Slide 1: Fifth Third Bancorp 1Q22 Earnings Presentation
Fifth Third Bancorp 1Q22 Earnings Presentation April 19th, 2022 Refer to earnings release dated April 19, 2022 for further information. 1 © Fifth Classification: Third Bancorp |Internal Use 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: 1Q22 highlights
1Q22 highlights Reported1 Adjusted1 • Net interest income stable compared to 4Q21, or EPS $0.68 $0.69 up 1% excluding PPP; NIM up 4 basis points compared to 4Q21 ROA 0.96% 0.97% • Average C&I loan growth excluding PPP of 8% ROE 10.0% 10.1% compared to 4Q21 ROTCE 13.4% 13.7% excl. AOCI • Average secu
Slide 4: Net interest income
Net interest income1 4Q21 to 1Q22 Reported NII & NIM Walk NII $ in millions; NIM change in bps NII NIM $1,179 $1,200 $1,198 4Q21 $1,200 2.55% Investment portfolio growth 18 (3) Commercial loans (balance growth / lower yields) 17 (2) Total net interest income; $ millions Addition of cash flow 7 1 hed
Slide 5: Noninterest income
Noninterest income 1Q22 vs. 4Q21 $791 $829 • Adjusted noninterest income1 down $120 million, or 14% $749 $759 • Primary drivers: $709 $684 ‒ Other noninterest income (down 55%) ‒ Commercial banking revenue (down 21%) Total noninterest income; $ millions ‒ Leasing business revenue (down 16%) ‒ Partia
Slide 6: Noninterest expense
Noninterest expense 1Q22 vs. 4Q21 • Adjusted noninterest expense1 up $26 million, or 2% $1,215 $1,215 $1,206 $1,196 $1,222 $1,222 • Primary drivers: ‒ Compensation and benefits (up 10%) Total noninterest expense; $ millions ‒ Partially offset by a decrease in marketing expense (down 31%) 1Q22 vs. 1Q
Slide 7: Interest earning assets
Interest earning assets Average loan & lease balances Average securities1 and short-term investments $ in billions; loan & lease balances excluding HFS $ in billions $109.5 $113.5 9.00% $80.0 $72.3 $70.7 $109.0 $120.0 % change $69.0 % change 8.00% $70.0 $100.0 QoQ YoY QoQ YoY 7.00% $39.6 $41.3 $42.1
Slide 8: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions $167.3 $168.4 $157.7 0.15% % change $20.0 % change 0.13% QoQ YoY $18.0 QoQ YoY $16.0 $17.6 $82.7 $85.4 0.11% $78.5 +3% +9% $14.0 0.09% $12.0 $13.3 (5%) (29%) $12.6 0.07% 0
Slide 9: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs ACL as % of portfolio loans and leases 1.20% 2.50% 1.00% 2.30% 0.84% 2.14% 0.79% 2.19% 2.05% 0.65% 2.00% 0.47% 0.72% 2.06% 1.87% 1.81% Ex. PPP 2.00% 0.80% 0.35% 0.62% 0.60% 0.61% 1.85% 1.80% 0.51% 0.52% 0.60% 0.45% 0.47% 0.47% 1.50% 0.33% 0.
Slide 10: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 1Q22 Change in Rate $ in millions Compared to: % of portfolio Allowance for loan & lease losses Amount loans & leases 4Q21 CECL Day 1 Commercial and industrial loans 761 1.41% 0.03% 0.19% Commercial mortgage loans 253 2.37% (0.58%) 0.80%
Slide 11: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 • Targeting 9.0% CET12 • Acquisition of Dividend Finance ~30 bps expected to utilize ~30 bps of capital2 9.54% ~(13 bps) 9.28% ~(35 bps) ~(8 bps) 4Q21 Tangible Net Income Common Dividends RWA Modified CECL
Slide 12: Fifth Third value proposition
Fifth Third value proposition 1 Generating strong relationship growth in all our markets with a focus on our Southeast expansion and on continually improving the digital experience 2 Diversifying and growing fee revenues to support profitability and generate strong returns 3 Investing for long-term
Slide 13: Current expectations: FY 2022 compared to FY 2021
Current expectations FY 2022 compared to FY 2021 Includes expected impacts from Dividend Finance Avg. loans & leases commercial: up 9 – 10% (January guidance: up 7 – 8%) (including HFS) consumer: stable (January guidance: up 3 – 4%) total: up 5 – 6% (January guidance: up 5 – 6%) Net interest income1
Slide 14: Current expectations: Second quarter 2022
Current expectations Second quarter 2022 compared to First quarter 2022 Includes expected impacts from Dividend Finance Avg. loans & leases commercial: up 3 – 4% (including HFS) consumer: stable total: up 2 – 3% Net interest income1 up 11 – 13% (with 4/1/22 forward curve) (1Q22 baseline: $1.2BN) Gui
Slide 15: Appendix
Appendix 15 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 16: Recent non-bank acquisitions
Recent non-bank acquisitions Dividend Finance Total Addressable Market • Dividend Finance is a national tech-enabled point-of-sale finance provider By total lending market1; Illustrative assisting homeowners with the renewable energy transition (solar and home improvement loans) Residential solar Ho
Slide 17: Living our purpose guided by our vision and values
Living our purpose guided by our vision and values Our To improve the lives of our customers and the Purpose well-being of our communities Our Be the One Bank people most value and trust Vision Our Work as One Bank Take Accountability Core Values Be Respectful Act with Integrity Our purpose, vision,
Slide 18: ESG priorities and actions
ESG priorities and actions Promoting Keeping the Demonstrating Addressing Strengthening our inclusion and customer at the our commitment climate change communities diversity center to employees ~$7.3BN in lending and $2.8BN accelerating 99% of banking centers Announced $20/hour $180MM Neighborhood f
Slide 19: ESG ratings and recognitions
ESG ratings and recognitions ESG data providers MSCI S&P Global Sustainalytics CSRHub SSGA CDP ESG Rating ESG Score ESG Risk Rating ESG Ranking R-Factor Score Climate Change Nov 2021 (last update) Corporate Sustainability April 2022 April 2022 Feb 2022 2019, 2020, 2021 Assessment A 73rd Low Risk 86t
Slide 20: Paycheck Protection Program update
Paycheck Protection Program update Average PPP loan balances Period-end PPP loan balances $ in billions $ in billions $5.4 $5.2 $4.8 $3.7 $3.1 $2.3 $1.8 $1.3 $1.0 $0.7 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22 PPP interest income $ in millions $53 $53 • Originated $7.3BN in PPP loans across
Slide 21: GNMA forbearance loan purchase update
GNMA forbearance loan purchase update1 Average loan balances $ in billions • Third-party serviced GNMA forbearance $2.7 loan purchases: • 4Q20: $2.1BN $1.6 • 1Q21: $0.6BN $1.1 $0.8 $0.3 • 2Q21: $1.0BN 1Q22 2Q22 3Q22 4Q22 1Q23 • 3Q21: $0.3BN actual • 4Q21: $0.7BN Net interest income 30.00 $ in millio
Slide 22: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $26.0BN fixed 3 | $46.3BN variable 1,2 $36.2BN fixed | $6.7BN variable 1 • 64% allocation to bullet/ $8.6BN fixed | $2.2BN variable 4 • 1M based: 44%7, 12 • 1M based: 1%8,12 locked-out cash flow secu
Slide 23: Well positioned to benefit from higher rates
Well positioned to benefit from higher rates NII is asset sensitive in year 1 and year 2 to rising Estimated NII sensitivity profile and ALCO policy limits rates. • As of March 31, 2022, 46% of HFI loans were variable % Change in NII (FTE) ALCO policy limit 13 to 24 13 to 24 rate net of existing hed
Slide 24: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM1 EOP notional value of cash flow hedges ($ in billions) Gross receive fixed rate of swaps: • 1Q22-4Q22: 2.35% • 1Q23-3Q23: 2.32% • 4Q23-1Q24: 1.89% $15 $15 $15 $15 • 2Q24: 1.71% • 3Q24-4Q24: 1.44% $14 $14 $14 $3 $3 $3 $3 $3 $3 $3 $10 $10 $9 $
Slide 25: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of March 31, 2022: $4.9BN $ millions – excl. Retail Brokered & Institutional CDs $3,737 • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~21 months (debt maturities
Slide 26: Mortgage banking results
Mortgage banking results $250 Mortgage banking net revenue $225 Mortgage originations and margins $200 $ in millions $ in billions $175 $85 $5.0 $5.0 $86 $4.7 $18 $64 $150 $9 Originations HFI $1.3 $1.2 $4.3 $1.1 $125 $59 $35 $52 $59 $63 $1.6 $3.5 $100 $9 $3.7 $3.8 $3.6 $75 $67 $1.2 $71 $2.7 $50 $89
Slide 27: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ in millions; pre-tax $45 $22 $11 4Q22 4Q23 4Q24 For end note descriptions, see end note summary starting on page 38 27 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 28: Commercial & industrial overview
Commercial & industrial overview Portfolio loans Key statistics $ in billions Average QoQ change excluding PPP 1Q21 4Q21 1Q22 (1.9%) (1.0%) 1.7% 7.0% 7.8% NCO ratio1 0.22% 0.11% 0.07% Period-end QoQ change excluding PPP 30-89 Delinquencies 0.24% 0.14% 0.16% (2.5%) 0.4% 3.7% 10.7% 5.6% 90+ Delinquenc
Slide 29: Commercial real estate overview
Commercial real estate overview Portfolio loans Key statistics $ in billions Average QoQ change 1Q21 4Q21 1Q22 0.1% (0.4%) (2.8%) (2.9%) 2.0% NCO ratio1 (0.05%) (0.03%) 0.03% Period-end QoQ change 30-89 Delinquencies 0.19% 0.03% 0.12% 1.6% (2.8%) (2.8%) (1.3%) 3.6% $10.7 $11.0 $20.0 $10.5 $10.5 $10.
Slide 30: Residential mortgage overview
Residential mortgage overview Portfolio loans Key statistics $ in billions Average QoQ change 1Q21 4Q21 1Q22 (1.3%) 0.5% 2.1% (0.2%) 1.9% NCO ratio1 (0.01%) (0.06%) (0.02%) Period-end QoQ change 30-89 Delinquencies 0.11% 0.12% 0.09% (1.0%) 2.3% 0.2% 1.5% 4.6% 90+ Delinquencies 0.46% 0.44% 0.23% Nonp
Slide 31: Home equity overview
Home equity overview Portfolio loans Key statistics $ in billions Average QoQ change 1Q21 4Q21 1Q22 (5.8%) (6.7%) (5.7%) (5.2%) (4.1%) NCO ratio1 0.01% (0.18%) (0.07%) Period-end QoQ change 30-89 Delinquencies 0.46% 0.61% 0.64% (7.1%) (5.6%) (5.9%) (4.5%) (4.1%) 90+ Delinquencies 0.02% 0.02% 0.03% N
Slide 32: Indirect secured consumer overview
Indirect secured consumer overview Portfolio loans Key statistics $ in billions Average QoQ change 1Q21 4Q21 1Q22 5.1% 5.4% 6.0% 4.8% 4.8% NCO ratio1 0.25% 0.14% 0.17% 30-89 Delinquencies 0.54% 0.61% 0.62% Period-end QoQ change 90+ Delinquencies 0.06% 0.05% 0.05% 5.0% 6.0% 5.3% 4.9% 3.8% Nonperformi
Slide 33: Credit card overview
Credit card overview Portfolio loans Key statistics $ in billions Average QoQ change 1Q21 4Q21 1Q22 (8.0%) (5.8%) (1.2%) (0.5%) (2.8%) NCO ratio1 5.50% 2.90% 3.13% Period-end QoQ change 30-89 Delinquencies 0.99% 1.02% 1.01% (9.8%) (0.9%) (2.7%) 1.3% (4.3%) 90+ Delinquencies 1.38% 0.85% 0.83% Nonperf
Slide 34: NPL rollforward
NPL rollforward1 Commercial $ in millions 1Q21 2Q21 3Q21 4Q21 1Q22 Balance, beginning of period $ 638 $ 509 $ 409 $ 349 $ 337 Transfers to nonaccrual status 29 100 47 62 54 Transfers to accrual status (1) - - (26) (2) Transfers to held for sale (42) (45) (1) (2) (4) Loan paydowns/payoffs (99) (116)
Slide 35: 1Q22 adjustments and notable items
1Q22 adjustments and notable items Adjusted EPS of $0.691 1Q22 reported EPS of $0.68 included a negative $0.01 impact from the following notable items: • $11 million pre-tax (~$8 million after-tax2) charge related to the valuation of the Visa total return swap For end note descriptions, see end note
Slide 36: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions March December September June March (unaudited) 2022 2021 2021 2021 2021 Net income (U.S. GAAP) (a) $494 $662 $704 $709 $694 Net income (U.S. GAAP) (annualized) (b) $2,003 $2,626 $2,793 $
Slide 37: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions March December September June March (unaudited) 2022 2021 2021 2021 2021 Average interest-earning assets (a) $187,894 $187,045 $182,801 $184,918 $182,715 Net interest income (U.S. GAAP) (
Slide 38: Earnings presentation end notes
Earnings presentation end notes Slide 3 end notes 1. Reported ROTCE, NIM, pre-provision net revenue, and efficiency ratio are non-GAAP measures: all adjusted figures are non-GAAP measures; see reconciliation on pages 36 and 37 of this presentation and the use of non-GAAP measures on pages 26-28 of t
Slide 39: Earnings presentation end notes
Earnings presentation end notes Slide 18 end notes Data is for fiscal year 2021, unless otherwise noted 1. 1/1/2012-12/31/2021. 2. Refer to press release. 3. For Scope 1, Scope 2 and business travel under Scope 3 emissions. Projected full year 2021 CO2e emissions are based on 2021 year-to-date data
Slide 40: Earnings presentation end notes
Earnings presentation end notes Slide 27 end notes 1. Assumes FIS will have sufficient taxable income to utilize TRA related deductions and have a marginal tax rate of 25%. 2. See forward-looking statements on page 2. Slide 28 end notes 1. Net losses charged-off as a percent of average portfolio loa