Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q3 2017 Earnings Presentation
22 slides from Fifth Third Bancorp's earnings presentation, Oct 24, 2017
Slide 1: 3Q17 Earnings Presentation
3Q17 Earnings Presentation October 24, 2017 Refer to earnings release dated October 24, 2017 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: 3Q17 highlights
Net interest income up 7% year-over-year, and up 3% sequentially NIM up 19 bps year-over-year, and up 6 bps sequentially Adjusted PPNR1 up 6% year-over-year, and up 2% sequentially Solid credit performance, with NPAs, NPLs and NCOs at or near multi-year lows Initiated $990 million share repurchase,
Slide 4: 3Q17 in review
Pre-tax items included in 3Q17 results had a positive $0.87 EPS impact: A $1.037 billion pre-tax (~$679 million after- tax) gain from sale of Vantiv stake A $47 million pre-tax (~$31 million after-tax)2 charge related to the valuation of the Visa total return swap $0.02 negative EPS impact reflectin
Slide 5: Balance sheet
Current 4Q17 Outlook: Avg flat YoY Balance sheet Loan & lease balances1 ($ billions) Avg -2% YoY Transaction deposits down 1% vs. 2Q17; flat YoY Sequential performance driven by lower commercial money market Average loan-to-core deposit ratio of 93% Modified LCR of 124% Core deposit balances1 ($ bil
Slide 6: Net interest income
Net interest income 1Non-GAAP measure: See Reg G reconciliation on pages 21 and 22 of this presentation and use of non-GAAP measures on page 31 of the earnings release NII up $64 million NIM up 19 bps NII & NIM performance vs. prior year driven by: Higher short-term market rates 3Q17 vs. 2Q17 3Q17 v
Slide 7: Noninterest income
Adjusted noninterest income: up ~10% sequentially, excluding mortgage Includes estimated impact of ~$40 million to be recognized in connection with annual Vantiv TRA payment Adjusted1 noninterest income down $25 million, or 4%, driven primarily by: Lower corporate banking revenue Noninterest income
Slide 8: Noninterest expense: up ~1.5% sequentially
Noninterest expense: up ~1.5% sequentially Noninterest expense 1 Non-GAAP measure: See Reg G reconciliation on pages 21 and 22 of this presentation and use of non-GAAP measures on page 31 of the earnings release Noninterest expense up 2%, driven by: Higher employee compensation expense Higher techno
Slide 9: Credit quality overview
Net charge-offs of 0.29%, down 16 bps from 3Q16; up 1 bp from 2Q17 Portfolio NPA ratio of 0.60%, down 15 bps from 3Q16; down 12 bps from 2Q17 Criticized assets at 5.50% of commercial loans, down 66 bps from 3Q16; flat from 2Q17 Allowance for loan & lease losses of 1.31%, down 3 bps sequentially driv
Slide 10: Strong capital and liquidity position
Strong capital and liquidity position 1Current period regulatory capital & liquidity ratios are estimated CET1 remains strong at 10.59%, up 42 bps from 3Q16 and down 4 bps from 2Q17 Initiated $990 million share repurchase, including after-tax proceeds from Vantiv gain Common shares outstanding reduc
Slide 11: Vantiv update
Executed a sale of Vantiv shares in August 2017 resulting in $1.037 billion pre-tax gain ($679MM after-tax) Sale triggered ~$650MM1 in additional future gross Tax Receivable Agreement (“TRA”) cash flows to be recognized over next 15+ years Current Vantiv ownership of 8.6% (15.25MM shares) Current ma
Slide 12: Current 4Q17 outlook
Current 4Q17 outlook 1Non-GAAP measure: See Reg G reconciliation on pages 21 and 22 of this presentation and use of non-GAAP measures on page 31 of the earnings release 2 Q3 2017 excludes all items shown on page 22 of this presentation, resulting in a base of $508 million Note: Previous and current
Slide 13: Appendix
Appendix (© Fifth Third Bancorp | Al Rights Reserved FIFTH THIRD BANCORP
Slide 14: 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 page 31 of the earnings release 2Prior quarters include similar adjustments Adjusted PPNR up 6% YoY driven by: NII growth primarily from higher short
Slide 15: Strong liquidity profile
Strong liquidity profile 1 Available and contingent borrowing capacity (3Q17): FHLB ~$7.1B available, ~$13.1B total Federal Reserve ~$31.6B 1$500MM matured in 1Q17 2$650MM matured in 2Q17 Holding Company: Modified LCR of 124% Holding Company cash at September 30, 2017: $2.4B Cash currently sufficien
Slide 16: Balance sheet positioning
Balance sheet positioning Commercial Loans1,2 Investment Portfolio Total Interest Earning Assets ~$128B; $69B Fix / $59B Float Consumer Loans1 Data as of 09/30/17 1Includes HFS Loans & Leases 2Fifth Third had $4.48B 1ML receive-fix swaps outstanding against C&I loans, which are being included in fix
Slide 17: Interest rate risk management
Interest rate risk management Data as of 09/30/17 1Actual 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
Slide 18: Mortgage banking results
Mortgage banking results $2.1B in originations, down 6% sequentially and down 26% YoY; 66% purchase volume 3Q17 mortgage banking drivers: Origination fees and gain on sale revenue up 8% sequentially Gain on sale margin up 19 bps sequentially $56MM in gross servicing fees up 14% sequentially YoY decl
Slide 19: NPL rollforward
NPL rollforward [NPL HA Rollforward lCommercial sare aie 10172017317 [Beginning NPL amount S$ 539 $ 460 $ 523 $ 523 485 ransfers to nonaccrual status 145 161 84 37 Transfers to accrual status : @ : (13) (46) Transfers to held for sale (36) @) @) a a) Loans sold from portfolio - : ® ) Loan paydowns/p
Slide 20: Credit trends
Residential Mortgage Commercial & Industrial Home Equity & Automobile Commercial Real Estate *Excludes loans held-for-sale Credit trends ($ in millions) 3Q16 4Q16 1Q17 2Q17 3Q17 EOP Balance* $3,905 $3,903 $4,283 $4,366 $4,652 Avg Balance* $3,848 $3,890 $3,987 $4,306 $4,533 NPAs* $5 $0 - - - as % of
Slide 21: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation See page 31 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) September June March December September 2017 2017 2017 20
Slide 22: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation See page 31 of the earnings release for a discussion on the use of non-GAAP financial measures