Slide 1: Fifth Third Bancorp 2Q20 Earnings Presentation
Fifth Third Bancorp 2Q20 Earnings Presentation July 23, 2020 Refer to earnings release dated July 23, 2020 for further information. Classification: Internal Use 1 Fifth Third Bancorp | All Rights Reserved
Slide 2: Cautionary statement
Cautionary statement This presentation 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 3
Slide 3: Customer activity and pandemic response update
Customer activity and pandemic response update COVID-19 hardship relief summary Payment deferrals % of Total loans in payment Consumer portfolio COVID-19 relief programs As of 6/30/20 deferral programs As of 7/17/20 % of deferral % of accounts % of deferral % of deferral balance Commercial loans & l
Slide 4: 2Q20 highlights
2Q20 highlights Reported1 Adjusted1 • Continue to support customers, communities, and employees EPS $0.23 $0.30 • Strong PPNR performance despite lower rate ROA 0.40% 0.50% environment; significant improvement in ROE 3.2% 4.2% reported and adjusted efficiency ratios • Record capital markets revenue
Slide 5: Interest earning assets
Interest earning assets Average loan & lease balances Average securities1 and short-term investments $ in billions; loan & lease balances exclude HFS $ in billions $118.5 $55.9 $110.1 $110.8 $38.3 $39.6 $19.8 $39.8 4.84% Includes approx. $37.0 $38.0 4.44% $3.8BN in PPP loans $2.3 $2.9 3.76% 3.28% 3.
Slide 6: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions $146.5 $118.5 $123.2 $71.6 $23.6 $23.7 $21.8 $66.8 $67.4 3.02% 2.73% $51.7 $55.8 $74.9 2.27% 1.03% 0.68% 0.27% 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 Total IB core Commercial Consu
Slide 7: Aggressively reducing interest expense given the rate environment
Aggressively reducing interest expense given the rate environment Proactively managing deposit costs given the rate environment IB core deposit rate 0.99% 1.03% 1.01% 2020 0.82% 0.77% 0.74% 0.54% 0.35% 0.27% 0.21% 1Q19 2Q19 3Q19 4Q19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 June Deposit rates by pr
Slide 8: Net interest income
Net interest income1 1Q20 to 2Q20 NII & NIM Walk NII $ in millions; NIM change in bps NII NIM $1,250 $1,232 $1,217 $1,233 $1,217 $1,203 $1,188 1Q20 3.24% Excluding PAA Elevated Cash Balances - (29) PPP Impact 21 (1) Total net interest income; $ millions Defensive Wholesale 3.32% Funding Actions (9)
Slide 9: Noninterest income
Noninterest income $732 2Q20 vs. 1Q20 • Adjusted noninterest income1 down $62 million, or 8% $674 $671 $670 $660 $650 • Primary drivers: ‒ Service charges on deposits (down 18%) ‒ Strong mortgage origination revenue, offset by positive net Total noninterest income; $ millions MSR valuation from the
Slide 10: Noninterest expense
Noninterest expense 2Q20 vs. 1Q20 $1,243 • Adjusted noninterest expense1 down $62 million. Excluding $1,200 impact of $22 million non-qualified deferred compensation $1,144 expense in the current quarter compared to $26 million benefit $1,120 $1,121 $1,082 in the prior quarter, adjusted expenses wer
Slide 11: Well diversified commercial portfolio with several potential risk mitigants to recent stresses
Well diversified commercial portfolio with several potential risk mitigants to recent stresses Commercial portfolio by industry sectors Potential risk mitigants for COVID-19 high impact portfolios $s in billions 1Q20 2Q20 Leisure & recreation – Primarily casinos, restaurants, sports, fitness, hotels
Slide 12: Oil & gas portfolio remains well positioned
Oil & gas portfolio remains well positioned $2.7BN I 2.3% of total loans Oil & Gas Balance Mix RBL 68% utilization 7% Oil & Gas Oil / Gas Mix 56% / 44% Production Reserve-Based Structure 95% 9% 4% $0.3BN I 0.3% of total loans ~97% <3% Midstream 26% utilization Refining Midstream Oil / Gas Mix 60% /
Slide 13: Consumer portfolios are well positioned
Consumer portfolios are well positioned Portfolio Weighted average % of Total Portfolio WA LTV Loans WA FICO1 at Orig. Potential mitigants FICO scores Residential mortgage 14% 756 74% • Proactively made over 3 million calls to our customers since the onset 56%of the pandemic to assess their financia
Slide 14: Credit quality overview
Credit quality overview Nonperforming assets1 (NPAs) ACL as % of portfolio loans and leases 2.76% Ex. PPP Including MB 2.64% unamortized loan discount 2.13% 2.50% 0.72% 0.65% 0.60% 1.19% 1.23% 0.52% 0.51% 1.15% 2Q17 2Q18 2Q19 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 NPA Ratio Incurred Loss Method CECL Net char
Slide 15: Current expected credit losses (CECL) allowance
Current expected credit losses (CECL) allowance Allocation of allowance by product 1Q20 2Q20 $s in millions % of portfolio % of portfolio Allowance for loan & lease losses Amount loans & leases Amount loans & leases Commercial and industrial loans 977 1.68% 988 1.78% Commercial mortgage loans 237 2.
Slide 16: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position 29 bps • Risk-based capital ratios have meaningfully 9.72% 33 bps (14 bps) improved despite reserve build (13 bps) 9.37% • Expect to continue suspension of share repurchases until at least end of the year • ~$3.5BN excess capital over
Slide 17: Current expectations
Current expectations Third quarter 2020 Loans & leases Down 3.5 - 4% sequentially (average balances, incl. HFS) NII (FTE)1 Down ~3% sequentially with no accelerated PPP fee benefit (excluding PAA) (2Q20 baseline: $1.188BN) Noninterest income1 Up 2%+ sequentially (2Q20 baseline: $670MM) Noninterest e
Slide 18: Resilient Balance Sheet, Proactive Management, Diversified Revenue Mix
Resilient 1 Balance Sheet Remain well- positioned to Proactive 2 Management navigate the uncertain economic environment Diversified 3 Revenue Mix Classification: Internal Use 18 Fifth Third Bancorp | All Rights Reserved
Slide 19: Appendix
Appendix Classification: Internal Use 19 Fifth Third Bancorp | All Rights Reserved
Slide 20: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $21.8BN fixed 3 | $48.5BN variable 1,2 $31.0BN fixed | $8.7BN variable 1 $12.4BN fixed | $3.9BN variable 4 • 58% allocation to bullet/ • 1ML based: 55%6 • 1ML based: 1%7 • 1ML based: 8%8 locked-out c
Slide 21: Interest rate risk management
Interest rate risk management NII is asset sensitive in year 1 and year 2 to rising Estimated NII sensitivity profile and ALCO policy limits rates. % Change in NII (FTE) ALCO policy limit • As of June 30, 2020, 52% of HFI loans were variable 13 to 24 13 to 24 rate net of existing hedges (69% of tota
Slide 22: NPL rollforward
NPL rollforward1 Commercial $ millions 2Q19 3Q19 4Q19 1Q20 2Q20 Balance, beginning of period $ 313 $ 390 $ 349 $ 397 $ 445 Transfers to nonaccrual status 139 32 165 176 173 Transfers to accrual status - - - (31) - Transfers to held for sale - - (17) (6) (4) Loan paydowns/payoffs (40) (44) (60) (31)
Slide 23: Balance and credit loss trends
Balance and credit loss trends1 Commercial & industrial Residential mortgage $59.0 $52.1 $51.2 $50.9 $51.6 $16.8 $16.7 $16.7 $16.7 $16.6 0.45% 0.39% 0.22% 0.28% 0.15% 0.03% 0.07% 0.02% 0.02% (0.02%) 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Commercial mortgage Home equity $10.7 $10.8 $11.0 $
Slide 24: Expected impacts of MB purchase accounting
Expected impacts of MB purchase accounting1 Net Core Deposit Intangible Amortization Purchase Accounting Accretion 8 7 $38 ($ in millions) 5 5 5 4 4 (3) (4) (4) (4) (5) (5) (5) (9) (9) (9) (9) (10) (11) (11) 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 • Reflects purchase accounting impacts exclusively relate
Slide 25: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of June 30, 2020: $4.4B $ millions – excl. Retail Brokered & Institutional CDs $5,487 • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~30 months (debt maturities,
Slide 26: Mortgage banking results
Mortgage banking results Mortgage banking net revenue $ millions $120 $99 $95 $19 • Mortgage banking revenue decreased $10 $73 $21 million from prior quarter and $63 $63 $4 $67 increased $36 million from year-ago $1 $71 quarter $72 $70 $95 • $3.4B in originations, up 19% compared $81 $64 $49 to the
Slide 27: 2Q20 adjustments and notable items
2Q20 adjustments and notable items Adjusted EPS of $0.301 2Q20 reported EPS of $0.23 included a negative $0.07 impact from the following notable items: • $29 million pre-tax (~$22 million after-tax2) charge related to the valuation of the Visa total return swap • $12 million pre-tax (~$10 million af
Slide 28: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation For the Three Months Ended $ and shares in millions June March December September June (unaudited) 2020 2020 2019 2019 2019 Net income (U.S. GAAP) (a) $195 $46 $734 $549 $453 Net income (U.
Slide 29: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation For the Three Months Ended $ and shares in millions June March December September June (unaudited) 2020 2020 2019 2019 2019 Average interest-earning assets (a) $176,224 $151,213 $149,312 $1