Slide 1: Fifth Third Bancorp 2Q22 Earnings Presentation
Fifth Third Bancorp 2Q22 Earnings Presentation July 21st, 2022 Refer to earnings release dated July 21st, 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: 2Q22 highlights
2Q22 highlights Reported1 Adjusted1 • Generated record adjusted revenue EPS $0.76 $0.79 ROA 1.09% 1.13% • Compared to 2Q21, PPNR increased 13% (adjusted PPNR increased 11%) ROE 12.3% 12.8% • Net interest income increased 12% compared ROTCE 17.5% 15.2% excl. AOCI to 1Q22; NIM up 33 basis points compa
Slide 4: Net interest income
Net interest income1 1Q22 to 2Q22 Reported NII & NIM Walk NII $ in millions; NIM change in bps NII NIM $1,342 1Q22 $1,198 2.59% Market rate benefit 86 19 $1,211 $1,198 Net benefit of deployment of 67 16 excess cash into securities Total net interest income; $ millions Net benefit of excess cash 22 1
Slide 5: Noninterest income
Noninterest income 2Q22 vs. 1Q22 • Adjusted noninterest income1 up $23 million, or 3% $768 $741 $732 • Primary drivers: $709 $684 $676 ‒ Other noninterest income (up 73%) ‒ Card and processing revenue (up 8%) Total noninterest income; $ millions ‒ Partially offset by mortgage banking net revenue (do
Slide 6: Noninterest expense
Noninterest expense 2Q22 vs. 1Q22 • Adjusted noninterest expense1 down $110 million, or 9% $1,222 $1,222 • Primary drivers: $1,153 $1,153 $1,112 $1,112 ‒ Compensation and benefits (down 18%, or down 15% excluding the impacts of NQDC) Total noninterest expense; $ millions ‒ Partially offset by other
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 $113.5 $117.7 0.09 $80.0 $70.5 $70.7 120 $108.5 % change % change 0.08 $70.0 $64.2 100 QoQ YoY QoQ YoY $42.1 $43.3 0.07 $40.1 $60.0 $9
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 $168.4 $162.2 0.20% % change $18.0 % change $85.4 QoQ YoY $82.0 $85.9 QoQ YoY $16.0 0.15% $14.0 $15.7 $15.8 0.10% +1% +5% $12.0 0.09% $12.6 0.06% $10.0 26% 1% 0.05%
Slide 9: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs ACL as % of portfolio loans and leases 1.20% 2.20% 0.84% 1.00% 0.62% 2.06% 2.00% 0.79% 1.70% 1.85% 1.85% 0.80% 0.72% 1.80% 0.37% 0.65% 0.61% 0.60% 0.51% 0.52% 0.60% 0.47% 0.47%0.49% 0.47% 1.20% 0.35% 0.33% 0.40% 0.35% 0.29% 0.33% 0.28% 0.26%
Slide 10: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 2Q22 Change in Rate $ in millions Compared to: % of portfolio Allowance for loan & lease losses Amount loans & leases 1Q22 CECL Day 1 Commercial and industrial loans 789 1.41% 0.00% 0.19% Commercial mortgage loans 261 2.43% 0.06% 0.86% C
Slide 11: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 Excludes impact of Dividend Finance acquisition • Targeting 9.25% area CET12 at year-end ~35 bps 9.31% ~(26 bps) ~6 bps 8.96% ~(37 bps) ~(13 bps) Net income to Dividend Finance Common 1Q22 RWA Other 2Q22 co
Slide 12: 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 Diversifying and growing fee revenues to support profitability and generate strong returns 3 Investing for long-term
Slide 13: Current expectations: FY 2022 vs FY 2021
Current expectations FY 2022 compared to FY 2021 Relative to April, no change to outlook with • Expect improved PPNR growth (now 17 to 19%), as better NII respect to: • Total loan growth and expense outlook expected to be partially offset by more • Total revenue growth subdued noninterest income in
Slide 14: Current expectations: 3Q22 vs 2Q22
Current expectations Third quarter 2022 compared to Second quarter 2022 Avg. loans & leases up ~1% (including HFS) Total revenue1 up 8 – 9% (2Q22 baseline: $2.042BN; includes securities g/l) Net interest income1 up 11 – 12% (2Q22 baseline: $1.342BN) Guidance utilizes July 1 forward curve and assumes
Slide 15: Appendix
Appendix 15 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 16: 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 17: ESG priorities and metrics
ESG priorities and metrics Promoting Keeping the Demonstrating Addressing Strengthening our inclusion and customer at the our commitment climate change communities diversity center to employees $8BN in lending and $2.8BN accelerating 99% of banking centers $20/hour minimum wage $180MM Neighborhood f
Slide 18: A recognized ESG leader among peers
A recognized ESG leader among peers Recent actions Third-party recognitions Published 3rd ESG report Available on ir.53.com Announced 10-year $100BN Environmental & Social Finance Target Expansion of the original $8BN renewable energy goal achieved in June 2022 Aligned executive compensation to ESG
Slide 19: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of June 30, 2022: $5.0BN $ millions – excl. Retail Brokered & Institutional CDs $4,737 • Cash currently sufficient to satisfy all fixed obligations in a stressed environment for ~21 months (debt maturities,
Slide 20: Recent non-bank acquisitions
Recent non-bank acquisitions Dividend Finance Provide • Closed acquisition of Dividend Finance on May 10, 2022 • Closed acquisition of Provide on August 2, 2021 • Dividend Finance is a national tech-enabled point-of-sale • Provide is the leading fintech in the healthcare practice finance finance pro
Slide 21: Paycheck Protection Program update
Paycheck Protection Program update Average PPP loan balances Period-end PPP loan balances $ in billions $ in billions $4.8 $3.7 $3.1 $2.3 $1.8 $1.3 $1.0 $0.7 $0.5 $0.4 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 PPP interest income $ in millions $53 • Originated $7.3BN in PPP loans across all
Slide 22: GNMA forbearance loan purchase update
GNMA forbearance loan purchase update1 Average loan balances $ in billions • Third-party serviced GNMA forbearance $1.6 loan purchases: $1.1 • 4Q20: $2.1BN $0.8 $0.3 • 1Q21: $0.6BN $0.0 • 2Q21: $1.0BN 2Q22 3Q22 4Q22 1Q23 2Q23 • 3Q21: $0.3BN actual • 4Q21: $0.7BN Net interest income 20.00 $ in millio
Slide 23: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $27.1BN fixed 3 | $47.6BN variable 1,2 $36.4BN fixed | $7.3BN variable 1 • 67% allocation to bullet/ $7.4BN fixed | $3.0BN variable 4 • 1M based: 42%7, 12 • 1M based: 1%8,12 locked-out cash flow secu
Slide 24: Well positioned to benefit from higher rates
Well positioned to benefit from higher rates NII is asset sensitive in year 1 and year 2 to rising Estimated NII sensitivity profile and ALCO policy limits rates. • As of June 30, 2022, 46% of HFI loans were variable rate net of existing hedges (64% of total commercial; 17% of total consumer)1 • Inv
Slide 25: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM1 EOP notional value of cash flow hedges ($ in billions) Gross receive fixed rate of swaps: • 2Q22-4Q22: 2.35% • 1Q23-3Q23: 2.37% 2 • 4Q23-1Q24: 2.34% $15 $15 $15 $15 $15 $15 $15 $15 $15 $15 $15 • 2Q24: 2.35% • 3Q24: 2.34% • 4Q24: 2.50% $3 $3
Slide 26: Mortgage banking results
Mortgage banking results $250 Mortgage banking net revenue $225 Mortgage originations and margins $200 $ in millions $ in billions $175 $5.0 $5.0 $86 $64 $150 $9 Originations HFI $1.3 $1.2 $4.3 $4.3 $125 $35 $52 $31 $59 $63 $1.6 $3.5 $1.3 $100 $9 $3.8 $3.7 $75 $67 $1.2 $71 $81 $3.0 $2.7 $50 $81 $78
Slide 27: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ in millions; pre-tax $45 $22 $11 4Q22 4Q23 4Q24 For end note descriptions, see end note summary starting on page 39 27 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 28: Preferred dividend schedule
Preferred dividend schedule Upcoming preferred dividend schedule1 $ in millions 3Q22 4Q22 1Q23 2Q23 Series H - ~$15 - ~$15 Series I ~$8 ~$8 ~$8 ~$8 Series J ~$5 ~$5 ~$5 ~$5 Floating (3ML + 3.129%)2 Series K ~$3 ~$3 ~$3 ~$3 Series L ~$4 ~$4 ~$4 ~$4 Class B Series A ~$3 ~$3 ~$3 ~$3 Total ~$22 ~$38 ~$2
Slide 29: Commercial & industrial overview
Commercial & industrial overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q21 1Q22 2Q22 (1.7%) (2.1%) 3.8% 6.0% 5.5% NCO ratio1 0.11% 0.07% 0.24% Period-end QoQ change 30-89 Delinquencies 0.22% 0.16% 0.19% (3.1%) 0.6% 8.0% 4.4% 4.1% 90+ Delinquencies 0.00% 0.02% 0.01% $60.0 1
Slide 30: Commercial real estate overview
Commercial real estate overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q21 1Q22 2Q22 (0.4%) (2.8%) (2.9%) 2.0% 1.1% NCO ratio1 0.15% (0.03%) 0.07% Period-end QoQ change 30-89 Delinquencies 0.22% 0.12% 0.07% (2.8%) (2.8%) (1.3%) 3.6% (0.1%) $11.0 $10.7 $10.7 $10.7 $20.0 90+
Slide 31: Residential mortgage overview
Residential mortgage overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q21 1Q22 2Q22 0.5% 2.1% (0.2%) 1.9% 5.2% NCO ratio1 (0.01%) (0.02%) (0.02%) Period-end QoQ change 30-89 Delinquencies 0.12% 0.09% 0.09% 2.3% 0.2% 1.5% 4.6% 2.5% 90+ Delinquencies 0.35% 0.08% 0.05% Nonperfo
Slide 32: Home equity overview
Home equity overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q21 1Q22 2Q22 (6.7%) (5.7%) (5.2%) (4.1%) (2.8%) NCO ratio1 (0.09%) (0.07%) (0.06%) Period-end QoQ change 30-89 Delinquencies 0.44% 0.64% 0.56% (5.6%) (5.9%) (4.5%) (4.1%) (0.3%) 90+ Delinquencies 0.02% 0.03% 0.05%
Slide 33: Indirect secured consumer overview
Indirect secured consumer overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q21 1Q22 2Q22 5.4% 6.0% 4.8% 4.8% 0.6% NCO ratio1 0.01% 0.17% 0.13% 30-89 Delinquencies 0.45% 0.62% 0.59% Period-end QoQ change 90+ Delinquencies 0.03% 0.05% 0.05% 6.0% 5.3% 4.9% 3.8% (2.3%) Nonperfor
Slide 34: Credit card overview
Credit card overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q21 1Q22 2Q22 (5.8%) (1.2%) (0.5%) (2.8%) 0.8% NCO ratio1 4.52% 3.13% 3.26% Period-end QoQ change 30-89 Delinquencies 0.84% 1.01% 0.96% (0.9%) (2.7%) 1.3% (4.3%) 4.3% 90+ Delinquencies 0.78% 0.83% 0.74% Nonperformi
Slide 35: NPL rollforward
NPL rollforward1 Commercial $ in millions 2Q21 3Q21 4Q21 1Q22 2Q22 Balance, beginning of period $ 509 $ 409 $ 349 $ 337 $ 323 Transfers to nonaccrual status 100 47 62 54 49 Transfers to accrual status - - (26) (2) - Transfers to held for sale (45) (1) (2) (4) - Loan paydowns/payoffs (116) (97) (21)
Slide 36: 2Q22 adjustments and notable items
2Q22 adjustments and notable items Adjusted EPS of $0.791 2Q22 reported EPS of $0.76 included a negative $0.03 impact from the following notable items: • $18 million pre-tax (~$14 million after-tax2) charge related to the valuation of the Visa total return swap • $6 million pre-tax (~$5 million afte
Slide 37: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions June March December September June (unaudited) 2022 2022 2021 2021 2021 Net income (U.S. GAAP) (a) $562 $494 $662 $704 $709 Net income (U.S. GAAP) (annualized) (b) $2,254 $2,003 $2,626 $2
Slide 38: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions June March December September June (unaudited) 2022 2022 2021 2021 2021 Average interest-earning assets (a) $184,406 $187,894 $187,045 $182,801 $184,918 Net interest income (U.S. GAAP) (b
Slide 39: 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 37 and 38 of this presentation and the use of non-GAAP measures on pages 27-29 of t
Slide 40: Earnings presentation end notes
Earnings presentation end notes Slide 20 end notes 1. See forward-looking statements on page 2 of this presentation regarding forward-looking non-GAAP measures and use of non-GAAP measures on pages 27-29 of the earnings release. Slide 21 end notes 1. See forward-looking statements on page 2 of this
Slide 41: Earnings presentation end notes
Earnings presentation end notes Slide 29 end notes 1. Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis. 2. Nonperforming portfolio loans and leases as a percent of portfolio loans and leases. 3. Total commercial portfolio line utilization. Sl