||||||||||||||
Residential |
Interest Rate |
|||||||||||||||||||
Mortgage |
Servicing |
Derivatives, |
Equity |
Total |
||||||||||||||||
For the year ended December 31, 2018 ($ in millions) |
Loans |
Rights |
Net (a) |
Derivatives |
Fair Value |
|||||||||||||||
Balance, beginning of period |
$ | ( |
||||||||||||||||||
Total (losses) gains (realized/unrealized): |
||||||||||||||||||||
Included in earnings |
( |
( |
( |
( |
||||||||||||||||
Purchases/originations |
( |
|||||||||||||||||||
Settlements |
( |
( |
( |
|||||||||||||||||
Transfers into Level 3 (b) |
||||||||||||||||||||
Balance, end of period |
$ | ( |
( |
|||||||||||||||||
The amount of total (losses) gains for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at December 31, 2018 (c) |
$ | ( |
( |
( |
( |
|||||||||||||||
(a) |
Net interest rate derivatives include derivative assets and liabilities of $ |
(b) |
Includes certain residential mortgage loans held for sale that were transferred to held for investment. |
(c) |
Includes interest income and expense. |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
||||||||||||||||||||
Residential |
Interest Rate |
Equity |
||||||||||||||||||
Mortgage |
Servicing |
Derivatives, |
Derivatives, |
Total |
||||||||||||||||
For the year ended December 31, 2017 ($ in millions) |
Loans |
Rights |
Net (a) |
Net |
Fair Value |
|||||||||||||||
Balance, beginning of period |
$ | ( |
||||||||||||||||||
Total (losses) gains (realized/unrealized): |
||||||||||||||||||||
Included in earnings |
( |
( |
( |
|||||||||||||||||
Purchases/originations |
( |
|||||||||||||||||||
Settlements |
( |
( |
( |
|||||||||||||||||
Transfers into Level 3 (b) |
||||||||||||||||||||
Balance, end of period |
$ | ( |
||||||||||||||||||
The amount of total (losses) gains for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at December 31, 2017 (c) |
$ | ( |
( |
( |
||||||||||||||||
(a) |
Net interest rate derivatives include derivative assets and liabilities of $ |
(b) |
Includes certain residential mortgage loans held for sale that were transferred to held for investment. |
(c) |
Includes interest income and expense. |
183 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total gains and losses included in earnings for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were recorded in the Consolidated Statements of Income for the years ended December 31, 2019, 2018 and 2017 as follows:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Mortgage banking net revenue |
$ |
( |
) |
( |
) | ( |
||||||
Corporate banking revenue |
||||||||||||
Other noninterest income |
( |
) |
( |
) | ( |
|||||||
Total losses |
$ |
( |
) |
( |
) | ( |
||||||
The total gains and losses included in earnings attributable to changes in unrealized gains and losses related to Level 3 assets and liabilities still held at December 31, 2019, 2018 and 2017 were recorded in the Consolidated Statements of Income as follows:
($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Mortgage banking net revenue |
$ |
( |
) |
( |
||||||||
Corporate banking revenue |
||||||||||||
Other noninterest income |
( |
) |
( |
) | ( |
|||||||
Total losses |
$ |
( |
) |
( |
) | ( |
||||||
The following tables present information as of December 31, 2019 and 2018 about significant unobservable inputs related to the Bancorp’s material categories of Level 3 financial assets and liabilities measured at fair value on a recurring basis:
As of December 31, 2019 ($ in millions) |
||||||||||||||||
Financial Instrument |
Fair Value |
Valuation Technique |
Significant Unobservable Inputs |
Ranges of Inputs |
Weighted- Average |
|||||||||||
Residential mortgage loans |
$ |
Loss rate model |
Interest rate risk factor |
( - |
( |
|||||||||||
Credit risk factor |
||||||||||||||||
Servicing rights |
DCF |
Prepayment speed |
(Fixed) (Adjustable) |
|||||||||||||
OAS (bps) |
- |
(Fixed) (Adjustable) |
||||||||||||||
IRLCs, net |
DCF |
Loan closing rates |
||||||||||||||
Swap associated with the sale of Visa, Inc. Class B Shares |
( |
DCF |
Timing of the resolution of the Covered Litigation |
- |
||||||||||||
As of December 31, 2018 ($ in millions) |
||||||||||||||||
Financial Instrument |
Fair Value |
Valuation Technique |
Significant Unobservable Inputs |
Ranges of Inputs |
Weighted- Average |
|||||||||||
Residential mortgage loans |
$ |
Loss rate model |
Interest rate risk factor |
( - |
||||||||||||
Credit risk factor |
||||||||||||||||
Servicing rights |
DCF |
Prepayment speed |
(Fixed) (Adjustable) |
|||||||||||||
OAS (bps) |
- |
(Fixed) (Adjustable) |
||||||||||||||
IRLCs, net |
DCF |
Loan closing rates |
||||||||||||||
Swap associated with the sale of Visa, Inc. Class B Shares |
( |
DCF |
Timing of the resolution of the Covered Litigation |
- |
||||||||||||
184 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables provide the fair value hierarchy and carrying amount of all assets that were held as of December 31, 2019 and 2018 and for which a nonrecurring fair value adjustment was recorded during the years ended December 31, 2019 and 2018, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.
Fair Value Measurements Using |
Total (Losses) Gains |
|||||||||||||||||||||
As of December 31, 2019 ($ in millions) |
Level 1 |
Level 2 |
Level 3 |
Total |
For the year ended December 31, 2019 |
|||||||||||||||||
Commercial and industrial loans |
$ |
( |
||||||||||||||||||||
Commercial mortgage loans |
||||||||||||||||||||||
Commercial leases |
( |
|||||||||||||||||||||
OREO |
( |
|||||||||||||||||||||
Bank premises and equipment |
( |
|||||||||||||||||||||
Operating lease equipment |
( |
|||||||||||||||||||||
Private equity investments |
||||||||||||||||||||||
Total |
$ |
( |
||||||||||||||||||||
Fair Value Measurements Using |
Total (Losses) Gains |
|||||||||||||||||||||
As of December 31, 2018 ($ in millions) |
Level 1 |
Level 2 |
Level 3 |
Total |
For the year ended December 31, 2018 |
|||||||||||||||||
Commercial loans held for sale |
$ | ( |
||||||||||||||||||||
Commercial and industrial loans |
( |
|||||||||||||||||||||
Commercial mortgage loans |
||||||||||||||||||||||
Commercial leases |
( |
|||||||||||||||||||||
OREO |
( |
|||||||||||||||||||||
Bank premises and equipment |
( |
|||||||||||||||||||||
Operating lease equipment |
( |
|||||||||||||||||||||
Private equity investments |
||||||||||||||||||||||
Other assets |
( |
|||||||||||||||||||||
Total |
$ | ( |
||||||||||||||||||||
The following tables present information as of December 31, 2019 and 2018 about significant unobservable inputs related to the Bancorp’s material categories of Level 3 financial assets and liabilities measured on a nonrecurring basis:
As of December 31, 2019 ($ in millions) |
||||||||||||||||||||
Financial Instrument |
Fair Value |
Valuation Technique |
Significant Unobservable Inputs |
Ranges of Inputs |
Weighted-Average |
|||||||||||||||
Commercial and industrial loans |
$ |
Appraised value |
Collateral value |
NM |
NM |
|||||||||||||||
Commercial mortgage loans |
Appraised value |
Collateral value |
NM |
NM |
||||||||||||||||
Commercial leases |
Appraised value |
Collateral value |
NM |
NM |
||||||||||||||||
OREO |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
Bank premises and equipment |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
Operating lease equipment |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
Private equity investments |
Comparable company analysis |
Market comparable transactions |
NM |
NM |
||||||||||||||||
As of December 31, 2018 ($ in millions) |
||||||||||||||||||||
Financial Instrument |
Fair Value |
Valuation Technique |
Significant Unobservable Inputs |
Ranges of Inputs |
Weighted-Average |
|||||||||||||||
Commercial loans held for sale |
$ | Appraised value |
Appraised value Costs to sell |
NM NM |
NM |
|||||||||||||||
Commercial and industrial loans |
Appraised value |
Collateral value |
NM |
NM |
||||||||||||||||
Commercial mortgage loans |
Appraised value |
Collateral value |
NM |
NM |
||||||||||||||||
Commercial leases |
Appraised value |
Collateral value |
NM |
NM |
||||||||||||||||
OREO |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
Bank premises and equipment |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
Operating lease equipment |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
Private equity investments |
- |
Liquidity discount applied to fund’s NAV |
Liquidity discount |
- |
||||||||||||||||
Comparable company analysis |
Market comparable transactions |
NM |
NM |
|||||||||||||||||
Other assets |
Appraised value |
Appraised value |
NM |
NM |
||||||||||||||||
185 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
186 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the difference between the fair value and the unpaid principal balance for residential mortgage loans and commercial loans measured at fair value as of:
($ in millions) |
Aggregate Fair Value |
Aggregate Unpaid Principal Balance |
Difference | |||||||
December 31, 2019 |
||||||||||
Residential mortgage loans measured at fair value |
$ |
|||||||||
Past due loans of 90 days or more |
||||||||||
Nonaccrual loans |
||||||||||
December 31, 2018 |
||||||||||
Residential mortgage loans measured at fair value |
$ | |||||||||
Past due loans of 90 days or more |
||||||||||
Nonaccrual loans |
||||||||||
Commercial loans measured at fair value |
||||||||||
187 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value of Certain Financial Instruments
The following tables summarize the carrying amounts and estimated fair values for certain financial instruments, excluding financial instruments measured at fair value on a recurring basis:
Net Carrying |
Fair Value Measurements Using |
Total |
||||||||||||||||||
As of December 31, 2019 ($ in millions) |
Amount |
Level 1 |
Level 2 |
Level 3 |
Fair Value |
|||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash and due from banks |
$ |
|||||||||||||||||||
Other short-term investments |
||||||||||||||||||||
Other securities |
||||||||||||||||||||
Held-to-maturity securities |
||||||||||||||||||||
Loans and leases held for sale |
||||||||||||||||||||
Portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
||||||||||||||||||||
Commercial mortgage loans |
||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||
Commercial leases |
||||||||||||||||||||
Residential mortgage loans |
||||||||||||||||||||
Home equity |
||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||
Credit card |
||||||||||||||||||||
Other consumer loans |
||||||||||||||||||||
Unallocated ALLL |
( |
) |
||||||||||||||||||
Total portfolio loans and leases, net |
$ |
|||||||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Deposits |
$ |
|||||||||||||||||||
Federal funds purchased |
||||||||||||||||||||
Other short-term borrowings |
||||||||||||||||||||
Long-term debt |
||||||||||||||||||||
Net Carrying |
Fair Value Measurements Using |
Total |
||||||||||||||||||
As of December 31, 2018 ($ in millions) |
Amount |
Level 1 |
Level 2 |
Level 3 |
Fair Value |
|||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash and due from banks |
$ | |||||||||||||||||||
Other short-term investments |
||||||||||||||||||||
Other securities |
||||||||||||||||||||
Held-to-maturity securities |
||||||||||||||||||||
Loans and leases held for sale |
||||||||||||||||||||
Portfolio loans and leases: |
||||||||||||||||||||
Commercial and industrial loans |
||||||||||||||||||||
Commercial mortgage loans |
||||||||||||||||||||
Commercial construction loans |
||||||||||||||||||||
Commercial leases |
||||||||||||||||||||
Residential mortgage loans |
||||||||||||||||||||
Home equity |
||||||||||||||||||||
Indirect secured consumer loans |
||||||||||||||||||||
Credit card |
||||||||||||||||||||
Other consumer loans |
||||||||||||||||||||
Unallocated ALLL |
( |
) | ||||||||||||||||||
Total portfolio loans and leases, net |
$ | |||||||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Deposits |
$ | |||||||||||||||||||
Federal funds purchased |
||||||||||||||||||||
Other short-term borrowings |
||||||||||||||||||||
Long-term debt |
||||||||||||||||||||
188 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
30. REGULATORY CAPITAL REQUIREMENTS AND CAPITAL RATIOS
PRESCRIBED CAPITAL RATIOS
Minimum |
Well-Capitalized |
|||||||
CET1 capital: |
||||||||
Fifth Third Bancorp |
% | N/A |
||||||
Fifth Third Bank, National Association |
||||||||
Tier I risk-based capital: |
||||||||
Fifth Third Bancorp |
||||||||
Fifth Third Bank, National Association |
||||||||
Total risk-based capital: |
||||||||
Fifth Third Bancorp |
||||||||
Fifth Third Bank, National Association |
||||||||
Tier I leverage: |
||||||||
Fifth Third Bancorp |
N/A |
|||||||
Fifth Third Bank, National Association |
||||||||
The following table presents capital and risk-based capital and leverage ratios for the Bancorp and its banking subsidiary at December 31:
2019 |
2018 |
|||||||||||||||
($ in millions) |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||
CET1 capital: |
||||||||||||||||
Fifth Third Bancorp |
$ |
$ | ||||||||||||||
Fifth Third Bank, National Association |
||||||||||||||||
Tier I risk-based capital: |
||||||||||||||||
Fifth Third Bancorp |
||||||||||||||||
Fifth Third Bank, National Association |
||||||||||||||||
Total risk-based capital: |
||||||||||||||||
Fifth Third Bancorp |
||||||||||||||||
Fifth Third Bank, National Association |
||||||||||||||||
Tier I leverage: (a) |
||||||||||||||||
Fifth Third Bancorp |
||||||||||||||||
Fifth Third Bank, National Association |
||||||||||||||||
(a) |
Quarterly average assets are a component of the Tier I leverage ratio and for this purpose do not include goodwill and any other intangible assets and other investments that the Banking Agencies determines should be deducted from Tier I capital. |
189 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31. PARENT COMPANY FINANCIAL STATEMENTS
Condensed Statements of Income (Parent Company Only) |
||||||||||||
For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Income |
||||||||||||
Dividends from subsidiaries: |
||||||||||||
Consolidated nonbank subsidiaries (a) |
$ |
|||||||||||
Securities gains, net |
||||||||||||
Interest on loans to subsidiaries |
||||||||||||
Total income |
||||||||||||
Expenses |
||||||||||||
Interest |
||||||||||||
Other |
||||||||||||
Total expenses |
||||||||||||
Income Before Income Taxes and Change in Undistributed Earnings of Subsidiaries |
||||||||||||
Applicable income tax benefit |
( |
) |
( |
) | ( |
|||||||
Income Before Change in Undistributed Earnings of Subsidiaries |
||||||||||||
Equity in undistributed earnings |
( |
|||||||||||
Net Income Attributable to Bancorp |
$ |
|||||||||||
Other Comprehensive Income |
||||||||||||
Comprehensive Income Attributable to Bancorp |
$ |
|||||||||||
a) |
The Bancorp’s indirect banking subsidiary paid dividends to the Bancorp’s direct nonbank subsidiary holding company of $ December 31, 2019 $ December 31, 2019 |
Condensed Balance Sheets (Parent Company Only) |
||||||||||||
As of December 31 ($ in millions) |
2019 |
2018 |
||||||||||
Assets |
||||||||||||
Cash |
$ |
|||||||||||
Short-term investments |
||||||||||||
Equity securities |
||||||||||||
Loans to subsidiaries: |
||||||||||||
Nonbank subsidiaries |
||||||||||||
Total loans to subsidiaries |
||||||||||||
Investment in subsidiaries: |
||||||||||||
Nonbank subsidiaries |
||||||||||||
Total investment in subsidiaries |
||||||||||||
Goodwill |
||||||||||||
Other assets |
||||||||||||
Total Assets |
$ |
|||||||||||
Liabilities |
||||||||||||
Other short-term borrowings |
$ |
|||||||||||
Accrued expenses and other liabilities |
||||||||||||
Long-term debt (external) |
||||||||||||
Total Liabilities |
$ |
|||||||||||
Equity |
||||||||||||
Common stock |
$ |
|||||||||||
Preferred stock |
||||||||||||
Capital surplus |
||||||||||||
Retained earnings |
||||||||||||
Accumulated other comprehensive income (loss) |
( |
|||||||||||
Treasury stock |
( |
( |
||||||||||
Noncontrolling interests |
||||||||||||
Total Equity |
||||||||||||
Total Liabilities and Equity |
$ |
|||||||||||
190 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Statements of Cash Flows (Parent Company Only) |
||||||||||||
For the years ended December 31 ($ in millions) |
2019 |
2018 |
2017 |
|||||||||
Operating Activities |
||||||||||||
Net income |
$ | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
(Benefit from) provision for deferred income taxes |
( |
|||||||||||
Securities gains, net |
( |
|||||||||||
Equity in undistributed earnings |
( |
( |
||||||||||
Net change in: |
||||||||||||
Equity securities |
( |
|||||||||||
Other assets |
( |
|||||||||||
Accrued expenses and other liabilities |
( |
( |
||||||||||
Net Cash Provided by Operating Activities |
||||||||||||
Investing Activities |
||||||||||||
Net change in: |
||||||||||||
Short-term investments |
( |
( |
( |
|||||||||
Loans to subsidiaries |
||||||||||||
Net cash paid on acquisition |
( |
|||||||||||
Net Cash (Used in) Provided by Investing Activities |
( |
( |
||||||||||
Financing Activities |
||||||||||||
Net change in other short-term borrowings |
( |
( |
||||||||||
Dividends paid on common stock |
( |
( |
( |
|||||||||
Dividends paid on preferred stock |
( |
( |
( |
|||||||||
Proceeds from issuance of long-term debt |
||||||||||||
Repayment of long-term debt |
( |
( |
( |
|||||||||
Issuance of preferred stock |
||||||||||||
Repurchase of treasury stock and related forward contract |
( |
( |
( |
|||||||||
Other, net |
( |
( |
( |
|||||||||
Net Cash Used in Financing Activities |
( |
( |
( |
|||||||||
(Decrease) Increase in Cash |
( |
( |
||||||||||
Cash at Beginning of Period |
||||||||||||
Cash at End of Period |
$ | |||||||||||
191 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
32. BUSINESS SEGMENTS
192 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the results of operations and assets by business segment for the years ended December 31:
2019 ($ in millions) |
Commercial Banking |
Branch Banking |
Consumer Lending |
Wealth and Asset Management |
General Corporate and Other |
Eliminations |
Total |
|||||||||||||||||||||
Net interest income |
$ |
( |
) |
|||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||
Net interest income after provision for credit losses |
( |
) |
||||||||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||
Corporate banking revenue |
(c) |
|||||||||||||||||||||||||||
Service charges on deposits |
( |
) |
||||||||||||||||||||||||||
Wealth and asset management revenue |
( (a) |
|||||||||||||||||||||||||||
Card and processing revenue |
||||||||||||||||||||||||||||
Mortgage banking net revenue |
||||||||||||||||||||||||||||
Other noninterest income (b) |
||||||||||||||||||||||||||||
Securities gains, net |
||||||||||||||||||||||||||||
Securities gains, net - non-qualifying hedges on MSRs |
||||||||||||||||||||||||||||
Total noninterest income |
( |
) |
||||||||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||
Salaries, wages and incentives |
||||||||||||||||||||||||||||
Employee benefits |
||||||||||||||||||||||||||||
Technology and communications |
||||||||||||||||||||||||||||
Net occupancy expense (e) |
||||||||||||||||||||||||||||
Card and processing expense |
( |
) |
||||||||||||||||||||||||||
Equipment expense |
||||||||||||||||||||||||||||
Other noninterest expense |
( |
) |
( |
) |
||||||||||||||||||||||||
Total noninterest expense |
( |
) |
||||||||||||||||||||||||||
Income before income taxes |
||||||||||||||||||||||||||||
Applicable income tax expense |
||||||||||||||||||||||||||||
Net income |
||||||||||||||||||||||||||||
Total goodwill |
$ |
|||||||||||||||||||||||||||
Total assets |
$ |
( (d) |
||||||||||||||||||||||||||
(a) |
Revenue sharing agreements between wealth and asset management and branch banking are eliminated in the Consolidated Statements of Income. |
(b) |
Includes impairment charges of $ for branches and land. For more information, refer to Note 8 and Note 29. |
(c) |
Includes impairment charges of $ for operating lease equipment. For more information, refer to Note 9 and Note 29. |
(d) |
Includes bank premises and equipment of $ classified as held for sale. For more information, refer to Note 8. |
(e) |
Includes impairment losses and termination charges of $ |
193 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2018 ($ in millions) |
Commercial Banking |
Branch Banking |
Consumer Lending |
Wealth and Asset Management |
General Corporate and Other |
Eliminations |
Total |
|||||||||||||||||||||
Net interest income |
$ | ( |
) | |||||||||||||||||||||||||
Provision for (benefit from) credit losses |
( |
) | ||||||||||||||||||||||||||
Net interest income after provision for credit losses |
( |
) | ||||||||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||
Corporate banking revenue |
(c) |
( |
) | |||||||||||||||||||||||||
Service charges on deposits |
||||||||||||||||||||||||||||
Wealth and asset management revenue |
( (a) |
|||||||||||||||||||||||||||
Card and processing revenue |
||||||||||||||||||||||||||||
Mortgage banking net revenue |
||||||||||||||||||||||||||||
Other noninterest income (b) |
||||||||||||||||||||||||||||
Securities losses, net |
( |
) | ( |
|||||||||||||||||||||||||
Securities losses, net - non-qualifying hedges on MSRs |
( |
) | ( |
|||||||||||||||||||||||||
Total noninterest income |
( |
) | ||||||||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||
Salaries, wages and incentives |
||||||||||||||||||||||||||||
Employee benefits |
||||||||||||||||||||||||||||
Technology and communications |
||||||||||||||||||||||||||||
Net occupancy expense |
||||||||||||||||||||||||||||
Card and processing expense |
( |
) | ||||||||||||||||||||||||||
Equipment expense |
||||||||||||||||||||||||||||
Other noninterest expense |
( |
) | ( |
) | ||||||||||||||||||||||||
Total noninterest expense |
( |
) | ||||||||||||||||||||||||||
Income (loss) before income taxes |
( |
) | ||||||||||||||||||||||||||
Applicable income tax expense (benefit) |
( |
) | ||||||||||||||||||||||||||
Net income (loss) |
( |
) | ||||||||||||||||||||||||||
Total goodwill |
$ | |||||||||||||||||||||||||||
Total assets |
$ | ( (d) |
||||||||||||||||||||||||||
(a) |
Revenue sharing agreements between wealth and asset management and branch banking are eliminated in the Consolidated Statements of Income. |
(b) |
Includes impairment charges of $ |
(c) |
Includes impairment charges of $ |
(d) |
Includes bank premises and equipment of $ |
194 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2017 ($ in millions) |
Commercial Banking |
Branch Banking |
Consumer Lending |
Wealth and Asset Management |
General Corporate and Other |
Eliminations |
Total |
|||||||||||||||||||||
Net interest income |
$ | ( |
) | |||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||
Net interest income after provision for credit losses |
( |
) | ||||||||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||
Corporate banking revenue |
(c) |
( |
) | |||||||||||||||||||||||||
Service charges on deposits |
||||||||||||||||||||||||||||
Wealth and asset management revenue |
( (a) |
|||||||||||||||||||||||||||
Card and processing revenue |
||||||||||||||||||||||||||||
Mortgage banking net revenue |
||||||||||||||||||||||||||||
Other noninterest income (b) |
||||||||||||||||||||||||||||
Securities gains, net |
||||||||||||||||||||||||||||
Securities gains, net - non-qualifying hedges on MSRs |
||||||||||||||||||||||||||||
Total noninterest income |
( |
) | ||||||||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||
Salaries, wages and incentives |
||||||||||||||||||||||||||||
Employee benefits |
||||||||||||||||||||||||||||
Technology and communications |
||||||||||||||||||||||||||||
Net occupancy expense |
||||||||||||||||||||||||||||
Card and processing expense |
( |
) | ||||||||||||||||||||||||||
Equipment expense |
||||||||||||||||||||||||||||
Other noninterest expense |
( |
) | ( |
) | ||||||||||||||||||||||||
Total noninterest expense |
( |
) | ||||||||||||||||||||||||||
Income before income taxes |
||||||||||||||||||||||||||||
Applicable income tax expense |
||||||||||||||||||||||||||||
Net income |
||||||||||||||||||||||||||||
Total goodwill |
$ | |||||||||||||||||||||||||||
Total assets |
$ | ( (d) |
||||||||||||||||||||||||||
(a) |
Revenue sharing agreements between wealth and asset management and branch banking are eliminated in the Consolidated Statements of Income. |
(b) |
Includes impairment charges of $ |
(c) |
Includes impairment charges of $ |
(d) |
Includes bank premises and equipment of $ |
195 Fifth Third Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
33. SUBSEQUENT EVENT
196 Fifth Third Bancorp
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Bancorp conducted an evaluation, under the supervision and with the participation of the Bancorp’s management, including the Bancorp’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Bancorp’s disclosure controls and procedures (as defined in Rules
13a-15(e)
and 15d-15(e)
under the Securities Exchange Act of 1934). Based on the foregoing, as of the end of the period covered by this report, the Bancorp’s Chief Executive Officer and Chief Financial Officer concluded that the Bancorp’s disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Bancorp files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and when required and information is accumulated and communicated to management including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.MANAGEMENT’S ASSESSMENT AS TO THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Fifth Third Bancorp is responsible for establishing and maintaining adequate internal control, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Bancorp’s management assessed the effectiveness of the Bancorp’s internal control over financial reporting as of December 31, 2019. Management’s assessment is based on the criteria established in the issued by the Committee of Sponsoring Organizations of the Treadway Commission and was designed to provide reasonable assurance that the Bancorp maintained effective internal control over financial reporting as of December 31, 2019. Based on this assessment, management believes that the Bancorp maintained effective internal control over financial reporting as of December 31, 2019. The Bancorp’s independent registered public accounting firm, that audited the Bancorp’s consolidated financial statements included in this annual report, has issued an audit report on our internal control over financial reporting as of December 31, 2019. This report appears on page 198 of the annual report.
Internal Control — Integrated Framework (2013)
CHANGES IN INTERNAL CONTROLS
The Bancorp’s management also conducted an evaluation of internal control over financial reporting to determine whether any changes occurred during the year covered by this report that have materially affected, or are reasonably likely to materially affect, the Bancorp’s internal control over financial reporting. Based on this evaluation, there has been no such change during the year covered by this report.
| /s/ Greg D. Carmichael |
/s/ Tayfun Tuzun | |||
| Greg D. Carmichael |
Tayfun Tuzun | |||
| Chairman, President and Chief Executive Officer |
Executive Vice President and Chief Financial Officer | |||
| March 2, 2020 |
March 2, 2020 |
197 Fifth Third Bancorp
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of Fifth Third Bancorp:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Fifth Third Bancorp and subsidiaries (the “Bancorp”) as of December 31, 2019, based on criteria established in issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Bancorp maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in issued by COSO.
Internal Control — Integrated Framework (2013)
Internal Control — Integrated Framework (2013)
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Bancorp and our report dated March 2, 2020 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Bancorp’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Assessment as to the Effectiveness of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Bancorp’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Bancorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
March 2, 2020
198 Fifth Third Bancorp
199 Fifth Third Bancorp
200 Fifth Third Bancorp
201 Fifth Third Bancorp
202 Fifth Third Bancorp
203 Fifth Third Bancorp
204 Fifth Third Bancorp
205 Fifth Third Bancorp
CONSOLIDATED TEN YEAR COMPARISON
| AVERAGE ASSETS FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS) |
||||||||||||||||||||||||||||||||||
| Interest-Earning Assets |
||||||||||||||||||||||||||||||||||
| Year |
Loans and Leases |
Federal Funds Sold (a) |
Interest-Bearing Deposits in Banks (a) |
Investment Securities |
Total |
Cash and Due from Banks |
Other Assets |
Total Average Assets |
||||||||||||||||||||||||||
| 2019 |
$ |
107,794 |
1 |
2,139 |
35,470 |
145,404 |
2,748 |
16,903 |
163,936 |
|||||||||||||||||||||||||
| 2018 |
93,876 |
1 |
1,475 |
33,553 |
128,905 |
2,200 |
12,203 |
142,183 |
||||||||||||||||||||||||||
| 2017 |
92,731 |
1 |
1,389 |
32,172 |
126,293 |
2,224 |
13,236 |
140,527 |
||||||||||||||||||||||||||
| 2016 |
94,320 |
1 |
1,865 |
30,099 |
126,285 |
2,303 |
14,870 |
142,173 |
||||||||||||||||||||||||||
| 2015 |
93,339 |
1 |
3,257 |
26,987 |
123,584 |
2,608 |
15,100 |
139,999 |
||||||||||||||||||||||||||
| 2014 |
91,127 |
- |
3,043 |
21,823 |
115,993 |
2,892 |
14,443 |
131,847 |
||||||||||||||||||||||||||
| 2013 |
89,093 |
1 |
2,416 |
16,444 |
107,954 |
2,482 |
15,025 |
123,704 |
||||||||||||||||||||||||||
| 2012 |
84,822 |
2 |
1,493 |
15,319 |
101,636 |
2,355 |
15,643 |
117,562 |
||||||||||||||||||||||||||
| 2011 |
80,214 |
1 |
2,030 |
15,437 |
97,682 |
2,352 |
15,259 |
112,590 |
||||||||||||||||||||||||||
| 2010 |
79,232 |
11 |
3,317 |
16,371 |
98,931 |
2,245 |
14,758 |
112,351 |
||||||||||||||||||||||||||
| AVERAGE DEPOSITS AND SHORT-TERM BORROWINGS FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS) |
||||||||||||||||||||||||||||||||||||||||||
| Deposits |
||||||||||||||||||||||||||||||||||||||||||
| Year |
Demand |
Interest Checking |
Savings |
Money Market |
Other Time |
Certificates $100,000 and Over |
Foreign Office and Other |
Total |
Short-Term Borrowings (b) |
Total |
||||||||||||||||||||||||||||||||
| 2019 |
$ |
34,343 |
36,658 |
14,041 |
25,879 |
5,470 |
4,504 |
474 |
121,369 |
2,313 |
123,682 |
|||||||||||||||||||||||||||||||
| 2018 |
32,634 |
29,818 |
13,330 |
21,769 |
4,106 |
2,426 |
839 |
104,922 |
3,120 |
108,042 |
||||||||||||||||||||||||||||||||
| 2017 |
35,093 |
26,382 |
13,958 |
20,231 |
3,771 |
2,564 |
665 |
102,664 |
3,715 |
106,379 |
||||||||||||||||||||||||||||||||
| 2016 |
35,862 |
25,143 |
14,346 |
19,523 |
4,010 |
2,735 |
830 |
102,449 |
3,351 |
105,800 |
||||||||||||||||||||||||||||||||
| 2015 |
35,164 |
26,160 |
14,951 |
18,152 |
4,051 |
2,869 |
874 |
102,221 |
2,641 |
104,862 |
||||||||||||||||||||||||||||||||
| 2014 |
31,755 |
25,382 |
16,080 |
14,670 |
3,762 |
3,929 |
1,828 |
97,406 |
2,331 |
99,737 |
||||||||||||||||||||||||||||||||
| 2013 |
29,925 |
23,582 |
18,440 |
9,467 |
3,760 |
6,339 |
1,518 |
93,031 |
3,527 |
96,558 |
||||||||||||||||||||||||||||||||
| 2012 |
27,196 |
23,096 |
21,393 |
4,903 |
4,306 |
3,102 |
1,555 |
85,551 |
4,806 |
90,357 |
||||||||||||||||||||||||||||||||
| 2011 |
23,389 |
18,707 |
21,652 |
5,154 |
6,260 |
3,656 |
3,497 |
82,315 |
3,122 |
85,437 |
||||||||||||||||||||||||||||||||
| 2010 |
19,669 |
18,218 |
19,612 |
4,808 |
10,526 |
6,083 |
3,361 |
82,277 |
1,926 |
84,203 |
||||||||||||||||||||||||||||||||
| INCOME FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA) |
||||||||||||||||||||||||||||||||||
| Per Share |
||||||||||||||||||||||||||||||||||
| Year |
Interest Income |
Interest Expense |
Noninterest Income |
Noninterest Expense |
Net Income Available to Common Shareholders |
Earnings |
Diluted Earnings |
Dividends Declared |
||||||||||||||||||||||||||
| 2019 |
$ |
6,254 |
1,457 |
3,536 |
4,660 |
2,419 |
3.38 |
3.33 |
0.94 |
|||||||||||||||||||||||||
| 2018 |
5,183 |
1,043 |
2,790 |
3,958 |
2,118 |
3.11 |
3.06 |
0.74 |
||||||||||||||||||||||||||
| 2017 |
4,489 |
691 |
3,224 |
3,782 |
2,105 |
2.86 |
2.81 |
0.60 |
||||||||||||||||||||||||||
| 2016 |
4,193 |
578 |
2,696 |
3,737 |
1,472 |
1.92 |
1.91 |
0.53 |
||||||||||||||||||||||||||
| 2015 |
4,028 |
495 |
3,003 |
3,643 |
1,610 |
2.00 |
1.97 |
0.52 |
||||||||||||||||||||||||||
| 2014 |
4,030 |
451 |
2,473 |
3,619 |
1,384 |
1.65 |
1.63 |
0.51 |
||||||||||||||||||||||||||
| 2013 |
3,973 |
412 |
3,227 |
3,978 |
1,799 |
2.05 |
2.02 |
0.47 |
||||||||||||||||||||||||||
| 2012 |
4,107 |
512 |
2,999 |
4,083 |
1,541 |
1.69 |
1.66 |
0.36 |
||||||||||||||||||||||||||
| 2011 |
4,218 |
661 |
2,455 |
3,804 |
1,094 |
1.20 |
1.18 |
0.28 |
||||||||||||||||||||||||||
| 2010 |
4,489 |
885 |
2,729 |
3,879 |
503 |
0.63 |
0.63 |
0.04 |
||||||||||||||||||||||||||
| MISCELLANEOUS AT DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA) |
||||||||||||||||||||||||||||||||||||||||||
| Bancorp Shareholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||
| Year |
Common Shares Outstanding |
Common Stock |
Preferred Stock |
Capital Surplus |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total |
Book Value Per Share |
Allowance for Loan and Lease Losses |
||||||||||||||||||||||||||||||||
| 2019 |
708,915,629 |
$ |
2,051 |
1,770 |
3,599 |
18,315 |
1,192 |
(5,724) |
21,203 |
27.41 |
1,202 |
|||||||||||||||||||||||||||||||
| 2018 |
646,630,857 |
2,051 |
1,331 |
2,873 |
16,578 |
(112) |
(6,471) |
16,250 |
23.07 |
1,103 |
||||||||||||||||||||||||||||||||
| 2017 |
693,804,893 |
2,051 |
1,331 |
2,790 |
14,957 |
73 |
(5,002) |
16,200 |
21.43 |
1,196 |
||||||||||||||||||||||||||||||||
| 2016 |
750,479,299 |
2,051 |
1,331 |
2,756 |
13,290 |
59 |
(3,433) |
16,054 |
19.62 |
1,253 |
||||||||||||||||||||||||||||||||
| 2015 |
785,080,314 |
2,051 |
1,331 |
2,666 |
12,224 |
197 |
(2,764) |
15,705 |
18.31 |
1,272 |
||||||||||||||||||||||||||||||||
| 2014 |
824,046,952 |
2,051 |
1,331 |
2,646 |
11,034 |
429 |
(1,972) |
15,519 |
17.22 |
1,322 |
||||||||||||||||||||||||||||||||
| 2013 |
855,305,745 |
2,051 |
1,034 |
2,561 |
10,156 |
82 |
(1,295) |
14,589 |
15.85 |
1,582 |
||||||||||||||||||||||||||||||||
| 2012 |
882,152,057 |
2,051 |
398 |
2,758 |
8,768 |
375 |
(634) |
13,716 |
15.10 |
1,854 |
||||||||||||||||||||||||||||||||
| 2011 |
919,804,436 |
2,051 |
398 |
2,792 |
7,554 |
470 |
(64) |
13,201 |
13.92 |
2,255 |
||||||||||||||||||||||||||||||||
| 2010 |
796,272,522 |
1,779 |
3,654 |
1,715 |
6,719 |
314 |
(130) |
14,051 |
13.06 |
3,004 |
||||||||||||||||||||||||||||||||
(a) |
Federal funds sold and interest-bearing deposits in banks are combined in other short-term investments in the Consolidated Financial Statements. |
(b) |
Includes federal funds purchased and other short-term investments. |
206 Fifth Third Bancorp
DIRECTORS AND OFFICERS
207 Fifth Third Bancorp
TABLE OF CONTENTS
Part IprintItem 1. BusinessprintItem 1A. Risk FactorsprintItem 1B. Unresolved Staff CommentsprintItem 2. PropertiesprintItem 3. Legal ProceedingsprintItem 4. Mine Safety DisclosuresprintPart IIprintItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesprintItem 6. Selected Financial DataprintItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of Operations (md&a)printItem 7A. Quantitative and Qualitative Disclosures About Market RiskprintItem 8. Financial Statements and Supplementary DataprintItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureprintItem 9A. Controls and ProceduresprintItem 9B. Other InformationprintPart IIIprintItem 10. Directors, Executive Officers and Corporate GovernanceprintItem 11. Executive CompensationprintItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersprintItem 13. Certain Relationships and Related Transactions, and Director IndependenceprintItem 14. Principal Accounting Fees and ServicesprintPart IVprintItem 15. Exhibits, Financial Statement SchedulesprintItem 16. Form 10 K Summaryprint