Fifth Third Bancorp fell short of Wall Street expectations today on earnings per share in their 4th quarter report, but beat the street on revenue estimates leading to a small gain in pre-market stock pricing.
Fifth Third Bancorp, which — despite closing down it’s largest local Fifth Third Bank presence in downtown St. Joseph — still maintains multiple branches across Michigan’s Great Southwest today reported fourth quarter 2019 net income of $734 million compared to net income of $455 million in the year-ago quarter. Net income available to common shareholders was $701 million, or $0.96 per diluted share, compared to $432 million, or $0.64 per diluted share in the year-ago quarter. Prior quarter net income was $549 million and net income available to common shareholders was $530 million, or $0.71 per diluted share.
Wall Street had expected 5-cents more in earnings per share.
Reported full year 2019 net income was $2.5 billion compared to full year 2018 net income of $2.2 billion. Full year 2019 net income available to common shareholders was $2.4 billion, or $3.33 per diluted share, compared to 2018 full year net income available to common shareholders of $2.1 billion, or $3.06 per diluted share.
Fifth Third Chairman, President & CEO Greg Carmichael says, “Our fourth quarter and full year results were strong, reflecting the strength of our diversified revenue streams, our continued expense discipline, and our ability to achieve our targeted financial outcomes from the MB Financial acquisition.” He adds, “Net interest income, non-interest income, and non-interest expense were in-line with or better than our previous guidance. We generated very strong fee revenue, including a new record in capital markets. Additionally, our net interest income results continue to reflect our ability to successfully manage the balance sheet despite the lower rate environment, which led to better than expected NIM performance for the quarter. Also, we continued to diligently manage our expenses, reflecting our ongoing focus on generating efficiencies throughout the Bank while still investing in high priority areas to support revenue growth.”
The bank holding company shared these key highlights in today’s report:
- Record full year net income of $2.5 billion
- Generated $345 million pre-tax gain in 4Q19 from Worldpay tax receivable agreement (TRA) transaction with FIS
- 4Q19 net interest income, NIM, noninterest income, and expense performance in-line with or better than prior guidance
- Effectively managed interest-bearing core deposit costs better than prior guidance (down 19 bps vs. 3Q19), while continuing to grow core deposits (up 1-percent vs. 3Q19)
- Generated record capital markets revenue in 4Q19; full year revenue up 12-percent
- Several credit metrics impacted by conversion to national charter; excluding conversion, total NCO ratio up 1 bp from 3Q19 with consumer NCO ratio flat from 3Q19
- Remain on-track to achieve MB expense savings by the end of 1Q20 ($255 million pre-tax)
- Continue to realize desired MB employee and client outcomes
Carmichael says, “From a balance sheet perspective, our loan growth was consistent with our prior guidance, reflective of the generally subdued macroeconomic environment. Also, we again generated strong core deposit growth while also proactively reducing deposit costs more than our previous guidance.”
Regarding operational costs, Carmichael says, “We remain on-track to achieve the previously-stated expense and revenue synergy targets related to the MB Financial acquisition. We continue to be pleased with the low client and employee attrition levels.”
The CEO concludes, “Our clearly defined strategic growth priorities, proactive balance sheet management, and ongoing discipline throughout the bank position us well for the future. We expect to build on our strong fourth quarter NIM performance and maintain our expense discipline in order to generate positive operating leverage this year while continuing to invest for long-term outperformance.”
