Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q1 2018 Earnings Presentation
22 slides from Fifth Third Bancorp's earnings presentation, Apr 24, 2018
Slide 1: Fifth Third Bancorp 1Q18 Earnings Presentation
Fifth Third Bancorp 1Q18 Earnings Presentation April 24, 2018 Refer to earnings release dated April 24, 2018 for further information. Exhibit 99.2
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: 1Q18 highlights
1Q18 highlights Adjusted NIM1 up 20 bps year-over-year, and up 8 bps sequentially Adjusted net interest income1 up 8% year-over-year, and up 1% sequentially Strong credit performance, with NPAs, NPLs, NCOs, and criticized assets at or near multi-year lows Adjusted ROA1 of 1.23% up 35 bps year-over-y
Slide 4: 1Q18 in review
1Q18 in review Items included in 1Q18 results had a net positive $0.40 EPS impact: $414MM pre-tax (~$327MM after-tax2) step-up gain included in other noninterest income from the Vantiv merger with Worldpay $39MM pre-tax (~$31MM after-tax2) charge to other noninterest income related to the valuation
Slide 5: Balance sheet
Balance sheet Securities1 and short-term investments Loan & lease balances Core deposit balances $ billions $ billions $ billions Current Outlook Average securities Short-term investments Transaction Other time Loan-to-core deposit ratio Commercial flat vs. 4Q17; up 1% YoY Consumer flat vs. 4Q17; fl
Slide 6: Net interest income
Net interest income 1Q18 vs. 4Q17 Current outlook 1Q18 vs. 1Q17 Adjusted NII1 up $9 million, or 1% Adjusted NIM1 up 8 bps NII and NIM performance drivers: Short term market rates ($20MM, +6 bps) Growth in higher yielding consumer loans ($2MM, +1 bp) Day count (-$14MM, +3 bps) Investment portfolio gr
Slide 7: Noninterest income
Noninterest income 1Q18 vs. 4Q17 Current outlook 1Q18 vs. 1Q17 Adjusted noninterest income1 down $34 million, or 6% Performance drivers: $44MM Vantiv TRA payment in 4Q17 $25MM lease impairment in 4Q17 Lower Worldpay equity method income from merger & integration costs Partially offset by higher weal
Slide 8: Noninterest expense
Noninterest expense 1Q18 vs. 4Q17 Current outlook 1Q18 vs. 1Q17 Adjusted noninterest expense1 up 6% Performance drivers: Seasonally higher compensation-related expenses Increased amortization of affordable housing investments resulting from the Tax Cuts and Jobs Act Adjusted noninterest expense1 up
Slide 9: Credit quality overview
Credit quality overview Nonperforming assets1 Net charge-offs Reserve coverage $ millions $ millions $ millions 1Excludes HFS loans Current Outlook Provision reflective of loan growth Net charge-offs range-bound with the potential for quarterly variability Net charge-offs of 0.36%, down 4 bps from 1
Slide 10: Strong capital and liquidity position
Strong capital and liquidity position 1Current period regulatory capital ratio is estimated Common Equity Tier 1 ratio (Basel III)1 Modified LCR CET1 ratio of 10.8%, up 21 bps sequentially and up 6 bps YoY Continue to expect migration towards 9.5% CET1 ratio Initiated and settled $318MM share repurc
Slide 11: Current outlook
Current outlook Loans & leases Noninterest expense Effective tax rate Noninterest income NII (FTE)1 NIM (FTE)1 Credit items 1Non-GAAP measure: See Cautionary Statement on page 2 of this presentation regarding forward-looking non-GAAP measures and use of non-GAAP measures on pages 28 and 29 of the ea
Slide 12: Appendix
Appendix
Slide 13: PPNR and efficiency ratio trends
PPNR and efficiency ratio trends1 1Non-GAAP measures: See Reg G reconciliation on pages 21 and 22 of this presentation and use of non-GAAP measures on pages 28 and 29 of the earnings release; 2Prior quarters include similar adjustments PPNR reconciliation $ millions PPNR trend $ millions $1,563 Adju
Slide 14: Strong liquidity profile
Strong liquidity profile $ millions – excl. Retail Brokered & Institutional CDs Unsecured debt maturities Heavily core funded Holding company: Modified LCR of 113% Holding Company cash as of March 31, 2018: $3.2B Cash currently sufficient to satisfy all fixed obligations in a stressed environment fo
Slide 15: Balance sheet positioning
Balance sheet positioning Investment portfolio $12.8B fix | $43.4B float 1,2 Commercial loans1,2 Consumer loans1 Long-term debt3 $25.6B fix | $10.2B float 1 $10.2B fix | $4.6B float 3 59% allocation to bullet/ locked-out cash flow securities Yield: 3.21% Effective duration of 5.24 Net unrealized pre
Slide 16: Interest rate risk management
Interest rate risk management Estimated NII sensitivity profile and ALCO policy limits Estimated NII sensitivity with deposit beta changes Estimated NII sensitivity with demand deposit balance changes NII benefits from asset rate reset in rising rate environment: 58% of total loans are floating rate
Slide 17: Mortgage banking results
Mortgage banking results $ billions Mortgage banking net revenue $ billions Mortgage originations and gain-on-sale margin1 1Gain-on-sale margin represents gains on all loans originated for sale $1.6B in originations, down 18% sequentially and down 19% YoY; 57% purchase volume 1Q18 mortgage banking d
Slide 18: Thoughtful reduction in Worldpay stake
Thoughtful reduction in Worldpay stake 49% ~$6BN Worldpay TRA revenue forecast1 Vantiv/Worldpay ownership and monetized gains 1Assumes Worldpay has sufficient U.S. taxable income to utilized the TRA-related deductions, and assumes a 21% federal tax rate 2Assumes remaining units are exchanged at $82.
Slide 19: NPL rollforward
NPL rollforward1 1Loan balances exclude nonaccrual loans HFS Commercial $ millions Consumer $ millions Total NPL $ millions 1Q17 2Q17 3Q17 4Q17 1Q18 523 $ 523 $ 485 $ 373 $ 306 $ Transfers to nonaccrual status 128 84 37 53 100 Transfers to accrual status - (13) (46) (27) - Transfers to held for sale
Slide 20: Credit trends
Credit trends Commercial & industrial $ millions Residential mortgage $ millions Commercial mortgage $ millions Commercial construction $ millions $ millions Home equity $ millions Automobile * Excludes loans HFS
Slide 21: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation 1See pages 28 and 29 of the earnings release for a discussion on the use of non-GAAP financial measures
Slide 22: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation 1See pages 28 and 29 of the earnings release for a discussion on the use of non-GAAP financial measures