Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q4 2018 Earnings Presentation
23 slides from Fifth Third Bancorp's earnings presentation, Jan 22, 2019
Slide 1: Fifth Third Bancorp 4Q18 Earnings Presentation
Fifth Third Bancorp 4Q18 Earnings Presentation January 22, 2019 Refer to earnings release dated January 22, 2019 for further information. Exhibit 99.2
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third Bancorp’s and MB Financial, Inc.’s expectations or predictions of future financial or business perfo
Slide 3: Strategic priorities for the company
Strategic priorities for the company 1 3 Achieve financial targets under Project NorthStar Invest to drive organic growth and profitability 2 Successfully integrate MB Financial and realize synergies Focused on generating positive operating leverage in all environments 4 Accelerate our digital trans
Slide 4: 4Q18 highlights
Generated strong loan & core deposit growth NIM expansion exceeded prior guidance Generated record commercial originations & corporate banking revenue Disciplined expense management Remain on-track to achieve NorthStar targets1,2 Adjusted ROTCE up ~440 bps Adjusted ROA up ~30 bps Adjusted efficiency
Slide 5: 4Q18 in review
4Q18 in review 4Q18 reported EPS of $0.64 included a negative $0.05 impact from the following items: $27MM pre-tax (~$21MM after-tax2) merger-related expenses $21MM pre-tax (~$17MM after-tax2) securities loss related to our ownership stake in GreenSky $7MM pre-tax (~$6MM after-tax2) benefit related
Slide 6: 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 7: Net interest income
Net interest income1 4Q18 vs. 4Q17 Current outlook (Fifth Third standalone; assumes no 2019 rate hikes) 4Q18 vs. 3Q18 NII up $95 million, or 10%, vs. adjusted 4Q17 NIM up 19 bps vs. adjusted 4Q17 Primary performance drivers: Higher short-term market rates Growth in interest-earning assets NII up $38
Slide 8: Noninterest income
Noninterest income 4Q18 vs. 4Q17 Current outlook (Fifth Third standalone) 4Q18 vs. 3Q18 Adjusted noninterest income1 up $13 million, or 2% Performance drivers: Record corporate banking revenue (driven by syndication revenue & record M&A advisory fees) Increased card and processing revenue Partially
Slide 9: Noninterest expense
Noninterest expense 4Q18 vs. 4Q17 4Q18 vs. 3Q18 Adjusted noninterest expense1 up $5 million, or 1% Performance drivers: Increased compensation-related expense Continued technology investments Partially offset by the elimination of the FDIC surcharge Adjusted noninterest expense1 down $20 million, or
Slide 10: Credit quality overview
Credit quality overview 1Excludes HFS loans; 2Commercial criticized assets as a percentage of total commercial loans excluding HFS See forward-looking statements on page 2 Net charge-offs of 0.35%, up 2 bps compared to the year-ago quarter; up 5 bps compared to the prior quarter Commercial net charg
Slide 11: Strong capital and liquidity position
Strong capital and liquidity position 1Current period regulatory capital ratio is estimated Common Equity Tier 1 ratio (Basel III)1 Modified LCR CET1 ratio of 10.2%, down 37 bps compared to the year-ago quarter and down 43 bps compared to the prior quarter Current period CET1 ratio negatively impact
Slide 12: 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 13: Strategic priorities for the company
Strategic priorities for the company Focused on top quartile through-the-cycle performance to create long term shareholder value 1 3 2 4 Achieve financial targets under Project NorthStar Successfully integrate MB Financial and realize synergies Invest to drive organic growth and profitability Accele
Slide 14: Appendix
Appendix
Slide 15: Efficiency ratio trend and pre-provision net revenue
Efficiency ratio trend1 Pre-provision net revenue1 4Q18 vs. 4Q17 4Q18 vs. 3Q18 Adjusted PPNR up 14%, driven by: Increased NII driven primarily from earning asset growth and higher short-term rates Partially offset by 1% increase in expenses Adjusted PPNR up 9%, driven by: Increased NII driven primar
Slide 16: Strong liquidity profile
Strong liquidity profile $ millions – excl. Retail Brokered & Institutional CDs Unsecured debt maturities Heavily core funded Holding company: Modified LCR of 128% Holding Company cash as of December 31, 2018: $3.1B Cash currently sufficient to satisfy all fixed obligations in a stressed environment
Slide 17: Balance sheet positioning
Balance sheet positioning Investment portfolio $13.6B fixed | $45.3B variable 1,2,3 Commercial loans1,2,3 Consumer loans1 Long-term debt4 $26.2B fixed | $10.0B variable 1 $9.8B fixed | $4.6B variable 4 57% allocation to bullet/ locked-out cash flow securities Yield: 3.27% Effective duration of 5.05
Slide 18: 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 19: NPL rollforward
4Q17 1Q18 2Q18 3Q18 4Q18 373 $ 306 $ 322 $ 305 $ 278 $ Transfers to nonaccrual status 53 100 72 58 24 Transfers to accrual status (27) - - ($3) - Transfers to held for sale - ($24) ($1) - ($3) Transfers to held for sale and sold (1) - - - - Loan paydowns/payoffs (59) (45) (43) (47) (40) Transfers to
Slide 20: Balance and credit loss trends
Balance and credit loss trends1 Commercial & industrial Residential mortgage Commercial mortgage Commercial construction Home equity Automobile Average Portfolio Balance NCOs as a % of average portfolio loans 1All balances are in billions
Slide 21: 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 4Q18, 3Q18, 2Q18, and 1Q18 assume a 21% tax rate, for 4Q17 assume a 35% tax rate Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reco
Slide 22: 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 Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation $ and shares in millions December September June March December (unaudited) 2018 2018 2018
Slide 23: Reconciliation of impact of accounting change
Reconciliation of impact of accounting change