Fifth Third Bancorp (FITB, Financial) filed Quarterly Report for the period ended 2009-03-31.
Fifth Third Bancorp is a registered financial holding company and a multi-bank holding company. They engage primarily in commercial retail and trust banking data processing services investment advisory services and leasing activities. In addition the company provides credit lifeaccident health and mortgage insurance discount brokerage services andproperty management for its properties. Fifth Third Bancorp has a market cap of $4.83 billion; its shares were traded at around $8.35 with and P/S ratio of 0.6. The dividend yield of Fifth Third Bancorp stocks is 0.5%. Fifth Third Bancorp had an annual average earning growth of 8% over the past 10 years.
During the first quarter of 2009, the Bancorp continued to be affected by the economic slowdown and market disruptions. The Bancorps net income was $50 million in the first quarter of 2009. Preferred dividends of $76 million in the first quarter of 2009 resulted from preferred stock issued during 2008, including the issuance of $3.4 billion in preferred stock to the U.S. Treasury on December 31, 2008. Including preferred dividends, the net loss available to common shareholders was $26 million, or $0.04 per diluted share, compared with net income of $286 million, or $0.54 per diluted share, in the first quarter of 2008. Results for both periods reflect a number of significant items.
Net interest income (FTE) decreased five percent, from $826 million to $781 million, compared to the same period last year reflecting the decline of market rates during the first quarter of 2009, particularly London Interbank Offered Rate (LIBOR) rates, as assets have repriced faster than liabilities. Net interest margin was 3.06% in the first quarter of 2009, a decrease of 35 bp from the first quarter of 2008. The primary driver of this decline was the differential impact of lower market rates of assets and liabilities and the full-quarter effect of higher-priced term deposits issued in the latter part of 2008.
Noninterest income decreased 19%, from $864 million to $697 million, over the same period last year. Excluding significant items mentioned previously, noninterest income decreased six percent from a year ago due to lower investment advisory revenue and increased securities losses in the first quarter of 2009, offset by growth in payments processing revenue, mortgage banking revenue and corporate banking revenue.
Noninterest expense increased 35%, or $247 million, compared to the first quarter of 2008. Excluding the first quarter of 2008 reversal of $152 million in Visa litigation expense previously discussed, expenses increased by $95 million, or 11% from the same quarter the previous year driven by higher credit-related costs, particularly loan and lease collection costs and provision for unfunded commitments, as well as the effect of higher deposit insurance assessments.
during the first quarter of 2009, putting significant stress on the Bancorps commercial and consumer loan portfolios. Consequently, the provision for loan and lease losses increased to $773 million for March 31, 2009 compared to $544 million for March 31, 2008. Net charge-offs as a percent of average loans and leases were 2.37% in the first quarter of 2009 compared to 1.37% in the first quarter of 2008. At March 31, 2009, nonperforming assets as a percent of loans, leases and other assets, including other real estate owned (OREO) (excluding nonaccrual loans held for sale) increased to 3.19% from 1.81% at March 31, 2008. Including $403 million of nonaccrual loans classified as held-for-sale in the first quarter of 2009, total nonperforming assets were $3.1 billion compared with $1.5 billion in the first quarter of 2008. During the first quarter of 2009, the Bancorp reclassified certain TDRs from nonaccrual to accrual status that were less than 90 days past due as measured by their modified terms as they were performing in accordance with their restructured terms. For comparability purposes, prior periods were adjusted to reflect this reclassification. The income statement impact of this reclassification was immaterial to the Bancorps Condensed Consolidated Financial Statements.
Read the The complete ReportFITB is in the portfolios of Charles Brandes of Brandes Investment, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Brian Rogers of T Rowe Price Equity Income Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, PRIMECAP Management, David Dreman of Dreman Value Management.
Fifth Third Bancorp is a registered financial holding company and a multi-bank holding company. They engage primarily in commercial retail and trust banking data processing services investment advisory services and leasing activities. In addition the company provides credit lifeaccident health and mortgage insurance discount brokerage services andproperty management for its properties. Fifth Third Bancorp has a market cap of $4.83 billion; its shares were traded at around $8.35 with and P/S ratio of 0.6. The dividend yield of Fifth Third Bancorp stocks is 0.5%. Fifth Third Bancorp had an annual average earning growth of 8% over the past 10 years.
Highlight of Business Operations:
On March 30, 2009, the Bancorp and Advent International (Advent) announced an agreement under which Advent will acquire a 51% interest in the Bancorps processing business through the formation of a joint venture that values the new company at approximately $2.35 billion before valuation adjustments by either party. Pursuant to the agreement, Fifth Third Bank (Ohio), an indirect wholly owned subsidiary of the Bancorp, will contribute the assets and operations of the Bancorps merchant acquiring and financial institutions processing business to a new limited liability company (LLC). The LLCs capitalization prior to the purchase of this interest will include senior secured notes payable to subsidiaries of the Bancorp in the amount of $1.25 billion. Advent will pay the Bancorp $561 million in cash for the 51% ownership interest in the equity of the LLC and for certain put rights. Additionally, the Bancorp will receive warrants in the new company exercisable in certain circumstances. The Bancorp estimates the valuation adjustments related to these warrants, the put, and minority interest discounts may reduce its implied valuation of the business by approximately $50 million. The agreement is subject to certain potential purchase price adjustments. The transaction is expected to contribute significantly to the Bancorps retained earnings, capital levels and capital ratios, and net income, generating estimated pre-tax book gain of $1.7 billion, increasing the Bancorps tangible common equity and Tier 1 capital by an estimated $1.2 billion, andDuring the first quarter of 2009, the Bancorp continued to be affected by the economic slowdown and market disruptions. The Bancorps net income was $50 million in the first quarter of 2009. Preferred dividends of $76 million in the first quarter of 2009 resulted from preferred stock issued during 2008, including the issuance of $3.4 billion in preferred stock to the U.S. Treasury on December 31, 2008. Including preferred dividends, the net loss available to common shareholders was $26 million, or $0.04 per diluted share, compared with net income of $286 million, or $0.54 per diluted share, in the first quarter of 2008. Results for both periods reflect a number of significant items.
Net interest income (FTE) decreased five percent, from $826 million to $781 million, compared to the same period last year reflecting the decline of market rates during the first quarter of 2009, particularly London Interbank Offered Rate (LIBOR) rates, as assets have repriced faster than liabilities. Net interest margin was 3.06% in the first quarter of 2009, a decrease of 35 bp from the first quarter of 2008. The primary driver of this decline was the differential impact of lower market rates of assets and liabilities and the full-quarter effect of higher-priced term deposits issued in the latter part of 2008.
Noninterest income decreased 19%, from $864 million to $697 million, over the same period last year. Excluding significant items mentioned previously, noninterest income decreased six percent from a year ago due to lower investment advisory revenue and increased securities losses in the first quarter of 2009, offset by growth in payments processing revenue, mortgage banking revenue and corporate banking revenue.
Noninterest expense increased 35%, or $247 million, compared to the first quarter of 2008. Excluding the first quarter of 2008 reversal of $152 million in Visa litigation expense previously discussed, expenses increased by $95 million, or 11% from the same quarter the previous year driven by higher credit-related costs, particularly loan and lease collection costs and provision for unfunded commitments, as well as the effect of higher deposit insurance assessments.
during the first quarter of 2009, putting significant stress on the Bancorps commercial and consumer loan portfolios. Consequently, the provision for loan and lease losses increased to $773 million for March 31, 2009 compared to $544 million for March 31, 2008. Net charge-offs as a percent of average loans and leases were 2.37% in the first quarter of 2009 compared to 1.37% in the first quarter of 2008. At March 31, 2009, nonperforming assets as a percent of loans, leases and other assets, including other real estate owned (OREO) (excluding nonaccrual loans held for sale) increased to 3.19% from 1.81% at March 31, 2008. Including $403 million of nonaccrual loans classified as held-for-sale in the first quarter of 2009, total nonperforming assets were $3.1 billion compared with $1.5 billion in the first quarter of 2008. During the first quarter of 2009, the Bancorp reclassified certain TDRs from nonaccrual to accrual status that were less than 90 days past due as measured by their modified terms as they were performing in accordance with their restructured terms. For comparability purposes, prior periods were adjusted to reflect this reclassification. The income statement impact of this reclassification was immaterial to the Bancorps Condensed Consolidated Financial Statements.
Read the The complete ReportFITB is in the portfolios of Charles Brandes of Brandes Investment, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Brian Rogers of T Rowe Price Equity Income Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, PRIMECAP Management, David Dreman of Dreman Value Management.
