Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q2 2019 Earnings Presentation
24 slides from Fifth Third Bancorp's earnings presentation, Jul 23, 2019
Slide 1: Fifth Third Bancorp 2Q19 Earnings Presentation
Fifth Third Bancorp 2Q19 Earnings Presentation July 23, 2019 Refer to earnings release dated July 23, 2019 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: Strategic priorities
Strategic priorities 1 2 Maintain credit, expense and capital discipline Invest to drive organic growth and profitability 3 Expand market share in key geographies Focused on generating continued positive operating leverage 4 Leverage technology capabilities to accelerate digital transformation
Slide 4: 2Q19 highlights
Successful integration of MB Financial NII, noninterest income, and noninterest expense all performed better than guidance NIM expanded 9 bps compared to 1Q19, or 4 bps excluding purchase accounting accretion 6th consecutive quarter generating year-over-year positive operating leverage on a core bas
Slide 5: Balance sheet
Commercial Balance sheet Securities1 and short-term investments Loan & lease balances Core deposit balances Securities1 Short-term investments Commercial Consumer Total IB core deposit rate 1Available-for-sale debt and other securities at amortized cost; previous disclosures included available-for-s
Slide 6: Net interest income
Net interest income1 2Q19 vs. 2Q18 Current outlook (excludes purchase accounting accretion) 2Q19 vs. 1Q19 Adjusted NII1 up $210 million, or 21%; Adjusted NIM1 up 11 bps NII and NIM performance drivers: Impact of earning assets acquired from MB Financial Higher short-term market rates Higher funding
Slide 7: Noninterest income
Adjusted noninterest income (excl. securities (gains)/losses)1 Noninterest income 2Q19 vs. 2Q18 Current outlook 2Q19 vs. 1Q19 Adjusted noninterest income1 up $107 million, or 19%, reflecting the impact of MB Financial Primary drivers of growth: Corporate banking revenue Wealth and asset management r
Slide 8: Noninterest expense
Adjusted noninterest expense (excl. intangible amortization) 1 Noninterest expense 2Q19 vs. 2Q18 2Q19 vs. 1Q19 Adjusted noninterest expense1 up $102 million, or 10%, reflecting the full quarter impact of MB Financial Primary drivers of growth: Continued technology investments Operating lease expense
Slide 9: Credit quality overview
Credit quality overview 1Excludes HFS loans; See forward-looking statements on page 2 Net charge-offs of 0.29%, down 12 bps compared to the year-ago quarter; down 3 bps compared to the prior quarter Commercial net charge-offs up 2 bps compared to the prior quarter Consumer net charge-offs down 9 bps
Slide 10: Strong capital and liquidity position
Strong capital and liquidity position 1Current period regulatory capital and liquidity ratios are estimated Common Equity Tier 1 ratio (Basel III)1 Modified LCR1 CET1 ratio of 9.6%, down 133 bps compared to the year-ago quarter and flat compared to the prior quarter Executed $200 million in share re
Slide 11: Current outlook
Current outlook Loans & leases Noninterest expense Effective tax rate Noninterest income NII (FTE)1 NIM (FTE)1 Credit items 1Non-GAAP measure: see forward-looking statements on page 2 of this presentation regarding forward-looking non-GAAP measures and use of non-GAAP measures on pages 26-28 of the
Slide 12: Strategic priorities
Strategic priorities Focused on top quartile through-the-cycle performance to create long-term shareholder value 1 3 2 4 Leverage technology capabilities to accelerate digital transformation Maintain credit, expense and capital discipline Expand market share in key geographies Invest to drive organi
Slide 13: Appendix
Appendix
Slide 14: Successful conversion of MB Financial
March 22 – Closed merger May 3-5 – Conversion of all primary systems completed May 31 – Conversion of trust and brokerage systems completed June – First wave of personnel reductions completed July 2019 – Close and consolidate remaining Chicago retail locations (totaling 47) No change to expense and
Slide 15: Expected impact of MB purchase accounting
Expected impact of MB purchase accounting 2H19 2020 2021 ($ in millions) 2022 2023 Reflects purchase accounting impact exclusively related to the MB Financial acquisition Projected purchase accounting accretion represents scheduled amortization, and does not include impact of any accelerated payoffs
Slide 16: Adjusted PPNR and efficiency ratio trend
Adjusted PPNR up $179 million, or 29%, reflecting the impact of MB Financial (including impact of MB operating lease revenue and expense) Growth driven by increased NII reflecting earning asset growth and continued deposit pricing discipline, corporate banking revenue, wealth and asset management re
Slide 17: Strong liquidity profile
Strong liquidity profile $ millions – excl. Retail Brokered & Institutional CDs Unsecured debt maturities Heavily core funded Holding company: Modified LCR of 119% Holding Company cash as of June 30, 2019: $3.4B Cash currently sufficient to satisfy all fixed obligations in a stressed environment for
Slide 18: Balance sheet positioning
Balance sheet positioning Investment portfolio $18.5B fixed | $52.5B variable1,2,3 Commercial loans1,2,3 Consumer loans1 Long-term debt4 $29.2B fixed | $10.4B variable1 $10.7B fixed | $5.1B variable4 61% allocation to bullet/ locked-out cash flow securities Yield: 3.28% Effective duration of 4.95 Ne
Slide 19: 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 1 Effective duration of the taxable available for sale portfolio; 2Re-pricing percentage or “beta”
Slide 20: Investment portfolio cash flows versus peers
1Data from S&P Global Market Intelligence and 3/31/19 10-Q filings, securities portfolio cash flows calculated as full year proceeds from maturities, redemptions, paydowns, and calls of AFS and HTM securities divided by March 31, 3018 securities balances; 2Pro forma FITB investment portfolio interes
Slide 21: NPL rollforward
NPL rollforward1 1Loan balances exclude nonaccrual loans HFS Commercial $ millions Consumer $ millions Total NPL $ millions 2Q18 3Q18 4Q18 1Q19 2Q19 130 $ 132 $ 125 $ 120 $ 137 $ Transfers to nonaccrual status 46 44 40 60 42 Acquired nonaccrual loans - - - - - Transfers to accrual status (21) (25) (
Slide 22: Balance and credit loss trends
Balance and credit loss trends1 Commercial & industrial Residential mortgage Commercial mortgage Commercial construction Home equity Indirect secured consumer loans Average Portfolio Balance NCOs as a % of average portfolio loans 1All balances are in billions 2Q18 2Q19 3Q18 4Q18 1Q19
Slide 23: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation See pages 26-28 of the earnings release for a discussion on the use of non-GAAP financial measures; 1Pre-tax items: for all periods assume a 23% tax rate, except for 1Q19 non-deductible merger-related items
Slide 24: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation See pages 26-28 of the earnings release for a discussion on the use of non-GAAP financial measures