Fifth Third Bancorp in Cincinnati reported higher third-quarter profit on the termination of tax receivables from its Vantiv payments subsidiary and several other one-time items.

Net income at the $143 billion-asset company rose 37% to $501 million, or 65 per share, from a year ago. Fifth Third reported numerous one-time items, which in aggregate lifted earnings by 22 cents per share.

The largest of the one-time items was a $182 million after-tax gain on the termination and settlement of gross cash flows from certain Vantiv tax-receivable agreements, and the expected obligation to terminate and settle cash flows from the remaining tax-receivable agreements at a later date. Fifth Third also recorded a $7 million after-tax gain on the sale of a non-branch facility.

The company recorded three after-tax charges in the third quarter: an $18 million noncash impairment charge tied to its previously disclosed plan to sell or consolidate land that had been acquired for future branch expansion; an $8 million charge on the valuation of Visa total-return swaps; and a $6 million charge on the transfer of certain nonconforming investments affected by the Volcker Rule to held-for-sale status.

Fifth Third also had an $8 million beneficial tax impact on the termination of some commercial leases.

Noninterest income rose 18% to $840 million. Without the benefit of the one-time items, noninterest income rose 1% to $596 million. Mortgage banking income fell 7% to $66 million.

Net interest income rose 0.7% to $907 million on higher investment securities balances and short-term market rate improvements. The provision for loan and leases losses was nearly cut in half, falling to $80 million from $156 million.

Noninterest expense rose 3% to $973 million as Fifth Third hired additional staff in risk management and compliance, and information technology. Yet Fifth Third's efficiency ratio improved to 55.5% from 58.2%.

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Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.