Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Bank of America Merrill Lynch Banking & Financials Conference 2011
27 slides from Fifth Third Bancorp's conference presentation, Nov 16, 2011
Slide 1: Bank of America Merrill Lynch Banking & Financials Conference
Exhibit 99.1 Bank of America Merrill Lynch Banking & Financials Conference Daniel T. Poston Executive Vice President & Chief Financial Officer November 16, 2011 Please refer to earnings release dated October 20, 2011 and 10-Q dated November 9, 2011 for further information Fifth Third Bank | All Righ
Slide 2: Key themes
Key themes Well-positioned for success and leadership in new banking landscape 2 Fifth Third Bank | All Rights Reserved
Slide 3: A foundation of continued robust results
A foundation of continued robust results Capital – exceeds required and targeted levels — Tier 1 common* capital up ~500bps or $4.6bnfrom 4Q08 — Capital base transformed through series of capital actions 1 – ~9.8% pro forma Tier 1 common ratio* on a fully-phased in Basel III-adjusted basis — Capital
Slide 4: Environment characterized by low growth expectations and low interest rates
Environment characterized by low growth expectations and low interest rates Characteristics of current environment Fifth Third’s response / position Potential lower growth and prolonged low- Continued strong loan production rate environment — Rates on loan originations have remained Lower securities
Slide 5: Diverse revenue stream
Diverse revenue stream • Business mix provides higher than average diversity among spread and fee revenues — Current NII lower than normalized levels due to impact of low rate environment (e.g. low cost deposits including DDAs providing little NII benefit) • Added clarity regarding effect of reform
Slide 6: Net interest income
Net interest income Seq. YoY Selected Yield Analysis 3Q10 2Q11 3Q11 (bps) (bps) Commercial and industrial loans 4.81% 4.35% 4.29% (6) (52) Commercial mortgage loans 3.97% 4.00% 3.94% (6) (3) Commercial construction loans 3.06% 3.01% 3.02% 1 (4) Residential mortgage loans 4.81% 4.54% 4.47% (7) (34) H
Slide 7: Core funded balance sheet and pricing discipline
Core funded balance sheet and pricing discipline • Strong, deposit-rich core funding mix supports relatively low cost of funds – Low reliance on wholesale funding • Run-off of high cost CDs (particularly from 2H08) will benefit NII in 4Q11 – Incremental $15mm in 4Q11 versus 3Q11 • Pricing discipline
Slide 8: Expense discipline
Expense discipline Efficient business model: • Efficiency ratio better than most peers through weak economic environment – Reflects below-capacity balance sheet and lower revenue than we expect and can support longer term – Current impact of credit costs on revenue and expenses Disciplined expense m
Slide 9: Strong pre-provision net revenue*
Strong pre-provision net revenue* • PPNR* of $617mm flat from 2Q11 reflecting strong mortgage banking results • PPNR* down 19% from 3Q10 driven by lower mortgage banking revenue, the 3Q10 net benefit from the settlement of BOLI-related litigation, and improved credit costs • Adjusted PPNR* of $633mm
Slide 10: Expect ROAA upside longer-term
Expect ROAA upside longer-term Third quarter ROA of 1.34% included Illustrative ROA calculation using historical NCO and credit-related costs* — Provision expense / average loans of 44 bps 3Q11 3Q11 Actual Illustrative* — $70mm of credit-related costs in PPNR ex-credit costs**^ $687 $687 revenue and
Slide 11: Strong relative credit trends
Strong relative credit trends FITB credit metrics are in line with or better than peers 11 Fifth Third Bank | All Rights Reserved
Slide 12: Strong credit coverage levels
Strong credit coverage levels Reserves and capital levels significant in relation to problem assets Source: SNL Financial and company reports. Data as of 3Q11. HFI NPAs and NPLs exclude loans held-for-sale and also exclude covered assets for BBT, USB, and ZION * Non-GAAP measure. See Reg. G reconcil
Slide 13: Strong capital position, Basel I and Basel III
Strong capital position, Basel I and Basel III Fifth Third’s capital position already well in excess of established standards, likely standards, and most peers Source: SNL Financial, company filings, and third-party estimates. Regulatory financial data as of 3Q11. * Peers include BAC, BBT, C, CMA, C
Slide 14: Capital management philosophy
Capital management philosophy Organic growth opportunities Return to more normal dividend policy * • Strong levels of profitability would support • Support growth of core banking franchise significantly higher dividend than current level • Continued loan growth despite sluggish • Incorporated higher
Slide 15: 2012 Annual capital plan
2012 Annual capital plan 15 Fifth Third Bank | All Rights Reserved
Slide 16: Strong returns drive capital generation
Strong returns drive capital generation Well above average profitability and capital generation, well below average valuation # Non-GAAP measure. See Reg. G reconciliation on pages 25-27. * 3Q11 annualized 16 Price as of 11/11/11 Fifth Third Bank | All Rights Reserved
Slide 17: Well-positioned for the future
Well-positioned for the future Diversified traditional banking platform • Traditional commercial banking franchise built on customer-oriented localized operating model • Strong market share in key markets with focus on further improving density • Fee income ~40% of total revenues Industry leader in
Slide 18: Cautionary statement
Cautionary statement This report contains 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 pro
Slide 19: Customer-centric traditional banking model: well-positioned for changed financial landscape
Customer-centric traditional banking model: well-positioned for changed financial landscape Fifth Third’s business model is driven by traditional banking activities, consistent with direction of financial reform — Dodd-Frank / Basel III do not require substantial changes to Fifth Third’s business mo
Slide 20: Strong liquidity profile
Strong liquidity profile Holding Company cash at 9/30/11: $2.1B Cash currently sufficient to satisfy all fixed obligations for more than 2 years (debt maturities, common and preferred dividends, interest and other expenses) without accessing capital markets; relying on dividends from subsidiaries; p
Slide 21: Mortgage repurchase overview
Mortgage repurchase overview 33% drop in 3Q11 outstanding claims balance driven by high number of resolutions in quarter Repurchase Reserves* ($ in millions) Virtually all sold loans and the majority of new claims 3Q10 4Q10 1Q11 2Q11 3Q11 relate to agencies — 98% of outstanding balance of loans sold
Slide 22: Troubled debt restructurings overview
Troubled debt restructurings overview Successive improvement in vintage performance during 2008 and 2009 as volume of modification increased Fifth Third’s mortgage portfolio TDRs have redefaulted at a lower rate than GSE composites Of $1.8B in consumer TDRs, $1.6B were on accrual status and $215mm w
Slide 23: NPL rollforward
NPL rollforward NPL HFI Rollforward Commercial 3Q10 4Q10 1Q11 2Q11 3Q11 Beginning NPL Amount 1,980 1,261 1,214 1,211 1,253 Transfers to nonperforming 522 269 329 340 217 Transfers to performing (21) (2) (2) (10) (11) Transfers to performing (restructured) (10) - - - (1) Transfers to held for sale (3
Slide 24: Non-performing loans
Non-performing loans * 3Q10 inflows into NPLs HFS were $217mm, reflecting performing loans moved to held-for-sale in 3Q10 that were deemed impaired as a result of the decision to sell these loans. Prior period NPL inflows restated to reflect additional detail and with transfers to nonaccrual status
Slide 25: Regulation G Non-GAAP reconciliation
Regulation G Non-GAAP reconciliation $ in millions (unaudited) For the Three Months Ended September June March December September June March December 2011 2011 2011 2010 2010 2010 2010 2009 Pre-tax Pre-provision Net Revenue: Income before income taxes (a) $ 530 $ 506 $ 377 $ 417 $ 303 $ 242 $ (22) $
Slide 26: Regulation G Non-GAAP reconciliation
Regulation G Non-GAAP reconciliation $ and shares in millions (unaudited) For the Three Months Ended September June March December September 2011 2011 2011 2010 2010 Net income available to common shareholders (U.S. GAAP) $ 373 $ 328 $ 88 $ 270 $ 175 Add: Intangible amortization, net of tax 3 4 5 7
Slide 27: Regulation G Non-GAAP reconciliation
Regulation G Non-GAAP reconciliation $ in millions (unaudited) For the Three Months Ended September June March December September 2011 2011 2011 2010 2010 Total Bancorp shareholders' equity (U.S. GAAP) $ 13,029 $ 12,572 $ 12,163 $ 14,051 $ 13,884 Goodwill and certain other intangibles (2,514) (2,536
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