Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Investor Presentation (May 2010)
46 slides from Fifth Third Bancorp's investor presentation, May 17, 2010
Slide 1: Investor Update
Exhibit 99.1 Investor Update May 2010 Please refer to earnings release dated April 22, 2010 and 10-Q dated May 7, 2010 for further information, including full results reported on a U.S. GAAP basis Fifth Third Bank | All Rights Reserved
Slide 2: Fifth Third franchise
Fifth Third franchise $113 billion assets (#13) $84 billion deposits (#13) $11 billion market cap (#13)* 16 affiliates in 12 states Michigan 1,309 banking centers Pennsylvania 2,364 ATMs Ohio Illinois Indiana Leading market share in mature Midwest West market Virginia Missouri Kentucky Built strong
Slide 3: Diversified franchise
Diversified franchise Branch Banking (38% of net revenue) 2009 net revenue - $2.8 billion* Retail and business banking $18.4B average loans; $44.6B average core deposits Investment 3.8M customers; 1.4M online banking customers Advisors Commercial Banking (35% of net revenue) $139M Corporate and midd
Slide 4: 1Q10 in review
1Q10 in review Strong operating trends Significant improvements in credit Robust capital levels • Net loss of $10 million • Nonperforming assets declined • Tangible common equity versus 4Q09 net loss of 3% and nonperforming loans ratio of 6.4% $98 million declined 7% sequentially (lowest levels sinc
Slide 5: Peer performance summary
Peer performance summary FITB Regional Midwest SEQ performance bank peers (1) peers (2) 1Q10 vs. peers 1Q10 1Q10 Net interest margin / (bps) 3.63% (+8) 3.60% (+13) 3.37% (+18) Better Operating fee growth* -1% -9% -5% Better Core pre-tax pre-provision earnings* / loans 2.9% 2.7% 2.6% Better Operating
Slide 6: Pre-tax pre-provision earnings
Pre-tax pre-provision earnings Core PPNR trend Core PPNR reconciliation 1Q09 2Q09 3Q09 4Q09 1Q10 Reported PPNR (GAAP) $511 $2,393 $844 $562 $568 Adjustments: $700 Gain on sale of Visa shares - - (244) - - 111 BOLI charge 54 - - - - 73 91 $600 57 Gain from sale of processing interest - (1,764) 6 - -
Slide 7: Stable income and expense in difficult environment
Stable income and expense in difficult environment Core fee income ($M) • Strong mortgage banking results continued in 1Q10, resulting in $3.5B of originations and $152M in net $700 revenue $600 • Investment advisory revenue up 5% from previous qtr $500 • Card and processing revenue sequential decre
Slide 8: Net interest income
Net interest income Core NII and NIM* • Trends in net interest income and net 4.0% $847 $859 $882 $900 $801 interest margin favorably compare with 3.5% $746 $800 peers 3.45% 3.55% $700 3.33% 3.0% 3.13% $600 – NIM up 8 bps in 1Q10 vs. 4Q09 2.92% 2.5% $500 • Expect continued margin benefit 2.0% $400 t
Slide 9: Balance sheet: Continued growth in core funding
Balance sheet: Continued growth in core funding Average loan growth ($B)^ • Extended $18B of new and renewed credit in 1Q10 84 82 • CRE loans down 4% sequentially and 12% from the previous year 80 78 78 34 33 33 – New homebuilder/developer, non-owner occupied CRE suspended 2008 32 33 • C&I loans dow
Slide 10: Improving credit results
Improving credit results Loans 30-89 days delinquent % vs. peers Loans 90+ days delinquent % vs. peers NPA ratio vs. peers Net charge-off ratio vs. peers* Source: SNL and company reports. NPA and NCO ratios exclude loans held-for-sale and covered assets for peers where appropriate. * 4Q08 net charge
Slide 11: Manageable commercial real estate exposure
Manageable commercial real estate exposure CRE / Assets CRE / (TCE + Reserves) 33% 30% Peer average: 18% 473% Peer average: 215% 24% 24% 24% 312% 295% 264% 15% 14% 13% 12% 209% 12% 11% 11% 173% 168% 154% 147% 143% 8% 136% 123% 117% MI MTB ZION RF CMA KEY HBAN FITB STI USB BBT WFC PNC MTB MI RF ZION
Slide 12: Updated credit loss expectations vs. SCAP scenarios
Updated credit loss expectations vs. SCAP scenarios $5,500 Fifth Third $5,250 capitalized for this level of credit Fifth Third’s realized credit losses $5,000 losses under SCAP have been significantly below its (plus surplus raised $5.0B SCAP submitted baseline and $4,750 vs. buffer) more adverse sc
Slide 13: Strong reserve position
Strong reserve position Industry leading reserve level Reserves / Loans 1. FITB 4.91% 4.88% 4.91% 2. KEY 4.34% 5% 4.69% $1,400 3. ZION 4.05% 4.28% $1,200 4. HBAN 4.00% 4% 3.31% 5. RF 3.61% $1,000 6. MI 3.57% 3% 415 196 68 $800 7. PNC 3.38% 283 8 $600 8. WFC 3.22% 2% 9. USB 2.80% 756 $400 10. STI 2.7
Slide 14: Robust capital position
Robust capital position Tier 1 capital ratio (with and without TARP) (TCE + reserves) / Loans Peer average w/ 13.4% 13.1% 12.9% TARP: 11.1% 11.7% 12.0% 11.7% Peer average: 12.8% 11.2% 11.1% 10.4% 10.3% 10.0% 9.9% 9.9% 9.9% 9.6% 8.7% 8.9% 8.3% 8.2% 7.9% 7.4% 16.8% 15.9% 14.3% 14.1% 13.7% Peer average
Slide 15: Strong liquidity profile
Strong liquidity profile Net loans and leases / core deposits Peer average: 104% 111% 112% 116% 102% 105% 106% 107% 107% 98% 98% 99% 92% 94% PNC HBAN RF FITB ZION STI MI KEY BBT WFC MTB CMA USB • Over the past year, Fifth Third has reduced its net noncore funding reliance by 20%, more than any peer
Slide 16: Strong liquidity profile
Strong liquidity profile Holding Company cash at 3/31/10: $1.35B Holding company unsecured debt maturities ($M) — Total Fed deposits ~$4.0B Expected cash obligations over the next 12 months (assuming no $5.0B TARP repayment) — $0 debt maturities — ~$39M common dividends — ~$205M preferred dividends
Slide 17: 2010 developments
2010 developments Macro themes Fifth Third response • Sluggish loan demand • Leverage existing customer relationships at the local level to offer our full portfolio of products and services across all of our lines of business • Deposits to grow but expect some diminution as later liquidity drawn • I
Slide 18: Continuing to invest for the future
Continuing to invest for the future 18 Fifth Third Bank | All Rights Reserved
Slide 19: Summary
Summary Aggressive management of Core franchise remains strong Robust capital levels credit issues • Dedicated to serving the needs • Strong reserve coverage of • Successfully completed June of families and businesses for problem loans 2008 capital plan and SCAP more than 150 years capital actions •
Slide 20: Cautionary statement
Cautionary statement This report may contain 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
Slide 21: Supplement
Investor Update Supplement May 2010 Please refer to earnings release dated April 22, 2010 and 10-Q dated May 7, 2010 for further information, including full results reported on a U.S. GAAP basis Fifth Third Bank | All Rights Reserved
Slide 22: Fifth Third: Second quarter 2010 outlook
Fifth Third: Second quarter 2010 outlook Category 1Q10 Actual Results 2Q10 Outlook Balance Sheet: Average loans & leases $80.1 billion Relatively stable Average core deposits $76.3 billion Consistent with 1Q10 Income Statement: Net interest income* $901 million Consistent with 1Q10 or Net interest m
Slide 23: Fifth Third credit ratings
Fifth Third credit ratings Fifth Third Bancorp Moody's Standard & Poor's Fitch DBRS Short Term Debt P-2 Short Term Issuer A-2 Short Term Issuer F1 Short Term R-1L Senior Unsecured Baa1 Long Term Issuer BBB Long Term Issuer A- Long Term Issuer AL Individual Rating C Outlook Negative Outlook Negative
Slide 24: Fifth Third outstanding debt
Fifth Third outstanding debt Outstanding Debt Holding Company Type Issue Date Maturity Date Amount Rate Type Rate Senior Notes 04/30/08 05/01/13 $ 750,000,000 Fixed 6.25% Subordinated Debt 12/13/06 12/20/16 $ 250,000,000 Floating 3ML + .42% Subordinated Debt 12/20/06 01/15/17 $ 500,000,000 Fixed 5.4
Slide 25: Updated stress testing - process overview
Updated stress testing - process overview Similar process to that used in 2008 and SCAP processes; updated for actual performance and current economic expectations Moody’s “Base” and “Weaker Recovery/Mild Second Recession” scenarios key economic assumptions Base Adverse Economic Assumptions* 2010 20
Slide 26: Fifth Third Bank: Strongly capitalized
Fifth Third Bank: Strongly capitalized Tier 1 Total Capital Capital Ratio Ratio Lead Banks 1Q10 Lead Banks 1Q10 Fifth Third Bank 13.9% Fifth Third Bank 15.9% CitiBank, NA 13.6% CitiBank, NA 15.5% BB&T (Bank) 12.3% PNC Bank, National Association 15.1% PNC Bank, National Association 11.5% BB&T (Bank)
Slide 27: Industry leading reserve levels
Industry leading reserve levels Reserves / Loans Reserves / NPLs Peer average: 3.2% Peer average: 90% 4.9% 150% 4.3% 139% 4.1% 4.0% 3.6% 3.6% 3.4% 117% 3.2% 2.8% 2.8% 2.7% 94% 92% 92% 86% 85% 2.4% 84% 80% 76% 67% 61% 1.8% FITB KEY ZION HBAN RF MI PNC WFC USB STI BBT CMA MTB USB FITB KEY BBT PNC WFC
Slide 28: 1Q10 net charge off and NPA ratios
1Q10 net charge off and NPA ratios 1Q10 NCO 1Q10 NPA Bank Ratio Bank Ratio M&T Bank Corporation 0.7% U.S. Bancorp 2.3% Comerica Incorporated 1.7% JPMorgan Chase & Co. 2.7% PNC Financial Services Group, Inc. 1.8% M&T Bank Corporation 2.8% BB&T Corporation 1.9% Comerica Incorporated 3.1% Zions Bancorp
Slide 29: Portfolio performance drivers
Portfolio performance drivers No Participation In Performance Largely Driven By • Subprime Geography • Option ARMs • Florida and Michigan most stressed • Remaining Midwest and Southeast performance reflect economic trends Discontinued or Suspended Lending 1Q10 NCO Ratios Coml Cons Total Discontinued
Slide 30: Credit by portfolio
Credit by portfolio* Commercial Commercial Commercial Total Residential Other Total Total loans & ($ in millions) C&I mortgage construction lease commercial mortgage Home equity Auto Credit card consumer consumer leases Loan balances $26,131 $11,744 $3,277 $3,388 $44,541 $7,918 $12,186 $10,180 $1,86
Slide 31: Non-performing assets and net charge-offs: Product view
Non-performing assets and net charge-offs: Product view* Total NPAs Total NCOs * NPAs exclude loans held-for-sale. Net charge-offs exclude losses on loans sold or transferred to held-for-sale in 4Q08. During 1Q09 the Bancorp modified its nonaccrual policy to exclude TDR loans less than 90 days past
Slide 32: Non-performing assets and net charge-offs: Geographic view
Non-performing assets and net charge-offs: Geographic view* Total NPAs Total NCOs * NPAs exclude loans held-for-sale. Net charge-offs exclude losses on loans sold or transferred to held-for-sale in 4Q08. During 1Q09 the Bancorp modified its nonaccrual policy to exclude TDR loans less than 90 days pa
Slide 33: Nonperforming assets
Nonperforming assets* Other $96M 4% • Total NPAs of $3.1B C&I^ • Homebuilder/developer NPAs of $520M; $843M represent 17% of total NPAs 27% CRE • Commercial NPAs of $2.4B; down 5% from $1.6B the previous quarter 50% • Consumer NPAs of $715M; up 1% from the Residential previous quarter $590M 19% C&I^
Slide 34: Improving nonperforming loan flows
Improving nonperforming loan flows Total NPLs New non-accrual loan flows $3,500 $1,000 $2,947 $2,947 $799 $832 $3,000 $2,733 $2,587 517 $800 $2,396 555 $2,500 477 561 $602 459 $544 $2,000 $600 $405 $1,500 2,430 $400 2,110 2,392 2,172 $1,000 1,937 $157 $125 $160 $152 $137 $200 $500 $0 $0 1Q09 2Q09 3Q
Slide 35: Troubled debt restructurings (TDR) overview
Troubled debt restructurings (TDR) overview Successive improvement in vintage performance during 2008 and 2009, even as volume of modification increased TDR performance has improved in newer vintages Fifth Third’s mortgage portfolio TDRs have redefaulted at a lower Mortgage TDR 60+ redefault trend b
Slide 36: Commercial & industrial
Commercial & industrial* Credit trends Loans by geography C&I ($ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 Balance $28,617 $28,409 $26,175 $25,683 $26,131 90+ days delinquent $131 $142 $256 $118 $63 as % of loans 0.46% 0.50% 0.98% 0.46% 0.24% NPAs $675 $634 $790 $781 $788 as % of loans 2.36% 2.23% 3.02%
Slide 37: Commercial mortgage
Commercial mortgage* Credit trends Loans by geography Commercial mortgage ($ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 Balance $12,560 $12,407 $12,105 $11,803 $11,744 90+ days delinquent $124 $131 $184 $59 $44 as % of loans 0.99% 1.06% 1.52% 0.50% 0.38% NPAs $718 $791 $968 $985 $1,002 as % of loans 5.72
Slide 38: Commercial construction
Commercial construction* Credit trends Loans by geography Commercial construction MI FL 11% ($ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 18% Balance $4,745 $4,491 $4,147 $3,784 $3,277 90+ days delinquent $49 $60 $168 $16 $9 as % of loans 1.02% 1.34% 4.04% 0.44% 0.28% Other NPAs $597 $735 $751 $707 $569
Slide 39: Homebuilders/developers
Homebuilders/developers* Credit trends Loans by geography Homebuilders/developers MI FL 17% ($ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 22% Balance $2,322 $2,102 $1,846 $1,563 $1,324 90+ days delinquent $37 $53 $79 $19 $6 as % of loans 1.59% 2.51% 4.29% 1.19% 0.43% Other NPAs $554 $613 $600 $548 $520 3
Slide 40: Residential mortgage
Residential mortgage Credit trends Loans by geography Residential mortgage ($ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 Balance $8,875 $8,489 $8,229 $8,035 $7,918 90+ days delinquent $231 $242 $198 $189 $157 as % of loans 2.60% 2.85% 2.41% 2.35% 1.98% NPAs $475 $475 $484 $523 $521 as % of loans 5.35% 5.
Slide 41: Home equity
Home equity Credit trends Brokered loans by geography Direct loans by geography Home equity - brokered FL FL 3% Other 9% ($ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 MI MI Other 21% 1% 21% Balance $2,225 $2,125 $2,028 $1,948 $1,906 NC 20% 90+ days delinquent $42 $34 $38 $33 $29 TN 5% as % of loans 1.91%
Slide 42: Florida market
Florida market* Deterioration in real estate values having effect on credit trends as evidenced by increasing NPA/NCOs in real estate related products % of % of NCOs % of Homebuilders, developers tied to ($ in millions) Loans (bn) FITB NPAs (mm) FITB (mm) FITB Commercial loans 1.7 7% 128 16% 27 16%
Slide 43: Michigan market
Michigan market* Deterioration in home price values coupled with weak economy impacting credit trends due to frequency of defaults and severity % of % of NCOs % of ($ in millions) Loans (bn) FITB NPAs (mm) FITB (mm) FITB Economic weakness impacts Commercial loans 3.9 15% 143 18% 44 27% commercial re
Slide 44: Deposit share momentum
Deposit share momentum Affiliate 5/3 Deposit (08-09) 5/3 Market Share Name Deposit ($) (%) Share 2009 2008 • Continued focus on customer satisfaction Chicago 788,601 9.8% 4.0% 3.8% and building full Northeastern Ohio 606,708 17.0% 4.2% 3.8% relationships has South Florida 579,342 21.1% 3.1% 2.8% giv
Slide 45: Liability mix and pricing discipline drive strong net interest income/NIM results
Liability mix and pricing discipline drive strong net interest income/NIM results Avg. Transaction Deposits / Avg. Liabilities 1Q10 Cost of Funds Peer Comparison Peer average 1.08% Peer average 57% C&I Spread to 1-month LIBOR • Strong, deposit rich core funding mix supports relatively low cost of fu
Slide 46: Cautionary statement
Cautionary statement This report may contain statements that we believe are “forward-lookingstatements” 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
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