Slide 1: Fifth Third Bancorp 4Q21 Earnings Presentation
Fifth Third Bancorp 4Q21 Earnings Presentation January 20, 2022 Refer to earnings release dated January 20, 2022 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: 4Q21 highlights
4Q21 highlights Reported1 Adjusted1 • Strong financial results, reflecting solid operating EPS $0.90 $0.93 results ROA 1.25% 1.29% • Average C&I loan growth ex. PPP of 7% compared to 3Q21 (end of period growth ex. PPP of 11%) ROE 12.2% 12.7% • Generated record commercial loan production of $8.2 bill
Slide 4: Net interest income
Net interest income1 3Q21 to 4Q21 Reported NII & NIM Walk NII $ in millions; NIM change in bps $1,185 $1,192 $1,200 NII NIM 3Q21 $1,192 2.59% Seasonal investment portfolio 10 2 mutual fund dividends Higher investment portfolio 6 1 Total net interest income; $ millions prepayment penalties Wholesale
Slide 5: Noninterest income
Noninterest income 4Q21 vs. 3Q21 • Adjusted noninterest income1 up $35 million, or 4% $836 $829 $814 $787 $794 $791 • Primary drivers: ‒ Other noninterest income (up 81%) ‒ Commercial banking revenue (up 13%) Total noninterest income; $ millions ‒ Service charges on deposits (up 3%) ‒ Partially offs
Slide 6: Noninterest expense
Noninterest expense 4Q21 vs. 3Q21 $1,236 $1,206 $1,196 • Adjusted noninterest expense1 up $39 million, or 3% $1,174 $1,172 $1,157 • Primary drivers: ‒ Compensation and benefits (up 3%), including $10MM from NQDC plans Total noninterest expense; $ millions ‒ Other noninterest expense (up 3%) ‒ Market
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 $71.0 $72.3 $69.3 0.09 $109.4 $109.5 120 $108.0 % change $70 % change 0.08 100 QoQ YoY $60 QoQ YoY 0.07 $39.5 $41.0 $41.3 $35.0 $32.1
Slide 8: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions $162.3 $167.3 8.35% % change % change $160.0 $157.3 7.35% QoQ YoY QoQ YoY $140.0 6.35% $81.8 $82.7 +1% +10% $120.0 $75.2 5.35% $17.7 $100.0 4.35% $80.0 $13.8 $13.3 (4%) (2
Slide 9: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs ACL as % of portfolio loans and leases 2.53% 2.41% 0.79% 2.30% 0.62% 2.19% 2.14% 2.05% 0.52% 2.06% 0.41% 0.29% 0.26% 0.47% 2.00% 1.87% Ex. PPP 1.85% 0.35% 0.37% 0.35% 0.33% 0.31% 0.29% 0.33% 0.33% 0.28% 0.25% 0.23% 4Q18 4Q19 4Q20 3Q21 4Q21 1
Slide 10: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 4Q21 Change in Rate $s in millions Compared to: % of portfolio Allowance for loan & lease losses Amount loans & leases 3Q21 CECL Day 1 Commercial and industrial loans 711 1.38% (0.16%) 0.16% Commercial mortgage loans 304 2.95% (0.30%) 1.
Slide 11: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 • Repurchased shares totaling $316 ~35 bps ~5 bps ~(13 bps) ~(40 bps) million in 4Q21 as part of capital plan 9.86% ~(20 bps) 9.53% • Acquisition of Dividend Finance expected to utilize ~30 bps of capital2
Slide 12: Current expectations: FY 2022 compared to FY 2021
Current expectations FY 2022 compared to FY 2021 Includes expected impacts from Dividend Finance Avg. loans & leases commercial: up 7 – 8% (up 12 – 13% excl. PPP) (including HFS) consumer: up 3 – 4% (up 6 – 7% excl. GNMA purchases) total: up 5 – 6% (up 10 – 11% excl. PPP and GNMA purchases) Net inte
Slide 13: Current expectations: first quarter 2022
Current expectations First quarter 2022 compared to Fourth quarter 2021 Avg. loans & leases commercial: up 3 – 4% (up 4 – 5% excl. PPP) (including HFS) consumer: down 1 – 2% (up ~1% excl. GNMA purchases) total: up 1 – 2% (up 3 – 4% excl. PPP and GNMA purchases) Net interest income1 down ~1% (with 1/
Slide 14: Fifth Third value proposition
Fifth Third value proposition 1 Generating strong relationship growth in all our markets with a focus on our Southeast expansion and on continually improving the digital experience 2 Diversified and growing fee revenues to support profitability and generate strong returns 3 Investing for long-term o
Slide 15: Appendix
Appendix 15 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 16: Dividend Finance overview
Dividend Finance overview LOGO HERE Company overview Origination and market share overview • Founded in 2013 and headquartered in San Francisco, Dividend Finance is • Originations in 44 states and D.C. a national tech-enabled point-of-sale finance provider assisting homeowners with the renewable ene
Slide 17: Dividend Finance acquisition is compelling on several dimensions
Dividend Finance acquisition is compelling on several dimensions ✓ Best-in-class lending experience to meet customers’ evolving preferences ✓ Furthers Fifth Third’s existing indirect consumer POS capabilities with a leading, proprietary tech- forward platform (full-service portal - easy application;
Slide 18: 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 Purpose well-being of our communities Our Be the One Bank people most value and trust Vision Our Work as One Bank Take Accountability Core Values Be Respectful Act with Integrity Our purpose, vision,
Slide 19: ESG priorities and actions
ESG priorities and actions Promoting Keeping the Demonstrating Addressing Strengthening our inclusion and customer at the our commitment climate change communities diversity center to employees ~$7.3BN in lending and $2.8BN accelerating 99% of banking centers $18 minimum wage per $180MM Neighborhood
Slide 20: ESG ratings and recognitions
ESG ratings and recognitions ESG data providers MSCI S&P Global Sustainalytics CSRHub SSGA CDP ESG Rating ESG Score ESG Risk Rating ESG Ranking R-Factor Score Climate Change November 2021 Corporate Sustainability January 2022 January 2022 August 2021 2019, 2020, 2021 Assessment A 73rd Low Risk 87th
Slide 21: Paycheck Protection Program update
Paycheck Protection Program update Average PPP loan balances Period-end PPP loan balances $ in billions $ in billions $5.4 $5.1 $5.2 $4.8 $4.8 $3.7 $3.1 $2.3 $1.8 $1.3 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 PPP interest income $ in millions $53 $53 • Originated $7.3BN in PPP loans across
Slide 22: GNMA forbearance loan purchase update
GNMA forbearance loan purchase update1 Average loan balances $ in billions 4.00 3.50 • Third-party serviced GNMA forbearance 3.00 $3.6 loan purchases: 2.50 2.00 $2.6 • 4Q20: $2.1BN 1.50 $1.8 • 1Q21: $0.6BN • 2Q21: $1.0BN 1.00 $1.3 0.50 $0.8 0.00 • 3Q21: $0.3BN 4Q21 1Q22 2Q22 3Q22 4Q22 • 4Q21: $0.7BN
Slide 23: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio14 Long-term debt4 $25.9BN fixed 3 | $43.1BN variable 1,2 $34.7BN fixed | $7.1BN variable 1 $9.2BN fixed | $2.6BN variable4 • 1M based: 44%7, 12 • 1M based: 1%8,12 • 59% allocation to bullet/ • 1ML based: 11%9 • 3M b
Slide 24: Well positioned to benefit from higher rates
Well positioned to benefit from higher rates NII is asset sensitive in year 1 and year 2 to rising Estimated NII sensitivity profile and ALCO policy limits rates. • As of December 31, 2021, 45% of HFI loans were % Change in NII (FTE) ALCO policy limit variable rate net of existing hedges (63% of tot
Slide 25: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM for next 3+ years1 EOP notional value of cash flow hedges ($ in billions) Blended rate of swaps: • 4Q21: 2.79% • 1Q22-4Q22: 2.35% • 1Q23-3Q23: 2.32% $15 $15 $15 $15 • 4Q23-1Q24: 1.89% $14 $14 $14 • 2Q24: 1.71% • 3Q24-4Q24: 1.44% $12 $3 $3 $3
Slide 26: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of December 31, 2021: $ millions – excl. Retail Brokered & Institutional CDs $3,737 $5.7BN • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~24 months $2,250 (debt
Slide 27: Mortgage banking results
Mortgage banking results Mortgage banking net revenue Mortgage originations and margins $ millions $ billions $5.0 $5.0 175 $85 $4.7 $86 $18 $64 $4.3 $9 Originations HFI $3.9 $1.1 $1.3 $1.2 125 $25 $59 $35 $59 $63 $1.0 $1.6 75 $66 $67 $89 Originations HFS $81 $78 25 $47 $37 ($13) ($3) ($5) $2.9 $3.6
Slide 28: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ millions; pre-tax $46 $45 $22 $11 4Q21 4Q22 4Q23 4Q24 actual For end note descriptions, see end note summary starting on page 41 28 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 29: Commercial & industrial overview
Commercial & industrial overview Portfolio loans Key statistics $ in billions Average QoQ change excluding PPP 4Q20 3Q21 4Q21 (7.2%) (1.9%) (1.0%) 1.7% 7.0% NCO ratio1 0.33% 0.04% 0.11% 30-89 Delinquencies 0.18% 0.15% 0.14% Period-end QoQ change excluding PPP (3.5%) (2.5%) 0.4% 3.7% 10.7% 90+ Delinq
Slide 30: Commercial real estate overview
Commercial real estate overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q20 3Q21 4Q21 (0.3%) 0.1% (0.4%) (2.8%) (2.9%) NCO ratio1 (0.72%) 0.02% (0.03%) Period-end QoQ change 30-89 Delinquencies 0.21% 0.23% 0.03% (0.7%) 1.6% (2.8%) (2.8%) (1.3%) $18.0 $20.0 90+ Delinquencies
Slide 31: Residential mortgage overview
Residential mortgage overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q20 3Q21 4Q21 (3.6%) (1.3%) 0.5% 2.1% (0.2%) NCO ratio1 0.04% (0.02%) (0.06%) 30-89 Delinquencies 0.13% 0.12% 0.12% Period-end QoQ change (1.4%) (1.0%) 2.3% 0.2% 1.5% 90+ Delinquencies 0.44% 0.38% 0.44% No
Slide 32: Home equity overview
Home equity overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q20 3Q21 4Q21 (4.8%) (5.8%) (6.7%) (5.7%) (5.2%) NCO ratio1 0.00% (0.13%) (0.18%) Period-end QoQ change 30-89 Delinquencies 0.69% 0.54% 0.61% (5.0%) (7.1%) (5.6%) (5.9%) (4.5%) 90+ Delinquencies 0.04% 0.02% 0.02% N
Slide 33: Indirect secured consumer overview
Indirect secured consumer overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q20 3Q21 4Q21 5.3% 5.1% 5.4% 6.0% 4.8% NCO ratio1 0.28% (0.02%) 0.14% 30-89 Delinquencies 0.92% 0.52% 0.61% Period-end QoQ change 90+ Delinquencies 0.07% 0.05% 0.05% 5.6% 5.0% 6.0% 5.3% 4.9% Nonperfor
Slide 34: Credit card overview
Credit card overview Portfolio loans Key statistics $ in billions Average QoQ change 4Q20 3Q21 4Q21 (4.3%) (8.0%) (5.8%) (1.2%) (0.5%) NCO ratio1 4.95% 2.70% 2.90% Period-end QoQ change 30-89 Delinquencies 1.49% 0.97% 1.02% (3.8%) (9.8%) (0.9%) (2.7%) 1.3% 90+ Delinquencies 1.54% 0.80% 0.85% Nonperf
Slide 35: Well diversified commercial portfolio with several potential risk mitigants
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 • ~75% of portfolio in QSR, mostly to top-tier brands and national chains ($1.8BN) • Areas of focus:
Slide 36: 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 Apartment 16% Owner Occupied 1% Office CRE 27% 2% Home Builder 5% 2% Hospitality Non-owner Occupied CRE 8
Slide 37: NPL rollforward
NPL rollforward1 Commercial $ millions 4Q20 1Q21 2Q21 3Q21 4Q21 Balance, beginning of period $ 688 $ 638 $ 509 $ 409 $ 349 Transfers to nonaccrual status 147 29 100 47 62 Transfers to accrual status - (1) - - (26) Transfers to held for sale (35) (42) (45) (1) (2) Loan paydowns/payoffs (93) (99) (116
Slide 38: 4Q21 adjustments and notable items
4Q21 adjustments and notable items Adjusted EPS of $0.931 4Q21 reported EPS of $0.90 included a negative $0.03 impact from the following notable items: • $19 million pre-tax (~$14 million after-tax2) charge related to the valuation of the Visa total return swap • $10 million pre-tax (~$8 million aft
Slide 39: 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) 2021 2021 2021 2021 2020 2021 Net income (U.S. GAAP) (a) $662 $704 $709 $694 $604 $2,770 Net income (U.S. GAAP) (annu
Slide 40: 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) 2021 2021 2021 2021 2020 2021 Average interest-earning assets (a) $187,045 $182,801 $184,918 $182,715 $182,418 $184,3
Slide 41: 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 39 and 40 of this presentation and the use of non-GAAP measures on pages 27-29 of t
Slide 42: Earnings presentation end notes
Earnings presentation end notes Slide 19 end notes Data is for fiscal year 2020, unless otherwise noted; 11/1/2012-12/31/2021. 1. Fifth Third is actively assessing an expanded goal. 2. For Scope 1, Scope 2 and business travel under Scope 3 emissions. Projected full year 2021 CO2e emissions are based
Slide 43: Earnings presentation end notes
Earnings presentation end notes Slide 28 end notes 1. Assumes FIS will have sufficient taxable income to utilize TRA related deductions and have a marginal tax rate of 25%. 2. See forward-looking statements on page 2. Slide 29 end notes 1. Net losses charged-off as a percent of average portfolio loa