Fifth Third Bank 2013 Annual Report Download - page 7

2013 ANNUAL REPORT | 5
in the branch, we’re accelerating the self-service transition where it makes sense. We’re working
to educate customers by using in-branch ATMs and a smaller, more cost-eective branch format
with about half the stang of a traditional branch. Our banking centers remain the most visible
brand identier in our communities and they also
will remain a key source of deposits and cross-selling.
Our customers have indicated that branch proximity
and convenience are still top factors in selecting a
bank, and a vast majority of our consumer checking
households, as well as Private Bank, small business,
and business banking customers have visited a
banking center in the past six months. Prudently
balancing the lower branch trac with branch
presence and the consultative expertise we can oer there will be a key priority for Fih ird and
the industry in coming years.
Our customers have told us how much they appreciate our employees and the way they listen
to them, get to know them, and respond to their needs. e friendly Fih ird face, the spirit
behind our pin, and the commitment to improving lives are among the hallmarks of our brand.
ey’re at the foundation of our relationships with customers, businesses, and communities, and
the strength of those relationships is paramount to our success. at’s why I believe that the people
who represent our Company are Fih ird Bank’s most valuable asset. In 2013, for the second
time, we were recognized by the Gallup organization with a Gallup Great Workplace Award for
our engaged and productive workforce. It takes a team eort to dierentiate our Company through
strong results. We can all be proud of what we accomplished in 2013, both in terms of engagement
and nancial performance.
Our solid nancial performance has produced high rates of internal capital generation, which
have been supplemented by gains on our position in the payment processing company, Vantiv,
Inc. is has proven to be a strategic advantage for Fih ird and we’ve recognized about
$2.9 billion in total pre-tax gains from the sale of the processing business in 2009 to today,
including gains in 2013 of $327 million on the sale of a portion of our Class A shares of Vantiv
common stock and $206 million on the valuation of the warrant we hold in Vantiv. We continue
to own a 25 percent interest in Vantiv, whose market capitalization was $5.4 billion at year-end.
Fih ird has beneted tremendously from its investment in Vantiv, and while we would expect
to manage our position downward over time in a disciplined way, it continues to give us signicant
capital exibility.
Fih ird’s strong earnings generation provides the ability to distribute excess capital to
shareholders while maintaining already strong capital levels. In 2013, we increased our annual
dividend 31 percent from the prior year, to a level consistent with the Federal Reserve’s near-
term dividend payout ratio guidance of 30 percent. Including common stock repurchases, we
returned a net $1.3 billion to shareholders. We’ve reduced our share count by 7 percent from the
peak in 2012 while growing tangible book value per share by 12 percent over that same period.
Despite these returns, our capital levels remain very strong overall, with a Tier 1 common ratio* of
9.4 percent as well as a Tier 1 risk-based capital ratio of 10.4 percent at year-end compared with
the 6 percent regulatory well-capitalized minimum.
Our capital position also is well-aligned with new capital rules that were approved by U.S. banking
regulators in July, with a Basel III pro form Tier 1 common ratio estimate of 9.0 percent at year-end.
In light of the new rules, we took a number of important steps in 2013 to make the composition
Fifth Third’s strong earnings generation
provides the ability to distribute excess
capital to shareholders while maintaining
already strong capital levels.
* Non-GAAP measure. For further information, see the Non-GAAP Financial Measures section of MD&A.