Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — IPO Roadshow (June 2008)
31 slides from Fifth Third Bancorp's IPO roadshow presentation, Jun 18, 2008
Slide 1: Investor Update
Free Writing Prospectus Filed on June 18, 2008 Pursuant to Rule 433 Registration No. 333-141560 Fifth Third Bancorp Investor Update June 18, 2008 Before reviewing this presentation, please carefully review the cautionary statements preceding the discussion Fifth Third Bank | All Rights Reserved
Slide 2: Cautionary statement
Cautionary statement This report may contain forward-lookingstatements 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
Slide 3: Securities law statement
Securities law statement Fifth Third Bancorp has filed a registration statement (including prospectus) with the SEC for the securities offerings discussed in this presentation. Before you would invest in such securities, you should read the prospectus in that registration statement, the related prel
Slide 4: Description of the capital offering
Description of the capital offering Security Convertible Preferred Stock Size of Offering $1.0 billion (+ 15% greenshoe) Maturity Perpetual [TBD]% per annum; payable Non-Cumulative Dividend quarterly No dividends on junior stock if Dividend Stopper convert dividend not paid Convertible into common a
Slide 5: Capital actions
Capital actions • Management developed a capital plan designed to help ensure strong regulatory capital and tangible equity levels, positioning the bank to absorb losses and provisions significantly in excess of current levels and environmental conditions through 2009 Revising Tier 1 capital target
Slide 6: Pro forma capital ratio comparison
Pro forma capital ratio comparison Regulatory well 2Q-2008 Pro Capital Ratio 1Q- 2008 Target capitalized forma* minimums Tier 1 7.72% 8.5% 8-9% 6% Total Capital 11.34% 12.2% 11.5-12.5% 10% TE/TA 6.22% 6.3% 6-7% N/A * Pro forma for $1B preferred capital issuance and a quarterly dividend reduction to
Slide 7: Agenda
Agenda Overview of Fifth Third Second quarter review — Credit costs overshadow continuing strong performance Credit update — Trends remain negative, driven primarily by residential and commercial real estate — Increased charge-off expectations; credit forecast review Summary Appendix 7 Fifth Third B
Slide 8: Fifth Third overview
Fifth Third overview Traverse City $111 billion assets #14^ Grand Rapids Detroit $7 billion market cap #15* Chicago Toledo Cleveland Pittsburgh Columbus Indianapolis 1,315 banking centers Cincinnati Florence Huntington St. Louis Evansville Louisville Over 2,250 ATMs Lexington Raleigh Nashville 18 af
Slide 9: Diversified franchise
Diversified franchise Branch Banking (36% of earnings) 2007 Revenue - $6.0 billion* Retail & Business banking 2.8 million households Over 1,200 banking centers, over 2,200 ATMs Consumer Lending $601M Commercial Banking (41%) Investment Corporate & Middle Market Lending, Treasury Services, 10% Adviso
Slide 10: 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 10 Fifth Third Bank | All Rights Reserved
Slide 11: Increasing net interest income
Increasing net interest income 3.75% $850 $800 3.50% $750 $700 3.25% $650 $600 3.00% $550 2.75% $500 1Q07 2Q07 3Q07 4Q07 1Q08 Net interest income Net interest margin Net interest margin and net interest income expected to continue to trend higher in 2Q08 – NII expected up more than 10% year-over-yea
Slide 12: Fee income growth and diversification
Fee income growth and diversification $900 $800 YOY growth $700 Payment processing +15% $600 $500 Deposit service +17% charges $400 Investment advisory -3% $300 Corporate banking +30% $200 Mortgage +144% $100 Secs/other +10% $0 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 non-interest income expected to grow more
Slide 13: Strong operating performance offset by current high credit costs
Strong operating performance offset by current high credit costs $800 $600 $400 $200 $0 Net charge- -$200 offs -$400 Additional provision -$600 1Q07 2Q07 3Q07 4Q07 1Q08 Strong operating results and reserve build continue in 2Q08; pre-tax pre-provision earnings expected >10% Reported pre-tax pre-prov
Slide 14: 2Q08 operating trends/outlook
2Q08 operating trends/outlook Note: all growth rates, ratios, dollar expectationsare approximations and estimates based on current forecast; subject to change; please refer to risk factors on page 2 Operating trends remain strong and generally exceed expectations NII growth of more than 10% compared
Slide 15: Credit trends/outlook
Credit trends/outlook Note: all growth rates, ratios, dollar expectationsare approximations and estimates based on current forecast; subject to change; please refer to risk factors on page 2 2Q08 annualized charge-off ratio of approximately 1.60-1.65%; total provision expense of approximately $700-7
Slide 16: Provision levels: Well ahead of stressed losses
Provision levels: Well ahead of stressed losses $3,000 2H08 provision dependent on credit results and 2% allowance $2,000 allowance model $1,300- • Charge-offs $1,400 expected to be $700- above 2008 levels $1,000 $628 $340- $725 •Continue $462 $544 $276 $350 provision build $0 2007 1Q08 2Q08 FY08 FY
Slide 17: Capital position
Capital position 11.4% Tangible Equity / Tier 1 9.7% Tangible Assets 9.0% 8.8% 8.8% 8.7% 8.7% 8.6% 8.5% 8.0% 7.7% 7.6% 8.6% 7.6% 7.6% 7.6% 7.3% 8.3% 7.4% 7.2% 6.5% 7.6% 7.4% 6.3% 6.2% 6.2% 7.7% 7.2% 7.3% 6.9% 5.7% 6.7% 6.5% 5.5% 5.4% 5.3% 4.9% 5.5% 4.6% 5.9% 5.0% 4.7% 4.3% 4.3% NCC MI CMA KEY STI FI
Slide 18: Credit Deterioration
Credit Deterioration Economic environment continues to be challenged; significant stress on real estate and real estate related portfolios, with Florida and Michigan particularly hard hit — Homebuilder / developer — Home equity — Commercial mortgage — Commercial construction Recently conducted inten
Slide 19: Diversified loan portfolio
Diversified loan portfolio Distributed by type $48 billion commercial loan portfolio Credit Card Other Consumer Auto 2% 1% 91% secured 10% $1.0 million average outstanding C&I 33% Home Equity $1.9 million average exposure 15% 1Q08 NCOs: 121 bps Residential mortgage 12% Commercial $33 billion consume
Slide 20: Credit by portfolio
Credit by portfolio Commercial Commercial Commercial Total Residential Home Credit Other Total Total loan & ($ in millions) C&I mortgage construction lease commercial mortgage equity Auto card consumer consumer lease Loan balances $26,590 $12,155 $5,592 $3,727 $48,065 $9,873 $11,803 $8,394 $1,686 $1
Slide 21: Commercial construction
Commercial construction Credit trends Loans by geography* Other 5% OH Commercial construction FL 31% ($ in millions) 1Q07 2Q07 3Q07 4Q07 1Q08 23% Balance $5,688 $5,469 $5,463 $5,561 $5,592 90+ days delinquent $20 $33 $54 $67 $49 90+ days ratio 0.35% 0.60% 0.99% 1.21% 0.87% NPAs $59 $66 $106 $257 $41
Slide 22: Homebuilder/developer
Homebuilder/developer Credit trends Portfolio split* Loans by geography* C&I MI 10% 24% Homebuilders/developers* FLA ($ in millions) 3Q07 4Q07 1Q08 34% Mortgage Balance $2,594 $2,868 $2,705 38% 90+ days delinquent $50 $57 $60 90+ days ratio 1.94% 1.99% 2.21% NPAs $78 $176 $309 as % of loans 3.01% 6.
Slide 23: Residential mortgage
Residential mortgage Credit trends Loans by geography* Other 8% OH 25% Consumer mortgage ($ in millions) 1Q07 2Q07 3Q07 4Q07 1Q08 Balance $8,484 $8,477 $9,057 $10,540 $9,873 90+ days delinquent $78 $98 $116 $186 $192 FL 90+ days ratio 0.91% 1.14% 1.27% 1.75% 1.92% 34% NPAs $103 $112 $150 $216 $333 M
Slide 24: Home equity
Home equity Credit trends Brokered loans by geography* Direct loans by geography* Other FL 2% Home equity - brokered OH 8% ($ in millions) 1Q07 2Q07 3Q07 4Q07 1Q08 Other 25% 24% KY Balance $2,903 $2,810 $2,746 $2,713 $2,651 10% OH 90+ days delinquent $21 $24 $30 $34 $33 90+ days ratio 0.73% 0.86% 1.
Slide 25: Credit containment actions
Credit containment actions Eliminated all brokered home equity production in 2007 Suspended all new developer and non-owner occupied commercial property lending New concentration limits for Commercial portfolio Implemented Watch and Criticized Asset Reduction initiative Significantly tightened under
Slide 26: Conservative balance sheet
Conservative balance sheet Diversified earning asset mix Strong core deposit funding Cash and due Long-term from banks debt Other assets 2% 12% 11% Equity 8% Securities 11% Fed Funds and Other short-term 9% Core Deposits borrowings 58% Loans 76% 9% Other Deposits Other liabilities 4% Low reliance on
Slide 27: Fifth Third corporate debt ratings
Fifth Third corporate 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+ 3/18/08 Negative Fitch A+ A A+ A A+ A 6/18/08 S
Slide 28: Summary and priorities
Summary and priorities While credit conditions continue to deteriorate, Fifth Third is taking aggressive steps to ensure it is well positioned to weather a challenging environment — Delivery of strong operating results remains a hallmark of Fifth Third despite sluggish economy — Active credit monito
Slide 29: Appendix
Appendix 29 Fifth Third Bank | All Rights Reserved
Slide 30: Real estate driving credit deterioration
Real estate driving credit deterioration NPAs NCOs 1,800 320 1,600 280 1,400 Res Res 240 RE RE 1,200 200 1,000 160 800 CRE CRE 120 600 80 400 200 40 0 0 1Q07 2Q07 3Q07 4Q07 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08 C&I/Lease Auto Credit Card C&I/Lease Auto CRE Res RE Other CRE Res RE NPA and charge-off growth d
Slide 31: Michigan and Florida: most stressed markets
Michigan and Florida: most stressed markets NPAs NCOs 1,800 320 1,600 280 1,400 240 1,200 Stressed markets 200 Stressed 1,000 markets 160 800 120 600 400 80 200 40 - - 1Q07 2Q07 3Q07 4Q07 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08 Other SE National Other MW Other SE National Other MW NE Ohio Michigan Florida NE