© Fifth Third Bank | All Rights Reserved Goldman Sachs U.S. Financial Services Conference Kevin T. Kabat Chief Executive Officer December 5, 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 Well-positioned for success and leadership in new banking landscape Key themes Strong levels of profitability Broad-based credit improvements Exceed fully Phased-in Basel III capital standards today Well-established franchise in key markets Commitment to our customers and our communities Continued investments to maintain and enhance revenue- generation Disciplined expense control Traditional banking focus consistent with direction of financial reform |
3 © Fifth Third Bank | All Rights Reserved A strong franchise showing momentum 1 Strong results underscored by continued loan growth, solid fee income, expense control, and ongoing improvement in credit metrics 2 Traditional banking model moderate risk profile and strong execution contribute to above average returns 3 New product offerings consistent with our mission, our customer value proposition, and regulatory reform 4 Return capital from robust internal capital generation through appropriate dividend payout and share repurchase plans 5 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 Diluted EPS $233 $789 $1,152 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2010 YTD 2011 YTD 2012 YTD $0.29 $0.86 $1.23 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 2010 YTD 2011 YTD 2012 YTD |
4 © Fifth Third Bank | All Rights Reserved NII results reflect continued moderate NIM pressure offset by balance sheet growth * Represents purchase accounting adjustments included in net interest income. ^ Estimate; funding (DDAs + interest-bearing liabilities); liabilities attributed to fixed or floating using terms and expected beta Fixed / Floating Portfolio Interest-Earning Assets Funding^ Fixed ~55-60% NII and NIM (FTE) ($MM) Loans 50% Loans 33% Investment Portfolio 3% Trend: fixed rate loan origination coupons relative to fixed portfolio weighted avg Larger portfolio repricing effects 3.65% 3.67% 3.61% 3.56% 3.56% $450 $550 $650 $750 $850 $950 2.0% 2.5% 3.0% 3.5% 4.0% 3Q11 4Q11 1Q12 2Q12 3Q12 $902 $920 $903 $899 $907 Net Interest Income (right axis) PAA* NIM Floating Fixed Fixed 47% Floating 53% Investment Portfolio 14% Floating 40 - 45% 0.00 0.50 1.00 1.50 2.00 • 3Q12 NII included $10MM of non-recurring benefits (4 bps positive impact to NIM) • NIM pressure created by low rate environment, higher prepayment speeds, repricing in securities and loan portfolios, and modest natural asset sensitivity, but overall is expected to be manageable • Spreads on new originations of variable rate assets consistent with historical spreads • Coupons on new fixed rate loan originations converging with portfolio average coupons • Current trends have pressured net interest income levels, but expect to mitigate much of impact with continued loan growth and liability management Emphasis on variable rate C&I lending |
5 © Fifth Third Bank | All Rights Reserved Balance sheet growth mitigates rate environment Average loan growth ($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 82 • 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 • Short-term wholesale borrowings represent only 7% of total funding • 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 44 45 46 47 47 3Q11 4Q11 1Q12 2Q12 3Q12 24 26 26 26 27 45 46 49 50 49 9 8 7 6 6 3Q11 4Q11 1Q12 2Q12 3Q12 Commercial Loans Consumer Loans Demand IBT/Savings/MMDA Consumer CD/Core foreign 35 35 36 36 36 |
6 © 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 securities gains / losses for FITB and peers. Non-GAAP measure. See Reg. G reconciliation in the Appendix to the presentation. ^ Excludes $16 million negative valuation adjustment on the Vantiv warrant in 3Q12 PPNR* / Average Assets Peer med. 1.7% 1.9% Deposit fees Corporate banking Investment advisors Other Mortgage Card & Processing Fee Income Distribution Significant purchase accounting benefit 3Q12 returns strong relative to peers ROAA ROAE • 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 ~$14MM, despite selling ~10% in 1Q12) 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% USB WFC MTB BBT FITB PNC KEY HBAN RF ZION CMA STI 19% 15% 14% 13% 30% 10% 10.4% 10.1% 10.9% FITB Peer Median ROAE Adjusted ROAE^ 1.23% 1.20% 1.28% FITB Peer Median ROAA Adjusted ROAA^ |
7 © Fifth Third Bank | All Rights Reserved Strong mortgage banking results • Record origination fees and gain on loan sales in 3Q12 • Highest ranking among all servicers and peer groups in Fannie Mae’s 2011 STAR TM Program for servicing performance Looking forward: • Stronger originations / deliveries in 4Q12 vs 3Q12 – Results should remain robust while rates remain low • Gain on sale margins benefitting from: – Strong demand – Industry capacity constraints – Strong mortgage-backed securities pricing • HARP 2.0 originations expected to remain similar percentage of total originations in 4Q12 vs 3Q12 Mortgage originations and gain-on-sale margins* Mortgage Banking Revenue ($MM) * Gain-on-sale margin represents margin on loans originated for sale. 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 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) |
8 © Fifth Third Bank | All Rights Reserved Momentum building in corporate banking Corporate banking revenue ($MM) $87 $82 $97 $102 • YTD corporate banking revenue up 12% versus YTD 2011 • Continued demand in large corporate and mid-corporate space • 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 $101 C&I Portfolio^ ($B) ^ Presented on an average basis; Excluding held-for-sale loans. 32 30 29 33 30 9 9 11 14 13 7 6 6 8 7 28 29 31 30 31 11 7 19 17 20 $0 $20 $40 $60 $80 $100 $120 3Q11 4Q11 1Q12 2Q12 3Q12 Letter of Credit / FX Institutional Sales Interest Rate Derivatives Business Lending Fees Other Corporate Banking 26.3 26.3 27.3 27.9 28.8 29.9 31.4 32.7 33.1 $20 $22 $24 $26 $28 $30 $32 $34 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 |
9 © Fifth Third Bank | All Rights Reserved • Deposit checks, view balances, transfer funds, pay bills, view alerts, and more • App available on iPhone, Android, and BlackBerry • The only combined credit and a debit card • Convenience, security, and financial flexibility • New sales consistently increasing; ~30% of new consumer card accounts • Reloadable Prepaid Card • Add money anytime without incurring a "load fee“; low monthly fee • Use card anywhere Debit MasterCard is accepted • Innovative, end-to-end remote cash management solution • Maximize cash flow while boosting control over cash handling • ~7,000 RCM locations; has more than doubled since 2009 Mobile Experience Access 360° DUO Card Remote Currency Manager Providing customers with products and services they find valuable New products developed by listening to the voice of the customer and a deliberate approach to mitigate regulatory and legislative impacts Customer oriented solutions • Withdraw cash at any Fifth Third ATM or Banking Center free of charge ® |
10 © Fifth Third Bank | All Rights Reserved Simplifying deposit structure: Aligning value to our customers with value to Fifth Third Value to our customers Value to Fifth Third 1 2 3 1 2 3 Accounts straightforward and easy to use Simplified service charges with elimination of certain fees Greater benefits, including competitive rates and identity theft protection, for total relationship value Simplifies relationship building for our sales force by reducing complexity across checking and savings products Payment and deposit fee results and balances expected to contribute to revenue growth Changes are compatible with Fifth Third’s strategic direction and new regulatory landscape We are committed to providing valuable products and services at a fair price – 25 checking products simplified to 5 segment-focused products – 17 savings products simplified to 3 – Elimination of daily overdraft fees on continuing customer overdraft positions – Broader and deeper banking relationships with Fifth Third earn better rates and lower costs |
11 © Fifth Third Bank | All Rights Reserved Disciplined expense management 2012 expense trend ($MM) * Non-recurring items described on page 19 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 $890 $910 $930 $950 $970 $990 $1,010 1Q12 2Q12 3Q12 4Q12 68% 58% 59% 64% 65% 62% 62% 61% 4Q11 1Q12 2Q12 3Q12 Efficiency Ratio Adjusted* • Expect similar adjusted efficiency ratio in 4Q12; target mid-50% in normalized environment (with higher interest rate environment) – 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 |
12 © 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 Loan loss reserves / Loans Net charge-off ratio Reserves / NPLs 0.3% 0.4% 0.4% 0.5% 0.8% 0.5% 0.9% 0.7% 1.1% 0.9% 1.4% 1.6% MTB CMA ZION PNC* FITB KEY* USB* HBAN* BBT WFC* RF STI NCO OCC Guidance 0.7% 1.2% 1.0% 1.0% 0.9% Peer average: 0.9% 2.7% 2.5% 2.3% 2.2% 2.2% 2.1% 2.0% 1.8% 1.8% 1.7% 1.5% 1.5% RF ZION FITB WFC PNC USB HBAN STI BBT KEY CMA MTB Peer average: 2.0% 0.9% 1.1% 1.3% 1.4% 1.4% 1.4% 1.4% 1.6% 1.9% 1.9% 2.5% 2.7% USB HBAN KEY FITB BBT STI MTB CMA PNC ZION RF WFC Peer average: 1.6% 234% 177% 167% 136% 133% 132% 129% 118% 109% 100% 93% 83% USB HBAN FITB KEY BBT ZION STI PNC RF MTB CMA WFC Peer average: 131% |
13 © 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 Dividends* • Move towards levels more consistent with Fed’s near-term payout ratio guidance of 30% • Strong levels of profitability would support higher dividend than current level • Quarterly dividend increased to $0.10 in 3Q12 Repurchases / Redemptions * • Common share repurchases to limit and manage growth of excess capital levels • Redeemed $1.4bn in TruPS in 3Q12 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) |
14 © 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 Tier 1 Common Equity 9.67% Basel I Pro forma Basel III ~9%* ~(65 bps) +/- |
15 © 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 12.7% 11.4% 11.4% 10.7% 10.7% 10.5% 10.4% 10.3% 10.3% 10.1% 9.8% 9.8% 9.7% 9.5% 9.5% 9.0% 7.5% C KEY BAC FHN COF RF JPM CMA HBAN WFC STI ZION FITB BBT PNC USB MTB 10.4% 9.4% 9.0% 8.8% 8.7% 8.6% 8.4% 8.2% 8.2% 8.0% 8.0% 8.0% 7.8% KEY CMA FITB BAC HBAN* RF C JPM FHN USB BBT WFC STI ZION* COF MTB PNC ~9% 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. |
16 © Fifth Third Bank | All Rights Reserved Fifth Third: A differentiated business model Competitively well-positioned in new landscape FITB “Trillionaire” Banks Regional Banks Community Banks Investment Banks Diverse businesses Efficiencies of scale market focus Multi- channel delivery Customer- centric model Moderate risk profile Strong profitability and well- capitalized Local |
17 © 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. |
18 © Fifth Third Bank | All Rights Reserved Appendix |
19 © Fifth Third Bank | All Rights Reserved 637 531 582 596 593 25 33 14 17 14 45 44 34 40 59 $0 $100 $200 $300 $400 $500 $600 $700 $800 3Q11 4Q11 1Q12 2Q12 3Q12 Noninterest Expense Credit Items Fee Income Credit Items Adjusted PPNR $617 $473 $694 $636 $568 Pre-tax pre-provision earnings* 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 PPNR reconciliation Efficiency ratio 60% 59% 64% 59% 62% 62% # 3Q11 2Q12 3Q12 Efficiency Ratio Adjusted * Non-GAAP measure. See Reg. G reconciliation on pages 21 and 22. ** 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 20 for detailed breakout of credit-related items. # 61% also excluding $22MM 3Q12 mortgage repurchase reserve build ($ in millions) 3Q11 4Q11 1Q12 2Q12 3Q12 Income before income taxes (U.S. GAAP) (a) $530 $418 $603 $565 $503 Add: Provision expense (U.S. GAAP) (b) 87 55 91 71 65 PPNR (a) + (b) $617 $473 $694 $636 $568 Adjustments to remove (benefit) / detriment^: In noninterest income: Vantiv IPO gain - - (115) - - Vantiv debt refinancing - - 34 - - Valuation of 2009 Visa total return swap 17 54 19 11 1 Vantiv warrants & puts (3) (10) (46) (56) 16 Valuation of bank premises moved to HFS - - - 17 - Litigation reserve additions in revenue - - - 6 - Sale of certain Fifth Third funds - - - - (13) Securities (gains) / losses (26) (5) (9) (3) (2) In noninterest expense: Debt extinguishment (gains) / losses - - 9 - 26 Non-income tax related assessment resolution - - (23) - - Sale of certain Fifth Third funds - - - - 2 Termination of certain borrowing & hedging transactions 28 - - - - Severance expense - - 6 - - FDIC insurance expense - - - (9) - Gain on sale of affordable housing - - - (8) (5) Litigation reserve additions in expense 4 19 13 2 - Adjusted PPNR $637 $531 $582 $596 $593 Credit-related items^^: In noninterest income 25 33 14 17 14 In noninterest expense 45 44 34 40 59 Credit-adjusted PPNR** $707 $608 $630 $653 $666 |
20 © Fifth Third Bank | All Rights Reserved Credit-related costs In noninterest income ($MM) In noninterest expense ($MM) Note: Numbers may not sum due to rounding 25 33 14 17 14 $0 $5 $10 $15 $20 $25 $30 $35 3Q11 4Q11 1Q12 2Q12 3Q12 45 44 34 40 59 $0 $10 $20 $30 $40 $50 $60 $70 3Q11 4Q11 1Q12 2Q12 3Q12 Actual ($ 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 $59 Actual ($ 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) |
21 © 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 Pre-provision net revenue (annualized) (b) 2,260 2,530 2,791 1,877 2,448 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) (c) 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 (d) 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 (e) 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 (f) 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 (g) 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 (h) 114,316 114,395 113,574 113,787 111,609 Common shares outstanding (i) 897 919 920 920 920 Securities gains, net 2 Securities gains, net (annualized) (j) 8 Average assets (k) 118 Ratios: Return on average tangible common equity (c) / (d) 12.8% 14.1% 16.2% 11.9% 15.0% Tangible common equity (excluding unrealized gains/losses) (f) / (h) 9.10% 9.15% 9.02% 8.68% 8.63% Tangible common equity (including unrealized gains/losses) (e) / (g) 9.45% 9.49% 9.37% 9.04% 9.04% Tangible book value per share (e) / (i) 12.12 11.89 11.64 11.25 11.05 Pre-provision net revenue / Average assets (b-j) / (k) 1.92% For the Three Months Ended |
22 © 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 requirements¹ (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 rules² 10,840 Estimated risk-weighted assets under Basel III rules³ 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. |