Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Morgan Stanley US Financials, Payments, & CRE Conference 2023
30 slides from Fifth Third Bancorp's conference presentation, Jun 13, 2023
Slide 1: Morgan Stanley US Financials, Payments, & CRE Conference
© Fifth Third Bancorp | All Rights Reserved © Fifth Third Bancorp | All Rights Reserved Morgan Stanley US Financials, Payments, & CRE Conference Tim Spence President and Chief Executive Officer June 14, 2023
Slide 2: Forward-looking statements
© Fifth Third Bancorp | All Rights Reserved 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,
Slide 3: Why Fifth Third
© Fifth Third Bancorp | All Rights Reserved Why Fifth Third Continually investing for long-term outperformance regardless of the environment Through the cycle discipline throughout the bank – liquidity/deposits, credit, rates, expenses, and capital management Focused on consistently generating top q
Slide 4: We have grown our high-quality deposit franchise through multi-year investments
© Fifth Third Bancorp | All Rights Reserved We have grown our high-quality deposit franchise through multi- year investments 4 1 Commercial segment service charges on deposits as a % of noninterest revenue; 2 See forward-looking statements on page 2 of this presentation regarding forward-looking non
Slide 5: Our deposit franchise stands out favorably among peers
© Fifth Third Bancorp | All Rights Reserved 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% Our deposit franchise stands out favorably among peers 5 Only bank among peers to increase deposits since 2Q22 Note: Banks impacted by M&A excluded from analysis ACH Credit
Slide 6: Consistent and focused investments in the Consumer deposit franchise
© Fifth Third Bancorp | All Rights Reserved 6 Presence 1 Data sourced from S&P Global Market Intelligence with deposits per branch capped at $250MM per June 2022 FDIC data; Total and Midwest rankings represent deposit market share and Southeast ranking is based on locational share; 2 See forward-loo
Slide 7: Commercial deposit franchise highlights
© Fifth Third Bancorp | All Rights Reserved Led by Expert AP, Expert AR, and Cash Logistics • Digitize and automate manual “order-to-cash” and “procure-to-pay” processes for clients • Expect mid-to-high single digits annual growth, reflecting acquisition of BD Healthcare Commercial deposit franchise
Slide 8: Rize acquisition accelerates long standing embedded payments capabilities
© Fifth Third Bancorp | All Rights Reserved Rize acquisition accelerates long standing embedded payments capabilities 8 Combining over a decade of embedded payments expertise with acquisition of Rize Money to form Newline TM by Fifth Third Client list includes a broad range of category leaders • Exp
Slide 9: Conservative consumer loan portfolio concentrated in super prime borrowers and homeowners
© Fifth Third Bancorp | All Rights Reserved 9 Conservative consumer loan portfolio highly concentrated in super prime borrowers and homeowners 1 April 2023 vs. April 2020 Additional information: ~20% ~(20%) Homeowners Renters ~25% ~(5%) FICO 720+ FICO <720 Median FITB customer deposit balance compar
Slide 10: Disciplined client selection throughout commercial
© Fifth Third Bancorp | All Rights Reserved 15% 14% 13% 8%8% 7% 6% 6% 4% 5% 4% 10% Real Estate Manufacturing Financial Services & Insurance Business Services Health Care Wholesale Trade Retail Trade Accommodation & Food Mining Communication & Information Construction Other 13% 14% 14% 15% 16% 16% 17
Slide 11: Current expectations 2Q23 compared to 1Q23
© Fifth Third Bancorp | All Rights Reserved Net interest income 1 Noninterest income 1 up 2 – 3% Noninterest expense 1 down 8 – 9% down ~1% (1Q23 baseline: $1.522BN) (1Q23 baseline: $723MM) (1Q23 baseline: $1.319BN) Net charge-off ratio 25 – 35 bps 1 Non-GAAP measure: see forward-looking statements
Slide 12: Appendix
© Fifth Third Bancorp | All Rights Reserved 12 Appendix
Slide 13: ESG commitments and community
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 13 Addressing climate change Promoting inclusion and diversity Demonstrating our commitment to employees Strengthening our communities Keeping the customer at the center $165MM in lending, investments, and philanthropy towards
Slide 14: Actions demonstrating leadership
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 14 Actions Demonstrating Leadership Third-party recognitions $500,000 donated for hurricane relief in Florida Through Fifth Third Foundation in addition to other assistance programs Published 3 rd ESG report Available on ir.53.
Slide 15: Footprint positioned to benefit from resurgence of domestic manufacturing
© Fifth Third Bancorp | All Rights Reserved Footprint is well positioned to benefit from the resurgence of domestic manufacturing and infrastructure spending 1 Source: https://www.whitehouse.gov/invest/; 2 Reshoring Initiative 2022 Data report; 3 Source: U.S. Bureau of Economic Analysis 15 • Footpri
Slide 16: Significantly improved credit profile
© Fifth Third Bancorp | All Rights Reserved 0.42% 0% 1% 2% 3% 4% 5% 1Q04 1Q08 4Q12 1Q20 1Q23 0.26% 0% 2% 4% 6% 8% 1Q04 1Q08 4Q12 1Q20 1Q23 0.48% 0% 1% 2% 3% 4% 5% 1Q04 1Q08 4Q12 1Q20 1Q23 0.17% 0% 4% 8% 12% 1Q04 1Q08 4Q12 1Q20 1Q23 Significantly improved credit profile Non-Performing Loans 1 Total N
Slide 17: Lowest CRE concentration relative to peers
© Fifth Third Bancorp | All Rights Reserved 15.3% 14.1% 14.1% 8.4% 7.5% 7.4% 7.4% 6.4% 5.5% 5.3% 4.8% 4.4% 3.0% Peer 12 Peer 11 Peer 10 Peer 9 Peer 8 Peer 7 Peer 6 Peer 5 Peer 4 Peer 3 Peer 2 Peer 1 x 2.4% 2.4% 2.3% 2.3% 1.8% 1.6% 1.2% 1.2% 1.0% 0.9% 0.9% 0.8% 0.1% Peer 12 Peer 11 Peer 10 Peer 9 Pee
Slide 18: Diversifying balance sheet and fee revenue
© Fifth Third Bancorp | All Rights Reserved 7% 5% 31% 8% 8% 12% 12% 9% 14% 12% 15% 15% 20% 14% 19% FY 2012 1Q23 LTM W&AM Commercial banking Commercial deposit fees Card & Processing Other noninterest income Leasing Mortgage banking Consumer deposit fees 42% 47% 37% 31% 21% 22% 4Q12 1Q23 C&I Real est
Slide 19: Investment portfolio composition
© Fifth Third Bancorp | All Rights Reserved 19 Investment portfolio composition as of 3/31/23 Total securities portfolio CMBS portfolio is AAA-rated Total securities portfolio $56B ~30% of interest earning assets Agency CMBS • $29BN portfolio • ~85% in Fannie/Freddie deals risk weighted at 20% and r
Slide 20: Fintech disruption in healthcare managed services
© Fifth Third Bancorp | All Rights Reserved Taking advantage of fintech disruption in healthcare managed services to support our broader strategic growth Healthcare provider revenue cycle management value chain Set up medical billing structure Enable pre- and point-of-care financial analysis Prepare
Slide 21: Cash flow hedges continue to protect NIM
© Fifth Third Bancorp | All Rights Reserved ($3BN @ 2.25% 1- month LIBOR strike) Cash flow hedges continue to protect NIM 1 EOP notional value of cash flow hedges ($ in billions) Actual Cash flow hedges 1 Represents forward looking statement, please refer to page 2 of this presentation regarding for
Slide 22: Balance sheet positioning as of 3/31/23
© Fifth Third Bancorp | All Rights Reserved • 65% allocation to bullet/ locked- out cash flow securities • AFS yield: 3.04% 5 • Effective duration of 5.3 6 • Net unrealized pre-tax loss: $5.2BN • 98% AFS 11 $25.0BN fixed 3 | $52.2BN variable 1,2 Commercial loans 1,2,3 Balance sheet positioning as of
Slide 23: Total commercial portfolio overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 0.05% 0.13% 0.17% 30-89 Delinquencies 0.15% 0.14% 0.15% 90+ Delinquencies 0.02% 0.02% 0.02% Nonperforming Loans 2 0.44% 0.34% 0.43% 23 Portfolio loans $ in billions Period-end QoQ change Average QoQ c
Slide 24: Commercial & industrial overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 0.07% 0.14% 0.21% 30-89 Delinquencies 0.16% 0.14% 0.17% 90+ Delinquencies 0.02% 0.02% 0.03% Nonperforming Loans 2 0.50% 0.38% 0.49% 24 Portfolio loans $ in billions Period-end QoQ change Average QoQ c
Slide 25: Commercial real estate overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 (0.03%) 0.00% 0.04% 30-89 Delinquencies 0.12% 0.16% 0.04% 90+ Delinquencies 0.01% 0.00% 0.00% Nonperforming Loans 2 0.30% 0.29% 0.29% Commercial real estate overview 25 CRE Mortgage Balance by occupan
Slide 26: Total consumer portfolio overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 0.25% 0.38% 0.42% 30-89 Delinquencies 0.41% 0.57% 0.44% 90+ Delinquencies 0.09% 0.06% 0.06% Nonperforming Loans 2 0.49% 0.56% 0.57% Weighted average FICO at origination 3 765 765 765 Weighted average
Slide 27: Residential Mortgage overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 (0.02%) 0.01% 0.00% 30-89 Delinquencies 0.09% 0.17% 0.10% 90+ Delinquencies 0.08% 0.04% 0.05% Nonperforming Loans 2 0.51% 0.70% 0.73% Weighted average FICO at origination 3 767 765 764 Weighted averag
Slide 28: Home equity overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 (0.07%) 0.02% (0.04%) 30-89 Delinquencies 0.64% 0.74% 0.58% 90+ Delinquencies 0.03% 0.02% 0.03% Nonperforming Loans 2 1.97% 1.66% 1.72% Weighted average FICO at origination 3 764 767 767 Weighted aver
Slide 29: Indirect secured consumer overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 0.17% 0.32% 0.34% 30-89 Delinquencies 0.62% 0.86% 0.67% 90+ Delinquencies 0.05% 0.00% 0.00% Nonperforming Loans 2 0.13% 0.18% 0.16% Indirect secured consumer overview 29 Portfolio FICO score at origin
Slide 30: Credit card overview
© Fifth Third Bancorp | All Rights Reserved Classification: Internal Use 1Q22 4Q22 1Q23 NCO ratio 1 3.13% 2.85% 3.43% 30-89 Delinquencies 1.01% 1.12% 1.02% 90+ Delinquencies 0.83% 0.96% 1.02% Nonperforming Loans 2 1.36% 1.44% 1.65% Credit card overview 30 Portfolio FICO score at origination 3 750+72
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