Slide 1: Fifth Third Bancorp 4Q22 Earnings Presentation
Fifth Third Bancorp 4Q22 Earnings Presentation January 19, 2023 Refer to earnings release dated January 19, 2023 for further information. © Fifth Third Bancorp | All Rights Reserved Ó Fifth Third Bancorp | 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: 4Q22 highlights
4Q22 highlights Reported1 Adjusted1 • Generated record revenue and prudently managed expenses EPS $1.01 $1.04 • PPNR1 increased 40% compared to 4Q21 ROA 1.42% 1.46% • Net interest income1 increased 32% compared to 4Q21; ROE 18.8% 19.3% NIM up 13 basis points compared to 3Q22 ROTCE 29.2% 19.2% excl.
Slide 4: Net interest income
Net interest income1 3Q22 to 4Q22 Reported NII & NIM Walk NII $ in millions; NIM change in bps NII NIM 3Q22 $1,502 3.22% 3.35% Net market rate benefit 83 18 Total net interest income; $ millions Loan balances / mix 31 5 3.22% Securities portfolio 5 (2) 2.55% Deposit balances / mix (37) (8) Other, ne
Slide 5: Noninterest income
Noninterest income 4Q22 vs. 3Q22 • Adjusted noninterest income1 up $50 million, or 7% Total noninterest income; $ millions • Primary drivers: ‒ Other noninterest income (up 53%) reflecting the recognition of tax receivable agreement revenue in the current quarter ‒ Commercial banking revenue (up 18%
Slide 6: Noninterest expense
Noninterest expense 4Q22 vs. 3Q22 • Adjusted noninterest expense1 up $51 million, or 4% • Primary drivers: ‒ Compensation and benefits (up 8%), including $13 million from Total noninterest expense; $ millions NQDC plans ‒ Net occupancy expense (up 11%) reflecting an increase in branch costs includin
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 % change % change QoQ YoY QoQ YoY +1% +8% +9% (82%) 5.10% 4.29% 3.46% 3.00% 3.00% 2.86% +1% +13% +1% +55% Commercial Consumer Total lo
Slide 8: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions % change % change QoQ YoY QoQ YoY 3.83% (2%) +1% 1.05% +6% +77% +2% (12%) 2.89% 0.41% 2.61% 0.04% Total wholesale funding Wholesale funding cost Commercial Consumer Total
Slide 9: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs ACL as % of portfolio loans and leases 0.79% 0.62% 0.47% 0.46% 0.44% 0.33% 0.33% 0.23% 0.28% 0.30% 4Q19 4Q20 4Q21 3Q22 4Q22 NPA ratio1 30-89 days past due as a % of portfolio loans1 Net charge-offs (NCOs) • Drivers of $112MM increase in ACL:
Slide 10: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 4Q22 Change in Rate $ in millions Compared to: % of portfolio Allowance for loan & lease losses Amount loans & leases 3Q22 CECL Day 1 Commercial and industrial loans 776 1.36% (0.07%) 0.14% Commercial mortgage loans 246 2.23% 0.05% 0.66%
Slide 11: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 targeting a 9.25% CET1 ratio2 ~41 bps ~3 bps 9.27% (~14 bps) 9.14% (~11 bps) (~6 bps) Net income Common Share 3Q22 RWA Other 4Q22 to common dividends repurchases Liquidity position $ in billions; as of 12/3
Slide 12: What you should expect from Fifth Third
What you should expect from Fifth Third 1 Sustained organic growth from positioning the bank to benefit from secular trends and through gaining market share 2 Innovative, software-enabled products that simplify customers’ lives and enhance the client experience Proactive balance sheet management (cr
Slide 13: Consistently investing for growth through the cycle
Consistently investing for growth through the cycle Consistent investments in our businesses Consistent outcomes De novo investments in the Southeast Consistent strong financial results and • Over 70 Southeast branches added since 2019 top tier profitability Platform modernization and digital enable
Slide 14: Current expectations: FY 2023 compared to FY 2022
Current expectations FY 2023 compared to FY 2022 Avg. loans & leases up 3 – 4% (including HFS) Total revenue1 up 9 – 10% (FY22 baseline: $8.487BN; Includes securities g/l) Net interest income1 up 13 – 14% (FY22 baseline: $5.625BN) guidance assumes 12/31/23 Fed funds rate of 4.75% Noninterest income1
Slide 15: Current expectations: 1Q23 compared to 4Q22
Current expectations 1Q23 compared to 4Q22 Avg. loans & leases stable (including HFS) Total revenue1 down 4 – 5% (4Q22 baseline: $2.361BN; down 3 - 4% excluding TRA impact Includes securities g/l) Net interest income1 down 1 – 2% (4Q22 baseline: $1.582BN) guidance assumes 3/31/23 Fed funds rate of 5
Slide 16: Appendix
Appendix 16 © Fifth Third Bancorp | 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 well-being of Purpose our communities Our Vision Be the One Bank people most value and trust Our Work as One Bank Take Accountability Core Values Be Respectful Act with Integrity Our purpose, vision,
Slide 18: Sustainability priorities and metrics
Sustainability priorities and metrics Keeping the Demonstrating our Addressing climate Promoting inclusion Strengthening our customer at the commitment to change and diversity communities center employees ~$24BN in sustainable financing $2.8BN accelerating racial 12MM customer outreach calls, $20/ho
Slide 19: A recognized leader in sustainability among peers
A recognized leader in sustainability among peers Actions Demonstrating Leadership Third-party recognitions $500,000 donated for hurricane relief in Florida Through Fifth Third Foundation in addition to other assistance programs Published 3rd ESG report Available on ir.53.com Announced 10-year $100B
Slide 20: Strong liquidity profile
Strong liquidity profile Unsecured debt maturities $ millions – excl. Retail Brokered & Institutional CDs Holding company: • Holding Company cash as of December 31, 2022: $5.2BN • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~24 months (debt maturities, co
Slide 21: Paycheck Protection Program update
Paycheck Protection Program update Average PPP loan balances Period-end PPP loan balances $ in billions $ in billions PPP interest income $ in millions • Originated $7.3BN in PPP loans across all 3 waves • 4Q22 loan balances ◦ FY22 Average Balance: $0.5BN $1 ◦ 4Q22 Average Balance: $0.2BN 21 © Fifth
Slide 22: GNMA forbearance loan purchase update
GNMA forbearance loan purchase update1 Average loan balances $ in billions • Third-party serviced GNMA forbearance loan purchases: • 4Q20: $2.1BN • 1Q21: $0.6BN • 2Q21: $1.0BN actual • 3Q21: $0.3BN Net interest income • 4Q21: $0.7BN $ in millions • FY22 NII of ~$66MM compared to ~$117MM in FY21 • FY
Slide 23: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $27.6BN fixed 3 | $48.7BN variable 1,2 $36.8BN fixed | $8.3BN variable 1 • 66% allocation to bullet/ locked- $7.6BN fixed | $6.1BN variable4 • 1M based: 45% 7,12 • 1M based: 2% 8,12 out cash flow sec
Slide 24: Managing rate risk against conservative outcomes
Managing rate risk against conservative outcomes Estimated NII sensitivity profile and ALCO policy limits Dynamic beta models assume approximately 75-80% effective betas in our baseline NII sensitivity used in IRR simulations1 • Models are calibrated to performance in prior rate cycles • In 2022, we
Slide 25: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM1 EOP notional value of cash flow hedges ($ in billions) Floors Forward starting swaps Existing swaps ($3BN @ 2.25% 1- month LIBOR strike) 2 Actual weighted average receive fix rate 2.35% 2.37% 2.37% 2.37% 2.34% 2.34% 2.35% 2.34% 2.50% 3.17% 3
Slide 26: Mortgage banking results
Mortgage banking results Mortgage banking net revenue Mortgage originations and margins $ in millions $ in billions Rate lock margin 0.95% 1.10% 0.84% 0.95% 0.74% Gain-on-sale margin 1.10% 1.18% 0.85% 0.80% 0.86% Rate lock margin represents gains recorded associated with salable rate locks divided b
Slide 27: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ in millions; pre-tax actual 27 © Fifth Third Bancorp | All Rights Reserved For end note descriptions, see end note summary starting on page 39
Slide 28: Preferred dividend schedule
Preferred dividend schedule Upcoming preferred dividend schedule1 1Q23 2Q23 3Q23 4Q23 $ in millions Series H2 - ~$15 ~$12 ~$12 Series I ~$8 ~$8 ~$8 ~$8 Series J ~$6 ~$6 ~$6 ~$6 Floating (3ML + 3.129%)2 Series K ~$3 ~$3 ~$3 ~$3 Series L ~$4 ~$4 ~$4 ~$4 Class B Series A ~$3 ~$3 ~$3 ~$3 Total ~$23 ~$39
Slide 29: Commercial & industrial overview
Commercial & industrial overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q21 3Q22 4Q22 3.8% 6.0% 5.5% 2.1% 1.8% NCO ratio1 0.11% 0.24% 0.14% Period-end QoQ change 30-89 Delinquencies 0.14% 0.22% 0.14% 8.0% 4.4% 4.1% 0.6% 1.4% 90+ Delinquencies 0.03% 0.03% 0.02% Nonperforming
Slide 30: Commercial real estate overview
Commercial real estate overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q21 3Q22 4Q22 (2.9%) 2.0% 1.1% 1.5% 0.8% NCO ratio1 0.03% (0.03%) 0.00% Period-end QoQ change 30-89 Delinquencies 0.03% 0.10% 0.16% (1.3%) 3.6% (0.1%) 2.6% (0.4%) 90+ Delinquencies 0.01% 0.00% 0.00% Nonp
Slide 31: Residential Mortgage overview
Residential Mortgage overview Portfolio loans Key statistics $ in billions 4Q21 3Q22 4Q22 Average QoQ change NCO ratio1 (0.06%) (0.02%) 0.01% (0.2%) 1.9% 5.2% 1.5% (0.2%) 30-89 Delinquencies 0.12% 0.10% 0.17% Period-end QoQ change 90+ Delinquencies 0.44% 0.04% 0.04% 1.5% 4.6% 2.5% 0.2% 0.2% Nonperfo
Slide 32: Home equity overview
Home equity overview Portfolio loans Key statistics $ in billions 4Q21 3Q22 4Q22 Average QoQ change NCO ratio1 (0.18%) (0.08%) 0.02% (5.2%) (4.1%) (2.8%) 1.6% 1.7% 30-89 Delinquencies 0.61% 0.55% 0.74% Period-end QoQ change 90+ Delinquencies 0.02% 0.03% 0.02% (4.5%) (4.1%) (0.3%) 2.4% 1.0% Nonperfor
Slide 33: Indirect secured consumer overview
Indirect secured consumer overview Portfolio loans Key statistics $ in billions 4Q21 3Q22 4Q22 Average QoQ change NCO ratio1 0.14% 0.24% 0.32% 4.8% 4.8% 0.6% (2.8%) (1.3%) 30-89 Delinquencies 0.61% 0.65% 0.86% Period-end QoQ change 90+ Delinquencies 0.05% 0.06% 0.00% 4.9% 3.8% (2.3%) (2.2%) (0.6%) N
Slide 34: Credit card overview
Credit card overview Portfolio loans Key statistics $ in billions 4Q21 3Q22 4Q22 Average QoQ change NCO ratio1 2.90% 2.69% 2.85% (0.5%) (2.8%) 0.8% 3.1% 2.2% 30-89 Delinquencies 1.02% 1.02% 1.12% Period-end QoQ change 90+ Delinquencies 0.85% 0.79% 0.96% 1.3% (4.3%) 4.3% 0.4% 5.9% Nonperforming Loans
Slide 35: NPL Rollforward
NPL1 Rollforward Commercial $ in millions 4Q21 1Q22 2Q22 3Q22 4Q22 Balance, beginning of period $349 $337 $323 $319 $298 Transfers to nonaccrual status 62 54 49 91 68 Transfers to accrual status (26) (2) — — (5) Transfers to held for sale (2) (4) — (19) — Loan paydowns/payoffs (21) (52) (17) (48) (6
Slide 36: 4Q22 adjustments and notable items
4Q22 adjustments and notable items Adjusted EPS of $1.041 4Q22 reported EPS of $1.01 included a negative $0.03 impact from the following notable items: • $38 million pre-tax (~$29 million after-tax2) charge related to the valuation of the Visa total return swap • $6 million pre-tax (~5 million after
Slide 37: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidaries For the Three Months Ended For the Year Ended $ and shares in millions December September June March December (unaudited) 2022 2022 2022 2022 2021 2022 Net income (U.S. GAAP) (a) $737 $653 $562 $494 $662 $2,446 Net income (U.S. GAAP) (annua
Slide 38: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For Three Months Ended For the Year Ended $ and shares in millions December September June March December (unaudited) 2022 2022 2022 2022 2021 2022 Average interest-earning assets (a) $187,640 $185,378 $184,406 $187,894 $187,045 $186,326 N
Slide 39: 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 37 and 38 of this presentation and the use of non-GAAP measures on pages 27-29 of t
Slide 40: Earnings presentation end notes
Earnings presentation end notes Slide 19 end notes 1. Peer Group comprises of Fifth Third's board approved peers. 2. From leading third party ESG data provider. Slide 22 end notes 1. See forward-looking statements on page 2 of this presentation regarding forward-looking non-GAAP measures and use of
Slide 41: Earnings presentation end notes
Earnings presentation end notes Slide 29 end notes 1. Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis. 2. Nonperforming portfolio loans and leases as a percent of portfolio loans and leases. 3. Total commercial portfolio line utilization. Sl