Fifth Third(US:FITB)2024-11-05 21:54Financial Overview - As of September 30, 2024, Fifth Third Bancorp had $214 billion in assets and operated 1,072 full-service banking centers and 2,060 ATMs across eleven states[11]. - The Bancorp's revenues are primarily derived from U.S. customers, with foreign revenue being immaterial for the reporting period[14]. - The Bancorp's financial performance is affected by changes in interest rates, credit quality, and economic trends[14]. - The total assets of the company reached $213,838 million, up from $208,385 million, indicating a growth of 2.2%[56]. - The total equity rose to $19.232 billion, up from $17.873 billion at December 31, 2023[57]. Revenue Composition - For the three and nine months ended September 30, 2024, net interest income accounted for 67% of total revenue, while noninterest income contributed 33%[14]. - Noninterest income sources include wealth management, service charges, and mortgage banking, contributing to overall revenue diversification[16]. - Noninterest income for Q3 2024 was $711 million, slightly down from $715 million in Q3 2023[43]. - Noninterest income decreased by $4 million for the three months ended September 30, 2024, primarily due to declines in leasing business revenue and mortgage banking net revenue[34]. Net Income and Earnings - The Bancorp's net income available to common shareholders for the third quarter of 2024 was $532 million, or $0.78 per diluted share, down from $623 million, or $0.91 per diluted share in the third quarter of 2023[30]. - Net income for the three and nine months ended September 30, 2024, was $573 million and $1.694 billion, respectively, compared to $660 million and $1.819 billion for the same periods in 2023, reflecting a decrease of 13.2% and 6.9%[126]. Interest Income and Expenses - For the three months ended September 30, 2024, net interest income was $1.438 billion, a decrease of 1% compared to the same period in 2023[29]. - Interest income on an FTE basis increased by $140 million to $2.675 billion for Q3 2024, driven by higher yields on loans and leases[51]. - Interest expense on average core deposits rose by $153 million for Q3 2024, reflecting increased competition for deposits[52]. - Net interest margin on an FTE basis was 2.90% for Q3 2024, down from 2.98% in Q3 2023[50]. Credit Losses and Provisions - The provision for credit losses was $160 million for the three months ended September 30, 2024, compared to $119 million in the same period in 2023, reflecting an increase of 34%[33]. - Provision for credit losses increased by $76 million and $247 million for the three and nine months ended September 30, 2024, respectively, driven by increases in allocated provisions related to commercial criticized assets[131]. - The allowance for loan and lease losses (ALLL) decreased by $17 million from December 31, 2023, to $2.3 billion at September 30, 2024[60]. Noninterest Expenses - Noninterest expense increased by $56 million for the three months ended September 30, 2024, primarily due to higher compensation and benefits expenses[35]. - Total noninterest expense increased by $56 million (5%) and $57 million (2%) for the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year[76]. - Compensation and benefits expense increased by $61 million (10%) and $63 million (3%) for the three and nine months ended September 30, 2024, respectively, primarily driven by increases in performance-based compensation and employee benefits[76]. Capital and Ratios - The CET1 capital ratio as of September 30, 2024, was 10.75%, indicating the capital strength of the Bancorp[37]. - Tangible common equity as a percentage of tangible assets was 8.00% as of September 30, 2024, up from 7.67% at the end of 2023[43]. Loans and Leases - Total loans and leases decreased to $117,415 million, down from $122,266 million, reflecting a decline of 4.4% year-over-year[56]. - Average loans and leases decreased by $4.9 billion, or 4%, for the three months ended September 30, 2024, compared to the same period in the prior year[89]. - Commercial loans and leases decreased by $1.6 billion, or 2%, from December 31, 2023, primarily due to a decrease in commercial and industrial loans[86]. Securities and Investments - Total investment securities were $53.4 billion at September 30, 2024, compared to $51.9 billion at December 31, 2023[93]. - The Bancorp transferred $12.6 billion of securities from available-for-sale to held-to-maturity in January 2024 to reduce potential capital volatility[97]. - The Bancorp recognized impairment losses on available-for-sale debt and other securities of $11 million and $21 million for the three and nine months ended September 30, 2024, compared to $1 million and $5 million for the same periods in 2023[96]. Consumer and Commercial Banking - Net income for the Consumer and Small Business Banking segment was $497 million for the three months ended September 30, 2024, compared to $739 million for the same period in 2023, a decrease of 32.8%[138]. - Net interest income for the Commercial Banking segment was $673 million for the three months ended September 30, 2024, down from $1.012 billion in 2023, reflecting a decrease of 33.5%[129]. Risk Management - The Bancorp's risk management strategy includes monitoring interest rate risk and managing the composition of its assets and liabilities[15]. - The Bancorp actively manages credit risk through concentration limits and adjusts underwriting guidelines based on economic conditions[179].