Fifth Third Bank 2014 Annual Report Download - page 47

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
45 Fifth Third Bancorp
and a decrease in the provision for loan and lease losses, partially
offset by higher noninterest expense.
Net interest income increased $62 million from 2012 primarily
due to growth in average commercial and industrial loans, an
increase in FTP credits due to increases in savings and money
market deposits and demand deposits and a decrease in FTP
charges on loans, partially offset by a decline in yields of 28 bps on
average commercial loans.
Provision for loan and lease losses decreased $55 million from
2012 as a result of improved credit trends. Net charge-offs as a
percent of average portfolio loans and leases decreased to 41 bps for
2013 compared to 57 bps for 2012.
Noninterest income increased $44 million from 2012 primarily
due to increases in other noninterest income and service charges on
deposits, partially offset by a decrease in corporate banking revenue.
The increase in other noninterest income of $38 million from 2012
was primarily due to decreases in negative valuation adjustments on
OREO, increases in operating lease income and card and processing
revenue, and decreases in negative valuation adjustments on loans
held for sale, partially offset by decreases in gains on loan sales.
Service charges on deposits increased $16 million from 2012
primarily driven by commercial deposit revenue which increased
due to fee repricing and the acquisition of new customers. The
decrease in corporate banking revenue of $10 million from the prior
year was primarily driven by decreases in lease remarketing and
letter of credit fees, partially offset by increases in syndication fees,
foreign exchange fees and business lending fees.
Noninterest expense increased $48 million from 2012 as a
result of increases in other noninterest expense and salaries,
incentives and employee benefits. Other noninterest expense
increased $42 million from the prior year primarily driven by
increases in impairment on affordable housing investments and
operating lease expense, partially offset by a decrease in loan and
lease expense. The increase in salaries, incentives and employee
benefits of $6 million from 2012 was primarily the result of an
increase in base compensation primarily driven by improved
production levels.
Average commercial loans increased $3.7 billion from the prior
year primarily due to an increase in average commercial and
industrial loans, partially offset by a decrease in average commercial
mortgage loans. Average commercial and industrial portfolio loans
increased $4.9 billion from December 31, 2012 as a result of an
increase in new origination activity from an increase in demand due
to a strengthening economy and targeted marketing efforts. Average
commercial mortgage loans decreased $1.1 billion due to continued
run-off as the level of new originations was less than the repayments
of the existing portfolio.
Average core deposits increased $1.5 billion from December
31, 2012. The increase was primarily driven by strong growth in
average savings and money market deposits and average demand
deposits, which increased $1.6 billion and $374 million, respectively,
from to the prior year, partially offset by a decrease in interest
checking deposits of $700 million.
Branch Banking
Branch Banking provides a full range of deposit and loan and lease
products to individuals and small businesses through 1,302 full-
service Banking Centers. Branch Banking offers depository and loan
products, such as checking and savings accounts, home equity loans
and lines of credit, credit cards and loans for automobiles and other
personal financing needs, as well as products designed to meet the
specific needs of small businesses, including cash management
services.
The following table contains selected financial data for the Branch Banking segment:
TABLE 18: BRANCH BANKING
For the years ended December 31 ($ in millions) 2014 2013 2012
Income Statement Data
Net interest income $ 1,546 1,356 1,261
Provision for loan and lease losses 181 210 268
Noninterest income:
Service charges on deposits 272 279 268
Card and processing revenue 226 207 195
Investment advisory revenue 152 148 129
Other noninterest income 70 106 107
Noninterest expense:
Salaries, incentives and employee benefits 537 547 537
Net occupancy and equipment expense 246 241 238
Card and processing expense 133 125 115
Other noninterest expense 635 660 579
Income before taxes 534 313 223
A
pplicable income tax expense 188 109 79
Net income $ 346 204 144
A
verage Balance Sheet Data
Consumer loans, including held for sale $ 14,978 15,223 14,926
Commercial loans, including held for sale 1,583 1,807 1,905
Demand deposits 11,228 10,750 8,391
Interest checking deposits 8,998 8,841 9,080
Savings and money market deposits 23,911 22,110 22,031
Other time deposits and certificates - $100,000 and over 4,690 4,709 5,386