Fifth Third Bank 2008 Annual Report Download - page 16

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
14 Fifth Third Bancorp
The following is management’s discussion and analysis of certain significant factors that have affected Fifth Third Bancorp’s (the “Bancorp”
or “Fifth Third”) financial condition and results of operations during the periods included in the Consolidated Financial Statements, which are
a part of this report. Reference to the Bancorp incorporates the parent holding company and all consolidated subsidiaries.
TABLE 1: SELECTED FINANCIAL DAT
A
For the years ended December 31 ($ in millions, except per share data) 2008 2007 2006 2005 2004
Income Statement Data
Net interest income (a) $3,536 3,033 2,899 2,996 3,048
Noninterest income 2,946 2,467 2,012 2,374 2,355
Total revenue (a) 6,482 5,500 4,911 5,370 5,403
Provision for loan and lease losses 4,560 628 343 330 268
Noninterest expense 4,564 3,311 2,915 2,801 2,863
Net income (loss) (2,113) 1,076 1,188 1,549 1,525
Net income (loss) available to common shareholders (2,180) 1,075 1,188 1,548 1,524
Common Share Data
Earnings per share, basic ($3.94) 2.00 2.14 2.79 2.72
Earnings per share, diluted (3.94) 1.99 2.13 2.77 2.68
Cash dividends per common share .75 1.70 1.58 1.46 1.31
Book value per share 13.57 17.18 18.00 16.98 15.99
Financial Ratios
Return on assets (1.85%) 1.05 1.13 1.50 1.61
Return on average common equity (23.0) 11.2 12.1 16.6 17.2
Average equity as a percent of average assets 8.78 9.35 9.32 9.06 9.34
Tangible equity 7.86 6.05 7.79 6.87 8.35
Tangible common equity 4.23 6.14 7.95 7.22 8.50
Net interest margin (a) 3.54 3.36 3.06 3.23 3.48
Efficiency (a) 70.4 60.2 59.4 52.1 53.0
Credit Quality
Net losses charged of
$2,710 462 316 299 252
Net losses charged off as a percent of average loans and leases 3.23 % .61 .44 .45 .45
Allowance for loan and lease losses as a percent of loans and leases 3.31 1.17 1.04 1.06 1.19
Allowance for credit losses as a percent of loans and leases (b) 3.54 1.29 1.14 1.16 1.31
Nonperforming assets as a percent of loans, leases and other assets,
including other real estate owned (c) 2.96 1.32 .61 .52 .51
Average Balances
Loans and leases, including held for sale $85,835 78,348 73,493 67,737 57,042
Total securities and other short-term investments 14,045 11,994 21,288 24,999 30,597
Total assets 114,296 102,477 105,238 102,876 94,896
Transaction deposits (d) 52,584 50,987 49,678 48,177 43,260
Core deposits (e) 63,719 61,765 60,178 56,668 49,468
Wholesale funding (f) 36,357 27,254 31,691 33,615 33,629
Shareholders’ equit
y
10,038 9,583 9,811 9,317 8,860
Regulatory Capital Ratios
Tier I capital 10.59 % 7.72 8.39 8.35 10.31
Total risk-based capital 14.78 10.16 11.07 10.42 12.31
Tier I leverage 10.27 8.50 8.44 8.08 8.89
(a) Amounts presented on a fully taxable equivalent basis (FTE). The taxable equivalent adjustments for years ending December 31, 2008, 2007, 2006, 2005 and 2004 were $22 million, $24
million, $26 million, $31 million and $36 million, respectively.
(b) The allowance for credit losses is the sum of the allowance for loan and lease losses and the reserve for unfunded commitments.
(c) Excludes nonaccrual loans held for sale.
(d) Includes demand, interest checking, savings, money market and foreign office deposits.
(e) Includes transaction deposits plus other time deposits.
(f) Includes certificates $100,000 and over, other foreign office deposits, federal funds purchased, short-term borrowings and long-term debt.
TABLE 2: QUARTERLY INFORMATION (unaudited)
2008 2007
For the three months ended ($ in millions, except per share data) 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
Net interest income (FTE) $897 1,068 744 826 785 760 745 742
Provision for loan and lease losses 2,356 941 719 544 284 139 121 84
Noninterest income 642 717 722 864 509 681 669 608
Noninterest expense 2,022 967 858 715 940 853 765 753
Net income (loss) (2,142) (56) (202) 286 16 325 376 359
Net income (loss) available to common shareholders (2,184) (81) (202) 286 16 325 376 359
Earnings per share, basic (3.82) (.14) (.37) .54 .03 .61 .69 .65
Earnings per share, diluted (3.82) (.14) (.37) .54 .03 .61 .69 .65