© Fifth Third Bank | All Rights Reserved Bank of America Merrill Lynch Banking & Financials Conference Daniel T. Poston Executive Vice President & Chief Financial Officer November 14, 2012 Refer to earnings release dated October 18, 2012 and 10-Q dated November 7, 2012 for further information Exhibit 99.1 |
2 © Fifth Third Bank | All Rights Reserved A strong franchise showing momentum Strong results underscored by continued loan growth, solid fee income, expense control, and ongoing improvement in credit metrics Traditional banking model moderate risk profile and strong execution contribute to above average returns New product offerings consistent with our mission, our customer value proposition, and regulatory reform Return capital from robust internal capital generation through appropriate dividend payout and share repurchase plans Current and forecasted fully phased-in pro-forma capital ratios would substantially exceed new fully phased-in well-capitalized minimums Earnings Growth Net income available to common shareholders ($MM) Diluted EPS |
3 © Fifth Third Bank | All Rights Reserved • Continued strong loan production – Rates on loan originations lower but loan interest income stable • Continue to provide customers with products / solutions they find valuable • Careful management of liability costs – Disciplined pricing on deposits – Continued evaluation of term liabilities and capital instruments • Strong mortgage banking results • Mortgage risks manageable – Typical quarterly mortgage repurchase cost ~$20MM – No mortgage securitizations outstanding • Strong profitability and capital in excess of fully phased-in Basel III standards today – Believe we are well positioned to maintain strong capital while providing meaningful distributions to shareholders* Environment characterized by low growth expectations and low interest rates • Prolonged low-rate environment, coupled with modest economic growth • Lower securities reinvestment yields on portfolio cash flows • Strong deposit flows • Competitive dynamics • Elevated mortgage refinance activity • Firms facing significant costs related to mortgage securitizations, GSE repurchases, private label mortgage repurchases • Higher capital standards; limitations on dividend payout ratios; capital building beyond targeted / required levels • Economic uncertainty including fiscal cliff and impact on business activity; concerns about European financial system Fifth Third is well-positioned to deal with current environmental challenges Characteristics of current environment Fifth Third’s response / position * Subject to 2013 Comprehensive Capital Analysis & Review final rules; subject to Board of Directors and regulatory approval. • Low exposure to European banks (see slide 22) |
4 © Fifth Third Bank | All Rights Reserved NII results reflect continued moderate NIM pressure offset by balance sheet growth * Represents purchase accounting adjustments included in net interest income. ^ Estimate; funding (DDAs + interest-bearing liabilities); liabilities attributed to fixed or floating using terms and expected beta Fixed / Floating Portfolio • 3Q12 NII included $10MM of non-recurring benefits (4 bps positive impact to NIM) • NIM pressure created by low rate environment, higher prepayment speeds, repricing in securities and loan portfolios, and modest natural asset sensitivity, but overall is expected to be manageable • Spreads on new originations of variable rate assets consistent with historical spreads Interest-Earning Assets Funding^ Fixed ~55-60% NII and NIM (FTE) ($MM) Loans 50% Loans 33% Investment Portfolio 3% Trend: fixed rate loan origination coupons relative to fixed portfolio weighted avg Larger portfolio repricing effects – Emphasis on variable rate C&I lending • Coupons on new fixed rate loan originations converging with portfolio average coupons • Current trends have pressured net interest income levels, but expect to mitigate much of impact with continued loan growth and liability management Investment Portfolio 14% |
5 © Fifth Third Bank | All Rights Reserved Balance sheet growth mitigates rate environment • Core deposit to loan ratio of 99% consistent with 3Q11 – DDAs up 15% year-over-year – Consumer average transaction deposits up 5% year-over-year – Commercial average transaction deposits up 10% year-over-year Average loan growth ($B)^ Average core deposit growth ($B) 83 79 82 78 ^ Excludes loans held-for-sale Note: Numbers may not sum due to rounding 80 81 82 82 83 • Growth driven by C&I and residential mortgage loans; portfolios in run-off mode are of moderate size – Commercial line utilization stable at 32%; potential source of future growth • CRE portfolio continues to run-off, with modest selective current origination volume • Managing auto volumes to ensure appropriate returns; spread pressure due to competition • Branch mortgage refi product has FICO over 780, LTV ~60% and avg. term ~15 years while yielding above market rates due to process convenience 82 • Short-term wholesale borrowings represent only 7% of total funding |
6 © Fifth Third Bank | All Rights Reserved Strength in C&I loan growth C&I Loans/Average Assets*^ C&I Spread to 1-month LIBOR Peer average: 24% Continued demand in large corporate and mid- corporate space Reduction in portfolio yields driven by mix shift toward higher-quality loans, portfolio effects of repricing, and pressure on new origination yields C&I loans as a percent of total commercial loans was 71% at 3Q12 versus peer average of 63% C&I production continues to be broad based across industries and sectors — Strength in manufacturing and healthcare industries — Launch of Energy Lending vertical expected to contribute to future growth in C&I C&I spreads remain stable C&I Portfolio^ ($B) ^ Presented on an average basis; Excluding held-for-sale loans. Source: SNL Financial and Company Reports. Peer average includes: BBT, CMA, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC, and ZION * ZION & BBT exclude government guaranteed loans; ZION presented as end of period data. |
7 Fifth Third Bank | All Rights Reserved Strong revenue and profit generation Source: SNL Financial and Company Reports. Peer median includes: BBT, CMA, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC, and ZION ^ Excludes $3MM, $10MM, $46MM, and $56MM positive valuation adjustment on the Vantiv warrant and put option in 3Q11, 4Q11, 1Q12, and 2Q12, respectively, and a $16 million negative valuation adjustment on the Vantiv warrant in 3Q12, as well as $115MM in gains from Vantiv's IPO and $34MM charge related to Vantiv's debt refinancing in 1Q12. * Non-GAAP measure. See Reg. G reconciliation in the Appendix to the presentation. Revenue ^ / Avg. Int. Earning Assets PPNR ^* / Avg. Int. Earning Assets 3Q12 returns strong relative to peers NII / Total Assets Noninterest Income^ / Total Assets • Business mix provides higher than average diversity among spread and fee revenues (40+% of revenue) • Relatively strong margin and relatively high fee income contribution drives strong revenue and PPNR generation profitability despite sluggish economy • Income from ownership in Vantiv $25MM in 3Q12 (full year 2011 quarterly avg ~$14MM, despite selling ~10% in 1Q12) 6.33% 5.82% 6.18% 6.02% 6.00% 6.25% ROAA ROAE 2.50% 1.86% 2.29% 2.31% 2.31% 2.13% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 Peer Median 3.65% 3.67% 3.61% 3.56% 3.56% 3.58% 2.68% 2.15% 2.57% 2.46% 2.69% 2.42% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 Peer Median 1.23% 1.20% 1.28% FITB Peer Median ROAA Adjusted ROAA^ 10.4% 10.1% 10.9% FITB Peer Median ROAE Adjusted ROAE^ © Fifth Third Bank | All Rights Reserved |
8 Strong mortgage banking results • Record origination fees and gain on loan sales in 3Q12 • Highest ranking among all servicers and peer groups in Fannie Mae’s 2011 STAR TM Program for servicing performance Looking forward: • Stronger originations / deliveries in 4Q12 vs 3Q12 – Results should remain robust while rates remain low • Gain on sale margins benefitting from: – Strong demand – Industry capacity constraints – Strong mortgage-backed securities pricing • HARP 2.0 originations expected to remain similar percentage of total originations in 4Q12 vs 3Q12 Mortgage originations and gain-on-sale margins* Mortgage Banking Revenue ($MM) * Gain-on-sale margin represents margin on loans originated for sale. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% $0 $1 $2 $3 $4 $5 $6 $7 $8 3Q11 4Q11 1Q12 2Q12 3Q12 Originations for sale Originations HFI Margins* ($B) 119 152 174 183 226 59 58 61 63 62 (34) (47) (46) (41) (48) 34 (7) 15 (22) (40) 3Q11 4Q11 1Q12 2Q12 3Q12 Orig fees and gains on loan sales Gross servicing fees Servicing rights amortization MSR valuation adjustments $178 $200 $183 $156 $204 © Fifth Third Bank | All Rights Reserved |
9 © Fifth Third Bank | All Rights Reserved Disciplined expense management • Expect similar adjusted efficiency ratio in 4Q12; target mid-50% in normalized environment (with higher interest rate environment) 2012 expense trend ($MM) * Non-recurring items described on page 18 in the appendix to this presentation. Reported expense Increasing expense Non-recurring items*: Adjusted expense Decreasing expense $973 $937 $1,006 $23 $17 $5 ($28) ($2) ($50) $968 $952 $961 Managing expenses carefully in response to revenue environment; continuous process of expense evaluation Efficiency ratio trend – Current impact of credit costs on revenue and expenses; impact of regulatory reforms (e.g., debit interchange) not fully mitigated – Reflects below-capacity balance sheet and lower revenue than we expect and can support longer term |
10 © Fifth Third Bank | All Rights Reserved Credit trends continue to improve with strong reserve coverage levels Source: SNL Financial and Company Reports. Data as of 3Q12. HFI NPLs exclude loans held-for-sale and also exclude covered assets for BBT, USB, and ZION * HBAN, KEY, PNC, USB, WFC include the implementation of newly issued 3Q12 OCC guidance which requires write-down of performing consumer loans restructured in bankruptcy to collateral value. The light blue section indicates the additional charge-offs due to this guidance. Continued decline in problem assets and corresponding decline in charge-offs combined with strong reserves on an absolute and relative basis NPLs / Loans Peer average: 1.6% Loan loss reserves / Loans Peer average: 2.0% Net charge-off ratio Peer average: 0.9% Reserves / NPLs Peer average: 131% |
11 Fifth Third Bank | All Rights Reserved Capital management philosophy * Subject to Board of Directors and regulatory approval Organic growth opportunities • Support growth of core banking franchise • Continued loan growth despite sluggish economy Strategic opportunities * • Prudently evaluate franchise including increasing density in core markets via disciplined acquisitions or selective de novos • Expect future acquisition opportunities although activity remains muted in near-term • Attain top 3 market position in 65% of markets or more longer term Return to more normal dividend policy* • Strong levels of profitability would support higher dividend than current level • Move towards levels more consistent with Fed’s near-term payout ratio guidance of 30% • Quarterly dividend increased to $0.10 in 3Q12 Repurchases / Redemptions * • Common share repurchases to limit and manage growth of excess capital levels Expect capital philosophy to remain consistent pending evaluation of results in 2013 CCAR process Capital Deployment Capital Return – Manage capital in light of regulatory environment, other alternatives, maintenance of desired / required buffers, stock price – $600MM of potential repurchases through 1Q13 ($350MM ASR completed in October; $125MM ASR entered into in November) • Redeemed $1.4bn in TruPS in 3Q12 |
12 © Fifth Third Bank | All Rights Reserved Capital position remains strong * The pro forma Tier I common equity ratio is management’s estimate based upon its current interpretation of the three draft Federal Register notices proposing enhancements to regulatory capital requirements published in June 2012. The actual impact to the Bancorp’s Tier I common equity ratio may change significantly due to further clarification of the agencies proposals or revisions to the agencies final rules, which remain subject to public comment. Proposed new U.S. capital standards would have manageable impact, if adopted Primary Basel III Adjustments* Proposed fully phased in buffered minimum of 7.0% Basel III Impacts • 3Q12 Tier 1 common equity ratio of 9.67% under Basel I Current • Capital impact increase primarily from inclusion of AOCI • RWA increase primarily from 1-4 family senior and junior lien residential mortgages, commitments under one year Estimated NPR Impact • Pro forma 3Q12 Tier 1 common equity ratio of ~9%* under Basel III • Does not include the effect of any mitigating actions Fifth Third may take Pro forma Tier 1 Common Equity NPR Capital Impact ~45 bps +/- NPR RWA Impact ~(110 bps) +/- Total Tier 1 Change ~(65 bps) +/- Tier 1 Common Equity |
13 © Fifth Third Bank | All Rights Reserved Fifth Third’s balance sheet and business model relatively advantaged under new capital standards Fifth Third’s capital position already well in excess of any established standards, likely standards, and most peers 5.0% 7.0% 4.5% Unofficial CCAR supervisory reference minimum 3Q12 Pro forma Tier 1 common / RWA U.S. proposed Basel III** 3Q12 Tier 1 common / RWA Basel I 2019 Basel III buffered minimum 2015 Basel III minimum Not disclosed High 7% range Source: SNL Financial and company reports (financial data as of 3Q12). * Data sourced form SNL Financial 2Q12. In 2Q12, HBAN stated Basel III Tier 1 common ratio would be negatively impacted by approximately 150 basis points. ** Note: Fifth Third’s pro forma Tier I common equity ratio is management’s estimate based upon its current interpretation of the three draft Federal Register notices proposing enhancements to regulatory capital requirements published in June 2012. The actual impact to the Bancorp’s Tier I common equity ratio may change significantly due to further clarification of the agencies proposals or revisions to the agencies final rules, which remain subject to public comment. Not adjusted for potential mitigation efforts. ^ CMA 3Q12 earnings call stated “Tier 1 capital ratio is estimated to be comfortably above the new 8.5% regulatory standard”. |
14 Fifth Third Bank | All Rights Reserved Well-positioned for the future • Fifth Third monitors liquidity at the Holding Company over a 24-month period, and manages liquidity based on the coverage of contractual obligations without accessing the capital markets or receiving dividends from the Bank entity • Fifth Third has completely exited all crisis-era government support programs Superior capital and liquidity position • NCOs of 0.75%; 3.1x reserves / annualized NCOs • Substantial reduction in exposure to CRE since 1Q09; relatively low CRE exposure versus peers • Very low relative exposure to areas of concern, e.g. European financials, mortgage repurchase risk Proactive approach to risk management • Traditional commercial banking franchise built on customer-oriented localized operating model • Strong market share in key markets with focus on further improving density • Fee income ~43% of total revenue Diversified traditional banking platform • PPNR has remained strong throughout the credit cycle • PPNR substantially exceeds annual net charge-offs (364% PPNR / NCOs^ in 3Q12) • 1.2% ROAA; 13% return on average tangible common equity^ Industry leader in earnings power ^ Non-GAAP measure. See Reg. G reconciliation in the Appendix to the presentation. – Fifth Third is one of the few large banks that have no TLGP-guaranteed debt to refinance in 2012 |
15 © Fifth Third Bank | All Rights Reserved Cautionary statement This report 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, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; (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 from the separation of or the results of operations of Vantiv, LLC 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. |
16 Fifth Third Bank | All Rights Reserved Appendix |
17 Fifth Third Bank | All Rights Reserved Core funded balance sheet and pricing discipline • Deposit-rich core funding mix supports relatively low cost of funds – High percentage of funding base in low cost transaction deposits and noninterest- bearing DDA accounts – Low reliance on wholesale funding SOURCE: SNL Financial and Company Reports. Data as of 3Q12 Transaction deposits defined as DDA, NOW and Savings/MMDA accounts; Cost of Funds defined as interest incurred on interest-bearing liabilities as a percentage of average noninterest-bearing deposits and interest- bearing liabilities; Transaction deposits/Total deposits presented on an average basis; DDA/Total deposits presented on end-of-period basis. Transaction Deposits / Total Deposits Peer average 85% Cost of Funds Peer average 0.51% DDA/Total Deposits Peer average 32% |
18 Fifth Third Bank | All Rights Reserved PPNR trend • PPNR of $568MM down 11% from 2Q12 levels and 8% from prior year • Adjusted PPNR of $593MM, including positive adjustments totaling $25MM, down 1% sequentially and 7% year-over-year — Including 3Q12 mortgage repurchase reserve build, PPNR of $617MM Efficiency ratio PPNR reconciliation Pre-tax pre-provision earnings* ($ in millions) Income before income taxes (U.S. GAAP) (a) Add: Provision expense (U.S. GAAP) (b) PPNR (a) + (b) Adjustments to remove (benefit) / detriment^: In noninterest income: Vantiv IPO gain Vantiv debt refinancing Valuation of 2009 Visa total return swap Vantiv warrants & puts Valuation of bank premises moved to HFS Litigation reserve additions in revenue Sale of certain Fifth Third funds Securities (gains) / losses In noninterest expense: Debt extinguishment (gains) / losses Non-income tax related assessment resolution Sale of certain Fifth Third funds Termination of certain borrowing & hedging transactions Severance expense FDIC insurance expense Gain on sale of affordable housing Litigation reserve additions in expense Adjusted PPNR Credit-related items^^: In noninterest income In noninterest expense Credit-adjusted PPNR** 3Q11 4Q11 1Q12 2Q12 3Q12 $530 $418 $603 $565 $503 87 55 91 71 65 $617 $473 $694 $636 $568 - - (115) - - - - 34 - - 17 54 19 11 1 (3) (10) (46) (56) 16 - - - 17 - - - - 6 - - - - - (13) (26) (5) (9) (3) (2) - - 9 - 26 - - (23) - - - - - - 2 28 - - - - - - 6 - - - - - (9) - - - - (8) (5) 4 19 13 2 - $637 $531 $582 $596 $593 25 33 14 17 14 45 44 34 40 59 $707 $608 $630 $653 $666 * Non-GAAP measure. See Reg. G reconciliation on pages 23 and 24. ** There are limitations on the usefulness of credit-adjusted PPNR, including the significant degree to which changes in credit and fair value are integral, recurring components of the Bancorp’s core operations as a financial institution. This measure has been included herein to facilitate a greater understanding of the Bancorp’s financial condition. ^ Prior quarters include similar adjustments. ^^ See page 19 for detailed breakout of credit-related items. # 61% also excluding $22MM 3Q12 mortgage repurchase reserve build |
19 Fifth Third Bank | All Rights Reserved Credit-related costs In noninterest income ($MM) In noninterest expense ($MM) Actual ($ in millions) 3Q11 4Q11 1Q12 2Q12 3Q12 Gain / (loss) on sale of loans $3 $9 $5 $8 $2 Commercial loans HFS FV adjustment (6) (18) (1) (5) (3) Gain / (loss) on sale of OREO properties (21) (22) (17) (19) (11) Mortgage repurchase costs (2) (1) (2) (2) (2) Total credit-related revenue impact ($25) ($33) ($14) ($17) ($14) Actual ($ in millions) 3Q11 4Q11 1Q12 2Q12 3Q12 Mortgage repurchase expense $19 $18 $15 $18 $36 Provision for unfunded commitments (10) (6) (2) (1) (2) Derivative valuation adjustments 4 (5) (4) (0) (2) OREO expense 7 8 5 5 6 Other problem asset related expenses 25 28 19 19 21 Total credit-related operating expenses $45 $44 $34 $40 $59 Note: Numbers may not sum due to rounding |
20 Fifth Third Bank | All Rights Reserved Continued improvement in credit trends Peer average includes: BBT, CMA, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC, and ZION Source: SNL Financial and company filings. All ratios exclude loans held-for-sale and covered assets for peers where appropriate. NPA ratio vs. peers Net charge-off ratio vs. peers Loans 90+ days delinquent % vs. peers Loans 30-89 days delinquent % vs. peers FITB credit metrics are in line with or better than peers (7.5%)* 3.8% before credit actions 5.0%* 2.3% before credit actions (HFS transfer) * 4Q08 NCOs included $800MM in NCOs related to commercial loans moved to held-for-sale; 3Q10 NCOs included $510MM in NCOs related to loans sold or moved to held-for-sale |
21 Fifth Third Bank | All Rights Reserved Mortgage repurchase overview 3Q12 balances of outstanding claims decreased 24% from 2Q12 — Within recent range of quarterly volatility Virtually all sold loans and the majority of new claims relate to agencies — 99% of outstanding balance of loans sold — 82% of current quarter outstanding claims Majority of outstanding balances of the serviced for others portfolio relates to origination activity in 2009 and later Private claims and exposure relate to whole loan sales (no outstanding first mortgage securitizations) — Preponderance of private sales prior to 2006 Repurchase Reserves* ($ in millions) Outstanding Counterparty Claims ($ in millions) 3Q11 4Q11 1Q12 2Q12 3Q12 Beginning balance $80 $69 $72 $71 $75 Net reserve additions 20 20 17 20 39 Repurchase losses (31) (17) (17) (16) (15) Ending balance $69 $72 $71 $75 $99 * Includes reps and warranty reserve ($81MM) and reserve for loans sold with recourse ($18MM) Note: Numbers may not sum due to rounding Outstanding Balance of Sold Loans ($ in millions) Fannie Freddie GNMA Private Total 2004 and Prior $778 $3,500 $195 $307 $4,779 2005 274 1,151 49 130 1,605 2006 363 930 48 214 1,556 13% 2007 563 1,517 64 171 2,314 2008 714 1,207 519 - 2,441 2009 1,362 6,498 3,160 1 11,020 2010 3,015 6,768 2,744 - 12,527 2011 3,712 6,844 2,275 - 12,831 2012 3,858 6,830 2,671 - 13,359 Grand Total $14,638 $35,246 $11,725 $823 $62,432 1.3% 2005-2008 vintages account for ~80% of total life to date losses of $372MM from sold portfolio $24MM increase in representation & warranty reserve resulting from additional information received from Freddie Mac regarding future mortgage file requests and repurchase expectations |
22 © Fifth Third Bank | All Rights Reserved European Exposure Total exposure includes funded and unfunded commitments, net of collateral; funded exposure excludes unfunded exposure Peripheral Europe includes Greece, Ireland, Italy, Portugal and Spain Other Europe includes European countries not part of the Euro (primarily the United Kingdom and Switzerland) Data above includes exposure to U.S. subsidiaries of Europe-domiciled companies Note: Numbers may not sum due to rounding • International exposure primarily related to trade finance and financing activities of U.S. companies with foreign parent or overseas activities of U.S. customers • No European sovereign exposure (total international sovereign exposure $3MM) • Total exposure to European financial institutions <$150MM • Total exposure to five peripheral Europe countries <$200MM • $878MM in funded exposure to Eurozone-related companies (~1% of total loan portfolio) European Exposure Total Funded Total Funded Total Funded Total Funded exposure exposure exposure exposure exposure exposure exposure exposure (amounts in $MM) Peripheral Europe - - 15 - 152 119 167 119 Other Eurozone - - 74 74 1,382 759 1,456 833 Total Eurozone - - 89 74 1,534 878 1,623 952 Other Europe - - 42 32 879 492 921 524 Total Europe - - 132 106 2,413 1,369 2,545 1,475 Sovereigns Financial Institutions Non-Financial Entities Total Eurozone includes countries participating in the European common currency (Euro) |
23 Fifth Third Bank | All Rights Reserved Regulation G Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconcilation $ and shares in millions (unaudited) September June March December September 2012 2012 2012 2011 2011 Income before income taxes (U.S. GAAP) $503 $565 $603 $418 $530 Add: Provision expense (U.S. GAAP) 65 71 91 55 87 Pre-provision net revenue (a) 568 636 694 473 617 Net income available to common shareholders (U.S. GAAP) 354 376 421 305 373 Add: Intangible amortization, net of tax 2 2 3 3 3 Tangible net income available to common shareholders 356 378 424 308 376 Tangible net income available to common shareholders (annualized) (b) 1,416 1,520 1,705 1,222 1,492 Average Bancorp shareholders' equity (U.S. GAAP) 13,887 13,628 13,366 13,147 12,841 Less: Average preferred stock (398) (398) (398) (398) (398) Average goodwill (2,417) (2,417) (2,417) (2,417) (2,417) Average intangible assets (31) (34) (38) (42) (47) Average tangible common equity (c) 11,041 10,779 10,513 10,290 9,979 Total Bancorp shareholders' equity (U.S. GAAP) 13,718 13,773 13,560 13,201 13,029 Less: Preferred stock (398) (398) (398) (398) (398) Goodwill (2,417) (2,417) (2,417) (2,417) (2,417) Intangible assets (30) (33) (36) (40) (45) Tangible common equity, including unrealized gains / losses (d) 10,873 10,925 10,709 10,346 10,169 Less: Accumulated other comprehensive income / loss (468) (454) (468) (470) (542) Tangible common equity, excluding unrealized gains / losses (e) 10,405 10,471 10,241 9,876 9,627 Total assets (U.S. GAAP) 117,483 117,543 116,747 116,967 114,905 Less: Goodwill (2,417) (2,417) (2,417) (2,417) (2,417) Intangible assets (30) (33) (36) (40) (45) Tangible assets, including unrealized gains / losses (f) 115,036 115,093 114,294 114,510 112,443 Less: Accumulated other comprehensive income / loss, before tax (720) (698) (720) (723) (834) Tangible assets, excluding unrealized gains / losses (g) 114,316 114,395 113,574 113,787 111,609 Common shares outstanding (h) 897 919 920 920 920 Net charge-offs (i) 156 181 220 239 262 Ratios: Return on average tangible common equity (b) / (c) 12.8% 14.1% 16.2% 11.9% 15.0% Tangible common equity (excluding unrealized gains/losses) (e) / (g) 9.10% 9.15% 9.02% 8.68% 8.63% Tangible common equity (including unrealized gains/losses) (d) / (f) 9.45% 9.49% 9.37% 9.04% 9.04% Tangible book value per share (d) / (h) 12.12 11.89 11.64 11.25 11.05 Pre-provision net revenue / net charge-offs (a) / (i) 364% 351% 315% 198% 235% For the Three Months Ended |
24 © Fifth Third Bank | All Rights Reserved Regulation G Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconcilation $ and shares in millions (unaudited) September June March December September 2012 2012 2012 2011 2011 Total Bancorp shareholders' equity (U.S. GAAP) $13,718 $13,773 $13,560 $13,201 $13,029 Goodwill and certain other intangibles (2,504) (2,512) (2,518) (2,514) (2,514) Unrealized gains (468) (454) (468) (470) (542) Qualifying trust preferred securities 810 2,248 2,248 2,248 2,273 Other 38 38 38 38 20 Tier I capital 11,594 13,093 12,860 12,503 12,266 Less: Preferred stock (398) (398) (398) (398) (398) Qualifying trust preferred securities (810) (2,248) (2,248) (2,248) (2,273) Qualifying noncontrolling interest in consolidated subsidiaries (51) (51) (50) (50) (30) Tier I common equity (a) 10,335 10,396 10,164 9,807 9,565 Risk-weighted assets, determined in accordance with prescribed regulatory requirements 1 (b) 106,858 106,398 105,412 104,945 102,562 Ratio: Tier I common equity (a) / (b) 9.67% 9.77% 9.64% 9.35% 9.33% Basel III - Estimated Tier 1 common equity ratio September 2012 Tier 1 common equity (Basel I) $10,333 Add: Adjustment related to AOCI for AFS securities 507 Estimated Tier 1 common equity under Basel III rules 2 10,840 Estimated risk-weighted assets under Basel III rules 3 120,308 Estimated Tier 1 common equity ratio under Basel III rules 9.01% (1) (2) (3) For the Three Months Ended Tier I common equity under Basel III includes the unrealized gains and losses for AFS securities. Other adjustments include mortgage servicing rights and deferred tax assets subject to threshold limitations and deferred tax liabilities related to intangible assets. Key differences under Basel III in the calculation of risk-weighted assets compared to Basel I include: (1) risk weighting for commitments under 1 year; (2) higher risk weighting for exposures to residential mortgage, home equity, past due loans, foreign banks and certain commercial real estate; (3) higher risk weighting for mortgage servicing rights and deferred tax assets that are under certain thresholds as a percent of Tier I capital; (4) incremental capital requirements for stress VaR; and (5) derivatives are differentiated between exchange clearing and over-the-counter and the 50% risk-weight cap is removed. The estimated Basel III risk-weighted assets are based upon the Bancorp’s interpretations of the three draft Federal Register notices proposing enhancements to the regulatory capital requirements that were published in June of 2012. These amounts are preliminary and subject to change depending on the adoption of final Basel III capital rules by the Regulatory Agencies. For the Three Months Ended Under the banking agencies’ risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together, along with the measure for market risk, resulting in the Bancorp’s total risk-weighted assets. |