Fifth Third Bank 2011 Annual Report Download - page 7

2011 ANNUAL REPORT 5
of the year, the market and U.S. banks experienced
a rally that erased most, but not all, of the effects of
these developments. Fifth Third’s total shareholder
return (stock price plus dividends) was negative
11 percent, in line with the S&P Banks Index, and
compared with a modest 2 percent increase for the
broader S&P 500. As a result, the strong continued
improvement in our financial performance was
clearly not reflected in the performance of our stock.
We believe that as we move into 2012, we’re well-
positioned to demonstrate continued solid results
with a business platform that is underleveraged
relative to its capacity to support a larger level of
activity and assets. Economic and lending activity
at the end of 2011 and early stage of this year
suggest that 2012 is off to a fairly good start. We
have reason to hope that the market will reward us
and other strong performing U.S. banks for the solid
returns we generate and our ability to distribute
significant amounts of capital and investment return
to shareholders.
DIFFERENTIAL RESULTS
Fifth Third’s 2011 results exemplified the resiliency
of our business model and the strength of our
strategic plan. As I noted earlier, we reported full
year net income available to common shareholders
of $1.1 billion, the highest since 2006 and more than
double 2010’s result. Return on assets levels moved
back above 1 percent in the fourth quarter of 2010
and have remained around that level throughout
2011. We believe that Fifth Third is capable of
generating a return on assets in the 1.3 to 1.5
percent range on a normalized basis longer-term.
Although the current environment is not normal, we
believe our results have demonstrated that we’re
well-positioned to achieve our profitability goals
when those conditions prevail.
In February 2011, we redeemed the U.S. Treasury’s
$3.4 billion preferred stock investment, following
successful equity and debt offerings in which the
Company raised more than $2.7 billion. In March we
chose to repurchase the related warrant issued to
the United States Treasury for $280 million. With
these actions, Fifth Third completely exited all crisis-
era government programs, well ahead of many large
banks that continue to have federally guaranteed
debt outstanding.
Core operating results in 2011 remained strong, as
demonstrated by the strength and consistency
of our pre-provision net revenue,* which was well
over $2 billion for the third year in a row. This is a
solid result in a challenging environment that has
been more than sufficient to absorb losses while
at the same time contributing to the generation of
additional equity and capital.
Net interest income and net interest margin were
relatively stable in 2011, despite historically low
interest rates that prevailed throughout the year,
* Non-GAAP measure. For further information, see the Non-GAAP Financial Measures section of MD&A.
Fifth Third’s 2011 results exemplified the resiliency of our
business model and the strength of our strategic plan.