Slide 1: Fifth Third Bancorp 4Q20 Earnings Presentation
Fifth Third Bancorp 4Q20 Earnings Presentation January 21, 2021 Refer to earnings release dated January 21, 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: 4Q20 highlights
4Q20 highlights Reported1 Adjusted1 • Strong reported and adjusted return metrics, reflecting solid operating results EPS $0.78 $0.88 • Strong PPNR performance driven by fee growth, ROA 1.18% 1.31% including record commercial banking revenue ROE 10.8% 12.1% • Solid credit quality, with stable NCOs a
Slide 4: Interest earning assets
Interest earning assets Average loan & lease balances Average securities1 and short-term investments $ in billions; loan & lease balances exclude HFS $ in billions $113.4 $70.0 $109.8 $109.4 $65.2 $39.3 $39.8 $35.0 $39.5 $29.8 4.49% ~$5.2BN $37.4 in PPP ~$5.1BN in PPP $2.0 3.64% loans 3.68% loans 3.
Slide 5: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions $152.3 $156.3 $121.8 $73.0 $74.3 $21.5 $21.8 $66.7 $18.7 $79.3 2.85% $55.0 $82.1 2.38% 2.26% 0.82% 0.13% 0.08% 4Q19 3Q20 4Q20 4Q19 3Q20 4Q20 Total IB core Commercial Consu
Slide 6: Net interest income
Net interest income1 3Q20 to 4Q20 Reported NII & NIM Walk NII $ in millions; NIM change in bps NII NIM $1,232 3Q20 $1,173 2.58% $1,173 $1,185 Elevated Cash - (8) Balances Impact of PPP Income 8 2 Total net interest income; $ millions Investment Portfolio Prepayment Penalty 11 2 Proceeds 3.27% Wholes
Slide 7: Noninterest income
Noninterest income $1,035 4Q20 vs. 3Q20 • Adjusted noninterest income1 up $111 million, or 16% • Primary drivers: $814 $787 ‒ Other noninterest income (up 260%) $724 $722 ‒ Commercial banking revenue (up 13%) Total noninterest income; $ millions $703 ‒ Service charges on deposits (up 1%) ‒ Partially
Slide 8: Noninterest expense
Noninterest expense 4Q20 vs. 3Q20 $1,236 • Adjusted noninterest expense1 up $41 million, or 4% (up 3% $1,160 $1,161 $1,169 excluding impact of NQDC) $1,131 $1,128 • Primary drivers: ‒ Compensation and benefits (up 7%) Total noninterest expense; $ millions ‒ Marketing expense (up 30%) ‒ Partially off
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 • ~65% of portfolio in QSR, mostly to top-tier brands and national chains ($1.6BN) • 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 14% Apartment 1% Owner Occupied Office CRE 2% 28% Home Builder 5% 3% Non-owner Occupied CRE Retail Non-CO
Slide 11: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs1 ACL as % of portfolio loans and leases 2.76% 2.75% 2.65% Ex. PPP 2.64% 2.62% Including MB 2.53% unamortized 2.50% loan discount 2.30% 2.49% 2.41% 0.84% 0.79% 2.13% 0.62% 0.53% 0.41% 1.23% 0.33% 0.30% 0.31% 0.33% 0.29% 4Q17 4Q18 4Q19 4Q20 NP
Slide 12: Current expected credit losses (CECL) allowance
Current expected credit losses (CECL) allowance Allocation of allowance by product 3Q20 4Q20 $s in millions % of portfolio % of portfolio Allowance for loan & lease losses Amount loans & leases Amount loans & leases Commercial and industrial loans 1,024 1.98% 900 1.81% Commercial mortgage loans 373
Slide 13: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 ~35 bps ~5 bps 10.34% 10.14% ~(6 bps) • Risk-based capital ratios have meaningfully ~(14 bps) improved (CET1 up ~60 bps since end of 2019) • Common dividends account for ~55 bps of CET1 per year • Expect to
Slide 14: Current expectations
Current expectations FY 2021 compared to FY 2020 PPP loan balance assumptions ($ BN; Average Balance) Actual Current expectations Loans & leases Average: stable 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 (including HFS) Period end: stable Wave 1 & 2 $5.2 $5.1 $4.6 $4.0 $1.2 $0.4 Wave 3 - - $0.8 $2.0 $2.0 $1.9 To
Slide 15: Current expectations
Current expectations First quarter 2021 compared to fourth quarter 2020 Average: up 2 – 3% Loans & leases (including HFS) Period end: up 1 – 2% Net interest income1 down ~3% (4Q20 baseline: $1.185BN) Net interest margin1 Reported down 4 – 5 bps Noninterest income1 down 9 – 10% (or stable excl. TRA i
Slide 16: Well-positioned Balance Sheet, Diversified Revenue Mix
Well-positioned 1 Balance Sheet Remain well-positioned Diversified to navigate the 2 Revenue Mix uncertain economic environment Proactive focus 3 on maintaining strong returns 16 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 17: Appendix
Appendix 17 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 18: COVID-19 hardship relief summary
COVID-19 hardship relief summary Payment deferrals % of Total loans ex. HFS As of: In payment deferral programs1 6/30/20 9/30/20 12/31/20 All percentages shown represent balances rather Commercial loans & leases: 5% 1% 0% than accounts Commercial and industrial loans 3% 0% 0% Commercial mortgage 15%
Slide 19: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM for next 4 years Notional value of cash flow hedges ($ Billions) $11 $11 $11 $11 $11 $11 $11 $11 $11 $10 $10 $10 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $6 $6 $5 $3 $3 $4 $8 $8 $8 $8 $8 $8 $8 $8 $8 $7 $7 $7 $3 $3 $3 $3 $2 $1 $1 4Q20 1Q21 2Q21 3Q2
Slide 20: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $21.3BN fixed 3 | $42.9BN variable 1,2 $31.5BN fixed | $8.3BN variable 1 $12.1BN fixed | $2.9BN variable 4 • 59% allocation to bullet/ • 1ML based: 54%6 • 1ML based: 2%7 • 1ML based: 8%8 locked-out c
Slide 21: Interest rate risk management
Interest rate risk management NII is asset sensitive in year 1 and year 2 to rising Estimated NII sensitivity profile and ALCO policy limits rates. % Change in NII (FTE) ALCO policy limit • As of December 31, 2020, 49% of HFI loans were 13 to 24 13 to 24 variable rate net of existing hedges (61% of
Slide 22: Strong liquidity profile
Strong liquidity profile Unsecured debt maturities Holding company: $ millions – excl. Retail Brokered & Institutional CDs $3,987 • Holding Company cash as of December 31, 2020: $4.9B $3,150 • Cash currently sufficient to satisfy all fixed obligations in a $2,250 stressed environment for ~32 months
Slide 23: Mortgage banking results
Mortgage banking results Mortgage banking net revenue $ millions $120 $99 $76 $19 • Mortgage banking revenue decreased $51 $73 $63 $66 $25 million from prior quarter and decreased $4 $67 $48 million from year-ago quarter $72 $66 $95 $93 • $3.9 billion in originations, up 4% $81 $49 $47 compared to t
Slide 24: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ Millions; pre-tax Includes $74 deferred 2019 benefit $44 $45 $22 $11 4Q20 4Q21 4Q22 4Q23 4Q24 Actual For end note descriptions, see end note summary starting on page 31 24 © Fifth Classification: Third Bancorp |
Slide 25: Balance and credit loss trends
Balance and credit loss trends1 Commercial & industrial Residential mortgage $59.0 $54.0 $50.9 $51.6 $50.4 $16.7 $16.7 $16.6 $16.6 $16.0 0.39% 0.45% 0.28% 0.31% 0.33% 0.07% 0.02% 0.02% 0.04% (0.02%) 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 Commercial mortgage Home equity $10.8 $11.0 $11.2 $
Slide 26: NPL rollforward
NPL rollforward1 Commercial $ millions Consumer $ millions Total NPL $ millions For end note descriptions, see end note summary starting on page 31 26 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 27: ESG highlights
ESG highlights Environmental Social Governance $18 Minimum wage Achieved carbon neutrality for our 33% operations in 60% Board gender diversity 2020 Women in workforce Outstanding Scopes 1, 2 and 3 (business travel) CRA Rating $8BN Sustainable Financing goal announced 27% Persons of color in workfor
Slide 28: 4Q20 adjustments and notable items
4Q20 adjustments and notable items Adjusted EPS of $0.881 4Q20 reported EPS of $0.78 included a negative $0.10 impact from the following notable items: • $30 million pre-tax (~$23 million after-tax2) charge related to the valuation of the Visa total return swap • $27 million pre-tax (~$21 million af
Slide 29: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended For the Year Ended $ and shares in millions December September June March December (unaudited) 2020 2020 2020 2020 2019 2020 Net income (U.S. GAAP) (a) $604 $581 $195 $46 $734 $1,427 Net income (U.S. GAAP) (annua
Slide 30: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended For the Year Ended $ and shares in millions December September June March December (unaudited) 2020 2020 2020 2020 2019 2020 Average interest-earning assets (a) $182,418 $180,704 $176,224 $151,213 $149,312 $172,6
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 26-28 of t
Slide 32: Earnings presentation end notes
Earnings presentation end notes Slide 20 end notes Note: Data as of 12/31/20. 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 ~$5BN in Small Business A