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Fifth Third Announces 2012 Earnings Per Share Of $1.66, Up 41 Percent From 2011

“These quarterly results capped a solidly profitable year in which Fifth Third generated the second highest level of net income in our Company’s history and pre-provision net revenue of $2.5 billion. Loans increased nearly $5 billion on an end of period basis. We produced double-digit growth in commercial and industrial loans and residential mortgage loan originations due to higher demand and low interest rates. Average core deposits increased 5 percent with a continued favorable mix shift to lower cost deposits.

“Credit trends continued to be favorable, with full year net charge-offs down 40 percent from 2011 and nonperforming assets declining 29 percent, both the lowest levels reported since 2007. At year end, total delinquencies were at their lowest level since the second quarter of 2004. The improvement in credit trends resulted in a $400 million reduction in loan loss reserves during the year, although reserve levels and coverage ratios remain strong at 2.16 percent of loans and 180 percent of nonperforming portfolio loans.

“Pursuant to our capital plan, we increased the return of capital to shareholders in 2012, with our recent increase of the quarterly common stock dividend to $0.10 per share and common stock repurchases of approximately $650 million during the year, including $175 million related to Vantiv gains. Despite these actions, our strong common equity capital ratios increased for the year. Our capital plan included the potential repurchase of an additional $125 million in the first quarter of 2013. Given our capacity for internal capital generation, we would expect to continue to return capital to shareholders in a responsible manner, absent unforeseen developments.”

Income Statement Highlights

  For the Three Months Ended   % Change
December   September   June   March   December    
2012   2012   2012   2012   2011   Seq   Yr/Yr
Condensed Statements of Income ($ in millions)
Net interest income (taxable equivalent) $903 $907 $899 $903 $920 - (2%)
Provision for loan and lease losses 76 65 71 91 55 17% 38%
Total noninterest income 880 671 678 769 550 31% 60%
Total noninterest expense   1,163   1,006   937   973   993   16%   17%
Income before income taxes (taxable equivalent)   544   507   569   608   422   7%   29%
 
Taxable equivalent adjustment 4 4 4 5 4 - -
Applicable income taxes   144   139   180   173   104   4%   38%
Net income 396 364 385 430 314 9% 26%
Less: Net income attributable to noncontrolling interest   (3)   1   -   -   -   NM   NM
Net income attributable to Bancorp 399 363 385 430 314 10% 27%
Dividends on preferred stock   9   9   9   9   9   -   -
Net income available to common shareholders   390   354   376   421   305   10%   28%
Earnings per share, diluted $0.43 $0.38 $0.40 $0.45 $0.33 13% 30%
                             

Net Interest Income

  For the Three Months Ended   % Change
December   September   June   March   December    
2012   2012   2012   2012   2011   Seq   Yr/Yr
Interest Income ($ in millions)
Total interest income (taxable equivalent) $1,020 $1,027 $1,031 $1,045 $1,061 (1%) (4%)
Total interest expense   117   120   132   142   141   (3%)   (17%)
Net interest income (taxable equivalent)   $903   $907   $899   $903   $920   -   (2%)
 
Average Yield
Yield on interest-earning assets (taxable equivalent) 3.94% 4.03% 4.08% 4.18% 4.23% (2%) (7%)
Yield on interest-bearing liabilities   0.65%   0.67%   0.73%   0.79%   0.79%   (3%)   (18%)
Net interest rate spread (taxable equivalent)   3.29%   3.36%   3.35%   3.39%   3.44%   (2%)   (4%)
Net interest margin (taxable equivalent) 3.49% 3.56% 3.56% 3.61% 3.67% (2%) (5%)
 
Average Balances ($ in millions)
Loans and leases, including held for sale $86,180 $84,829 $84,508 $83,757 $82,278 2% 5%
Total securities and other short-term investments 16,765 16,588 17,168 16,735 17,243 1% (3%)
Total interest-earning assets 102,945 101,417 101,676 100,492 99,521 2% 3%
Total interest-bearing liabilities 71,420 72,026 73,162 72,219 71,467 (1%) -
Bancorp shareholders' equity   13,855   13,887   13,628   13,366   13,147   -   5%
 

Net interest income of $903 million on a fully taxable equivalent basis decreased $4 million from the third quarter. The decline in net interest income was driven by the effect of approximately $10 million in non-recurring benefits recorded in the third quarter. Otherwise, net interest income benefited from a decline in interest expense driven by higher demand deposit balances and continued runoff in consumer CD balances; a $2 million reduction in long-term debt expense due to the FHLB debt termination in December; and a $5 million reduction in long-term debt expense due to the full quarter impact of the TruPS redemption in the third quarter. The benefit of net loan growth on interest income was offset by a decline in interest income attributable to loan repricing, primarily in the C&I, auto, and residential mortgage portfolios, as well as lower reinvestment rates on the securities portfolio.

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