Fifth Third Bancorp Announces First Quarter 2010 Results

CINCINNATI, April 22 /PRNewswire-FirstCall/ --

• First quarter 2010 net loss of $10 million; $0.09 per diluted share
  • Fourth quarter 2009 net loss of $98 million; $0.20 per diluted share
  • Per share results include preferred dividends which reduced net income available to common shareholders by $0.08 per diluted share
• Significantly improved credit trends
  • Nonperforming assets declined 3 percent and nonperforming loans declined 7 percent sequentially (lowest levels since 2Q09)
  • Net charge-offs declined $126 million or 18 percent sequentially (lowest level since 1Q09)
  • Total delinquencies declined 15 percent sequentially (lowest level since 3Q07), driven by lower loans 90 days past due
  • Allowance to loan ratio increased to 4.91 percent, 139 percent of nonperforming loans and leases, and allowance of 1.6 times annualized 1Q10 net charge-offs
• Pre-provision net revenue (PPNR)* of $568 million up $6 million from 4Q09
  • Net interest income increased $19 million, or 2 percent, sequentially; net interest margin of 3.63 percent, up 8 bps from the previous quarter
  • Noninterest income down 4 percent sequentially, reflecting continued strong mortgage banking revenue more than offset by expected lower TSA revenue, warrant gains in 4Q09, and seasonality
  • Noninterest expense down 1 percent sequentially, driven by expected lower TSA expense
• Capital and liquidity position remain very strong
  • Average loans increased 1 percent, reflecting impact of consolidation due to  accounting guidance adopted on January 1, 2010
  • Average core deposits up 14 percent, wholesale funding down 42 percent from a year ago
  • Tangible common equity ratio of 6.37 percent, Tier 1 common ratio of 6.97 percent, Leverage ratio of 12.00 percent, Tier 1 ratio of 13.40 percent, total capital ratio of 17.55 percent
• Extended $18 billion of new and renewed credit in the first quarter

* Pre-provision net revenue (PPNR): net interest income plus noninterest income minus noninterest expense.

Fifth Third Bancorp (Nasdaq: FITB) today reported a first quarter 2010 net loss of $10 million compared with a net loss of $98 million in the fourth quarter of 2009 and net income of $50 million in the first quarter of 2009. After preferred dividends, the first quarter 2010 net loss available to common shareholders was $72 million or $0.09 per diluted share, compared with a fourth quarter net loss of $160 million or $0.20 per diluted share, and a net loss of $26 million or $0.04 per diluted share in the first quarter of 2009.

First quarter 2009 net income included $121 million after-tax, or $0.21 per share, in benefits related to the decision to surrender one of our bank-owned life insurance (BOLI) policies, which included lower tax expense partially offset by non-cash charges, and also related to our agreement with the IRS to settle all of Fifth Third's disputed leveraged leases for all open years, which included a reduction in tax expense partially offset by a reduction in net interest income.

Earnings Highlights

"First quarter results showed continued significant improvement, reflecting not only lower credit costs but also stronger than expected pre-provision earnings," said Kevin Kabat, chairman, CEO and president of Fifth Third Bancorp. "Since the beginning of the credit crisis, we have focused on addressing the sources of credit issues, on aggressively identifying and resolving problem loans. At the same time, we've sought to ensure that we were appropriately reserved and capitalized for the deterioration that we expected to occur as the credit cycle unfolded.

I believe our results this quarter reflect the benefit of those actions and efforts. Delinquent loans declined 15 percent to the lowest level since 2007. Nonperforming loans declined 7 percent to the lowest level we've seen since mid-2009. And net charge-offs declined $126 million or 18 percent, representing the lowest level experienced since the first quarter of 2009. Reserve coverage levels remain very strong, at 4.91 percent of loans, 139 percent of nonperforming loans, and 1.6 times annualized first quarter charge-offs.

We currently expect to see continued credit improvement in the second quarter, with delinquencies and nonperforming assets remaining relatively stable and charge-offs down another $100 million or so in the second quarter. We also expect full year charge-offs to be significantly below the $2.6 billion we experienced in 2009. Given recent credit trends and our current expectations for future credit results, we expect loan loss reserves to begin to come down next quarter. These expectations are dependent on economic trends remaining consistent with our current outlook.

Operating results also showed improvement. Pre-provision net revenue of $568 million reflected solid net interest income growth, better than expected fee income results, and lower expenses. Net interest income increased 2 percent from last quarter despite continued weak loan demand and excess liquidity. Average loans increased 1 percent and average core deposits increased 6 percent sequentially. Wholesale borrowings are down 42 percent from a year ago, reflecting our strong liquidity position. Noninterest income was down 4 percent from a seasonally strong fourth quarter with mortgage banking results stronger than expected. Noninterest expense was down 1 percent sequentially despite continued elevated credit-related expenses and investments in our business.

Capital levels remained strong, including a Tier 1 common equity ratio of 7.0 percent and a Tier 1 capital ratio of 13.4 percent. We expect second quarter capital levels to remain consistent with first quarter levels and to begin to reflect organic growth as our earnings results continue to improve."

Income Statement Highlights

Net Interest Income

Net interest income of $901 million on a taxable equivalent basis increased $19 million, or 2 percent, from the fourth quarter of 2009. The net interest margin was 3.63 percent, up 8 bps from 3.55 percent the previous quarter. The sequential increase in net interest income and net interest margin was largely driven by reduced funding costs and deposit mix shift to lower cost core deposits from higher priced term deposits as well as continued realization of more attractive spreads on loans originated during the quarter. Net interest income also benefitted by approximately $10 million from the effect of the consolidation of loans in accordance with accounting guidance adopted on January 1, 2010,

Compared with the first quarter of 2009, net interest income increased $120 million and the net interest margin increased 57 bps from 3.06 percent, largely the result of the mix shift from higher cost term deposits to lower cost deposit products throughout the year, partially offset by reduced loan demand.

Average Securities

During the quarter, average securities and other short-term investments increased by $1.7 billion. The increase was driven by a $2 billion sequential increase in average short-term investments, reflecting excess liquidity. The full-quarter effect of fourth quarter purchases of agency mortgage-backed securities was largely offset by the impact of the consolidation of certain of our off-balance sheet conduits at the beginning of the quarter. The consolidation reduced securities balances by approximately $940 million on a net basis.

Average Loans

Average portfolio loan and lease balances increased 1 percent sequentially and declined 6 percent from the first quarter of 2009.

Average commercial loan and lease balances were flat sequentially and declined 10 percent from the first quarter of 2009. Commercial and industrial (C&I) average loans increased 2 percent sequentially and declined 9 percent from the previous year. Sequential growth was driven by the addition of $724 million in C&I balances that were consolidated on January 1, 2010. Excluding this impact, sequential and year-over-year declines were impacted by continued low demand and lower customer line utilization, which was 34 percent of committed lines in the first quarter versus 35 and 41 percent in the fourth quarter and first quarter of 2009 respectively. Average commercial mortgage and commercial construction loan balances declined by a combined 4 percent sequentially and 12 percent from the same period the previous year, reflecting low customer demand and tighter underwriting standards.

Average consumer loan and lease balances increased 3 percent sequentially and declined 1 percent from the first quarter of 2009. The sequential increase was driven by $1.2 billion of securitized auto loans and $263 million of home equity loans that were consolidated on January 1, 2010. Excluding the impact of these consolidations, average consumer loan and lease balances declined 1 percent sequentially and 5 percent from the first quarter of 2009. Sequential declines reflect lower demand for consumer loans and leases, while year-over-year declines in residential mortgage loans and home equity were partially offset by growth in auto loans and credit card.

Nearly all of Fifth Third's mortgages are originated to be sold to agencies and are not reflected in portfolio loans or portfolio loan growth. Warehoused residential mortgages held-for-sale were $1.5 billion at quarter end.

Average Deposits

Average core deposits increased 6 percent sequentially and 14 percent from the first quarter of 2009. Sequential growth in demand deposit accounts (DDA), interest checking and savings was partially offset by lower consumer CD balances. Higher priced, short-term consumer CDs originated in the second half of 2008 continue to mature, while demand deposits and interest checking balances continue to reflect excess customer liquidity, particularly public funds. Average transaction deposits excluding consumer time deposits were up 9 percent from fourth quarter of 2009 and increased 23 percent from the same period the previous year.

Retail average core deposits increased 1 percent sequentially and 3 percent from the first quarter of 2009. Sequential growth in savings, interest checking, and foreign deposits was partially offset by a decline in consumer CD balances. On a year-over-year basis, growth in savings, foreign deposits, and interest checking was partially offset by lower money market and consumer CD balances. Commercial average core deposits increased 20 percent sequentially and 46 percent from the previous year, reflecting excess customer liquidity. Sequential growth was driven by a $1.9 billion increase in average public funds balances and year-over-year growth was driven by interest checking and DDA, due to higher average account balances.

Noninterest Income

Noninterest income of $627 million decreased $24 million sequentially and $70 million from a year ago. Sequential growth in mortgage banking and investment advisory revenue was more than offset by declines in corporate banking revenue, service charges on deposits, and other noninterest income. The decline from a year ago was driven by the effect of processing business sale.

Noninterest income was negatively impacted by both a $9 million decline in fair value on a total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares and $2 million in mark-to-market adjustments on warrants related to the processing business sale. Results benefited from $13 million in revenue associated with the transition service agreement (TSA) entered into as part of our processing business sale, under which the Bancorp provides services to the processing business to support its operations during the deconversion period. Fourth quarter 2009 results included a benefit of $20 million in mark-to-market adjustments on warrants related to the processing business sale and $39 million in revenue from the TSA. First quarter 2009 results included $54 million in charges related to one of our BOLI policies. Excluding these items, as well as investment securities gains/losses in all periods, noninterest income increased by $21 million, or 4 percent, from the previous quarter, driven by strong mortgage banking revenue and lower credit-related costs, partially offset by the effects of seasonality. On the same basis, the $164 million, or 21 percent, decrease from the first quarter of 2009 was largely due to merchant processing and financial institution revenue in the first quarter of 2009 that was included with the processing business sale on June 30, 2009.

Service charges on deposits of $142 million declined 11 percent sequentially and 3 percent compared with the same quarter last year. Retail service charges declined 16 percent from the previous quarter and 5 percent compared with the first quarter of 2009. The sequential decline was largely driven by seasonality as well as a reduction of NSF fees related to fewer occurrences. The year-over-year decline was largely driven by the changes in overdraft policies. Commercial service charges decreased 6 percent sequentially and 1 percent versus last year, reflecting seasonality and higher client use of compensating balances to pay for treasury management services.

Corporate banking revenue of $81 million decreased 8 percent from seasonally strong fourth quarter 2009 results and declined 28 percent from the same period the previous year. Sequential results were driven by declines in business lending fees, foreign exchange revenue, and institutional sales, partially offset by modest growth in interest rate derivative sales revenue. On a year-over-year basis, lower foreign exchange and interest rate derivative sales revenue more than offset growth in institutional sales and business lending fees. Results were impacted by a significant effect of lower loan demand and volume, affecting sales of corporate bonds and loan-related services such as interest rate derivatives.

Mortgage banking net revenue was $152 million in the first quarter of 2010, an increase of $20 million from fourth quarter 2009 results and an increase of $18 million from the first quarter of 2009. First quarter 2010 originations of $3.5 billion declined from strong levels of $4.8 billion in the previous quarter and $5.0 billion in the first quarter of 2009. First quarter 2010 originations resulted in gains of $70 million on mortgages sold compared with gains of $97 million during the previous quarter and $130 million during the same period in 2009. Net servicing revenue, before MSR valuation adjustments, totaled $31 million in the first quarter, compared with $26 million last quarter and $2 million a year ago. MSR valuation adjustments, including mark-to-market related adjustments on free-standing derivatives used to economically hedge the MSR portfolio, represented a net gain of $51 million in the first quarter of 2010, compared with a net gain of $9 million last quarter and a net gain of $1 million a year ago. The mortgage-servicing asset, net of the valuation reserve, was $725 million at quarter end on a servicing portfolio of $50 billion.

Investment advisory revenue of $91 million was up 5 percent sequentially and up 14 percent from the first quarter of 2009. Sequential results were driven by seasonal growth in tax-related private client services fees and brokerage fees, partially offset by declines in institutional trust and mutual fund fees. On a year-over-year basis, growth in brokerage fees, private client services, and institutional trust revenue, primarily due to higher retail trading volumes and market value increases, was offset by lower mutual fund fees.

Card and processing revenue was $73 million in the first quarter of 2010, a decrease of 4 percent from the previous quarter due to seasonality. Results in the first quarter of 2009 included $155 million in merchant processing revenue and financial institutions revenue, which are now part of the processing business that was sold. Excluding the divested revenue, card and processing revenue increased by $5 million, or 8 percent, from the previous year due to growth in debit card transaction volumes.

Other noninterest income totaled $74 million in the first quarter of 2010 versus $107 million in the previous quarter and $10 million in the first quarter of 2009. First quarter 2010 results included the previously mentioned $9 million decline in fair value on a total return swap entered into as part of the 2009 sale of Visa, Inc. Class B shares, and $2 million decline in the valuation of warrants related to the processing  business sale. First quarter results also included $13 million of TSA revenue and $5 million of revenue from our equity interest in the processing business. Fourth quarter 2009 results included a benefit of $20 million from the valuation of the processing business warrants, $39 million of TSA revenue, and $8 million of revenue from our processing business equity interest. First quarter 2009 results included $54 million in charges related to one of our BOLI policies. Excluding these items, other noninterest income increased $27 million from the previous quarter and $3 million from the first quarter of 2009. Credit-related costs recognized in noninterest income were $1 million in the first quarter of 2010, versus $30 million last quarter and $3 million in the first quarter of 2009. This quarter, we realized $25 million of net gains on the sale of loans held-for-sale which were offset by $9 million of fair value charges on commercial loans held-for-sale and $16 million of losses on the sale of other real estate owned (OREO). Fourth quarter 2009 results included net gains of $8 million on sale of loans held-for-sale, $17 million of fair value charges on commercial loans held-for-sale, and $21 million of losses on the sale of OREO. First quarter 2009 results included net gains of $11 million on the sale of loans, offset by $14 million of losses on the sale of OREO.

There were no net securities gains on non-qualifying hedges on MSRs in the first quarter of 2010 or in the previous quarter while first quarter 2009 results included gains of $16 million.

Net gains on investment securities were $14 million in the first quarter of 2010, compared with securities gains of $2 million in the previous quarter and net losses of $24 million in the same period the previous year.

Noninterest Expense

Noninterest expense of $956 million decreased $11 million sequentially and decreased $6 million from a year ago. Other noninterest expense included a $4 million charge to increase the litigation reserve associated with bank card association memberships, compared with $22 million of such charges in the fourth quarter of 2009. During the first quarter we incurred approximately $13 million in operating expenses related to the processing business that were offset with revenue under the TSA reported in other noninterest income. TSA related expenses were $39 million in the fourth quarter of 2009. First quarter 2009 results included $8 million in severance expense. Excluding these items, first quarter 2010 noninterest expense increased by $33 million from the previous quarter, or 4 percent, and decreased by $15 million from a year ago, or 2 percent. This remaining sequential increase reflected an $18 million increase in credit-related expenses, outlined below, as well as a $16 million seasonal increase in FICA and unemployment costs. The decrease from a year ago was primarily driven by lower provision expense for unfunded commitments.

Expenses incurred related to problem assets totaled $91 million in the first quarter of 2010, compared with $73 million in the fourth quarter and $94 million in the first quarter of 2009. Noninterest expenses related to mortgage repurchase reserves were $39 million, compared with $18 million in the fourth quarter of 2009 and $6 million a year ago. (Realized repurchase losses realized were $13 million in the first quarter of 2010, compared with $14 million and $10 million in the fourth and first quarters of 2009.) Provision expense for unfunded commitments was $9 million in the first quarter of 2010 versus $11 million last quarter and $36 million a year ago. Derivative valuation adjustments related to customer credit risk resulted in an $8 million expense this quarter versus a $2 million gain last quarter and a $15 million expense a year ago. OREO expense was $6 million this quarter, compared with $9 million last quarter and $4 million a year ago. Other work-out related expenses were $29 million in the first quarter, compared with $37 million the previous quarter and $32 million in the same period last year.

Credit Quality

Net charge-offs were $582 million in the first quarter of 2010, or 301 bps of average loans on an annualized basis. Fourth quarter net charge-offs were $708 million, or 362 bps of average loans on an annualized basis. Loss experience overall continues to be disproportionately affected by commercial and residential real estate loans in Michigan and Florida. In aggregate, Florida and Michigan represented approximately 46 percent of total losses during the quarter and 27 percent of total loans and leases.

Commercial net charge-offs were $342 million, or 307 bps, in the first quarter of 2010, a decrease of $126 million from the fourth quarter of 2009. Within the commercial portfolio, C&I losses were $161 million, a decrease of $22 million from the previous quarter. Within C&I, losses on loans to companies in real estate-related industries were $51 million, a decrease of $20 million from the previous quarter. Commercial mortgage net losses totaled $99 million, a decrease of $43 million from the previous quarter, with Michigan and Florida accounting for 53 percent of losses. Commercial construction net losses were $78 million, a decrease of $57 million from the previous quarter, with Michigan and Florida accounting for 40 percent of losses. Across all commercial portfolios, net losses on residential builder and developer portfolio loans totaled $81 million, down $29 million from the fourth quarter. These homebuilder losses included $39 million on commercial construction loans, $37 million on commercial mortgage loans, and $5 million on C&I loans. Originations of homebuilder/developer loans were suspended in 2007 and the remaining portfolio balance totals $1.3 billion.

Consumer net charge-offs of $240 million, or 293 bps, were flat compared with the fourth quarter of 2009. Net charge-offs within the residential mortgage portfolio were $88 million, an increase of $10 million from the previous quarter, with losses in Michigan and Florida representing 68 percent of losses in the first quarter and approximately 42 percent of total residential mortgage loans. Home equity net charge-offs of $73 million decreased $9 million sequentially, with Michigan and Florida representing 44 percent of first quarter home equity losses and 29 percent of total home equity loans. Net losses on brokered home equity loans were $29 million, down $5 million sequentially, and represented 40 percent of first quarter home equity losses and 16 percent of the total home equity portfolio. The home equity portfolio included $1.9 billion of brokered loans; originations of these loans were discontinued in 2007. Net charge-offs in the auto portfolio of $31 million decreased $1 million from the fourth quarter of 2009 and net losses on consumer credit card loans were $44 million, consistent with the previous quarter.

Provision for loan and lease losses totaled $590 million in the first quarter of 2010, down $186 million from the fourth quarter and exceeding net charge-offs by $8 million. The allowance for loan and lease losses represented 4.91 percent of total loans and leases outstanding as of quarter end, compared with 4.88 percent last quarter, and represented 139 percent of nonperforming loans and leases and 161 percent of first quarter annualized net charge-offs.

Nonperforming assets (NPAs) at quarter end were $3.1 billion or 4.02 percent of total loans, leases and OREO, and decreased $115 million, or 4 percent, from the previous quarter. Including $243 million of nonaccrual loans classified as held-for-sale, total NPAs were $3.4 billion and were down $96 million, or 3 percent compared with the fourth quarter. In aggregate, Florida and Michigan represented approximately 45 percent of NPAs in the loan portfolio. Total NPAs are currently carried at approximately 59 percent of their original face value through the process of taking charge-offs, purchase accounting marks, and specific reserves recorded through the first quarter.

Commercial NPAs at quarter-end were $2.4 billion, or 5.39 percent of commercial loans, leases and OREO, and declined $126 million, or 5 percent, from the fourth quarter of 2009. Commercial construction portfolio NPAs were $569 million, a decline of $138 million from the fourth quarter of 2009. Commercial mortgage NPAs were $1 billion, a sequential increase of $17 million. Commercial real estate loans in Michigan and Florida represented 47 percent of commercial real estate NPAs and 38 percent of our total commercial real estate portfolio. C&I portfolio NPAs of $788 million increased $7 million from the previous quarter. Within the commercial loan portfolio, residential real estate builder and developer portfolio NPAs were down $28 million from the fourth quarter to $520 million, of which $232 million were commercial construction assets, $265 million were commercial mortgage assets and $23 million were C&I assets. Commercial NPAs included $39 million of nonaccrual troubled debt restructurings (TDRs), compared with $47 million last quarter.

At quarter-end, $243 million of commercial nonaccrual loans were held-for-sale, compared with $224 million at the end of the fourth quarter, and included $80 million from loans transferred to held-for-sale during the first quarter. During the quarter, we also transferred $28 million of loans from loans held-for-sale to OREO. Loans held-for-sale are carried at the lower of cost or market, and this portfolio is currently recorded at 32 percent of original balances. We recorded negative valuation adjustments of $9 million on held-for-sale loans and we recorded net gains of $25 million on loans that were sold or settled, including loans moved to held-for-sale and sold during the quarter.

Consumer NPAs of $715 million, or 2.16 percent of consumer loans, leases and OREO, increased $10 million, or 1 percent, from the fourth quarter of 2009. Of consumer NPAs, $590 million were in residential real estate portfolios. Residential mortgage NPAs were $521 million, down $2 million from the previous quarter. Home equity NPAs decreased $1 million from last quarter to $70 million. Residential real estate loans in Michigan and Florida represented 59 percent of total residential real estate NPAs and 34 percent of total residential real estate loans. Consumer nonaccrual TDRs were $271 million in the first quarter of 2010, compared with $258 million in the fourth quarter of 2009.

First quarter OREO balances included in NPAs were $375 million compared with $275 million in the fourth quarter of 2009, and included $220 million in commercial real estate assets, $113 million in residential mortgage assets, and $20 million in home equity assets. Repossessed personal property of $21 million largely consisted of autos.

Loans still accruing over 90 days past due were $436 million, down $131 million from the fourth quarter of 2009. Commercial balances 90 days past due declined $78 million to $120 million in the first quarter of 2010. Consumer balances 90 days past due of $316 million declined by $53 million from the previous quarter. Loans 30-89 days past due of $917 million increased $22 million or 2 percent from the fourth quarter. Commercial balances 30-89 days past due were up $34 million sequentially and consumer balances 30-89 days past due were down $12 million from the fourth quarter.

Capital Position

Capital ratios were relatively stable during the quarter and included the effect of the consolidation of certain of our off-balance sheet conduits at the beginning of the quarter. The corresponding cumulative effect of change in accounting principle reduced equity by $77 million. Compared with the prior quarter, the Tier 1 common equity ratio decreased 3 bps to 6.97 percent, the Tier 1 capital ratio increased 9 bps to 13.40 percent, and the total capital ratio increased 7 bps to 17.55 percent. The tangible common equity to tangible assets ratio decreased 8 bps to 6.37 percent. Book value per share at March 31, 2010 was $12.31 and tangible book value per share was $9.16, compared with December 31, 2009 book value per share of $12.44 and tangible book value per share of $9.26.

Conference Call

Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live by Thomson Financial and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on "About Fifth Third" then "Investor Relations"). The webcast also is being distributed over Thomson Financial's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Financial's individual investor center at www.earnings.com or by visiting any of the investor sites in Thomson Financial's Individual Investor Network. Institutional investors can access the call via Thomson Financial's password-protected event management site, StreetEvents (www.streetevents.com).

Those unable to listen to the live webcast may access a webcast replay or podcast through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available beginning approximately two hours after the conference call until Thursday, May 6th by dialing 800-642-1687 for domestic access and 706-645-9291 for international access (passcode 65786356#).

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of March 31, 2010, the Company has $113 billion in assets, operates 16 affiliates with 1,309 full-service Banking Centers, including 103 Bank Mart® locations open seven days a week inside select grocery stores and 2,364 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has a 49% interest in Fifth Third Processing Solutions, LLC. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2010, had $190 billion in assets under care, of which it managed $25 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third's common stock is traded on the NASDAQ® National Global Select Market under the symbol "FITB."

Forward-Looking Statements

This news release contains statements that we believe are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking language such as "will likely result," "may," "are expected to," "is anticipated," "estimate," "forecast," "projected," "intends to," or may include other similar words or phrases such as "believes," "plans," "trend," "objective," "continue," "remain," or similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us.

There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) general economic conditions and weakening in the economy, specifically the real estate market, either nationally or in the states in which Fifth Third, one or more acquired entities and/or the combined company do business, are less favorable than expected; (2) deteriorating credit quality; (3) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (4) changes in the interest rate environment reduce interest margins; (5) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; (6) Fifth Third's ability to maintain required capital levels and adequate sources of funding and liquidity; (7) maintaining capital requirements may limit Fifth Third's operations and potential growth; (8) changes and trends in capital markets; (9) problems encountered by larger or similar financial institutions may adversely affect the banking industry and/or Fifth Third (10) competitive pressures among depository institutions increase significantly; (11) effects of critical accounting policies and judgments; (12) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies; (13) legislative or regulatory changes or actions, or significant litigation, adversely affect Fifth Third, one or more acquired entities and/or the combined company or the businesses in which Fifth Third, one or more acquired entities and/or the combined company are engaged; (14) ability to maintain favorable ratings from rating agencies; (15) fluctuation of Fifth Third's stock price; (16) ability to attract and retain key personnel; (17) ability to receive dividends from its subsidiaries; (18) potentially dilutive effect of future acquisitions on current shareholders' ownership of Fifth Third; (19) effects of accounting or financial results of one or more acquired entities; (20) difficulties in separating Fifth Third Processing Solutions from Fifth Third; (21) loss of income from any sale or potential sale of businesses that could have an adverse effect on Fifth Third's earnings and future growth;(22) ability to secure confidential information through the use of computer systems and telecommunications networks; and (23) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity.

You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or "SEC," for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.

SOURCE Fifth Third Bancorp