Fifth Third Bank 2010 Annual Report Download - page 6

FIFTH THIRD BANCORP4
The
improvement in credit trends resulted in
reductions of our loan loss reserves by $745
million during the year; however, these reserves
are still among the strongest coverage levels in the
industry, at 3.88 percent of loans and 179 percent of
nonperforming loans.
Noninterest income benefited from solid mortgage
banking revenue of $647 million in 2010, an increase
of 17 percent over 2009. Our investment advisory
revenue increased 11 percent over the prior year
and deposit fees declined only 9 percent despite
the impact of the overdraft regulation.
Our capital position remains robust. Our Tier 1
capital ratio was 13.9 percent at year-end compared
with 13.3 percent at the end of 2009. Our tangible
common equity (TCE) ratio including unrealized
gains on securities, which increased to 7.3 percent,
continues to compare favorably with our peers and
is even more favorable when viewed in light of our
capital raise at the beginning of 2011. Given our
capital position and our strong reserve position,
Fifth Third has one of the strongest balance sheets
among commercial banks.
Strategic initiatives and
Lines of Business
Fifth Third has a simple overall value proposition
– we have the resources and technology to oer
products competitive with the largest banks in the
country for traditional banking business, but our
customer service rivals that of most community
banks. By focusing on this “sweet spot,” we
believe we are able to drive dierentiation to our
customers and value creation for our shareholders.
Our strategic plan is designed to further improve
that position through a variety of initiatives that
have the ultimate goal of developing deeper
customer relationships and growing our customer
base through the strength of the Fifth Third brand.
Our Commercial Banking line of business is
focused on maintaining a close relationship with
our customers, developing new value-added
products based on customer needs, and continuing
to enhance sales processes. We strive to develop
innovative solutions for our customers, such as
our Remote Currency Manager product, which
has enhanced our suite of treasury management
product oerings. We’ve also hired exceptional
talent across our footprint, and we expect this to
contribute to our revenue growth going forward.
Recently, we’ve begun to see some positive
signs within C&I lending, particularly within the
manufacturing and health care industries, and
we have seen significant growth in core deposits,
posting a 32 percent increase over last year.
Our Branch Banking line of business has continued
to post strong results. We have been successful
in introducing new product bundles in the last
few years, such as our Secure Checking Package
that combines identity theft protection with a
traditional
checking account. Our Relationship
Savings product
has attracted over $9 billion in
balances since inception and has more than tripled
in balances this year alone. We were one of the first
of our peers to eliminate free checking products,
and we continue to focus on providing value-added
products to our customers. Customer service
remains a top priority and during 2010 we expanded
our traditional branch hours on weeknights and
weekends at many locations in order to be even
more accessible to our customers. Additionally, we
have hired over 100 small business banking ocers
focused on customers in the $1 million to $3 million
revenue range, as we see additional opportunities
in this underpenetrated market space and are
committed to fostering economic growth through
investing in this area.
Our Consumer Lending line of business had another
outstanding year. Our mortgage originations
exceeded $18 billion and we generated over $600
million of mortgage banking revenue. Our recent J.D.
Power Mortgage Origination Customer Satisfaction
scores improved significantly compared with
2009 results. Our J.D. Power Mortgage Servicer
Satisfaction score increased – ranking Fifth Third in
the top five - while the industry average declined
compared with 2009. Our auto lending operations
continued to perform well as we maintained
strong credit quality and pricing discipline, while
generating more than $5 billion in originations.
We remain committed to oering responsible
credit solutions to our customers and helping them
through our mortgage modification programs,
while also keeping long-term value creation for
shareholders a priority.
Our Investment Advisors business benefited
from the overall lift in the equity and bond