CINCINNATI (July 21, 2015) – Fifth Third Bancorp late Tuesday reported second quarter 2015 net income of $315 million versus net income of $361 million in the first quarter of 2015 and $439 million in the second quarter of 2014.
After preferred dividends, net income available to common shareholders was $292 million, or $0.36 per diluted share, in the second quarter of 2015, compared with $346 million, or $0.42 per diluted share, in the first quarter of 2015, and $416 million, or $0.49 per diluted share, in the second quarter of 2014.
Cincinnati-based Fifth Third Bancorp is a diversified financial services company with $142 billion in assets as of June 30. Approximately 100 of its 1,299 full-service Banking Centers are in Kentucky, where it is the second largest bank by market share with $5.3 billion in deposits. In addition to Ohio and Kentucky, Fifth Third operates locations and ATMs in Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina.
In its quarterly earnings posting, Fifth Third reported noninterest income of $556 million decreased $74 million sequentially and decreased $180 million compared with prior year results. The second quarter of 2015 included a $97 million non-cash impairment charge related to previously announced changes in the branch network; those actions are expected to be complete by mid-2016, and the expected annualized reduction in operating expenses associated with these actions is now expected to be $65 million, higher by $5 million as a result of the additions.
“We are very pleased with our core business trends. The strategic and tactical decisions that we have made over the past year are producing the intended results, and reflect our focus on revenue generation and balance sheet management in this low rate environment,” said Kevin Kabat, CEO of Fifth Third Bancorp.
“Net interest income was up 5 percent sequentially, reflecting solid growth in our commercial business, particularly in C&I lending, which was up 3 percent sequentially. Core deposits were up 8 percent over last year and crossed $100 billion for the first time in our history, which contributed to our core funding ratio of 108 percent in the quarter.
“Credit performance metrics continue to reflect the underlying positive trends in our portfolio as net charge-offs declined to 37 basis points and non-performing assets improved to 67 basis points. Our balance sheet is not only positioned to generate good returns in this environment, but also in the upcoming rate cycle that we expect to operate in once the Fed decides to raise short-term rates.”
“Fee income results for the quarter showed sequential growth, highlighted by corporate banking revenue growth of 79 percent, and mortgage banking revenue up 36 percent. Expenses were in line with our expectations and reflected our investment in our business as we continue to make adjustments to the company in the current operating environment and the heightened focus on risk and compliance infrastructure,” added Kabat.
Total nonperforming assets, including commercial and consumer loans held-for-sale, were $627 million, a decline of $66 million, or 10 percent, from the previous quarter. Nonperforming loans at quarter-end were $475 million or 0.51 percent of total loans, leases and OREO, and decreased $51 million, or 10 percent, from the previous quarter.
“While we are very focused on our current operating results we continue to take long-term strategic actions to maximize our company’s performance in the changing banking environment. Our decision to close approximately 105 branches not only shows our management team’s intense focus on expense management, but also aligns our customer service quality and product delivery strategies with our customers’ preferences,” said Greg Carmichael, who will become CEO in November.
“I am very excited to have the opportunity to lead this great company and continue Kevin’s successful track record in building long-term shareholder value,” Carmichael said. “Our industry is undergoing important fundamental changes and my goal is to maintain the momentum that we have in our core businesses as I look to achieve our revenue growth targets and look for further opportunities to improve operational efficiencies.”
Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has a 22.8 percent interest in Vantiv Holding LLC, valued as of June 30 at approximately $1.6 billion and has a warrant to purchase additional shares valued at $500 million.
Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2015, had $304 billion in assets under care, of which it managed $27 billion for individuals, corporations and not-for-profit organizations.
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