Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q1 2020 Earnings Presentation
27 slides from Fifth Third Bancorp's earnings presentation, Apr 21, 2020
Slide 1: Fifth Third Bancorp 1Q20 Earnings Presentation
Fifth Third Bancorp 1Q20 Earnings Presentation April 21, 2020 Refer to earnings release dated April 21, 2020 for further information. Classification: Internal Use 1 Fifth Third Bancorp | 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: Making a difference during the pandemic
Making a difference during the pandemic Consumers Businesses Employees Communities • 99% of 1,123 banking • ~10 thousand loans under • Up to $1,000 special • $8.75 million philanthropic centers remain open for the Paycheck Protection payment to banking center, commitment to help business, in additio
Slide 4: 1Q20 highlights
1Q20 highlights Reported1 Adjusted1 • Supporting customers, communities, and employees during the pandemic EPS $0.04 $0.68 ROA 0.11% 1.19% • Maintained robust capital and liquidity levels ROE 0.6% 9.9% • Net interest income, NIM, noninterest income, and expense performance in-line ROTCE 1.0% 14.7% e
Slide 5: Average balance sheet
Average balance sheet Securities1 Loan & lease balances and short-term investments Core deposit balances $121.8 $123.2 $109.8 $110.8 $38.0 $37.4 $97.8 $105.5 $35.3 $39.3 $39.8 Total average balance; $ billions Loan & lease balances exclude HFS $66.7 $67.4 $36.0 $33.6 $35.4 $35.1 $61.0 4.73% 4.49% 4.
Slide 6: Net interest income
Net interest income1 1Q20 vs. 1Q19 $1,232 $1,233 • Adjusted NII1 up $132 million, or 12%; Adjusted NIM1 down 4 bps $1,214 $1,217 • Primary NII drivers: $1,086 $1,085 ‒ Increase in interest-earning assets including the impact from MB Financial ‒ Favorable impact of previously executed cash flow hedge
Slide 7: Noninterest income
Noninterest income 1Q20 vs. 1Q19 • Adjusted noninterest income1 up $165 million, or 29%, $1,101 including the impact of MB Financial $1,035 • Primary drivers: $724 $732 ‒ Mortgage banking revenue (up 114%) $671 ‒ Total noninterest income; $ millions Leasing business revenue (up 128%; primarily from
Slide 8: Noninterest expense
Noninterest expense 1Q20 vs. 1Q19 $1,200 • Adjusted noninterest expense1 up $126 million, or 12%, $1,160 $1,144 reflecting the impact of MB Financial $1,117 $1,097 • Primary drivers: $1,018 ‒ Compensation and benefits (up 12%) Total noninterest expense; $ millions ‒ Technology investments (up 25%) ‒
Slide 9: COVID-19 high impact industries
COVID-19 high impact industries $8.7 billion C&I and Leasing portfolios (7.3% of total) Ongoing portfolio surveillance $5.3BN I 4.5% of total Leisure & Primarily casinos ($2.0BN), restaurants ($1.9BN), 19% in leveraged portfolio sports ($0.5BN), fitness ($0.4BN) and hotels • Centralized team managin
Slide 10: Oil & gas portfolio remains well positioned
Oil & gas portfolio remains well positioned $2.8BN I 2.3% of total loans Oil & Gas Balance Mix RBL 65% utilization 7% Oil & Gas Oil / Gas Mix 56% / 44% Production Reserve-Based Structure 95% 9% 4% $0.4BN I 0.3% of total loans ~97% <3% Midstream 28% utilization Refining Midstream Oil / Gas Mix 63% /
Slide 11: Consumer portfolios are well positioned
Consumer portfolios are well positioned Portfolio % of Total Portfolio WA LTV Consumer portfolio FICO score Loans WA FICO at Orig. distribution1 Residential mortgage 14% 758 74% >=750 Indirect secured 10% 752 93% 56% Predominantly auto 720-749 Home equity 5% 761 70% 18% 660-719 Other consumer 2% 759
Slide 12: Credit quality overview
Credit quality overview Nonperforming assets1 (NPAs) ACL as % of portfolio loans and leases 2.13% 0.79% 0.62% Incurred Loss Method CECL 0.60% 0.55% 1.23% 1.15% 1.19% 1.14% 0.45% 1Q17 1Q18 1Q19 1Q20 NPA Ratio 1Q19 2Q19 3Q19 4Q19 1Q20 Net charge-offs (NCOs) • NPA ratio of 0.60% down 2 bps from prior q
Slide 13: Current expected credit losses (CECL) implementation
Current expected credit losses (CECL) implementation 4Q19 1Q20 Allocation of allowance by product (Incurred) (CECL) $s in millions % of portfolio % of portfolio Allowance for loan & lease losses Amount loans & leases Amount loans & leases Commercial and industrial loans 624 1.23% 977 1.68% Commercia
Slide 14: Strong capital and liquidity position
Strong capital and liquidity position Common Equity Tier 1 ratio (Basel III)1 • CET1 ratio remained strong; largest drivers of sequential change: 30 bps - +30 bps from earnings ex. provision 9.75% (13 bps) (18 bps) - (38) bps from RWA, primarily C&I line draws 9.36% (38 bps) - (18) bps from provisio
Slide 15: Current expectations
Current expectations Second quarter 2020 compared to first quarter 2020 Loans & leases Up high-single to low-double digits (average balances, incl. HFS) NII (FTE)1 Relatively stable (excluding PAA) (1Q20 baseline: $1.217BN) Noninterest income1 Down high-single to low-double digits (1Q20 baseline: $7
Slide 16: Resilient balance sheet, proactive management, diversified revenue mix
Resilient 1 Balance Sheet Remain well- positioned to Proactive 2 Management navigate the uncertain economic environment Diversified 3 Revenue Mix Classification: Internal Use 16 Fifth Third Bancorp | All Rights Reserved
Slide 17: Appendix
Appendix Classification: Internal Use 17 Fifth Third Bancorp | All Rights Reserved
Slide 18: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $19.3B fixed | $58.8B variable 1,2,3 $31.1B fixed | $10.5B variable 1 $12.3B fix | $3.9B variable 4 • 60% allocation to bullet/ • 1ML based: 60%6 • 1ML based: 1%7 • 1ML based: 8%8 locked-out cash flo
Slide 19: Interest rate risk management
Interest rate risk management NII is asset sensitive over the next 12-24 months Estimated NII sensitivity profile and ALCO policy limits to rising rates. % Change in NII (FTE) ALCO policy limit • As of March 31, 2020, 58% of loans were variable 13 to 24 13 to 24 rate net of existing swaps (75% of to
Slide 20: NPL rollforward
NPL rollforward1 Commercial $ millions 1Q19 2Q19 3Q19 4Q19 1Q20 Balance, beginning of period $ 228 $ 313 $ 390 $ 349 $ 397 Transfers to nonaccrual status 120 139 32 165 176 Acquired nonaccrual loans 8 - - - - Transfers to accrual status - - - - (31) Transfers to held for sale - - - (17) (6) Loan pay
Slide 21: Balance and credit loss trends
Balance and credit loss trends1 Commercial & industrial Residential mortgage $52.1 $51.2 $50.9 $51.6 $46.0 $16.8 $16.7 $16.7 $16.7 $15.6 0.39% 0.22% 0.28% 0.16% 0.15% 0.02% 0.03% 0.07% 0.02% (0.02%) 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Commercial mortgage Home equity $10.6 $10.7 $10.8 $
Slide 22: Expected impacts of MB purchase accounting
Expected impacts of MB purchase accounting1 Net Core Deposit Intangible Amortization Purchase Accounting Accretion 10 8 7 6 5 5 $38 4 2 ($ in millions) (1) (3) (4) (4) (4) (4) (5) (7) (10) (9) (9) (9) (9) (11) (11) (11) 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 • Reflects purchase accounting impacts e
Slide 23: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of March 31, 2020: $4.1B $ millions – excl. Retail Brokered & Institutional CDs $4,737 • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~26 months (debt maturities,
Slide 24: Mortgage banking results
Mortgage banking results Mortgage banking net revenue $ millions $95 $120 • Mortgage banking revenue increased $73 $64 million from year-ago quarter and $63 $67 $71 $47 million from prior quarter $56 $72 $70 $55 • $4B in originations, up 145% $64 $81 compared to the year-ago quarter and $49 $25 $37
Slide 25: 1Q20 adjustments and notable items
1Q20 adjustments and notable items Adjusted EPS of $0.681 1Q20 reported EPS of $0.04 included a negative $0.55 impact from: • $518 million pre-tax (~$399 million after-tax2) provision in excess of net charge-offs Also included a negative $0.09 impact from the following notable items: • $36 million p
Slide 26: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation For the Three Months Ended $ and shares in millions March December September June March (unaudited) 2020 2019 2019 2019 2019 Net income (U.S. GAAP) (a) $46 $734 $549 $453 $775 Net income (U
Slide 27: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries Regulation G Non-GAAP Reconciliation For the Three Months Ended $ and shares in millions March December September June March (unaudited) 2020 2019 2019 2019 2019 Average interest-earning assets (a) $151,213 $149,312 $148,854 $