Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Lehman Brothers Global Financial Services Conference (September 2008)
31 slides from Fifth Third Bancorp's conference presentation, Sep 9, 2008
Slide 1: Lehman Brothers Global Financial Services Conference
Exhibit 99.1 Lehman Brothers Global Financial Services Conference Kevin Kabat, Chairman, President & CEO September 9, 2008 Fifth Third Bank | All Rights Reserved
Slide 2: Agenda
Agenda Overview Traverse City Grand Rapids 2Q08 results Detroit Chicago Toledo Cleveland Operating trends Columbus Pittsburgh Indianapolis Cincinnati Credit trends St. Louis Florence Huntington Evansville Louisville Lexington Capital position Raleigh Nashville Charlotte Summary and priorities Atlant
Slide 3: Fifth Third overview
Fifth Third overview Traverse City $115 billion assets #14^ Grand Rapids Detroit $9 billion market cap #12* Chicago Toledo Cleveland Pittsburgh Columbus Indianapolis Over 1,300 banking centers Cincinnati Florence Huntington St. Louis Evansville Louisville Over 2,300 ATMs Lexington Raleigh Nashville
Slide 4: 2Q08 in review
2Q08 in review Difficult quarter due to economic environment — Significant increase in net charge-offs and provision expense – Net charge-offs of $344 million, provision expense of $719 million — Charges related to the tax treatment of leveraged leases Core business momentum remains strong – core pr
Slide 5: Increasing net interest income
Increasing net interest income 3.75% $900 $850 $800 3.50% $750 $700 $650 3.25% $600 $550 3.00% $500 2Q07 3Q07 4Q07 1Q08 2Q08* Net interest income NIM *Reported net interest income of $744 and net interest margin of 3.04%. 2Q08 results above exclude $130 million charge related to leveraged lease liti
Slide 6: Fee income growth and diversification
Fee income growth and diversification $900 YOY $800 growth $700 Payment $600 processing +15% $500 Deposit $400 service +12% charges $300 Investment advisory -5% Corporate $200 banking +26% $100 Mortgage +108% Secs/other -59% $0 2Q07 3Q07 4Q07 1Q08 2Q08 Continued strong growth in processing, deposit
Slide 7: FTPS: key growth engine
FTPS: key growth engine 2Q08 revenue Financial Merchant Institutions $250 Services 36% 2-Yr YOY CAGR growth 37% $200 Bankcard +19% +16% 27% $150 Merchant • 4 th Largest U.S. Acquirer $100 +16% +20% • Over 37,500 merchants • $26.7B in credit/debit processing volume • Over 5.6B acquired transactions •
Slide 8: Corporate banking
Corporate banking International $120 2-Yr YOY • Letters of credit CAGR growth • Foreign exchange +19% +29% $90 Derivatives • Customer interest rate derivatives +10% -6% $60 +14% +23% Capital markets lending fees • Institutional Sales • Asset securitization/conduit fees • Loan/lease syndication fees
Slide 9: Peer performance summary
Peer performance summary Large bank Midwest FITB YOY performance peers (1) peers (2) 2Q08 vs. peers 2Q08 2Q08 Average loan growth 11% 8% 9% Outperformed Average transaction deposit growth 6% 5% 5% Outperformed NII growth* 17% 8% 4% Outperformed Operating fee growth* 9% 1% 8% Outperformed Pre-tax pre
Slide 10: Strong operating performance…
Strong operating performance… $800 $700 $600 $500 $400 $300 2Q07 3Q07 4Q07 1Q08 2Q08 Reported pre-tax pre-provision earnings growth -6% due primarily to 2Q08 leveraged lease charges. Data above excludes $130 million charge related to impact of leasing litigation and $13 million in acquisition relate
Slide 11: …offset by credit costs
…offset by credit costs $800 $600 $400 $200 $0 Net -$200 charge- offs -$400 Additional -$600 provision -$800 2Q07 3Q07 4Q07 1Q08 2Q08 See note on p. 9 for adjustments. 11 Fifth Third Bank | All Rights Reserved
Slide 12: Credit by portfolio
Credit by portfolio Commercial Commercial Commercial Total Residential Other Total Total loans & ($ in millions) C&I mortgage construction lease commercial mortgage Home equity Auto Credit card consumer consumer leases Loan balances $28,958 $13,394 $6,007 $3,647 $52,006 $9,866 $12,421 $8,362 $1,717
Slide 13: Real estate driving credit deterioration
Real estate driving credit deterioration Total NPAs Total NCOs 2,500,000 400,000 2,000,000 Res RE 300,000 Res RE 1,500,000 200,000 CRE 1,000,000 CRE 100,000 500,000 0 0 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 C&I/Lease Auto Credit Card C&I/Lease Auto/Other CRE
Slide 14: Michigan and Florida: most stressed markets
Michigan and Florida: most stressed markets Total NPAs Total NCOs 2,500,000 400,000 2,000,000 300,000 Highest Highest 1,500,000 stress stress markets markets 200,000 1,000,000 500,000 100,000 421 - - Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Other SE National Ot
Slide 15: Credit containment
Credit containment Eliminated all brokered home equity production Suspended all new developer lending Significantly tightened underwriting limits and exception authorities Major expansion of commercial and consumer workout teams Aggressive write downs in stressed geographies Significant addition to
Slide 16: Capital actions
Capital actions • Capital plan and targets designed to help ensure strong regulatory capital and tangible equity levels, positioning Fifth Third to absorb losses and provisions significantly in excess of current levels and environmental conditions through 2009 Revised Tier 1 capital targets to provi
Slide 17: Strong capital position
Strong capital position Tangible Equity / Tangible Assets 8.94 7.49 6.98 6.89 6.37 6.24 5.97 5.67 5.65 5.35 5.23 4.98 4.68 4.40 NCC CMA KEY MI FITB STI ZION RF HBAN BBT USB MTB WB PNC Tier 1 Capital 11.06 8.92 8.82 8.53 8.51 8.47 8.20 8.00 7.87 7.76 7.48 7.47 7.45 7.45 As of 6/30/08 NCC BBT HBAN KEY
Slide 18: Fifth Third debt ratings
Fifth Third debt ratings Fifth Third Bancorp Fifth Third Bank (OH) Fifth Third Bank (MI) Rating Current Senior Sub Senior Sub Senior Sub Date# Outlook Moody’s Aa3 A1 Aa2 Aa3 Aa2 Aa3 6/18/08 Review for possible downgrade S&P A+ A AA- A+ AA- A+ 8/3/08 CreditWatch negative Fitch A+ A A+ A A+ A 6/18/08
Slide 19: Fifth Third debt ratings
Fifth Third debt ratings Lead Bank Moody's S&P Fitch DBRS Well Fargo (Well Fargo Bank NA) Aaa AAA AA AAH Bank of America (Bank America America NA) Aaa AA+ AA- AA JPMorgan Chase (JPMorgan Chase Bank NA) Aaa AA AA- AAL US Bank (US Bank NA North Dakota) Aa1 AA+ AA- NR BB&T (BB&T Co/WI) Aa2 AA- AA- AA F
Slide 20: Fifth Third differentiators
Fifth Third differentiators Integrated affiliate delivery model Strong sales culture Operational efficiency Streamlined decision making Integrated payments platform (FTPS) Acquisition integration Customer satisfaction 20 Fifth Third Bank | All Rights Reserved
Slide 21: Summary and priorities
Summary and priorities Fifth Third has taken steps to ensure it is well-positioned to weather potential further deterioration in the credit environment Delivery of strong operating results remains a hallmark of Fifth Third despite sluggish economy Capital plan designed to maintain Tier 1 capital in
Slide 22: Fifth Third: building a better tomorrow
Fifth Third: building a better tomorrow Consistently outperform the U.S. banking industry Deliver growth in excess of industry Enhance the customer experience Increase employee engagement Institutionalize enterprise operational excellence 22 Fifth Third Bank | All Rights Reserved
Slide 23: Appendix
Appendix 23 Fifth Third Bank | All Rights Reserved
Slide 24: Nonperforming assets
Nonperforming assets Other $44M C&I* 2% $431M • Total NPAs of $2.2B, or 256 bps 20% • Commercial NPAs of $1.5B; recent growth driven by commercial construction and real CRE estate, particularly in Michigan and Florida $1.1B 49% • Consumer NPAs of $674M; recent growth driven by residential real estat
Slide 25: Commercial construction
Commercial construction Credit trends Loans by geography FL MI 21% 19% Commercial construction ($ in millions) 2Q07 3Q07 4Q07 1Q08 2Q08 Other Balance $5,469 $5,463 $5,561 $5,592 $6,007 1% 90+ days delinquent $33 $54 $67 $49 $53 NC/GA 90+ days ratio 0.60% 0.99% 1.21% 0.87% 0.88% 5% NPAs $66 $106 $257
Slide 26: Homebuilder/developer
Homebuilder/developer Credit trends Portfolio split Loans by geography C&I MI 8% Commercial 22% Homebuilders/developers* construction FL 53% ($ in millions) 3Q07 4Q07 1Q08 2Q08 32% Balance $2,594 $2,868 $2,705 $3,295 90+ days delinquent $50 $57 $60 $123 90+ days ratio 1.94% 1.99% 2.21% 3.73% NPAs $7
Slide 27: Residential mortgage
Residential mortgage Credit trends Loans by geography MI FL 15% Residential mortgage 31% ($ in millions) 2Q07 3Q07 4Q07 1Q08 2Q08 Balance $8,477 $9,057 $10,540 $9,873 $9,866 90+ days delinquent $98 $116 $186 $192 $229 90+ days ratio 1.15% 1.28% 1.76% 1.95% 2.32% OH NPAs $112 $150 $216 $333 $448 23%
Slide 28: Home equity
Home equity Credit trends Brokered loans by geography Direct loans by geography FL FL Home equity - brokered 3% MI 8% MI ($ in millions) 2Q07 3Q07 4Q07 1Q08 2Q08 20% 22% Other* Other* Balance $2,810 $2,746 $2,713 $2,651 $2,433 24% 8% 90+ days delinquent $24 $30 $34 $33 $34 90+ days ratio 0.86% 1.08%
Slide 29: Michigan market
Michigan market Loans % of NPAs % of NCOs % of ($ in millions) (bn) FITB (mm) FITB (mm) FITB Economic weakness impacts Commercial loans 5.01 17% 87 21% 16 15% commercial real estate market Commercial mortgage 3.86 29% 152 28% 10 50% Commercial construction 1.16 19% 187 34% 14 29% Issues: homebuilder
Slide 30: Florida market
Florida market Loans % of NPAs % of NCOs % of Issues: homebuilders, developers ($ in millions) (bn) FITB (mm) FITB (mm) FITB tied to weakening real estate Commercial loans 2.11 7% 61 15% 14 13% market Commercial mortgage 1.95 15% 215 40% 2 8% Commercial construction 1.26 21% 193 35% 16 33% Issues: i
Slide 31: Cautionary statement
Cautionary statement This report may contain forward-looking statements about Fifth Third Bancorp and/or the company as combined acquired entities within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and 21E of the Securities Exchange Act
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