Fifth Third Announces First Quarter 2021 Results

Fifth Third Bancorp (NASDAQ: FITB):

Key Highlights

• Returned $180 million to shareholders through repurchases; capacity to repurchase up to $347 million in 2Q21
• ROTCE^(a) of 16.8%; adjusted ROTCE^(a) of 19.8% excl. AOCI improved 150 bps sequentially
• Produced record commercial banking revenue
• Generated consumer household growth of 3% compared to 1Q20
• Historically low NCO ratio reflecting improvements in commercial and consumer
• Benefit to credit losses and resulting reserve coverage reflects improved macroeconomic environment and strong credit results; NPA ratio improved 7 bps sequentially
• NII^(a) down 1%; reported NIM^(a) increased 4 bps, with ~4 bps decline in underlying NIM excl. excess cash and all PPP impacts^(f)
• Named one of the "World's Most Ethical Companies" by Ethisphere
• Exceeded five-year commitment to low-and-moderate income communities by more than $9 billion

 

 

 

 

 

 

 

Key Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ millions for all balance sheet and income statement items

 

 

 

 

 

 

1Q21

4Q20

1Q20

 

 

 

 

 

 

 

 

 

Income Statement Data

 

 

 

 

 

 

 

Net income available to common shareholders

$674

 

$569

 

$29

 

 

Net interest income (U.S. GAAP)

1,176

 

1,182

 

1,229

 

 

Net interest income (FTE)^(a)

1,179

 

1,185

 

1,233

 

 

Noninterest income

749

 

787

 

671

 

 

Noninterest expense

1,215

 

1,236

 

1,200

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

Earnings per share, basic

$0.94

 

$0.79

 

$0.04

 

 

Earnings per share, diluted

0.93

 

0.78

 

0.04

 

 

Book value per share

28.78

 

29.46

 

28.26

 

 

Tangible book value per share^(a)

22.60

 

23.28

 

22.02

 

 

 

 

 

 

 

 

 

 

Balance Sheet & Credit Quality

 

 

 

 

 

 

 

Average portfolio loans and leases

$108,956

 

$109,360

 

$110,779

 

 

Average deposits

158,888

 

158,626

 

126,789

 

 

Net charge-off ratio^(b)

0.27

%

0.43

%

0.44

%

 

Nonperforming asset ratio^(c)

0.72

 

0.79

 

0.60

 

 

 

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

 

 

Return on average assets

1.38

%

1.18

%

0.11

%

 

Return on average common equity

13.1

 

10.8

 

0.6

 

 

Return on average tangible common equity^(a)

16.8

 

13.9

 

1.0

 

 

CET1 capital^(d)(e)

10.46

 

10.34

 

9.37

 

 

Net interest margin^(a)

2.62

 

2.58

 

3.28

 

 

Efficiency^(a)

63.0

 

62.7

 

63.0

 

Other than the Quarterly Financial Review tables beginning on page 13 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

"Fifth Third’s quarterly financial performance was once again strong, reflecting record commercial banking revenue, continued momentum generating household growth, a strong underlying net interest margin, and historically low net charge-offs with improvements in both commercial and consumer portfolios.

Our credit results continue to demonstrate the strength of our balance sheet, as we have maintained our disciplined client selection, adhered to our conservative underwriting, and continued to manage our balance sheet exposures with a focus on a long-term performance horizon. I am optimistic that we will continue to benefit from an improving economic environment, including higher interest rates, as well as a more vibrant economy over the next year within most of our commercial franchise and throughout our retail footprint.

Despite the overall economic recovery over the past several quarters, I recognize that not everyone in our society has benefited from it. This is why I am very proud that, in addition to producing strong financial results, we have also continued to take deliberate actions to improve the lives of our customers and the well-being of our communities. I am particularly pleased that we exceeded our five-year community commitment to invest in low-and-moderate income communities by more than $9 billion.

We were honored to be named one of the world’s most ethical companies by Ethisphere, reflecting our strong corporate culture, compliance program, and ESG actions. We are guided by our core values to work as one bank, be respectful, take accountability, and always act with integrity. We remain committed to generating sustainable long-term value for shareholders and anticipate that we will continue improving our relative performance as a top performing regional bank."

-Greg D. Carmichael, Chairman and CEO

	Income Statement Highlights
	($ in millions, except per share data)		For the Three Months Ended						% Change
			March		December		March
			2021		2020		2020		Seq		Yr/Yr
	Condensed Statements of Income
	Net interest income (NII)(a)		$1,179		$1,185		$1,233		(1)%		(4)%
	(Benefit from) provision for credit losses		(173)		(13)		640		NM		NM
	Noninterest income		749		787		671		(5)%		12%
	Noninterest expense		1,215		1,236		1,200		(2)%		1%
	Income before income taxes(a)		$886		$749		$64		18%		NM
	Taxable equivalent adjustment		$3		$3		$4		—		(25)%
	Applicable income tax expense		189		142		14		33%		NM
	Net income		$694		$604		$46		15%		NM
	Dividends on preferred stock		20		35		17		(43)%		18%
	Net income available to common shareholders		$674		$569		$29		18%		NM
	Earnings per share, diluted		$0.93		$0.78		$0.04		19%		NM

Fifth Third Bancorp (NASDAQ: FITB) today reported first quarter 2021 net income of $694 million compared to net income of $604 million in the prior quarter and $46 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $674 million, or $0.93 per diluted share, compared to $569 million, or $0.78 per diluted share, in the prior quarter and $29 million, or $0.04 per diluted share, in the year-ago quarter.

	Net Interest Income
	(FTE; $ in millions)(a)		For the Three Months Ended									% Change
			March			December			March
			2021			2020			2020			Seq		Yr/Yr
	Interest Income
	Interest income		$1,305			$1,318			$1,529			(1)%		(15)%
	Interest expense		126			133			296			(5)%		(57)%
	Net interest income (NII)		$1,179			$1,185			$1,233			(1)%		(4)%
	Average Yield/Rate Analysis											bps Change
	Yield on interest-earning assets		2.90	%		2.87	%		4.07	%		3		(117)
	Rate paid on interest-bearing liabilities		0.44	%		0.45	%		1.09	%		(1)		(65)
	Ratios
	Net interest rate spread		2.46	%		2.42	%		2.98	%		4		(52)
	Net interest margin (NIM)		2.62	%		2.58	%		3.28	%		4		(66)

Compared to the prior quarter, NII decreased $6 million, or 1%, primarily due to lower day count and a reduction in prepayment penalties received in the investment portfolio, partially offset by the impact of loan purchases of government guaranteed GNMA loan buyouts associated with CARES Act forbearance plans from a third party ($2.1 billion in December 2020 and $0.6 billion in March 2021), as well as approximately $12 million in incremental PPP fees reflecting loan forgiveness. Compared to the prior quarter, NIM increased 4 bps reflecting a decline in excess liquidity, an increase in PPP fees, and the impact of day count, partially offset by the reduction in investment portfolio prepayment penalties received relative to the prior quarter. First quarter 2021 NIM was negatively impacted by approximately 48 bps due to the impacts of PPP and excess liquidity relative to historical balances, compared to 56 bps in the prior quarter.

Compared to the year-ago quarter, NII decreased $54 million, or 4%, primarily reflecting lower market rates and lower commercial loan balances, partially offset by lower deposit costs, the favorable impact of previously executed cash flow hedges, and interest income from PPP loans. Compared to the year-ago quarter, NIM decreased 66 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
			March		December		March
			2021		2020		2020		Seq		Yr/Yr
	Noninterest Income
	Service charges on deposits		$144		$146		$148		(1)%		(3)%
	Commercial banking revenue		153		141		124		9%		23%
	Mortgage banking net revenue		85		25		120		240%		(29)%
	Wealth and asset management revenue		143		133		134		8%		7%
	Card and processing revenue		94		92		86		2%		9%
	Leasing business revenue		87		69		73		26%		19%
	Other noninterest income		42		168		7		(75)%		500%
	Securities gains (losses), net		3		14		(24)		(79)%		NM
	Securities (losses) gains, net - non-qualifying hedges
	on mortgage servicing rights		(2)		(1)		3		100%		NM
	Total noninterest income		$749		$787		$671		(5)%		12%

Reported noninterest income decreased $38 million, or 5%, from the prior quarter, and increased $78 million, or 12%, 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 $4 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
			March		December		March
			2021		2020		2020
	Noninterest Income excluding certain items
	Noninterest income (U.S. GAAP)		$749		$787		$671
	Valuation of Visa total return swap		13		30		22
	Net business dispositions charge		—		11		—
	Net impairment of private equity investments		—		—		15
	Securities (gains) losses, net		(3)		(14)		24
	Noninterest income excluding certain items(a)		$759		$814		$732

Compared to the prior quarter, noninterest income excluding certain items decreased $55 million, or 7%. Compared to the year-ago quarter, noninterest income excluding certain items increased $27 million, or 4%.

Compared to the prior quarter, service charges on deposits decreased $2 million, or 1%, as a decrease in consumer deposit fees was partially offset by an increase in commercial deposit fees. Commercial banking revenue increased $12 million, or 9%, primarily driven by strong debt capital markets revenue combined with increased equity capital markets revenue, partially offset by lower M&A advisory revenue. Mortgage banking net revenue increased $60 million, or 240%, reflecting a $42 million increase in origination fees and gains on loan sales reflecting increased origination volumes and a $31 million improvement from MSR net valuation adjustments. This was partially offset by lower servicing revenue and elevated MSR asset decay. Current quarter mortgage originations of $4.7 billion increased 19% compared to the prior quarter. Wealth and asset management revenue increased $10 million, or 8%, driven by seasonally strong tax-related private client service revenue and higher personal asset management revenue reflecting market improvements. Card and processing revenue increased $2 million, or 2%, primarily driven by higher debit interchange and lower rewards, partially offset by a decrease in credit spend volume. Leasing business revenue increased $18 million, or 26%, primarily driven by strong lease syndication revenue, partially offset by lower income related to operating leases. Other noninterest income results were impacted by both the recognition of tax receivable agreement revenue of $74 million as well as private equity income in the prior quarter.

Compared to the year-ago quarter, service charges on deposits decreased $4 million, or 3%, as a decline in consumer deposit fees was partially offset by an increase in commercial deposit fees. Commercial banking revenue increased $29 million, or 23%, reflecting an increase in debt capital markets revenue, loan syndication revenue, and M&A advisory revenue, partially offset by lower financial risk management revenue. Mortgage banking net revenue decreased $35 million, or 29%, primarily driven by elevated MSR asset decay and lower servicing revenue, partially offset by an increase in mortgage origination fees and gain on loan sales. Wealth and asset management revenue increased $9 million, or 7%, primarily driven by higher personal asset management revenue and brokerage fees. Card and processing revenue increased by $8 million, or 9%, primarily reflecting higher consumer card spend and transaction volumes combined with lower rewards. Leasing business revenue increased $14 million, or 19%, primarily reflecting strong lease syndication revenue, partially offset by lower income related to operating leases.

	Noninterest Expense
	($ in millions)		For the Three Months Ended						% Change
			March		December		March
			2021		2020		2020		Seq		Yr/Yr
	Noninterest Expense
	Compensation and benefits		$706		$679		$647		4%		9%
	Net occupancy expense		79		98		82		(19)%		(4)%
	Technology and communications		93		90		93		3%		—
	Equipment expense		34		34		32		—		6%
	Card and processing expense		30		31		31		(3)%		(3)%
	Leasing business expense		35		37		35		(5)%		—
	Marketing expense		23		30		31		(23)%		(26)%
	Other noninterest expense		215		237		249		(9)%		(14)%
	Total noninterest expense		$1,215		$1,236		$1,200		(2)%		1%

Reported noninterest expense decreased $21 million, or 2%, from the prior quarter, and increased $15 million, or 1%, 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
			March		December		March
			2021		2020		2020
	Noninterest Expense excluding certain items
	Noninterest expense (U.S. GAAP)		$1,215		$1,236		$1,200
	Fifth Third Foundation contribution		—		(25)		—
	Branch and non-branch real estate charges		—		(21)		—
	Business acquisition and merger-related charges		—		(16)		(7)
	Noninterest expense excluding certain items(a)		$1,215		$1,174		$1,193

Compared to the prior quarter, noninterest expense excluding certain items increased $41 million, or 3%, primarily due to a seasonal increase in compensation and benefits expense as well as expenses linked to strong business performance, partially offset by lower other noninterest expense, net occupancy expense, and the mark-to-market impacts of approximately $7 million in non-qualified deferred compensation expense in the current quarter compared to a $19 million expense in the prior quarter. Compared to the year-ago quarter, noninterest expense excluding certain items increased $22 million, or 2%, primarily reflecting an increase in compensation and benefits expense, the unfavorable impact of $33 million from non-qualified deferred expenses compared to the year-ago quarter and servicing expense associated with recently-purchased consumer loans, partially offset by lower other noninterest expense (reflecting a $36 million unfavorable credit valuation adjustment in the year-ago quarter) and lower marketing expense.

	Average Interest-Earning Assets
	($ in millions)		For the Three Months Ended						% Change
			March		December		March
			2021		2020		2020		Seq		Yr/Yr
	Average Portfolio Loans and Leases
	Commercial loans and leases:
	Commercial and industrial loans		$49,629		$50,385		$51,586		(2)%		(4)%
	Commercial mortgage loans		10,532		10,727		11,019		(2)%		(4)%
	Commercial construction loans		6,039		5,820		5,132		4%		18%
	Commercial leases		3,114		2,932		3,201		6%		(3)%
	Total commercial loans and leases		$69,314		$69,864		$70,938		(1)%		(2)%
	Consumer loans:
	Residential mortgage loans		$15,803		$16,016		$16,732		(1)%		(6)%
	Home equity		5,009		5,315		6,006		(6)%		(17)%
	Indirect secured consumer loans		13,955		13,272		11,809		5%		18%
	Credit card		1,879		2,042		2,498		(8)%		(25)%
	Other consumer loans		2,996		2,851		2,796		5%		7%
	Total consumer loans		$39,642		$39,496		$39,841		—		—
	Total average portfolio loans and leases		$108,956		$109,360		$110,779		—		(2)%
	Average Loans and Leases Held for Sale
	Commercial loans and leases held for sale		$104		$56		$108		86%		(4)%
	Consumer loans held for sale		4,641		2,048		1,293		127%		259%
	Total average loans and leases held for sale		$4,745		$2,104		$1,401		126%		239%
	Securities (taxable and tax-exempt)		$36,297		$35,965		$36,135		1%		—
	Other short-term investments		32,717		34,989		2,898		(6)%		NM
	Total average interest-earning assets		$182,715		$182,418		$151,213		—		21%

Compared to the prior quarter, total average portfolio loans and leases were flat, as an increase in indirect secured consumer loans was offset by a decrease in C&I balances. Average commercial portfolio loans and leases decreased 1%, reflecting lower C&I revolving line of credit utilization and term loan balances, partially offset by growth in commercial construction balances reflecting drawdowns on previous commitments. Average consumer portfolio loans were flat, as higher indirect secured consumer loans were offset by lower home equity and residential mortgage balances.

Compared to the year-ago quarter, total average portfolio loans and leases decreased 2% reflecting lower C&I revolving line of credit utilization and term loan balances, as well as declines in home equity and residential mortgage loans, partially offset by increases from PPP loans, indirect secured consumer loans, and commercial construction loans. Average commercial portfolio loans and leases decreased 2% due to a decline in C&I loan balances reflecting lower revolving line of credit utilization and lower commercial mortgage loans, partially offset by growth from PPP loans and commercial construction loans. Average consumer portfolio loans were flat, as higher indirect secured consumer loans were offset by lower residential mortgage, home equity, and credit card balances.

Average other short-term investments (including interest-bearing cash) of $33 billion in the current quarter decreased $2 billion compared to the prior quarter and increased $30 billion compared to the year-ago quarter. The increase relative to the year-ago quarter reflected average core deposit growth of 27% compared to average total loan growth of 1%.

Total period-end commercial portfolio loans and leases of $69 billion were flat from the prior quarter as higher PPP, commercial construction, and commercial lease balances were offset by lower C&I revolving line of credit utilization and term loan balances reflecting elevated paydowns. Compared to the year-ago quarter, total period-end commercial portfolio loans decreased $9 billion, or 11%, reflecting lower C&I revolving line of credit utilization. Period-end commercial revolving line utilization was 31%, compared to 32% in the prior quarter and 47% in the year-ago quarter. Period-end consumer portfolio loans were stable compared to the prior quarter, as continued growth in indirect secured consumer loans was partially offset by declines in home equity and credit card balances. Period-end consumer loans held for sale increased $0.9 billion sequentially, primarily attributable to the purchase of approximately $0.6 billion in government guaranteed loans related to GNMA early buyouts associated with CARES Act forbearance plans.

Average Deposits
	($ in millions)		For the Three Months Ended						% Change
			March		December		March
			2021		2020		2020		Seq		Yr/Yr
	Average Deposits
	Demand		$58,586		$56,365		$35,765		4%		64%
	Interest checking		45,568		47,664		40,298		(4)%		13%
	Savings		18,951		17,658		14,715		7%		29%
	Money market		30,601		31,205		27,109		(2)%		13%
	Foreign office(g)		128		161		209		(20)%		(39)%
	Total transaction deposits		$153,834		$153,053		$118,096		1%		30%
	Other time		3,045		3,273		5,081		(7)%		(40)%
	Total core deposits		$156,879		$156,326		$123,177		—		27%
	Certificates - $100,000 and over		2,009		2,300		3,355		(13)%		(40)%
	Other deposits		—		—		257		NM		(100)%
	Total average deposits		$158,888		$158,626		$126,789		—		25%

Compared to the prior quarter, average core deposits were flat, as increases in demand and savings deposits were offset by decreases in interest checking, money market, and other time deposits. Average demand deposits represented 37% of total core deposits in the current quarter compared to 36% in the prior quarter. Average commercial transaction deposits decreased 4% primarily reflecting seasonality, and average consumer transaction deposits increased 5% partially impacted by fiscal stimulus.

Compared to the year-ago quarter, average core deposits increased 27%, reflecting double-digit growth in all deposit captions except other time and foreign office deposits. Average commercial transaction deposits increased 42% and average consumer transaction deposits increased 20%.

The period end portfolio loan-to-core deposit ratio was 68% in the current quarter, compared to 69% in the prior quarter and 89% 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 66% in the prior quarter.

Average Wholesale Funding
	($ in millions)		For the Three Months Ended						% Change
			March		December		March
			2021		2020		2020		Seq		Yr/Yr
	Average Wholesale Funding
	Certificates - $100,000 and over		$2,009		$2,300		$3,355		(13)%		(40)%
	Other deposits		—		—		257		NM		(100)%
	Federal funds purchased		324		307		654		6%		(50)%
	Other short-term borrowings		1,209		1,091		1,750		11%		(31)%
	Long-term debt		14,849		15,018		15,816		(1)%		(6)%
	Total average wholesale funding		$18,391		$18,716		$21,832		(2)%		(16)%

Compared to the prior quarter, average wholesale funding decreased 2%, driven by lower jumbo CD balances and long-term debt outstanding, partially offset by an increase in other short-term borrowings (reflecting commercial client sweep accounts). Compared to the year-ago quarter, average wholesale funding decreased 16%, reflecting decreases in jumbo CD balances, long-term debt, and other short-term borrowings.

Credit Quality Summary
($ in millions)		As of and For the Three Months Ended
		March			December			September			June			March
		2021			2020			2020			2020			2020
Total nonaccrual portfolio loans and leases (NPLs)		$741			$834			$891			$700			$647
Repossessed property		7			9			7			4			10
OREO		35			21			33			43			52
Total nonperforming portfolio loans and leases and OREO (NPAs)		$783			$864			$931			$747			$709
NPL ratio(h)		0.68	%		0.77	%		0.80	%		0.61	%		0.55	%
NPA ratio(c)		0.72	%		0.79	%		0.84	%		0.65	%		0.60	%
Total loans and leases 30-89 days past due (accrual)		$305			$357			$323			$381			$409
Total loans and leases 90 days past due (accrual)		124			163			139			136			151
Allowance for loan and lease losses (ALLL), beginning		$2,453			$2,574			$2,696			$2,348			$1,202
Impact of CECL adoption		—			—			—			—			643
Total net losses charged-off		(71)			(118)			(101)			(130)			(122)
(Benefit from) provision for loan and lease losses		(174)			(3)			(21)			478			625
ALLL, ending		$2,208			$2,453			$2,574			$2,696			$2,348
Reserve for unfunded commitments, beginning		$172			$182			$176			$169			$144
Impact of CECL adoption		—			—			—			—			10
Provision for (benefit from) the reserve for unfunded commitments		1			(10)			6			7			15
Reserve for unfunded commitments, ending		$173			$172			$182			$176			$169
Total allowance for credit losses (ACL)		$2,381			$2,625			$2,756			$2,872			$2,517
ACL ratios:
As a % of portfolio loans and leases		2.19	%		2.41	%		2.49	%		2.50	%		2.13	%
As a % of nonperforming portfolio loans and leases		321	%		315	%		309	%		410	%		389	%
As a % of nonperforming portfolio assets		304	%		304	%		296	%		385	%		355	%
ALLL as a % of portfolio loans and leases		2.03	%		2.25	%		2.32	%		2.34	%		1.99	%
Total losses charged-off		$(109)			$(154)			$(135)			$(163)			$(159)
Total recoveries of losses previously charged-off		38			36			34			33			37
Total net losses charged-off		$(71)			$(118)			$(101)			$(130)			$(122)
Net charge-off ratio (NCO ratio)(b)		0.27	%		0.43	%		0.35	%		0.44	%		0.44	%
Commercial NCO ratio		0.17	%		0.40	%		0.33	%		0.40	%		0.32	%
Consumer NCO ratio		0.43	%		0.47	%		0.40	%		0.52	%		0.66	%

Nonperforming portfolio loans and leases were $741 million in the current quarter, with the resulting NPL ratio of 0.68%. Compared to the prior quarter, NPLs decreased $93 million with the NPL ratio decreasing 9 bps. Compared to the year-ago quarter, NPLs increased $94 million with the NPL ratio increasing 13 bps.

Nonperforming portfolio assets were $783 million in the current quarter, with the resulting NPA ratio of 0.72%. Compared to the prior quarter, NPAs decreased $81 million with the NPA ratio decreasing 7 bps. Compared to the year-ago quarter, NPAs increased $74 million with the NPA ratio increasing 12 bps.

The benefit from credit losses totaled $173 million in the current quarter. The allowance for credit loss ratio represented 2.19% of total portfolio loans and leases in the current quarter, compared with 2.41% in the prior quarter and 2.13% in the year-ago quarter. In the current quarter, the allowance for credit losses represented 321% of nonperforming portfolio loans and leases and 304% of nonperforming portfolio assets. The allowance for loan and lease losses ratio represented 2.03% of total portfolio loans and leases in the current quarter.

Net charge-offs were $71 million in the current quarter, with the resulting NCO ratio of 0.27%. Compared to the prior quarter, net charge-offs decreased $47 million and the NCO ratio decreased 16 bps. Compared to the year-ago quarter, net charge-offs decreased $51 million and the NCO ratio decreased 17 bps.

	Capital Position
				As of and For the Three Months Ended
				March			December			September			June			March
				2021			2020			2020			2020			2020
	Capital Position
	Average total Bancorp shareholders' equity as a % of average assets			11.26	%		11.34	%		11.33	%		11.30	%		12.63	%
	Tangible equity(a)			8.20	%		8.18	%		8.09	%		7.68	%		8.41	%
	Tangible common equity (excluding AOCI)(a)			7.14	%		7.11	%		6.99	%		6.77	%		7.41	%
	Tangible common equity (including AOCI)(a)			7.95	%		8.29	%		8.31	%		8.13	%		8.65	%
	Regulatory Capital Ratios(e)
	CET1 capital(d)			10.46	%		10.34	%		10.14	%		9.72	%		9.37	%
	Tier I risk-based capital(d)			11.94	%		11.83	%		11.64	%		10.96	%		10.56	%
	Total risk-based capital(d)			14.80	%		15.08	%		14.93	%		14.24	%		13.59	%
	Tier I leverage			8.62	%		8.49	%		8.37	%		8.16	%		9.37	%

Capital ratios remained strong this quarter. The CET1 capital ratio was 10.46%, the tangible common equity to tangible assets ratio was 7.14% excluding AOCI, and 7.95% including AOCI. The Tier I risk-based capital ratio was 11.94%, the Total risk-based capital ratio was 14.80%, and the Tier I leverage ratio was 8.62%. 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 growth in 0% risk-weighted assets resulting from an increase in interest-bearing cash as well as PPP loans.

On January 26, 2021, Fifth Third initially settled an accelerated share repurchase agreement whereby Fifth Third would purchase $180 million of its outstanding stock. The initial settlement reduced first quarter common shares outstanding by 4.9 million shares. On March 31, 2021, the final settlement occurred in connection with the completion of this agreement, which resulted in an additional 0.4 million shares being repurchased by Fifth Third.

On March 25, 2021, the Federal Reserve announced that the temporary restrictions on capital distributions, which limited common dividends and share repurchases to the average net income over the prior four quarters, will end after June 30, 2021 for banks not participating in the 2021 annual supervisory stress tests, including Fifth Third.

Tax Rate

The effective tax rate was 21.4% compared with 19.1% in the prior quarter and 22.6% in the year-ago quarter. The tax rate in the current quarter reflected a $14 million tax benefit primarily related to share-based compensation. The tax rate in the prior quarter reflected favorable state tax adjustments of $13 million.

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 March 31, 2021, the Company had $207 billion in assets and operates 1,098 full-service Banking Centers, and 2,383 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 March 31, 2021, had $464 billion in assets under care, of which it managed $58 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 25 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)		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%; Fourth quarter 2020 underlying NIM calculated by reducing average interest-earning assets approximately $32.5 billion resulting from excess cash compared to normalized levels (average other short term investments less a $2.5 billion normalized level) and approximately $5.1 billion from average PPP balances (with a corresponding reduction to net interest income of approximately $41 million), resulting in an underlying NIM of approximately 3.14%.
(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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