Slide 1: Fifth Third Bancorp 3Q21 Earnings Presentation
Fifth Third Bancorp 3Q21 Earnings Presentation October 19, 2021 Refer to earnings release dated October 19, 2021 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: 3Q21 highlights
3Q21 highlights Reported1 Adjusted1 • Strong financial results reflect diversified EPS $0.97 $0.94 revenues, disciplined balance sheet management, expense management, and ROA 1.36% 1.32% benign credit results ROE 13.0% 12.6% • Period end C&I loan growth of 1% (or 4% excluding the impact of PPP loans
Slide 4: Net interest income
Net interest income1 2Q21 to 3Q21 Reported NII & NIM Walk $1,211 NII $ in millions; NIM change in bps $1,192 NII NIM $1,173 2Q21 $1,211 2.63% Day count 9 (1) Wholesale funding actions 8 2 Total net interest income; $ millions Lower investment portfolio (4) (1) prepayment penalties Lower PPP-related
Slide 5: Noninterest income
Noninterest income 3Q21 vs. 2Q21 $836 $794 • Adjusted noninterest income1 up $26 million, or 3% $768 $741 • Primary drivers: $722 $703 ‒ Mortgage banking net revenue (up 34%) ‒ Leasing business revenue (up 28%) Total noninterest income; $ millions ‒ Partially offset by commercial banking revenue (do
Slide 6: Noninterest expense
Noninterest expense 3Q21 vs. 2Q21 • Adjusted noninterest expense1 up $4 million $1,161 $1,153 $1,153 $1,172 $1,157 $1,133 • Primary drivers: ‒ Marketing expense (up 45%) Total noninterest expense; $ millions ‒ Technology and communications (up 4%) ‒ Partially offset by a decrease in compensation and
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 $113.4 0.09 $70.5 $69.3 120 $108.5 $108.0 % change $66.1 % change 0.08 100 QoQ YoY QoQ YoY $39.8 0.07 $40.1 $41.0 $33.6 $32.1 80 0.06
Slide 8: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions $161.5 $161.8 % change $152.3 % change QoQ YoY QoQ YoY $21.8 $73.0 $81.2 $81.3 Flat +11% $16.5 $14.4 (13%) (34%) $79.3 2.47% 2.55% $80.3 $80.5 Flat +2% 2.26% 0.13% 0.05% 0
Slide 9: Well diversified commercial portfolio with several potential risk mitigants to recent stresses
Well diversified commercial portfolio with several potential risk mitigants to recent stresses COVID-19 high impact portfolios of interest Total Commercial balances ex. PPP Key takeaways: Restaurants • ~75% of portfolio in QSR, mostly to top-tier brands and national chains ($1.7BN) • Areas of focus:
Slide 10: CRE portfolio is smaller, centrally managed, and well diversified
CRE portfolio is smaller, centrally managed, and well diversified CRE as a % of total loans and leases Well diversified by property type Total loans and leases ex. PPP Exposures by property type Apartment 1% 14% Owner Occupied Home Builder CRE 2% 26% Office 5% 3% Hospitality Non-owner Occupied CRE 8
Slide 11: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs1 ACL as % of portfolio loans and leases 2.75% 2.65% 2.62% 2.53% 2.40% 2.49% 2.22% Ex. PPP 2.41% 2.29% 2.12% 0.84% 2.15% 2.08% Including MB 2.19% unamortized 2.06% 2.00% loan discount 0.61% 0.52% 0.48% 0.47% 0.37% 0.26% 0.25% 0.29% 0.29% 3Q18
Slide 12: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 3Q21 Change in Rate $s in millions Compared to: % of portfolio Allowance for loan & lease losses Amount loans & leases 2Q21 CECL Day 1 Commercial and industrial loans 739 1.54% (0.02%) 0.32% Commercial mortgage loans 335 3.25% (0.34%) 1.
Slide 13: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 ~43 bps ~2 bps • Repurchased shares totaling $550 million ~(14 bps) in 3Q21 10.37% ~(19 bps) • Increased quarterly common dividend ~(27 bps) $0.03, or 11%, to $0.30 per share 9.85% ~(37 bps) • Capital plans
Slide 14: Current expectations
Current expectations Fourth quarter 2021 compared to Third quarter 2021 • Reflects impact of previous Loans & leases average: up ~1% (up ~2% excl. PPP impacts) consumer loan purchases (including HFS) (including ~$300 million in Sep and ~$700 million in Oct related to GNMA forbearance loans) Net inte
Slide 15: 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 Diversified and growing fee revenues to support profitability and generate strong returns 3 Investing for long-term o
Slide 16: Appendix
Appendix 16 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
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: Committed to generating sustainable value
Committed to generating sustainable value Environmental, Social, and Governance (ESG) actions and impact Actions Impact $41.6BN Delivered against 2016 $32BN community World’s Most Ethical Companies commitment1 Recognized by Ethisphere in 2021 Most Responsible Companies $18 Minimum wage per hour (sin
Slide 19: Neighborhood Investment Program
Neighborhood Investment Program Delivering capital, expertise and collaboration to nine neighborhoods creating economic mobility Program overview • $180 million neighborhood program to support and revitalize nine majority-Black communities across seven states that have experienced disinvestment PHIL
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 $5.1 $5.2 $5.2 $4.8 $4.8 $3.7 $3.1 $2.3 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 PPP interest income $ in millions $53 $53 • Originated $7.3BN in PPP loans across
Slide 21: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $21.4BN fixed 3 | $43.0BN variable 1,2 $33.7BN fixed | $7.5BN variable 1 $9.3BN fixed | $2.1BN variable4 • 1ML based: 50%7 • 1ML based: 2%8 • 60% allocation to bullet/ • 1ML based: 7%9 • 3ML based: 6
Slide 22: Well positioned to benefit from higher rates
Well positioned to benefit from higher rates Estimated NII sensitivity profile and ALCO policy limits NII is asset sensitive in year 1 and year 2 to rising rates. % Change in NII (FTE) ALCO policy limit • As of September 30, 2021, 48% of HFI loans were 13 to 24 13 to 24 variable rate net of existing
Slide 23: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM for next 3+ years Notional value of cash flow hedges ($ Billions) Blended rate of swaps will continue to improve throughout time: • 3Q21-4Q22: 3.02% • 1Q23-3Q23: 3.08% $11 $11 $11 $11 $11 $11 • 4Q23-1Q24: 3.09% $10 $10 $10 • 2Q24: 3.14% • 3Q2
Slide 24: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of September 30, 2021: $ millions – excl. Retail Brokered & Institutional CDs $5.1BN $3,987 • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~27 months $2,250 (debt
Slide 25: Mortgage banking results
Mortgage banking results Mortgage banking net revenue Mortgage originations and margins $ millions $ billions $5.0 $5.0 $76 $85 $4.5 $4.7 $86 $18 $64 $3.9 $1.3 $1.2 $9 $1.1 $1.1 Originations HFI $66 $25 $1.0 $59 $59 $63 $66 $93 $89 $81 $78 Originations HFS $47 $3.4 $2.9 $3.6 $3.7 $3.8 ($8) ($13) ($3
Slide 26: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ Millions; pre-tax $44 $45 $22 $11 4Q21 4Q22 4Q23 4Q24 For end note descriptions, see end note summary starting on page 31 26 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 27: NPL rollforward
NPL rollforward1 Commercial $ millions Consumer $ millions Total NPL $ millions For end note descriptions, see end note summary starting on page 31 27 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 28: 3Q21 adjustments and notable items
3Q21 adjustments and notable items Adjusted EPS of $0.941 3Q21 reported EPS of $0.97 included a positive $0.03 impact from the following notable items: • $17 million pre-tax (~$13 million after-tax2) charge related to the valuation of the Visa total return swap • $15 million pre-tax (~$12 million af
Slide 29: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions September June March December September (unaudited) 2021 2021 2021 2020 2020 Net income (U.S. GAAP) (a) $704 $709 $694 $604 $581 Net income (U.S. GAAP) (annualized) (b) $2,793 $2,844 $2,8
Slide 30: Non-GAAP reconciliation
Non-GAAP reconciliation For end note descriptions, see end note summary starting on page 31; totals shown above may not foot due to rounding 30 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 31: 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 29 and 30 of this presentation and the use of non-GAAP measures on pages 27-29 of t
Slide 32: Earnings presentation end notes
Earnings presentation end notes Slide 21 end notes Note: Data as of 9/30/21. 1. Excludes HFS Loans & Leases. 2. Fifth Third had $11B of variable loans classified as fixed given the impacts of $3BN in floors with a 2.25% 1ML strike and $8BN in receive-fix swaps. 3. Excludes ~$2.3BN in Small Business