Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q4 2017 Earnings Presentation
21 slides from Fifth Third Bancorp's earnings presentation, Jan 23, 2018
Slide 1: Fifth Third Bancorp 4Q17 Earnings Presentation
Fifth Third Bancorp 4Q17 Earnings Presentation January 23, 2018 Refer to earnings release dated January 23, 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: 4Q17 highlights
4Q17 highlights Adjusted NIM1 up 19 bps year-over-year, and up 3 bps sequentially Adjusted net interest income1 up 7% year-over-year, and up 1% sequentially Solid credit performance, with NPAs, NPLs, NCOs, and criticized assets at or near multi-year lows Achieved positive operating leverage year-ove
Slide 4: 4Q17 in review
4Q17 in review Items included in 4Q17 results had a net positive $0.15 EPS impact: $220MM income tax reduction from a remeasurement of the deferred tax liability $68MM pre-tax (~$44MM after-tax2) impairment related to affordable housing investments within noninterest expense $27MM pre-tax (~$18MM af
Slide 5: Balance sheet
Balance sheet Securities 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. 3Q17; down 1% YoY; excl. deliberate exits u
Slide 6: Net interest income
Net interest income 4Q17 vs. 3Q17 Current outlook 4Q17 vs. 4Q16 Adjusted NII1 up $13 million, or 1% Adjusted NIM1 up 3 bps NII and NIM performance drivers: Higher securities yields ($5MM, +2 bps) Investment portfolio dividend ($2MM, +1 bp) Auto yield improvement ($2MM, +1 bp) Increased Consumer mix
Slide 7: Noninterest income
Noninterest income 4Q17 vs. 3Q17 Current outlook 4Q17 vs. 4Q16 Adjusted noninterest income1 up $16 million, or 3% Performance drivers: $44MM Vantiv TRA payment in 4Q17 Increased wealth and asset management revenue Partially offset by lower corporate banking revenue due to $25MM lease impairment and
Slide 8: Noninterest expense
Noninterest expense 4Q17 vs. 3Q17 Current outlook 4Q17 vs. 4Q16 Adjusted noninterest expense1 flat Performance drivers: Lower marketing expense Lower equipment & occupancy expense Partially offset by higher employee compensation and technology & communication expense Adjusted noninterest expense1 up
Slide 9: Credit quality overview
Credit quality overview Non-performing 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 0.33%, up 2 bps from 4Q
Slide 10: Strong capital and liquidity position
Strong capital and liquidity position 1Current period regulatory capital & liquidity ratios are estimated Common Equity Tier 1 ratio (Basel III)1 Modified LCR1 Returned over $2 billion to common shareholders in the form of dividends and repurchases in 2017 (~95% of earnings) CET1 ratio of 10.6%, up
Slide 11: Current outlook
Current outlook Loans & leases Noninterest expense Effective tax rate Noninterest income1 NII (FTE)1 NIM (FTE)1 Credit items 1Non-GAAP measure: See Reg G reconciliation on pages 20 and 21 of this presentation and use of non-GAAP measures on pages 30 and 31 of the earnings release Note: Previous and
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 page 30 of the earnings release; 2Prior quarters include similar adjustments PPNR reconciliation $ millions PPNR trend $ millions $1,563 Adjusted PPN
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 129% Holding Company cash as of December 31, 2017: $2.9B Cash currently sufficient to satisfy all fixed obligations in a stressed environment
Slide 15: Balance sheet positioning
Balance sheet positioning Investment portfolio $13.9B fix | $42.5B float 1,2 Commercial loans1,2 Consumer loans1 Long-term debt3 $25.7B fix | $10.4B float 1 $10.3B fix | $4.6B float 3 55% allocation to bullet/ locked-out cash flow securities Yield: 3.15% Effective duration of 4.74 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: 57% of total loans are floating rate
Slide 17: Mortgage banking results
Mortgage banking results $ billions Mortgage banking net revenue1 $ billions Mortgage originations and gain-on-sale margin2 1Effective January 1, 2017 the Bancorp elected to measure its MSR portfolio at fair value rather than at amortized cost; 2Gain-on-sale margin represents gains on all loans orig
Slide 18: NPL rollforward
NPL rollforward1 1Loan balances exclude nonaccrual loans HFS Commercial $ millions Consumer $ millions Total NPL $ millions
Slide 19: 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 20: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation 1See pages 30 and 31 of the earnings release for a discussion on the use of non-GAAP financial measures
Slide 21: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation 1See pages 30 and 31 of the earnings release for a discussion on the use of non-GAAP financial measures