Fifth Third Announces Second Quarter 2021 Results

Rhea-AI Summary

Fifth Third Bancorp (NASDAQ: FITB) reported strong financial results for 2Q21, with net income of $709 million, up 264% from $195 million a year ago. Earnings per share reached $0.94, marking a 309% increase year-over-year. The company launched Momentum Banking, a fintech solution, and announced the acquisition of Provide, enhancing its fintech capabilities. Notably, the NCO ratio improved to 0.16%, indicating robust credit quality. Share repurchases totaled $347 million, with plans for additional buybacks in 2H21, positioning the company for continued growth.

Positive

• Net income rose to $709 million, up 264% YoY.
• Earnings per share increased to $0.94, a 309% YoY growth.
• Launched Momentum Banking, enhancing consumer banking services.
• Acquired Provide, boosting fintech capabilities.
• NCO ratio improved to 0.16%, reflecting strong credit quality.
• Share repurchases of $347 million, with a projected $850 million in 2H21.

Negative

• Mortgage banking revenue fell by 35% YoY.
• Noninterest income decreased by $8 million, or 1%, from the prior quarter.

Fifth Third Bancorp (NASDAQ ^®: FITB):

Key Highlights

Select Business Highlights:

• Launched Fifth Third Momentum Banking across footprint - a fintech banking solution with Early Pay, Extra Time, smart savings, and other features with no monthly fee
• Announced acquisition of Provide, a leading fintech company serving healthcare practices (expect to close early August 2021)
• Generated consumer household growth of 4% vs. 2Q20
• Published second annual ESG report on June 30^th

Select Financial Highlights:

(2Q21 versus 1Q21 where applicable)

• ROTCE^(a) of 16.6%; adjusted ROTCE^(a) of 19.7% excl. AOCI
• PPNR^(a) increased 12%; adjusted PPNR^(a) increased 15%
• Historically low NCO ratio of 0.16% reflecting improvements in both commercial and consumer
• Benefit to credit losses and resulting reserve coverage reflects improved macroeconomic environment and strong credit results; NPA ratio improved 11 bps
• Repurchased shares totaling $347 million; capital plans support repurchase of shares totaling approximately $850 million in 2H21; continue to target 9.5% CET1 by June 2022

Key Financial Data
$ millions for all balance sheet and income statement items
		2Q21		1Q21		2Q20
Income Statement Data
Net income available to common shareholders		$674		$674		$163
Net interest income (U.S. GAAP)		1,208		1,176		1,200
Net interest income (FTE)(a)		1,211		1,179		1,203
Noninterest income		741		749		650
Noninterest expense		1,153		1,215		1,121
Per Share Data
Earnings per share, basic		$0.95		$0.94		$0.23
Earnings per share, diluted		0.94		0.93		0.23
Book value per share		29.57		28.78		28.88
Tangible book value per share(a)		23.34		22.60		22.66
Balance Sheet & Credit Quality
Average portfolio loans and leases		$108,534		$108,956		$118,506
Average deposits		162,619		158,888		150,598
Net charge-off ratio(b)		0.16	%	0.27	%	0.44	%
Nonperforming asset ratio(c)		0.61		0.72		0.65
Financial Ratios
Return on average assets		1.38	%	1.38	%	0.40	%
Return on average common equity		13.0		13.1		3.2
Return on average tangible common equity(a)		16.6		16.8		4.3
CET1 capital(d)(e)		10.37		10.46		9.72
Net interest margin(a)		2.63		2.62		2.75
Efficiency(a)		59.1		63.0		60.5

Other than the Quarterly Financial Review tables beginning on page 14 of the earnings release, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis.

CEO Commentary

"We delivered outstanding financial results once again this quarter supported by strong business performance across our franchise and reflecting improved and diversified revenues. This was combined with well-managed expenses and yet another quarter of historically low net charge-offs reflecting our disciplined client selection, conservative underwriting, and improvement in the broader economy supported by government stimulus programs.

Commercial lending production trends and pipelines continue to indicate improved loan growth once supply and labor constraints normalize. To further accelerate profitable relationship growth over the long-term, we recently announced the acquisition of Provide, a leading fintech company serving healthcare practices.

Furthermore, we recently launched Fifth Third Momentum Banking, a consumer banking value proposition unparalleled in the industry, which combines the best of a traditional bank offering with several leading fintech features. We believe this will further accelerate our already-strong household growth and continue to provide a differentiated customer experience.

We remain focused on disciplined client selection, generating strong relationships and managing the balance sheet through varying cycles over a long-term performance horizon. We are well-positioned to benefit when interest rates rise and well-hedged if rates remain at low levels for several more years. As a result, we expect to generate and return a significant amount of excess capital to shareholders over the next year.”

-Greg D. Carmichael, Chairman and CEO

	Income Statement Highlights
	($ in millions, except per share data)		For the Three Months Ended									% Change
			June			March			June
			2021			2021			2020			Seq		Yr/Yr
	Condensed Statements of Income
	Net interest income (NII)(a)		$1,211			$1,179			$1,203			3%		1%
	(Benefit from) provision for credit losses		(115)			(173)			485			(34)%		NM
	Noninterest income		741			749			650			(1)%		14%
	Noninterest expense		1,153			1,215			1,121			(5)%		3%
	Income before income taxes(a)		$914			$886			$247			3%		270%
	Taxable equivalent adjustment		$3			$3			$3			—		—
	Applicable income tax expense		202			189			49			7%		312%
	Net income		$709			$694			$195			2%		264%
	Dividends on preferred stock		35			20			32			75%		9%
	Net income available to common shareholders		$674			$674			$163			—		313%
	Earnings per share, diluted		$0.94			$0.93			$0.23			1%		309%

Fifth Third Bancorp (NASDAQ^®: FITB) today reported second quarter 2021 net income of $709 million compared to net income of $694 million in the prior quarter and $195 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $674 million, or $0.94 per diluted share, compared to $674 million, or $0.93 per diluted share, in the prior quarter and $163 million, or $0.23 per diluted share, in the year-ago quarter.

	Net Interest Income
	(FTE; $ in millions)(a)		For the Three Months Ended												% Change
			June				March				June
			2021				2021				2020				Seq		Yr/Yr
	Interest Income
	Interest income		$1,326				$1,305				$1,406				2%		(6)%
	Interest expense		115				126				203				(9)%		(43)%
	Net interest income (NII)		$1,211				$1,179				$1,203				3%		1%
	Average Yield/Rate Analysis														bps Change
	Yield on interest-earning assets		2.88	%			2.90	%			3.21	%			(2)		(33)
	Rate paid on interest-bearing liabilities		0.40	%			0.44	%			0.66	%			(4)		(26)
	Ratios
	Net interest rate spread		2.48	%			2.46	%			2.55	%			2		(7)
	Net interest margin (NIM)		2.63	%			2.62	%			2.75	%			1		(12)

Compared to the prior quarter, NII increased $32 million, or 3%. Results reflected the impact of purchases of GNMA loan buyouts associated with CARES Act forbearance plans from a third party ($3.7 billion purchased since December 2020, including $1.0 billion in April 2021), elevated investment portfolio prepayment penalties, higher day count, and the early redemption of long-term debt, partially offset by the impact of lower commercial loan balances and lower yields on loan balances. PPP-related interest income was $53 million, unchanged relative to the prior quarter. Compared to the prior quarter, NIM increased 1 bp reflecting elevated investment portfolio prepayment penalties, early redemption of long-term debt, and the impact of the aforementioned GNMA loan buyout purchases, partially offset by lower C&I loan balances and lower yields on loan balances. PPP and excess liquidity had a negative impact on NIM of approximately 49 bps in the second quarter of 2021, compared to 48 bps in the prior quarter. As a result, underlying NIM^(f) expanded 2 bps sequentially.

Compared to the year-ago quarter, NII increased $8 million, or 1%, primarily reflecting lower deposit costs, the impact of the aforementioned GNMA loan buyout purchases, interest income from PPP loans, and a reduction in long-term debt, partially offset by lower C&I loan balances. Compared to the year-ago quarter, NIM decreased 12 bps, primarily reflecting the impact of excess liquidity, lower market rates, and lower commercial loan balances, partially offset by lower deposit costs.

	Noninterest Income
	($ in millions)		For the Three Months Ended						% Change
			June		March		June
			2021		2021		2020		Seq		Yr/Yr
	Noninterest Income
	Service charges on deposits		$149		$144		$122		3%		22%
	Commercial banking revenue		160		153		137		5%		17%
	Mortgage banking net revenue		64		85		99		(25)%		(35)%
	Wealth and asset management revenue		145		143		120		1%		21%
	Card and processing revenue		102		94		82		9%		24%
	Leasing business revenue		61		87		57		(30)%		7%
	Other noninterest income		49		42		12		17%		308%
	Securities gains, net		10		3		21		233%		(52)%
	Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights		1		(2)		—		NM		NM
	Total noninterest income		$741		$749		$650		(1)%		14%

Reported noninterest income decreased $8 million, or 1%, from the prior quarter, and increased $91 million, or 14%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below, including securities gains and losses, which included approximately $10 million attributable to mark-to-market impacts related to non-qualified deferred compensation assets in the current quarter.

	Noninterest Income excluding certain items
	($ in millions)		For the Three Months Ended
			June			March			June
			2021			2021			2020
	Noninterest Income excluding certain items
	Noninterest income (U.S. GAAP)		$741			$749			$650
	Valuation of Visa total return swap		37			13			29
	Branch and non-branch real estate charges		—			—			12
	Securities (gains), net		(10)			(3)			(21)
	Noninterest income excluding certain items(a)		$768			$759			$670

Compared to the prior quarter, noninterest income excluding certain items increased $9 million, or 1%. Compared to the year-ago quarter, noninterest income excluding certain items increased $98 million, or 15%.

Compared to the prior quarter, service charges on deposits increased $5 million, or 3%, reflecting an increase in both commercial and consumer deposit fees. Commercial banking revenue increased $7 million, or 5%, primarily driven by increases in loan syndication revenue and financial risk management revenue, partially offset by lower corporate bond fees. Mortgage banking net revenue decreased $21 million, or 25%, reflecting an incremental $21 million unfavorable impact from MSR net valuation adjustments and an $8 million decrease in origination fees and gains on loan sales due to market pressures including margin compression. This was partially offset by an $8 million decrease in MSR asset decay reflecting slower prepayment speeds. Current quarter mortgage originations of $5.0 billion increased 7% compared to the prior quarter. Wealth and asset management revenue increased $2 million, or 1%, driven primarily by higher personal asset management revenue and brokerage fees, partially offset by seasonally strong tax preparation fees from the prior quarter. Card and processing revenue increased $8 million, or 9%, primarily driven by higher credit and debit interchange, partially offset by higher rewards. Leasing business revenue decreased $26 million, or 30%, primarily driven by strong lease syndication revenue from the prior quarter.

Compared to the year-ago quarter, service charges on deposits increased $27 million, or 22%, reflecting an increase in both commercial and consumer deposit fees. Commercial banking revenue increased $23 million, or 17%, primarily driven by increases in loan syndication revenue and M&A advisory revenue, partially offset by lower corporate bond fees. Mortgage banking net revenue decreased $35 million, or 35%, primarily driven by an increase in MSR asset decay and a decrease in origination fees and gains on loan sales due to market pressures including margin compression. Wealth and asset management revenue increased $25 million, or 21%, primarily driven by higher personal asset management revenue and brokerage fees. Card and processing revenue increased by $20 million, or 24%, primarily driven by higher credit and debit interchange, partially offset by higher rewards. Leasing business revenue increased $4 million, or 7%, primarily reflecting increases in lease remarketing revenue and business solutions revenue.

	Noninterest Expense
	($ in millions)		For the Three Months Ended									% Change
			June			March			June
			2021			2021			2020			Seq		Yr/Yr
	Noninterest Expense
	Compensation and benefits		$638			$706			$627			(10)%		2%
	Net occupancy expense		77			79			82			(3)%		(6)%
	Technology and communications		94			93			90			1%		4%
	Equipment expense		34			34			32			—		6%
	Card and processing expense		20			30			29			(33)%		(31)%
	Leasing business expense		33			35			33			(6)%		—
	Marketing expense		20			23			20			(13)%		—
	Other noninterest expense		237			215			208			10%		14%
	Total noninterest expense		$1,153			$1,215			$1,121			(5)%		3%

Reported noninterest expense decreased $62 million, or 5%, from the prior quarter, and increased $32 million, or 3%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below.

	Noninterest Expense excluding certain items
	($ in millions)	For the Three Months Ended
		June			March			June
		2021			2021			2020
	Noninterest Expense excluding certain items
	Noninterest expense (U.S. GAAP)	$1,153			$1,215			$1,121
	Merger-related expenses	—			—			(9)
	FHLB debt extinguishment charge	—			—			(6)
	Noninterest expense excluding certain items(a)	$1,153			$1,215			$1,106

Compared to the prior quarter, noninterest expense decreased $62 million, or 5%, reflecting the prior quarter seasonal compensation and benefits expense impacts, lower card and processing expense due to contract renegotiations, and diligent expense management throughout the company. These expense decreases were partially offset by increased performance-based compensation expense reflecting strong business results, higher other noninterest expense including the expenses associated with the aforementioned GNMA loan buyout purchases, and the impact of non-qualified deferred compensation mark-to-market expense ($12 million in the current quarter compared to $7 million in the prior quarter). Full-time equivalent employees declined 2% compared to the prior quarter.

Compared to the year-ago quarter, noninterest expense excluding certain items increased $47 million, or 4%, primarily due to an increase in performance-based compensation expense reflecting strong business results and higher other noninterest expense including the expenses associated with the aforementioned GNMA loan buyout purchases, partially offset by lower card and processing expense and lower net occupancy expense. Full-time equivalent employees declined 5% compared to the year-ago quarter.

	Average Interest-Earning Assets
	($ in millions)		For the Three Months Ended									% Change
			June			March			June
			2021			2021			2020			Seq		Yr/Yr
	Average Portfolio Loans and Leases
	Commercial loans and leases:
	Commercial and industrial loans		$48,773			$49,629			$59,040			(2)%		(17)%
	Commercial mortgage loans		10,459			10,532			11,222			(1)%		(7)%
	Commercial construction loans		6,043			6,039			5,548			—		9%
	Commercial leases		3,174			3,114			3,056			2%		4%
	Total commercial loans and leases		$68,449			$69,314			$78,866			(1)%		(13)%
	Consumer loans:
	Residential mortgage loans		$15,883			$15,803			$16,561			1%		(4)%
	Home equity		4,674			5,009			5,820			(7)%		(20)%
	Indirect secured consumer loans		14,702			13,955			12,124			5%		21%
	Credit card		1,770			1,879			2,248			(6)%		(21)%
	Other consumer loans		3,056			2,996			2,887			2%		6%
	Total consumer loans		$40,085			$39,642			$39,640			1%		1%
	Total average portfolio loans and leases		$108,534			$108,956			$118,506			—		(8)%
	Average Loans and Leases Held for Sale
	Commercial loans and leases held for sale		$52			$104			$68			(50)%		(24)%
	Consumer loans held for sale		5,857			4,641			844			26%		594%
	Total average loans and leases held for sale		$5,909			$4,745			$912			25%		548%
	Securities (taxable and tax-exempt)		$36,917			$36,297			$36,973			2%		—
	Other short-term investments		33,558			32,717			19,833			3%		69%
	Total average interest-earning assets		$184,918			$182,715			$176,224			1%		5%

Compared to the prior quarter, total average portfolio loans and leases were flat, as an increase in consumer loans was offset by a decrease in commercial loan and lease balances. Average commercial portfolio loans and leases decreased 1%, reflecting lower C&I term loan balances (nearly half of the sequential decline was due to PPP forgiveness), as well as lower commercial mortgage loans. Average consumer portfolio loans increased 1%, as higher indirect secured consumer loans were partially offset by lower home equity and credit card balances.

Compared to the year-ago quarter, total average portfolio loans and leases decreased 8% reflecting lower C&I revolving line of credit utilization and term loan balances, as well as declines in home equity and commercial mortgage loans, partially offset by increases in indirect secured consumer loans and commercial construction loans. Average commercial portfolio loans and leases decreased 13% due to declines in C&I revolving line of credit utilization and term loan balances and lower commercial mortgage loans, partially offset by growth in commercial construction loans. Average consumer portfolio loans increased 1%, as higher indirect secured consumer loans were partially offset by lower home equity, residential mortgage, and credit card balances.

Average loans and leases held for sale of $6 billion in the current quarter increased $1 billion compared to the prior quarter and increased $5 billion compared to the year-ago quarter, impacted by the aforementioned GNMA loan buyout purchases within consumer loans held for sale ($3.7 billion purchased since December 2020, including $1.0 billion in April 2021).

Average other short-term investments (including interest-bearing cash) of $34 billion in the current quarter increased $1 billion compared to the prior quarter and increased $14 billion compared to the year-ago quarter. The increase relative to the year-ago quarter reflected average core deposit growth of 10% compared to average total loan decline of 4%.

Total period-end commercial portfolio loans and leases of $67 billion decreased 3% from the prior quarter driven by lower C&I term loan balances almost entirely due to PPP forgiveness, as well as declines in commercial construction and commercial mortgage loan balances. Compared to the year-ago quarter, total period-end commercial portfolio loans decreased $8 billion, or 11%, reflecting lower C&I revolving line of credit utilization and term loan balances partially due to PPP forgiveness, as well as lower commercial mortgage loans, partially offset by growth in commercial construction loans. Period-end commercial revolving line utilization was flat compared to the prior quarter at 31%, compared to 38% in the year-ago quarter. Period-end consumer portfolio loans of $41 billion increased 2% compared to the prior quarter, as continued growth in indirect secured consumer loans and residential mortgage loans were partially offset by a decline in home equity balances. Compared to the year-ago quarter, total period-end consumer portfolio loans increased $1 billion, or 3%, reflecting higher indirect secured consumer loan balances, partially offset by lower home equity balances.

Average Deposits
	($ in millions)	For the Three Months Ended									% Change
		June			March			June
		2021			2021			2020			Seq		Yr/Yr
	Average Deposits
	Demand	$61,994			$58,586			$45,761			6%		35%
	Interest checking	45,307			45,568			49,760			(1)%		(9)%
	Savings	20,494			18,951			16,354			8%		25%
	Money market	30,844			30,601			30,022			1%		3%
	Foreign office(g)	140			128			182			9%		(23)%
	Total transaction deposits	$158,779			$153,834			$142,079			3%		12%
	Other time	2,696			3,045			4,421			(11)%		(39)%
	Total core deposits	$161,475			$156,879			$146,500			3%		10%
	Certificates - $100,000 and over	1,144			2,009			4,067			(43)%		(72)%
	Other deposits	—			—			31			NM		(100)%
	Total average deposits	$162,619			$158,888			$150,598			2%		8%

Compared to the prior quarter, average core deposits increased 3%, as increases in consumer and commercial deposit balances across most product types benefited from continued fiscal and monetary stimulus and were partially offset by a decrease in other time balances. Average demand deposits represented 38% of total core deposits in the current quarter compared to 37% in the prior quarter. Average commercial transaction deposits increased 1% and average consumer transaction deposits increased 5%.

Compared to the year-ago quarter, average core deposits increased 10%, driven by the impacts of fiscal and monetary stimulus combined with success generating consumer household growth. Average commercial transaction deposits increased 7% and average consumer transaction deposits increased 17%.

The period end portfolio loan-to-core deposit ratio was 67% in the current quarter, compared to 68% in the prior quarter and 75% in the year-ago quarter. Excluding the impact of PPP loans, the period end portfolio loan-to-core deposit ratio was 64% in the current quarter, compared to 64% in the prior quarter and 72% in the year-ago quarter.

Average Wholesale Funding
	($ in millions)		For the Three Months Ended									% Change
			June			March			June
			2021			2021			2020			Seq		Yr/Yr
	Average Wholesale Funding
	Certificates - $100,000 and over		$1,144			$2,009			$4,067			(43)%		(72)%
	Other deposits		—			—			31			NM		(100)%
	Federal funds purchased		346			324			309			7%		12%
	Other short-term borrowings		1,097			1,209			2,377			(9)%		(54)%
	Long-term debt		13,883			14,849			16,955			(7)%		(18)%
	Total average wholesale funding		$16,470			$18,391			$23,739			(10)%		(31)%

Compared to the prior quarter, average wholesale funding decreased 10%, driven by the retirement of approximately $2.3 billion in long-term debt in the current quarter, as well as continued runoff in jumbo CD balances. Compared to the year-ago quarter, average wholesale funding decreased 31%, reflecting decreases in long-term debt, jumbo CD balances, and other short-term borrowings.

Credit Quality Summary
($ in millions)		As of and For the Three Months Ended
		June					March			December			September			June
		2021					2021			2020			2020			2020
Total nonaccrual portfolio loans and leases (NPLs)		$621					$741			$834			$891			$700
Repossessed property		5					7			9			7			4
OREO		31					35			21			33			43
Total nonperforming portfolio loans and leases and OREO (NPAs)		$657					$783			$864			$931			$747
NPL ratio(h)		0.58%					0.68%			0.77%			0.80%			0.61%
NPA ratio(c)		0.61%					0.72%			0.79%			0.84%			0.65%
Total loans and leases 30-89 days past due (accrual)		$281					$305			$357			$323			$381
Total loans and leases 90 days past due (accrual)		83					124			163			139			136
Allowance for loan and lease losses (ALLL), beginning		$2,208					$2,453			$2,574			$2,696			$2,348
Total net losses charged-off		(44)					(71)			(118)			(101)			(130)
(Benefit from) provision for loan and lease losses		(131)					(174)			(3)			(21)			478
ALLL, ending		$2,033					$2,208			$2,453			$2,574			$2,696
Reserve for unfunded commitments, beginning		$173					$172			$182			$176			$169
Provision for (benefit from) the reserve for unfunded commitments		16					1			(10)			6			7
Reserve for unfunded commitments, ending		$189					$173			$172			$182			$176
Total allowance for credit losses (ACL)		$2,222					$2,381			$2,625			$2,756			$2,872
ACL ratios:
As a % of portfolio loans and leases		2.06%					2.19%			2.41%			2.49%			2.50%
As a % of nonperforming portfolio loans and leases		358%					321%			315%			309%			410%
As a % of nonperforming portfolio assets		338%					304%			304%			296%			385%
ALLL as a % of portfolio loans and leases		1.89%					2.03%			2.25%			2.32%			2.34%
Total losses charged-off		$(103)					$(109)			$(154)			$(135)			$(163)
Total recoveries of losses previously charged-off		59					38			36			34			33
Total net losses charged-off		$(44)					$(71)			$(118)			$(101)			$(130)
Net charge-off ratio (NCO ratio)(b)		0.16%					0.27%			0.43%			0.35%			0.44%
Commercial NCO ratio		0.10%					0.17%			0.40%			0.33%			0.40%
Consumer NCO ratio		0.26%					0.43%			0.47%			0.40%			0.52%

Nonperforming portfolio loans and leases were $621 million in the current quarter, with the resulting NPL ratio of 0.58%. Compared to the prior quarter, NPLs decreased $120 million with the NPL ratio decreasing 10 bps. Compared to the year-ago quarter, NPLs decreased $79 million with the NPL ratio decreasing 3 bps.

Nonperforming portfolio assets were $657 million in the current quarter, with the resulting NPA ratio of 0.61%. Compared to the prior quarter, NPAs decreased $126 million with the NPA ratio decreasing 11 bps. Compared to the year-ago quarter, NPAs decreased $90 million with the NPA ratio decreasing 4 bps.

The benefit from credit losses totaled $115 million in the current quarter. The allowance for credit loss ratio represented 2.06% of total portfolio loans and leases in the current quarter, compared with 2.19% in the prior quarter and 2.50% in the year-ago quarter. In the current quarter, the allowance for credit losses represented 358% of nonperforming portfolio loans and leases and 338% of nonperforming portfolio assets. The allowance for loan and lease losses ratio represented 1.89% of total portfolio loans and leases in the current quarter.

Net charge-offs were $44 million in the current quarter, with the resulting NCO ratio of 0.16%. Compared to the prior quarter, net charge-offs decreased $27 million and the NCO ratio decreased 11 bps, reflecting improvement in both commercial and consumer portfolios. Compared to the year-ago quarter, net charge-offs decreased $86 million and the NCO ratio decreased 28 bps.

	Capital Position
				As of and For the Three Months Ended
				June				March				December			September		June
				2021				2021				2020			2020		2020
	Capital Position
	Average total Bancorp shareholders' equity as a % of average assets			11.11	%			11.26	%			11.34%			11.33%		11.30	%
	Tangible equity(a)			8.35	%			8.20	%			8.18%			8.09%		7.68	%
	Tangible common equity (excluding AOCI)(a)			7.28	%			7.14	%			7.11%			6.99%		6.77	%
	Tangible common equity (including AOCI)(a)			8.18	%			7.95	%			8.29%			8.31%		8.13	%
	Regulatory Capital Ratios(d)(e)
	CET1 capital			10.37	%			10.46	%			10.34%			10.14%		9.72	%
	Tier I risk-based capital			11.83	%			11.94	%			11.83%			11.64%		10.96	%
	Total risk-based capital			14.60	%			14.80	%			15.08%			14.93%		14.24	%
	Tier I leverage			8.55	%			8.61	%			8.49%			8.37%		8.16	%

Capital ratios remained strong this quarter. The CET1 capital ratio was 10.37%, the tangible common equity to tangible assets ratio was 7.28% excluding AOCI, and 8.18% including AOCI. The Tier I risk-based capital ratio was 11.83%, the Total risk-based capital ratio was 14.60%, and the Tier I leverage ratio was 8.55%. Certain capital ratios, including the Tier I leverage ratio, continued to be impacted by the increase in assets since the onset of the pandemic, predominantly from 0% risk-weighted assets resulting from interest-bearing cash as well as PPP loans.

During the second quarter of 2021, Fifth Third repurchased approximately $347 million of its outstanding stock, which reduced common shares by approximately 8.6 million at quarter end.

On June 24, 2021, the Federal Reserve Board (FRB) notified Fifth Third that its required stress capital buffer (SCB) beginning July 1, 2021 will be 2.5%, which is the floor under the regulatory capital rules. Without the floor, Fifth Third's buffer would have been approximately 2.1%.

Fifth Third's capital position and earnings capacity support an increase in the quarterly common dividend starting in the third quarter of 2021, subject to economic conditions and approval by the Fifth Third Board of Directors.

Tax Rate

The effective tax rate was 22.1% compared with 21.4% in the prior quarter and 19.9% in the year-ago quarter.

Conference Call

Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor Relations”). Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address, which will be available for 30 days.

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. As of June 30, 2021, the Company had $205 billion in assets and operates 1,096 full-service Banking Centers, and 2,369 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina and South Carolina. In total, Fifth Third provides its customers with access to approximately 53,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2021, had $483 billion in assets under care, of which it managed $61 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”

Earnings Release End Notes

(a)		Non-GAAP measure; see discussion of non-GAAP reconciliation beginning on page 27 of the earnings release.
(b)		Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis.
(c)		Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO.
(d)		Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(e)		Current period regulatory capital ratios are estimated.
(f)		Second quarter 2021 underlying NIM calculated by reducing average interest-earning assets approximately $31.1 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $4.8 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $53 million), resulting in an underlying NIM of approximately 3.12%; First quarter 2021 underlying NIM calculated by reducing average interest-earning assets approximately $30.2 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $5.2 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $53 million), resulting in an underlying NIM of approximately 3.10%.
(g)		Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.
(h)		Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO.

FORWARD-LOOKING STATEMENTS

This release contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance, capital actions 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 our most recent Annual Report on Form 10-K as updated by our filings with the U.S. Securities and Exchange Commission (“SEC”). 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. We undertake no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this document.

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) effects of the global COVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft, misappropriation or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Third’s capital plan; (21) regulation of Fifth Third’s derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates; (28) changes and trends in capital markets; (29) fluctuation of Fifth Third’s stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (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, other natural disasters, or health emergencies (including pandemics); (43) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity; and (44) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases.

You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.

Category: Earnings

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FAQ

What were Fifth Third Bancorp's earnings for Q2 2021?

Fifth Third Bancorp reported net income of $709 million for Q2 2021.

How much did Fifth Third Bancorp's earnings per share increase in Q2 2021?

Earnings per share rose to $0.94, marking a 309% increase year-over-year.

What is Fifth Third Bancorp's stock symbol?

The stock symbol for Fifth Third Bancorp is FITB.

What fintech solutions did Fifth Third Bancorp launch?

Fifth Third Bancorp launched Momentum Banking, a fintech banking solution.

What acquisition did Fifth Third Bancorp announce recently?

Fifth Third Bancorp announced the acquisition of Provide, a leading fintech company.