![]() 2Q16 Earnings Presentation July 28, 2016 Refer to earnings release dated July 28, 2016 for further information. Exhibit 99.2 © Fifth Third Bank | All Rights Reserved |
![]() 2 Cautionary statement This release 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,” “anticipates,” “potential,” “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 as updated from time to time by our Quarterly Reports on Form 10-Q. 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 is a risk that additional information may become known during the company’s quarterly closing process or as a result of subsequent events that could affect the accuracy of the statements and financial information contained herein. 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 or real estate market conditions, either nationally or in the states in which Fifth Third, one or more acquired entities and/or the combined company do business, weaken or 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 and adequate sources of funding and liquidity 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 Fifth Third’s investment in, relationship with, and nature of the operations of Vantiv, LLC; (21) loss of income from any sale or potential sale of businesses (22) difficulties in separating the operations of any branches or other assets divested; (23) inability to achieve expected benefits from branch consolidations and planned sales within desired timeframes, if at all; (24) ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; and (25) 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. . © Fifth Third Bank | All Rights Reserved |
![]() 3 • Stable NII and NIM; continued benefit from steady and cautious interest rate risk management strategy • Solid noninterest income growth despite market volatility • Adjusted 1 : up 4% sequentially • Strong corporate banking activity • Tightly controlled operational expenses • Reported noninterest expenses down $3 million sequentially • Adjusted 1 expenses flat sequentially • Strategic investments on-track • Credit conditions benign overall and in-line with expectations Second Quarter 2016 Highlights Earnings Per Share Reported $0.40 Included ($0.01) negative impact from certain items Net Income to Common $310 million LCR 110% 1 Non-GAAP measure: see Reg G reconciliation on page 23 of this presentation and use of non-GAAP measures on page 33 of the earnings release 2 See page 4 of this presentation for impact of certain items © Fifth Third Bank | All Rights Reserved 2 |
![]() 4 2Q16 in review Significant pre-tax items in 2Q16 results ($0.01 negative after-tax EPS impact): — $50MM pre-tax (~$33MM after-tax) charge related to the Visa total return swap — $19MM pre-tax (~$12MM after-tax) positive valuation adjustment on the Vantiv warrant — $11MM pre-tax (~$7MM after-tax) gain on sale of Pennsylvania branches — $11MM pre-tax (~$7MM after-tax) gain on sale of the agented bankcard loan portfolio — $9MM pre-tax (~$6MM after-tax) expense due to retirement eligibility changes Core businesses showed solid results given challenging market conditions — Strong corporate banking activity offset market volatility — Mortgage origination volumes up 53% QoQ Credit trends — NCO ratio of 37 bps; flat YoY and 5 bps decrease QoQ — NPA ratio of 86 bps; down 2 bps sequentially ($ in millions) 2Q16 Seq. YOY Average Balances Total loans & leases $93,931 1% 2% Core deposits $98,973 - (2%) Income Statement Data Net interest income (taxable equivalent) $908 - 2% Provision for loan and lease losses 91 (24%) 15% Noninterest income 599 (6%) 8% Noninterest expense 983 - 4% Net income attributable to Bancorp $333 2% 6% Net income available to common shareholders $310 (1%) 6% Financial Ratios Earnings per share, diluted 0.40 - 11% Net interest margin 2.88% (3bps) (2bps) Efficiency ratio 65.3% 150bps (10bps) Return on average assets 0.94% 1bps 4bps Return on average common equity 8.2% (10bps) 10bps Return on average tangible common equity 9.7% (20bps) - Tangible book value per share $ 16.93 4% 16% © Fifth Third Bank | All Rights Reserved 1 2 2 1 Excludes loans held-for-sale Non-GAAP measure: see Reg G reconciliation on page 22 of this presentation and use of non-GAAP measures on page 33 of the earnings release 2 |
![]() 5 Balance sheet HFI Loan balances ($B) • Average commercial loans up 2% sequentially; up 4% year-over-year – C&I up 2%, CRE up 2% sequentially – C&I up 3%, CRE up 7% YoY • Average consumer loans down 1% sequentially; down 1% year-over-year – Automobile loans decreased 4% sequentially and 9% YoY • Average transaction deposits up $249MM sequentially, driven by higher demand & money market deposits, partially offset by lower interest checking – Excl. St. Louis and Pennsylvania deposits sold, core deposits up 1% sequentially • Average loan to core deposit ratio of 95% • LCR of 110% at 2Q16 Average core deposit balances ($B) $99.0 $100.5 Average securities and short-term investments ($B) • Average securities up $2.7B year-over- year driven by: – LCR requirement additions – Positioning to maintain steady and cautious interest rate risk strategy • Average securities portfolio / total assets of 21.1% compared to 19.6% in 2Q15 $31.3 $31.6 $30.6 $30.1 Note: Numbers may not sum due to rounding. $32.0 Outlook: 2% FY 2016 loan growth (ex. HFS) Continuing to maintain pricing discipline © Fifth Third Bank | All Rights Reserved $92.2 $93.4 $93.6 $93.3 $93.9 70 75 80 85 90 95 2Q15 3Q15 4Q15 1Q16 2Q16 $96.5 $94.7 $95.7 $94.7 $94.9 92% 95% 94% 94% 95% 80% 85% 90% 95% 100% 65 70 75 80 85 90 95 100 2Q15 3Q15 4Q15 1Q16 2Q16 Transaction deposits Other time deposits Loan to core deposit ratio $27.4 $28.3 $29.0 $29.7 $30.1 0 5 10 15 20 25 30 35 2Q15 3Q15 4Q15 1Q16 2Q16 Average securities Short-term investments |
![]() 6 • Sequential comparisons: – NII & NIM decrease impacted by the full quarter impact of $750 million unsecured senior debt and $750 million subordinated debt ($1.5B total) issued in 1Q16 – Decline in NII also the result of lower average consumer loan balances, partially offset from growth in commercial loans and securities • Year-over-year comparisons: – NII increase from higher investment securities and loan balances, as well as short-term market rate improvements from the Dec 2015 Fed funds rate increase – NIM decrease driven by increased long-term debt balances, lower commercial loan yields, and reduced cash flow hedges, partially offset by lower cash balances held at the Fed and Dec 2015 Fed funds rate increase Net interest income NII and NIM (FTE) Outlook: FY NII up 2% and NIM down 2 - 3 bps from 2015; Q3 NIM to decline 2 - 4 bps, driven by higher wholesale funding costs and day count Now assumes no rate increases in 2016 © Fifth Third Bank | All Rights Reserved $892 $906 $904 $909 $908 2.90% 2.89% 2.85% 2.91% 2.88% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 2Q15 3Q15 4Q15 1Q16 2Q16 Net Interest Income ($MM) NIM |
![]() 7 Outlook: 5% annual fee growth Noninterest income $637 $591 $623 $578 $602 $556 $713 $1,104 $637 $599 $0 $200 $400 $600 $800 $1,000 2Q15 3Q15 4Q15 1Q16 2Q16 Adjusted noninterest income Reported noninterest income Noninterest Income ($MM) • Sequentially, adjusted noninterest income up $24 million, or 4 percent, primarily due to increases in: – Corporate banking revenue from higher syndication revenue and institutional sales revenue • Year-over-year adjusted noninterest income down $35 million, or 5 percent, primarily due to: – Decreases in mortgage banking net revenue due to a significant MSR valuation gain in 2Q15 2 © Fifth Third Bank | All Rights Reserved 1 1 Adjusted noninterest income items are detailed on page 23 of this presentation. Also see use of non-GAAP measures on page 33 of the earnings release. 2 2015 excludes a $655MM benefit from gains on Vantiv share sales, gain on Vantiv warrant actions, and Vantiv warrant valuation adjustments. 2016 excludes a $66MM benefit from Vantiv warrant valuation adjustments and a $50MM detriment from the Visa total return swap adjustment in 2Q16. |
![]() 8 Noninterest expense • Adjusted expenses flat sequentially, primarily due to: – Seasonal decrease in FICA and unemployment tax – $9 million in compensation-related expenses due to retirement eligibility changes • Adjusted expenses up 3% YoY: – Year-over-year growth primarily due to personnel additions in risk and compliance and information technology $945 $934 $951 $971 $971 $947 $943 $963 $986 $983 $750 $800 $850 $900 $950 $1,000 2Q15 3Q15 4Q15 1Q16 2Q16 Adjusted noninterest expense Reported noninterest expense Noninterest Expense ($MM) Note: Provision for unfunded commitments was an expense of $7MM in 2Q16, $6MM in 1Q16, $4M in 4Q15, $2M in 3Q15, and $2M in 2Q15 1 Adjusted noninterest expense items are detailed on page 23 of this presentation. Also see use of non-GAAP measures on page 33 of the earnings release. Outlook: 4% annual growth 1 © Fifth Third Bank | All Rights Reserved |
![]() 9 Credit quality overview Net charge-offs ($MM) $80 NCO ratio 0.37% 0.80% 0.34% 0.42% $188 HFI Non-performing assets ($MM) Reserve Coverage $86 $96 1 Charge-off related to restructuring of a student loan backed commercial credit originally extended in 2007 1021 40 0.37% $87 $805 NPA ratio 0.67% 0.65% 0.70% 0.88% 0.86% $626 $606 $647 $825 • 2Q16 charge-offs down 5 bps from 1Q16 – Includes $7MM decrease in C&I loan NCOs – Energy loan NCO rate of 0.48% lowest since 3Q15 • 2Q16 portfolio NPA decrease of $20MM from 1Q16 – Energy loan NPAs up $1MM sequentially, which was more than offset by improvement in remaining Commercial portfolio • 2Q16 reserve of 1.38% flat sequentially Outlook: NCOs range-bound around recently observed levels (ex. student loan credit from 3Q15) with some quarterly variability; provision reflective of loan growth © Fifth Third Bank | All Rights Reserved 41 46 46 42 41 45 102 1 34 54 46 $0 $25 $50 $75 $100 $125 $150 $175 $200 2Q15 3Q15 4Q15 1Q16 2Q16 Consumer Commercial $1,293 $1,261 $1,272 $1,295 $1,299 1.39% 1.35% 1.37% 1.38% 1.38% $750 $850 $950 $1,050 $1,150 $1,250 $1,350 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2Q15 3Q15 4Q15 1Q16 2Q16 Allowance for Loan & Lease Losses (ALLL) ($MM) ALLL / Loans and Leases 376 370 419 611 602 250 236 228 214 203 $0 $200 $400 $600 $800 $1,000 2Q15 3Q15 4Q15 1Q16 2Q16 Commercial Consumer |
![]() ![]() ![]() ![]() ![]() 10 Sovereigns Financial Institutions Non-Financial Entities Total (amounts in $MMs) Total Exposure Funded Exposure Total Exposure Funded Exposure Total Exposure Funded Exposure Total Exposure Funded Exposure United Kingdom - - 70 67 702 334 772 401 Peripheral Europe - - 262 190 120 46 382 236 Other Eurozone - - 391 169 1,698 908 2,089 1,077 Other Europe - - 66 5 118 41 184 46 Total Europe - - 789 431 2,638 1,329 3,427 1,760 Limited UK and other European exposure Note: Data above includes the Bancorp’s exposure to all European domiciled and U.S. subsidiaries of European businesses as well as European financial institutions. 1 Total exposure includes funded and unfunded commitments, net of collateral; funded exposure excludes unfunded exposure 2 Peripheral Europe includes Greece, Ireland, Italy, Portugal and Spain 3 Eurozone includes countries participating in the European common currency (Euro) 4 Other Europe includes European countries not part of the Euro (primarily Switzerland and Norway) 5 Current period regulatory capital data is estimated. • Fifth Third has been closely monitoring Brexit situation, engaging in direct client conversations to understand potential impact of Brexit on clients’ underlying businesses • Portfolio well diversified, primarily global public businesses with solid credit quality (probability of default rating in-line with overall Commercial portfolio) • Exposure primarily related to trade finance and financing activities of U.S. companies with foreign parent or overseas activities of U.S. customers • Direct UK exposure represents 6.4% of CET1 5 • No sovereign exposures • $1.8B in funded European exposure represents less than 2% of total loan portfolio 1 1 1 2 3 4 © Fifth Third Bank | All Rights Reserved |
![]() 11 Strong capital position 1 Current period regulatory capital ratios are estimated 9.4% 9.4% 9.8% 9.8% 9.9% 0% 2% 4% 6% 8% 10% 2Q15 3Q15 4Q15 1Q16 2Q16 Capital Update Common Equity Tier 1 Ratio (Basel III) CET1 remained strong at 9.9%, up 13 bps sequentially and 52 bps from 2Q15 Share repurchase activity: — April 11 – retired 1.87MM shares due to completion of the March 1, 2016 ASR — June 14 – retired 1.44MM shares through open market repurchases totaling $26 million Increase in the common dividend to $0.14 in 4Q16 Repurchase of common shares in an amount up to $660 million, including $84 million related to share issuances under employee benefit plans The additional ability to repurchase shares in the amount of any realized after-tax gains from the sale of Vantiv stock, if executed The additional ability to repurchase shares in the amount of any realized after-tax gains from the sale of any portion of the tax receivable agreement with Vantiv, if executed CCAR 2016 capital plan included the following components: 1 © Fifth Third Bank | All Rights Reserved |
![]() 12 $116 $34 $41 $163 $0 $50 $100 $150 $200 $250 $300 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 ~$1 $331MM 3Q16 termination and settlement of estimated $331MM gross cash flows expected to be payable to Fifth Third from 2019 – 2035 in exchange for a $116MM payment; $116MM pre-tax gain expected to be realized by Fifth Third in 3Q16 $75MM Existing annual TRA payments expected to be recognized in 4Q16 and 4Q17 are not impacted $394MM Agreement to terminate and settle estimated $394MM remaining gross cash flows expected to be payable to Fifth Third from 2019-2035 in exchange for expected payments from exercises of quarterly options ¹ starting in 1Q17 through 4Q18 totaling $171MM pre-tax; expected to result in 3Q16 $163MM pre-tax gain and corresponding receivable on Fifth Third’s balance sheet Estimated potential GAAP income recognition (within noninterest income) ¹ ($s in millions; pre-tax) $116 $15 $16 $16 $17 $26 $26 $27 $28 $34 $41 $0 $25 $50 $75 $100 $125 $150 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Expected TRA cash flows 1,2 ($s in millions; pre-tax) Continued monetization of Vantiv 1 Options can either be executed by Vantiv or Fifth Third and generate payments to Fifth Third. Projections assume put/call options are exercised every quarter. 2 Fifth Third received a “non-objection” from the Federal Reserve for the ability to repurchase shares in the amount of any realized after-tax gains from the termination and settlement of any portion of the tax receivable agreement with Vantiv. This excludes the estimated existing annual TRA payment of $34 million in 1Q17 and $41 million in 1Q18. 3 Based on the analysis performed by Vantiv, Inc. disclosed in its first quarter Form 10-Q. Continue to have additional potential TRA gross cash flows, based on additional share sales, of approximately $1 billion ³ ~$800MM expected gross cash flows from existing TRA ~$1 ~$1 ~$1 ~$1 ~$1 ~$1 ~$1 ~$1 © Fifth Third Bank | All Rights Reserved |
![]() 13 Average loans & leases (excl. HFS) Net interest income 1 Net interest margin 1 Noninterest income 2 Noninterest expense Effective tax rate 1 Net charge-offs Loan loss provision Category Fifth Third: current outlook As of July 28, 2016 1 Presented on a fully-taxable equivalent basis. 2 2015 excludes a $655MM benefit from gains on Vantiv share sales, gain on Vantiv warrant actions, and Vantiv warrant valuation adjustments. 2016 excludes a $66MM benefit from Vantiv warrant valuation adjustments and a $50MM detriment from the Visa total return swap adjustment in 2Q16. Note: Previous and current outlook excludes potential, but currently unforecasted, items, such as any potential additional Vantiv gains or losses, future capital actions, or changes in regulatory or accounting guidance. Outlook as of July 28, 2016; please see cautionary statement on slide 2 for risk factors related to forward-looking statements FY16: average total loan growth of 2% FY16: 2% growth with no rate increases FY16: down 2-3 bps; 3Q16 down 2-4 bps from Q2 FY16: 5% growth FY16: 4% growth FY16: 25% - 26% range; 3Q16 ~28% due to Vantiv TRA FY16: range-bound with quarterly variability FY16: to be reflective of loan growth © Fifth Third Bank | All Rights Reserved |
![]() 14 Appendix © Fifth Third Bank | All Rights Reserved |
![]() 15 Pre-tax pre-provision earnings and efficiency ratio trend PPNR trend Adjusted PPNR up 4% sequentially – $15MM increase in corporate banking revenue Adjusted PPNR down 8% YoY – 2Q15 results included $57MM MSR valuation adjustment – Processing revenue up 6%; Corporate banking revenue up 4% PPNR reconciliation Efficiency ratio 65.3% 65.4% 1 Non-GAAP measures: see Reg G reconciliation on page 23 of this presentation and use of non-GAAP measures on page 33 of the earnings release 2 Prior quarters include similar adjustments. ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 Net interest income (FTE) $892 $906 $904 $909 $908 Add: Noninterest income 556 713 1,104 637 599 Less: Noninterest expense 947 943 963 986 983 Pre-provision net revenue $501 $676 $1,045 $560 $524 Adjustments to remove (benefit) / detriment : In noninterest income: Gain on sale of Vantiv shares - - (331) - - Gain on Vantiv warrant actions - - (89) - - Vantiv TRA settlement payment - - (49) - - Vantiv warrant valuation (14) (130) (21) (47) (19) Gain on sale of certain branches - - - (8) (11) Branch and land valuation adjustments 97 - - - - Gain on sale of the agented bankcard loan portfolio - - - - (11) Valuation of 2009 Visa total return swap 2 8 10 (1) 50 Securities (gains) / losses (4) - (1) (3) (6) In noninterest expense: Contribution to Fifth Third Foundation - - 10 - - Severance expense 2 3 2 15 3 Retirement eligibility changes - - - - 9 Executive Retirements - 6 - - - Adjusted PPNR $584 $563 $576 $516 $539 $584 $563 $576 $516 $539 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 2Q15 3Q15 4Q15 1Q16 2Q16 Adjusted PPNR Reported PPNR 58.2% 48.0% 63.8% 61.8% 62.5% 62.2% 64.3% 2Q15 3Q15 4Q15 1Q16 2Q16 Efficiency Ratio Adjusted Efficiency Ratio 65.3% © Fifth Third Bank | All Rights Reserved 1 2 |
![]() 1 Available and contingent borrowing capacity (2Q16): – FHLB ~$10.5B available, ~$14.4B total – Federal Reserve ~$25.7B Holding Company: Bancorp LCR of 110% at 06/30/2016 Holding Company cash at 06/30/16: $2.4B Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~23 months (debt maturities, common and preferred dividends, interest and other expenses) without accessing capital markets; relying on dividends from subsidiaries or any other discretionary actions Bank Entity: No outstanding debt matured in 2Q16. During the quarter the Bank issued $1.25B of senior long term debt. 2016 Funding Plans: Due to the Moody’s LGF methodology, we intend to replace all debt maturing this calendar year ($3.7B in total) in order to maintain our current senior debt ratings As of 2Q16, $2.75B of the $3.7B in 2016 maturities has been replaced It is likely that most of this replacement funding will take place at the Bank Entity due to the solid liquidity position at the Holding Company and FDIC savings on debt issued at the Bank Holding company unsecured debt maturities ($MM) Bank unsecured debt maturities ($MM – excl. Retail Brokered & Institutional CDs) Heavily core funded Strong liquidity profile S-T wholesale 5% 1 $1B matured in 1Q16 2 $700MM matured in 1Q16 3 $350MM of Institutional CD maturities removed causing change in maturity amount from 1Q16 disclosure 2,3 Demand 25% Interest checking 17% Savings/ MMDA 23% Consumer time 3% Foreign Office 1% Non-Core Deposits 2% S-T borrowings 3% Other liabilities 3% Equity 12% L-T debt 11% $1,750 $650 $1,850 $1,600 $2,850 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2016 2017 2018 2019 2020 2021 On Fifth Third Bank $250 $500 $500 $500 $1,100 $2,312 $0 $500 $1,000 $1,500 $2,000 $2,500 2016 2017 2018 2019 2020 2021 on Fifth Third Bancorp Fifth Third Capital Trust (Bancorp) © Fifth Third Bank | All Rights Reserved 16 |
![]() 17 Portfolio compositions Commercial: Fixed: $10.4B Float: $47.7B • 1M Libor based: 68% • 3M Libor based: 8% • Prime based: 5% Weighted Avg. Life: 1.75 years 75% Float / 25% Fix 96% Float / 4% Fix 0% Float / 100% Fix 89% Float / 11% Fix 71% Float / 29% Fix 25% Float / 75% Fix 91% Float / 9% Fix 1% Float / 99% Fix 100% Float / 0% Fix Investments: 51% allocation to bullet/locked-out cash flow securities Investment portfolio yield: 3.16% Duration: 4.2 years Net unrealized pre-tax gain: $1.35B Portfolio Characteristics 0% Float / 100% Fix 0% Float / 100% Fix 21% Float / 79% Fix Consumer: Fixed: $23.4B Float: $13.3B • Prime based: 24% Weighted Avg. Life: 3.37 years Avg. duration of Auto book: 1.29 years 1 Includes HFS Loans & Leases 37% 44% 19% Bancorp Investment Portfolio (BV) Level 1 Level 2A Non -HQLA 75% 12% 6% 7% EOP Commercial Loans 1 Commercial & Industrial Commercial Mortgage Commercial Construction Commercial Lease 22% 29% 2% 6% 41% EOP Consumer Loans 1 Home Equity Auto Other Credit Card Resi Mortgage & Construction © Fifth Third Bank | All Rights Reserved 1 1 1 1 |
![]() 18 Interest rate risk management • NII benefits from asset re-pricings in a rising rate environment – 64% of total loans are floating rate (82% of commercial and 36% of consumer) – Investment portfolio duration of 4.2 years – Short-term wholesale funding represents approximately 17% of total wholesale funding, or 3% of total funding – Approximately $11B in non-core funding matures beyond one year • Interest rate sensitivity tables are based on conservative deposit assumptions – 70% beta on all interest-bearing deposit and sweep balances (~50% betas experienced in 2004 – 2006 Fed tightening cycle) – No modeled re-pricing lag – Modeled non-interest bearing commercial DDA runoff of approximately $2.5B (about 10%) for each 100 bps increase in rates – DDA runoff rolls into an interest bearing product with a 100% beta Change in Interest Rates (bps) +200 bps Shock Change in Interest Rates +100 bps Shock +200 bps Ramp 3.07% 11.51% (4.00%) +25 bps Shock +100 bps Ramp 1.68% 6.92% - -50 bps Shock -50 bps Ramp (4.03%) (7.08%) - Betas 25% Higher Betas 25% Lower Change in Interest Rates 12 Months 13 to 24 Months 12 Months Change in Interest Rates 12 Months 13 to 24 Months 12 Months 13 to 24 Months +200 bps Ramp 2.79% 10.96% 3.34% +200 bps Ramp (0.06%) 5.25% 6.20% 17.77% +100 bps Ramp 1.55% 6.64% 1.82% +100 bps Ramp 0.12% 3.79% 3.25% 10.05% 13 to 24 Months 12.07% 7.19% - ESTIMATED NII SENSITIVITY with DEMAND DEPOSIT BALANCE CHANGES ESTIMATED NII SENSITIVITY with DEPOSIT BETA CHANGES Percent Change in NII (FTE) Percent Change in NII (FTE) $1B Balance Decrease $1B Balance Increase (12.00%) 0.03% (6.00%) 0.30% - (1.35%) 12 Months 13 to 24 Months 12 Months 13 to 24 Months (1.76%) ESTIMATED NII SENSITIVITY PROFILE ESTIMATED EVE SENSITIVITY PROFILE Percent Change in NII (FTE) ALCO Policy Limits Change in EVE ALCO Policy Limit © Fifth Third Bank | All Rights Reserved 1. Actual results may vary from these simulated results due to differences between forecasted and actual balance sheet composition, timing, magnitude, and frequency of interest rate changes, as well as other changes in market conditions and management strategies. 2. Re-pricing percentage or “beta” is the estimated change in yield over 12 months as a result of a shock or ramp 100 bps parallel shift in the yield curve |
![]() 19 Margin Mortgage banking results • $2.7B in originations; 54% purchase volume • 2Q16 mortgage drivers: – Origination fees and gain on sale revenue up $12MM, or 29%, sequentially – Gain on sale margin down 85 bps sequentially – Retaining only jumbos and ARMs on balance sheet – MSR valuation adjustments of positive $6MM; servicing rights amortization of ($35MM) – $50MM in gross servicing fees • YoY decline in mortgage banking revenue driven primarily by 2Q15 MSR valuation adjustment; revenue up 15% excluding MSR valuation adjustments Mortgage originations ($B) and gain on sale margin 1 Mortgage Banking Net Revenue ($MM) Gain on sale margin represents gains on all loans originated for sale. $78 $71 $75 $117 1 $74 © Fifth Third Bank | All Rights Reserved 43 46 37 42 54 56 54 53 52 50 (39) (37) (29) (27) (35) 57 8 13 11 6 2Q15 3Q15 4Q15 1Q16 2Q16 Orig fees and gains on loan sales Gross servicing fees Servicing rights amortization MSR valuation adjustments 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 2Q15 3Q15 4Q15 1Q16 2Q16 Originations for sale Originations HFI 1 |
![]() 20 NPL rollforward NPL HFI Rollforward Commercial 2Q15 3Q15 4Q15 1Q16 2Q16 325 $ 287 $ 286 $ 341 $ 543 $ Transfers to nonaccrual status 66 195 165 306 104 Transfers to accrual status (3) (2) (3) (3) (6) Transfers from held for sale - - - - - Transfers to held for sale - - (12) (3) - Loans sold from portfolio (3) (1) (2) (6) (2) Loan paydowns/payoffs (44) (46) (37) (39) (52) Transfers to OREO (10) - (13) (1) (3) Charge-offs (49) (149) (46) (60) (51) Draws/other extensions of credit 5 2 3 8 6 287 $ 286 $ 341 $ 543 $ 539 $ Consumer 2Q15 3Q15 4Q15 1Q16 2Q16 201 $ 188 $ 172 $ 165 $ 158 $ Transfers to nonaccrual status 55 55 56 55 56 Transfers to accrual status (26) (30) (28) (33) (31) Transfers from held for sale - - - - - Transfers to held for sale - (1) - - - Loans sold from portfolio - - - - - Loan paydowns/payoffs (14) (11) (10) (9) (11) Transfers to OREO (10) (11) (9) (6) (7) Charge-offs (18) (18) (16) (14) (11) Draws/other extensions of credit - - - - - 188 $ 172 $ 165 $ 158 $ 154 $ Total NPL 475 $ 458 $ 506 $ 701 $ 693 $ Total new nonaccrual loans - HFI 121 $ 250 $ 221 $ 361 $ 160 $ Beginning NPL amount Ending Commercial NPL Beginning NPL amount Ending Consumer NPL © Fifth Third Bank | All Rights Reserved |
![]() ![]() ![]() ![]() 21 Credit trends Residential Mortgage Commercial & Industrial Home Equity & Automobile Commercial Real Estate * Excludes loans held-for-sale. ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 EOP Balance* $8,547 $8,427 $8,301 $8,112 $7,988 90+ days delinquent - - - - - as % of loans NM NM NM NM NM Net charge-offs $9 $9 $9 $8 $6 as % of loans 0.41% 0.42% 0.39% 0.36% 0.30% Home equity ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 EOP Balance* $12,933 $13,392 $13,716 $13,895 $14,307 Avg Loans* $12,831 $13,144 $13,504 $13,788 $14,046 90+ days delinquent $43 $40 $40 $44 $38 as % of loans 0.33% 0.30% 0.29% 0.32% 0.27% NPAs* $101 $91 $86 $77 $69 as % of loans 0.78% 0.68% 0.63% 0.55% 0.48% Net charge-offs $5 $3 $3 $2 $2 as % of loans 0.16% 0.10% 0.08% 0.07% 0.06% Residential mortgage ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 EOP Balance* $42,800 $42,948 $42,131 $43,433 $43,558 Avg Loans* $42,550 $43,149 $43,154 $43,089 $43,876 90+ days delinquent $2 $3 $7 $3 $2 as % of loans NM 0.01% 0.02% 0.01% NM NPAs* $193 $183 $272 $472 $477 as % of loans 0.45% 0.43% 0.65% 1.09% 1.10% Net charge-offs $34 $128 $30 $46 $39 as % of loans 0.32% 1.17% 0.28% 0.43% 0.36% C&I ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 EOP Balance* $7,150 $7,061 $6,957 $6,864 $6,875 Avg Loans* $7,148 $7,023 $7,032 $6,886 $6,831 NPAs* $166 $165 $138 $126 $114 as % of loans 2.31% 2.34% 1.98% 1.84% 1.66% Net charge-offs $11 $11 $3 $6 $6 as % of loans 0.62% 0.66% 0.19% 0.35% 0.38% Commercial mortgage ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 EOP Balance* $11,909 $11,826 $11,493 $11,128 $10,671 90+ days delinquent $8 $8 $10 $8 $7 as % of loans 0.07% 0.07% 0.09% 0.07% 0.07% Net charge-offs $4 $7 $9 $9 $8 as % of loans 0.14% 0.23% 0.31% 0.32% 0.26% Automobile ($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 EOP Balance* $2,709 $3,101 $3,214 $3,428 $3,706 Avg Loans* $2,549 $2,965 $3,141 $3,297 $3,551 NPAs* $14 $19 $8 $8 $7 as % of loans 0.51% 0.61% 0.25% 0.23% 0.19% Net charge-offs - $3 - - - as % of loans 0.00% 0.43% 0.00% (0.06%) 0.00% Commercial construction © Fifth Third Bank | All Rights Reserved |
![]() 22 Regulation G Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation $ and shares in millions (unaudited) June March December September June 2016 2016 2015 2015 2015 Net interest income (U.S. GAAP) 902 903 899 901 887 Add: Noninterest income 599 637 1,104 713 556 Less: Noninterest expense (983) (986) (963) (943) (947) Pre-provision net revenue 518 554 1,040 671 496 Net income available to common shareholders (U.S. GAAP) 310 312 634 366 292 Add: Intangible amortization, net of tax - - - - - Tangible net income available to common shareholders 310 312 634 366 292 Tangible net income available to common shareholders (annualized) (a) 1,247 1,255 2,515 1,452 1,171 Average Bancorp shareholders' equity (U.S. GAAP) 16,584 16,376 15,982 15,815 15,841 Less: Average preferred stock (1,331) (1,331) (1,331) (1,331) (1,331) Average goodwill (2,416) (2,416) (2,416) (2,416) (2,416) Average intangible assets and other servicing rights (11) (12) (13) (14) (15) Average tangible common equity (b) 12,826 12,617 12,222 12,054 12,079 Total Bancorp shareholders' equity (U.S. GAAP) 16,726 16,323 15,839 15,826 15,605 Less: Preferred stock (1,331) (1,331) (1,331) (1,331) (1,331) Goodwill (2,416) (2,416) (2,416) (2,416) (2,416) Intangible assets and other servicing rights (11) (12) (13) (13) (14) Tangible common equity, including unrealized gains / losses (c) 12,968 12,564 12,079 12,066 11,844 Less: Accumulated other comprehensive income (889) (684) (197) (522) (291) Tangible common equity, excluding unrealized gains / losses (d) 12,079 11,880 11,882 11,544 11,553 Total assets (U.S. GAAP) 143,625 142,430 141,048 141,883 141,628 Less: Goodwill (2,416) (2,416) (2,416) (2,416) (2,416) Intangible assets and other servicing rights (11) (12) (13) (13) (14) Tangible assets, including unrealized gains / losses (e) 141,198 140,002 138,619 139,454 139,198 Less: Accumulated other comprehensive income / loss, before tax (1,368) (1,052) (303) (803) (448) Tangible assets, excluding unrealized gains / losses (f) 139,830 138,950 138,316 138,651 138,750 Common shares outstanding (g) 766 770 785 795 810 Ratios: Return on average tangible common equity (a) / (b) 9.7% 9.9% 20.6% 12.0% 9.7% Tangible common equity (excluding unrealized gains/losses) (d) / (f) 8.64% 8.55% 8.59% 8.33% 8.33% Tangible common equity (including unrealized gains/losses) (c) / (e) 9.18% 8.97% 8.71% 8.65% 8.51% Tangible book value per share (c) / (g) $16.93 $16.32 $15.39 $15.18 $14.62 For the Three Months Ended See page 33 of the earnings release for a discussion on the use of non-GAAP financial measures. © Fifth Third Bank | All Rights Reserved |
![]() 23 Regulation G Non-GAAP reconciliation See page 33 of the earnings release for a discussion on the use of non-GAAP financial measures. Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation $ and shares in millions (unaudited) June March December September June 2016 2016 2015 2015 2015 Basel III Final Rule - Transitional to fully phased-in CET 1 capital (transitional) $12,112 $11,914 $11,917 $11,574 $11,582 Less: Adjustments to CET 1 capital from transitional to fully phased-in (1) (4) (5) (8) (11) (12) CET 1 capital (fully phased-in) (a) 12,108 11,909 11,909 11,563 11,570 Risk-weighted assets (transitional) 121,824 121,432 121,290 123,148 122,986 Add: Adjustments to risk-weighted assets from transitional to fully phased-in (2) 932 1,027 1,178 1,136 1,280 Risk-weighted assets (fully phased-in) (b) $122,756 $122,459 $122,468 $124,284 $124,266 Estimated CET 1 capital ratio under Basel III Final Rule (fully phased-in) (a) / (b) 9.86% 9.72% 9.72% 9.30% 9.31% (1) Primarily relates to disallowed intangible assets (other than goodwill and MSRs, net of associated deferred tax liabilities). (2) Primarily relates to higher risk-weighting for MSRs. June March December September June 2016 2016 2015 2015 2015 Net interest income (FTE) (c) $908 $909 $904 $906 $892 Noninterest income excluding certain items Noninterest income (U.S. GAAP) $599 $637 $1,104 $713 $556 Gain on sale of Vantiv shares - - (331) - - Gain on Vantiv warrant actions - - (89) - - Vantiv TRA settlement payment - - (49) - - Vantiv warrant valuation (19) (47) (21) (130) (14) Gain on sale of certain branches (11) (8) - - - Gain on sale of the non-strategic agented bankcard loan portfolio (11) - - - - Branch and land valuation adjustments - - - - 97 Valuation of 2009 Visa total return swap 50 (1) 10 �� 8 2 Securities (gains) / losses (6) (3) (1) - (4) Adjusted noninterest income (d) $602 $578 $623 $591 $637 Noninterest expense excluding certain items Noninterest expense (U.S. GAAP) $983 $986 $963 $943 $947 Contribution for Fifth Third Foundation - - (10) - - Severance expense (3) (15) (2) (3) (2) Retirement eligibility changes (9) - - - - Executive retirements - - - (6) - Adjusted noninterest expense (e) $971 $971 $951 $934 $945 Adjusted efficiency ratio (e) / [(c ) + (d)] 64.3% 65.3% 62.2% 62.5% 61.8% Adjusted PPNR (c) + (d) - (e) $539 $516 $576 $563 $584 For the Three Months Ended For the Three Months Ended © Fifth Third Bank | All Rights Reserved |