Fifth Third Bancorp (FITB) Tops Q4 EPS by 19c

Fifth Third Bancorp (NASDAQ: FITB) reported Q4 EPS of $0.67, $0.19 better than the analyst estimate of $0.48.

2017 Earnings Per Diluted Share of $2.83

• 4Q17 net income available to common shareholders of $486 million, or $0.67 per diluted common share
• Results included a net positive $0.15 impact on reported 4Q17 EPS:

Items primarily resulting from the Tax Cuts and Jobs Act(a):

• $220 million income tax reduction from a remeasurement of the deferred tax liability
• $68 million pre-tax (~$44 million after-tax)(b) impairment related to affordable housing investments within noninterest expense
• $27 million pre-tax (~$18 million after-tax)(b) remeasurement related to the tax treatment of leveraged leases reducing interest income
• $15 million pre-tax (~$10 million after-tax)(b) expense related to one-time employee bonuses
• $15 million pre-tax (~$10 million after-tax)(b) contribution to the Fifth Third Foundation

$20 million tax expense related to a gain on the sale of Vantiv(c) shares sold in 3Q17

$11 million pre-tax (~$7 million after-tax)(b) charge related to the valuation of the Visa total return swap

• Net interest income (NII) of $956 million; taxable equivalent NII of $963 million(d), down 1% from 3Q17 and up 6% from 4Q16
• Reported results were negatively impacted by the $27 million leveraged lease remeasurement in 4Q17 and $16 million estimated card refund charge in 4Q16
• Adjusted taxable equivalent NII(d) of $990 million, up 1% from 3Q17 and up 7% from 4Q16, driven by higher interest earning asset yields and higher yielding consumer loans
• Taxable equivalent net interest margin (NIM) of 3.02%(d), down 5 bps from 3Q17 and up 16 bps from 4Q16
• Reported results were negatively impacted by 8 bps from the leveraged lease remeasurement in 4Q17 and 5 bps from the estimated card refund charge in 4Q16
• Adjusted taxable equivalent NIM(d) of 3.10%, up 3 bps from 3Q17 and up 19 bps from 4Q16, impacted by higher securities portfolio and consumer loan yields
• Noninterest income of $577 million, compared with $1.561 billion in 3Q17 and $620 million in 4Q16
• Sequential decrease primarily reflected a gain on the sale of Vantiv shares in 3Q17
• Excluding the Vantiv gain, Visa total return swap charges and securities gains, noninterest income increased 3% from 3Q17 reflecting a $44 million Vantiv TRA payment and higher wealth and asset management revenue
• Noninterest expense of $1.073 billion, up 10% from 3Q17 and up 12 percent from 4Q16
• Sequential increase was driven primarily by the affordable housing impairment, one-time employee bonuses, and contribution to the Fifth Third Foundation in 4Q17
• Excluding these items, noninterest expense of $975 million was flat from 3Q17 reflecting lower other noninterest expense offset by higher employee benefits
• Average portfolio loans and leases of $92.3 billion, flat from 3Q17 and down 1% from 4Q16
• Portfolio nonperforming asset (NPA) ratio of 0.53%, down 7 bps from 3Q17 and down 27 bps from 4Q16
• Net charge-offs (NCOs) of $76 million, up $8 million from 3Q17 and up $3 million from 4Q16; NCO ratio of 0.33% compared to 0.29% in 3Q17 and 0.31% in 4Q16
• 4Q17 provision expense of $67 million flat from 3Q17 and up $13 million from 4Q16
• Common equity Tier 1 (CET1)(e) ratio of 10.61%
• Tangible common equity ratio of 8.99%(d); 8.94% excluding unrealized gains/losses(d)
• Book value per share of $21.67, up 2% from 3Q17 and up 9% 4Q16; tangible book value per share(d) of $18.10 up 1% from 3Q17 and up 9% from 4Q16

For earnings history and earnings-related data on Fifth Third Bancorp (FITB) click here.

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