Fifth Third Bank's new CEO Greg Carmichael knows how to make a good impression with the folks on Wall Street. This week the new man in charge delivered the banking institution's financial report for the 1st quarter of 2016 — the first full quarter under his watch — and beat analyst's expectations right out of the box.
The nation's 12th largest bank, with branch offices prevalent throughout Michigan's Great Southwest, reported first quarter 2016 net income of $327-million versus net income of $657-million in the fourth quarter of 2015 and $361-million in the first quarter a year ago. After preferred dividends, net income available to common shareholders was $312-million, of $0.40-per diluted share in the first quarter of 2016, compared with $634-million, or $0.79-per diluted share, in the fourth quarter of 2015, and $346-million, or $0.42-per diluted share, in the first quarter a year ago.
Analysts polled by Thomson Financial and Zacks Investment Research had expected Fifth Third to earn 34-cents per share, so the first quarter easily topped that, and the quarter's $1.55-billion in revenue also beat analyst's estimates by 5-percent, inasmuch as they had projected revenues at $1.47-billion.
Carmichael who serves as President & CEO at Fifth Third said, "First quarter results were strong despite significant market volatility." He added, "Our net income increased from the fourth quarter, reflecting the benefit of the Fed's December rate hike on loan yields. In addition, we had very strong results this quarter in our fee generating businesses. At the same time the results also highlight our focus on expense management. We remain cautious about the economic outlook and are continuing to look to drive better near term performance without relying on higher interest rates."
Carmichael says the first quarter of 2016 represented "a critical starting point for the planned investments we discussed in January. During the quarter we also executed other expense saving initiatives, including our early retirement offer, which will positively impact our operating leverage going forward."
The new leader says, despite the challenging economic environment, "We are making these investments now as they will help drive revenue growth and efficiency improvements, while enhancing the quality of customer service.
On the revenue side of the sheet, first quarter income included $8-million in gains on the sale of certain St. Louis branches as part of a previously announced branch consolidation and sales plan, as well as $47-million positive valuation adjustments on remaining Vantiv warrants, part of the voluntary early retirement program.
Carmichael concludes, "Economic conditions within our footprint remain relatively unchanged, and activity levels are in line with customer sentiment. Our customers continue to embrace the changes we have made to our products, services and delivery methods as we adapt to their evolving preferences. Our focus on the customer remains at the core of our efforts."
