Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Citigroup 2009 Financial Services Conference
19 slides from Fifth Third Bancorp's conference presentation, Jan 28, 2009
Slide 1: Citigroup 2009 Financial Services Conference
Exhibit 99.1 Citigroup 2009 Financial Services Conference Kevin Kabat, Chairman, President and CEO January 28, 2009 Please refer to earnings release dated January 22, 2009 for further information, including full results reported on a GAAP basis Fifth Third Bank | All Rights Reserved
Slide 2: 4Q08 in Review
4Q08 IN REVIEW Difficult quarter due to continued deterioration in credit and significant non-recurring items — 4Q08 net loss of $2.2 billion, or $3.82 per diluted share; full year net loss of $2.2 billion or $3.94 per diluted share — Sold or transferred to held-for-sale $1.6 billion in original loa
Slide 3: Significantly Strengthened Credit Metrics/Risk Profile
SIGNIFICANTLY STRENGTHENED CREDIT METRICS/RISK PROFILE FITB FITB Peer 4Q08 3Q08 4Q08 Median Credit Metrics Allowance/Loans 2.41 3.31 +90 bps 2.17 NPLs/Loans* 3.04 2.69 -35 bps 1.81 NPAs/Loans* 3.30 2.96 -34 bps 2.09 Allowance/NPLs* 0.79 1.23 +44 bps 0.93 Allowance/NPAs* 0.73 1.11 +38 bps 0.78 Capita
Slide 4: Strong Capacity to Absorb Losses
STRONG CAPACITY TO ABSORB LOSSES Tangible book value $1.5 billion lower than year-end 2007 after challenging 2008 — Allowance/reserves for loan losses and unfunded commitments increased $2.0 billion — Net reduction of $223 million of combined capital and after-tax reserves, or 3% of year-end 2007 le
Slide 5: Strong Capital Position
STRONG CAPITAL POSITION • Capital plans and targets designed to help ensure strong capital levels, positioning Fifth Third to absorb significant potential losses and provisions in a potentially more difficult environment through 2009 • Revised capital targets in June 2008 in order to provide greater
Slide 6: Capital Plans
CAPITAL PLANS Expect capital levels to continue to exceed targets near-term in difficult economic environment Comfortable with current levels of capital, including tangible common equity (TCE) ratio Longer-term, expect to manage company at higher TCE levels Potential or expected avenues of improveme
Slide 7: Strong Funding Position
STRONG FUNDING POSITION Highlights Holding Company Highlights Fifth Third remains heavily core funded Current holding company cash position through 1Q10 sufficient to satisfy all fixed obligations over — Core deposit growth of $3.5 billion, total the next 24 months deposit growth of $5.6 billion sin
Slide 8: Portfolio Performance Drivers
PORTFOLIO PERFORMANCE DRIVERS* No Participation In Performance Largely Driven By Subprime mortgages Geography: Option ARMs Florida, Michigan most stressed FY2008 C/O ratio: Total loan portfolio 3.7% Commercial portfolio 4.0% Consumer portfolio 3.3% Discontinued or Suspended Lending Remaining Midwest
Slide 9: 86% of Commercial Loan Charge-offs in 2008 from Loans Originated Before 2007
86% OF COMMERCIAL LOAN CHARGE-OFFS (BY VALUE) IN 2008 ARE FROM LOANS ORIGINATED BEFORE 2007 Profile of 2008 commercial charge-offs ($) by Highlights obligor vintage 2007 2008 Core* 2% 2006 was the single greatest contributing 12% year to commercial charge-offs in 2008, comprising 25% of charge-offs
Slide 10: Home Builder Loans Account for 40% of Total 2008 Commercial Losses
‘HOME BUILDER’ LOANS ACCOUNT FOR 40% OF TOTAL 2008 COMMERCIAL LOSSES, LARGELY FROM LOANS IN FLORIDA AND MICHIGAN Overview of 2008 ‘Home Builder’ loan losses by Highlights commercial loan losses geography FL • Florida and Michigan (Crown)** account for 37% of the 100% = $2.0 BN total homebuilder loan
Slide 11: Overview of Actions Taken to Improve Commercial Credit Process
OVERVIEW OF ACTIONS TAKEN TO IMPROVE COMMERCIAL CREDIT PROCESS Key actions 2006 2007 2008 1 Tightened • Reduced individuals with • Stopped new originations for underwriting business banking override non-owner occupied RE authority by two-thirds • Stopped new originations to home builders • Created c
Slide 12: Commercial Portfolio Actions
COMMERCIAL PORTFOLIO ACTIONS 9/30/2008 Total Current Loans identified where sale value Contractual carrying 4Q08 carrying believed to exceed work out value ($ in millions) balance value charge-offs value Sold 240 177 120 - Portfolio actions reduced risk of further Moved to held-for-sale 1,370 1,165
Slide 13: 81% of Consumer Loan Charge-offs in 2008 from Loans Originated Before 2007
81% OF CONSUMER LOAN CHARGE-OFFS (BY VALUE) IN 2008 ARE FROM LOANS ORIGINATED BEFORE 2007 Profile of 2008 consumer charge-offs ($) by Highlights obligor vintage 2008 2007 3% 2004 & 16% prior 2005 contributed the largest proportion 19% (32%) of consumer charge-offs 19% of charge-offs in 2008 from con
Slide 14: FITB Has Addressed the Origination Sources Behind Home Equity Losses
FITB HAS ADDRESSED THE ORIGINATION SOURCES THAT LED TO THE MAJORITY OF CONSUMER HOME EQUITY CREDIT LOSSES 2008 consumer home equity dollar charge-offs Highlights by source/root cause On-going originations 8% Targeted actions have addressed the source of 92% of home equity losses HEA 41% With these a
Slide 15: Underwriting Actions Have Improved Home Equity Quality
UNDERWRITING ACTIONS HAVE IMPROVED HOME EQUITY QUALITY Weighted avg. CLTV (combined loan-to-value) Weighted avg. FICO score* 80.1% 775 75.5% 761 751 68.4% 2006 2007 2008 2006 2007 2008 st % of broker originated loans % 1 lien position 14% 40% 25% 28% 7% 1% 2006 2007 2008 2006 2007 2008 15 * At origi
Slide 16: Underwriting Actions Since 2006 Improved Mortgage Origination Quality
UNDERWRITING ACTIONS SINCE 2006 HAVE SIGNIFICANTLY IMPROVED ORIGINATION QUALITY IN MORTGAGE Weighted avg. LTV (loan-to-value) Weighted avg. FICO score* 83.4% 747 80.7% 729 717 76.3% 2006 2007 2008 2006 2007 2008 $ of non-owner occupied home originations % of lot loan originations 8% 16% 5% 1.5% 3% 0
Slide 17: Overview of Actions Taken to Improve Consumer Credit Process
OVERVIEW OF ACTIONS TAKEN TO IMPROVE CONSUMER CREDIT PROCESS Key actions 2006 2007 2008 1 Tightened • Tightened home equity • Limited exceptions in home • Discontinued mortgage spec underwriting lending collateral and credit equity, targeting broker and lending guidelines high LTV segments • Revised
Slide 18: Summary
SUMMARY Solid operating results despite sluggish economy Significant reduction in credit risk, improvement in coverage ratios Capital position remains strong in conjunction with credit risk actions Core funding orientation Proactive measure to mitigate exposures, tighten credit standards for new loa
Slide 19: Cautionary Statement
CAUTIONARY STATEMENT This report may contain forward-looking statements about Fifth Third Bancorp 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 of 1934, as amended, and Rule 3b-6 promulgated t
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