Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — KBW 2011 Bank Conference
28 slides from Fifth Third Bancorp's conference presentation, Mar 1, 2011
Slide 1: KBW 2011 Bank Conference
Exhibit 99.1 KBW 2011 Bank Conference Dan Poston Executive Vice President & Chief Financial Officer March 1, 2011 Please refer to earnings release dated January 19, 2011 for further information Fifth Third Bank | All Rights Reserved
Slide 2: A foundation of continued growth
A foundation of continued growth Capital – foundation for continued growth Tier 1 common ratio (%) — Tier 1 common capital has increased 313bps or $2.6bn¹ — Capital base transformed through series of capital actions – 9.4% pro forma Tier 1 ratio excluding trust preferred securities to be phased-out
Slide 3: Net interest income
Net interest income • Sequential trends in net interest income and net interest margin (FTE) reflect CD repricing, deposit mix shift out of CDs, higher average total loan balances and continued deposit pricing discipline partially offset by effect of FTPS loan refinancing – NII up $3mm sequentially
Slide 4: Core fee income growth and stable core expenses
Core fee income growth and stable core expenses • Core noninterest income of $632mm decreased $44mm, or 7%, compared with prior quarter, primarily due to lower mortgage banking net revenue • Strong mortgage banking net revenue ($149mm) driven by originations of $7.4bn; recent mortgage activity down
Slide 5: Strong pre-provision net revenue
Strong pre-provision net revenue • Reported PPNR of $583mm down 34% from strong 3Q10 levels, which included higher mortgage banking revenue, and up 4% over prior year • Adjusted PPNR of $576mm, due to adjustments totaling ($7mm), resulting in sequential decrease of 9% and year-over-year increase of
Slide 6: Balance sheet
Balance sheet • Extended $26bn of new and renewed credit in 4Q10 • C&I loans flat sequentially and up 2% from the previous year • CRE loans down 8% sequentially and 18% from the previous year • Consumer loans up 2% sequentially and up 4% from the previous year • $2.3bn of warehoused residential mort
Slide 7: Strong relative credit trends
Strong relative credit trends FITB credit metrics are now generally better than peers Source: SNL Financial and company filings. Peers include: BBT, CMA, HBAN, KEY, MI, MTB, PNC, RF, STI, USB, WFC, and ZION. NPA and NCO ratios exclude loans held-for-sale and covered assets for peers where appropriat
Slide 8: Strong credit metrics compared with peers
Strong credit metrics compared with peers FITB credit metrics lower than peer average and represent position of relative strength Source: SNL Financial and company reports. Data as of 4Q10. HFI NPAs exclude covered assets for BBT, USB, and ZION ^ FITB pro forma for $1.7bn common equity issuance 8 Fi
Slide 9: Industry leading reserve levels
Industry leading reserve levels Reserve coverage strong relative to problem assets and losses Source: SNL Financial and company reports. Data as of 4Q10. NPLs and NPAs exclude loans held-for-saleand also excludes covered assets for BBT, USB, and ZION 9 Fifth Third Bank | All Rights Reserved
Slide 10: TARP repayment
TARP repayment Repaid $3.408 billion TARP CPP investment on February 2, 2011 Utilized proceeds from — $1.7 billion common equity offering — $1.0 billion debt offering — Internally available funds Intend to evaluate repurchase of warrants from U.S. Treasury; if mutually agreeable value not reached, w
Slide 11: Pro forma capital position vs. peers (not adjusted for Basel III)
Pro forma capital position vs. peers (not adjusted for Basel III) Fifth Third’s Basel I capital position will be well in excess of any establishedstandards and most peers Source: SNL Financial and company filings (financial data as of 4Q10). Common equity ratios for non-TARP repayers exclude discoun
Slide 12: Pro forma capital position including TARP repayment (adjusted for Basel III)
Pro forma capital position including TARP repayment (adjusted for Basel III*) Unlike other SCAP commercial banks, Fifth Third does not expect adverse effect to common capital ratios from Basel III — Improvement of relative capital position Potentially net positive impact on regulatory capital — Limi
Slide 13: Capital management philosophy
Capital management philosophy Organic growth opportunities • Support growth of core banking franchise • Improving loan demand in recovering economy Return to more normal dividend policy* • Strong levels of profitability would support significantly higher dividend than current dividend • Subject to c
Slide 14: Well-positioned for the future
Well-positioned for the future Diversified traditional banking platform • Traditional commercial banking franchise built on customer-oriented localized operating model • Strong market share in key markets with focus on further improving density • Fee income ~40% of total revenues Strong industry lea
Slide 15: Cautionary statement
Cautionary statement This report 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 pr
Slide 16: Well-positioned for changed financial landscape
Well-positioned for changed financial landscape Fifth Third’s business model is driven by traditional banking activities — Largest bank headquartered within Fifth Third’s core Midwest footprint — Focused on expansion and development of businesses where regional leadership matters — Capital investmen
Slide 17: Potential impact of key elements of Dodd-Frank Act and other recent financial legislation
Potential impact of key elements of Dodd-Frank Act and other recent financial legislation* Scope of activity Potential impact** • 2010 debit interchange revenue of $204mm • Fed has proposed limits on debt interchange; proposal Debit • 2010 debit interchange $ volume: $15.7B currently out for comment
Slide 18: Pro forma capital ratios
Pro forma capital ratios 4Q10 4Q10 TARP 4Q10 $1.7bn offering redemption Peer 4Q10 pro forma¹ pro forma² Median4 Consolidated TCE / TA (incl. unrealized gains) 7.3% 8.8% 8.7% 7.1% TCE / TA (excl. unrealized gains) 7.0% 8.6% 8.4% 7.1% Tier 1 common 7.5% 9.1% 9.0% 8.7% Tier 1 capital 13.9% 15.6% 12.2%
Slide 19: Effects of capital plan and TARP repayment on income statement and earnings per share
Effects of capital plan and TARP repayment on income statement and earnings per share Fifth Third has not provided earnings or earnings per share guidance The comments below relate to the effects of our capital plan on our earnings and earnings per share. — Write-off of discount accretion and avoida
Slide 20: Mortgage repurchase overview
Mortgage repurchase overview Demand requests and repurchase losses remain volatile and near-term repurchase losses are expected to remain elevated Repurchase Reserves* ($ in millions) — Number of outstanding demand requests (units) down 9% from 3Q10, outstanding demand requests ($) down 13% Q4 Q1 Q2
Slide 21: Troubled debt restructurings (TDR) overview
Troubled debt restructurings (TDR) overview Successive improvement in vintage performance during 2008 and 2009, even as volume of modification increased Fifth Third’s mortgage portfolio TDRshave redefaulted at a lower rate than other bank held portfolio modifications — Fifth Third’s TDRs less likely
Slide 22: Criticized / Classified Commercial Assets
Criticized / Classified Commercial Assets Criticized assets have declined significantly in all categories since the peak in 2009 * Criticized / Classified assets also include $2mm, $9mm, and $2mm of loss assets in 2007, 2008, and 2009, respectively 22 Fifth Third Bank | All Rights Reserved
Slide 23: NPL Rollforward
NPL Rollforward Significant improvement in NPL inflows over past two years * 3Q10 inflows into NPLsHFS were $217mm, reflecting performing loans moved to held-for-sale in 3Q10 that were deemed impaired as a result of the decision to sell these loans 23 Fifth Third Bank | All Rights Reserved
Slide 24: Non-performing loans
Non-performing loans Fifth Third’s non-performing loan inflows (relative to loans) were higher than peers throughout 2008. More recently, FITB inflows have been proportionally lower than peers Source: SNL Financial and company filings. Peers include: BAC, BBT, C, CMA, HBAN, JPM, KEY, MI, MTB, PNC, R
Slide 25: Pre-provision net revenue reconciliation
Pre-provision net revenue reconciliation 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Reported PPNR $511 $2,393 $844 $562 $568 $567 $760 $583 Adjustments: BOLI 54 - - - - - (127) - Gain on sale of Visa shares - - (244) - 9 - - - Gain from sale of processing interest - (1,764) 6 - - - - - Divested merchan
Slide 26: Regulation G Non-GAAP reconciliation
Regulation G Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconcilation For the Three Months Ended $ and shares in millions Proforma Proforma (unaudited) CS Issue, TARP CS Issuance December December December September June March December 2010 2010 2010 2010 2010
Slide 27: Regulation G Non-GAAP reconciliation
Regulation G Non-GAAP reconciliation Common offering and TARP repay 4Q10 Common share offering only 4Q10 Tier 1 Capital ratio Tier 1 Capital ratio Tier 1 capital $ 13,964,857 Tier 1 capital $ 13,964,857 TARP repay $ (3,408,000) Equity raise $ 1,648,830 Equity raise $ 1,648,830 $ 12,205,687 $ 15,613,
Slide 28: Regulation G Non-GAAP reconciliation
Regulation G Non-GAAP reconciliation Common share offering only 4Q10 Phase out of TRUPs (Equity raise) 4Q10 Phase out of TRUPs (TARP, Equity raise) 4Q10 Tangible Common Equity ratio Tier 1 Capital ratio Tier 1 Capital ratio Tangible CE $ 7,603,486 Tier 1 capital $ 13,964,857 Tier 1 capital $ 13,964,