As Mortgage Revenue Tumbles, Fifth Third Bancorp Earnings Take a Hit

Resulting from declining mortgage revenue and fewer gains from its position in Vantiv (NYSE: VNTV  ) , Fifth Third Bancorp (NASDAQ: FITB  ) announced today its earnings per share fell from $0.65 in the second quarter of 2013 to $0.49 in the most recent quarter, a decline of 25%.

Following the sale of 6 million shares for a pre-tax gain of $125 million, Fifth Third has a remaining 23% ownership stake in Vantiv, which is an electronic payment processing company with a market capitalization of $6.5 billion. In his remarks Kabat noted the position "continues to be an important investment," for Fifth Third Bancorp.

As noted in the company's earnings presentation there were a number of significant items which affected its bottom line, including a positive gain from its sale of Vantiv shares, a valuation adjustment, as well as negative impacts from a litigation charge and other adjustments.

These were also largely impactful in the second quarter of 2013, and the adjusted impact is noted below:


Reported EPS

Impact of Significant Items

Adjusted EPS

Q2 2013




Q2 2014




Source: Company Investor Relations

Excluding these adjustments, earnings per share at Fifth Third Bancorp fell 7%. The biggest reason for this decline resulted from its mortgage banking revenue plummeting by 67%, or $155 million, over the second quarter of last year, to stand at $78 million.

On a positive note, the bank did see its deposits rise by 9% over the last year to $93 billion, and its loans have risen by 4% to $90.5 billion. The biggest growth in its loans came from its commercial and industrial loans, which rose 10% to stand at $41.4 billion.

"Second quarter results reflected our continued focus on revenue generation and core expense management, which contributed to return on average assets of 1.34 percent and return on average tangible common equity* of 14.4 percent," noted the CEO of Fifth Third Bancorp, Kevin Kabat, in the announcement.

Kabat closed by noting, "During the quarter, we increased our quarterly common stock dividend 8 percent to $0.13 and entered into an agreement to repurchase $150 million of common shares, which represented the first quarter of share repurchases under our 2014 CCAR plan."

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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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Related Tickers

9/3/2015 4:00 PM
FITB $19.50 Up +0.16 +0.83%
Fifth Third Bancor… CAPS Rating: ****
VNTV $45.02 Up +0.45 +1.01%
Vantiv CAPS Rating: **