Slide 1: Fifth Third Bancorp 1Q21 Earnings Presentation
Fifth Third Bancorp 1Q21 Earnings Presentation April 20, 2021 Refer to earnings release dated April 20, 2021 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: 1Q21 highlights
1Q21 highlights Reported1 Adjusted1 • Returned $180 million to shareholders through repurchases; capacity to repurchase up to $347 EPS $0.93 $0.93 million in 2Q21 ROA 1.38% 1.40% • Strong reported and adjusted return metrics, reflecting solid operating results ROE 13.1% 13.3% • Historically low NCO
Slide 4: Net interest income
Net interest income1 4Q20 to 1Q21 Reported NII & NIM Walk NII $ in millions; NIM change in bps NII NIM $1,233 4Q20 $1,185 2.58% $1,185 $1,179 Decline in excess liquidity - 3 3.28% Incremental PPP fees 12 3 Total net interest income; $ millions Government-guaranteed loans purchased from third party 2
Slide 5: 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 rates. Estimated NII sensitivity profile and ALCO policy limits • As of March 31, 2021, 48% of HFI loans were variable % Change in NII (FTE) ALCO policy limit rate net of existing hedges (66% of total
Slide 6: Noninterest income
Noninterest income 1Q21 vs. 4Q20 $814 • Adjusted noninterest income1 down $55 million, or 7% $787 $749 $759 • Primary drivers: $732 ‒ Record commercial banking revenue (up 9%) $671 ‒ Mortgage banking revenue (up 240%) Total noninterest income; $ millions ‒ Leasing business revenue (up 26%) ‒ Offset
Slide 7: Noninterest expense
Noninterest expense 1Q21 vs. 4Q20 $1,236 $1,200 $1,193 $1,215 $1,215 • Adjusted noninterest expense1 up $41 million, or 3% $1,174 • Primary drivers: ‒ Compensation and benefits (up 6%) Total noninterest expense; $ millions ‒ Technology and communications (up 3%) ‒ Partially offset by marketing expen
Slide 8: Interest earning assets
Interest earning assets Average loan & lease balances Average securities1 and short-term investments $ in billions; loan & lease balances exclude HFS $ in billions $71.0 $69.0 $110.8 $109.4 $109.0 $39.8 $39.5 $39.6 $35.0 $32.7 4.44% ~$5.1BN $39.0 ~$5.2BN 3.68% in PPP 3.68% in PPP $2.9 loans loans 3.
Slide 9: Core deposits and wholesale funding
Core deposits and wholesale funding Average core deposit balances Average wholesale funding balances $ in billions $ in billions $156.3 $156.9 $123.2 $74.3 $77.7 $21.8 $67.4 $18.7 $18.4 2.73% $82.1 $79.2 2.38% 2.42% $55.8 0.68% 0.08% 0.06% 1Q20 4Q20 1Q21 1Q20 4Q20 1Q21 Total IB core Commercial Consu
Slide 10: Well diversified commercial portfolio with several potential risk mitigants to recent stresses
Well diversified commercial portfolio with several potential risk mitigants to recent stresses COVID-19 high impact portfolios of interest Total Commercial balances ex. PPP Key takeaways: Restaurants • ~75% of portfolio in QSR, mostly to top-tier brands and national chains ($1.6BN) • Areas of focus:
Slide 11: CRE portfolio is smaller, centrally managed, and well diversified
CRE portfolio is smaller, centrally managed, and well diversified CRE as a % of total loans and leases Well diversified by property type Total loans and leases ex. PPP Exposures by property type Apartment 14% 1% Owner Occupied Office CRE 2% 27% Home Builder 5% 3% Non-owner Occupied CRE Hospitality 7
Slide 12: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs1 ACL as % of portfolio loans and leases 2.76% 2.75% 2.65% 2.64% 2.62% Ex. PPP 2.53% 2.40% Including MB 2.30% 2.50% 2.49% 2.29% unamortized 2.41% loan discount 0.79% 2.19% 2.13% 0.72% 0.60% 0.55% 0.45% 0.33% 0.33% 0.28% 0.29% 0.35% 1Q18 1Q19
Slide 13: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 4Q20 1Q21 $s in millions % of portfolio % of portfolio Allowance for loan & lease losses Amount loans & leases Amount loans & leases Commercial and industrial loans 901 1.81% 805 1.64% Commercial mortgage loans 402 3.79% 389 3.71% Commer
Slide 14: Strong capital and liquidity position
Strong capital and liquidity position Regulatory capital position Common equity tier 1 ratio1 ~34 bps ~9 bps 10.46% 10.34% ~(5 bps) ~(14 bps) • Risk-based capital ratios have meaningfully improved ~(12 bps) (CET1 up ~70 bps since end of 2019) • Capacity to repurchase up to ~$347 million in 2Q21 • Po
Slide 15: Current expectations
Current expectations FY 2021 compared to FY 2020 • Includes impact of PPP forecast provided Loans & leases Average: stable to up slightly • Reflects impact of recent consumer loan (including HFS) purchases (~$3.7BN in GNMA forbearance pools added since December 2020, incl. ~$1BN in April 2021) • Ass
Slide 16: Current expectations
Current expectations Second quarter 2021 compared to first quarter 2021 Loans & leases Average: up 1 – 2% • Includes impact of PPP forecast provided (including HFS) • Reflects impact of recent consumer loan purchases • NII guidance assumes relatively stable securities balances Net interest income1 s
Slide 17: 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 Diversified and growing fee revenues to support profitability and generate strong returns 3 Investing for long-term
Slide 18: Appendix
Appendix 18 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 19: 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 20: Committed to generating sustainable value
Committed to generating sustainable value Environmental, Social, and Governance (ESG) actions and impact Actions Impact $41.6BN Delivered against 2016 $32BN community commitment1 World’s Most Ethical Companies Recognized by Ethisphere in 2021 $18 Minimum wage per hour (since 2019) Most Responsible C
Slide 21: Paycheck Protection Program update
Paycheck Protection Program update PPP loan balance assumptions ($ billions; Average Balance) 2021 Actual Current expectations1 Expected yield1 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Ex. accelerated forgiveness Wave 1 & 2 $5.2 $5.1 $4.4 $3.1 $1.2 $0.4 2.3% previously $3.2 previously $1.3 unchanged unchanged
Slide 22: Cash flow hedges
Cash flow hedges Cash flow hedges continue to protect NIM for next 4 years Notional value of cash flow hedges ($ Billions) Blended rate of swaps will continue to improve throughout time: • 1Q21-4Q22: 3.02% • 1Q23-3Q23: 3.08% $11 $11 $11 $11 $11 $11 $11 $11 • 4Q23-1Q24: 3.09% $10 $10 $10 • 2Q24: 3.14
Slide 23: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $21.5BN fixed 3 | $42.2BN variable 1,2 $32.0BN fixed | $7.8BN variable 1 $11.5BN fixed | $2.9BN variable 4 • 1ML based: 54%6 • 1ML based: 2%7 • 57% allocation to bullet/ • 1ML based: 9%8 • 3ML based:
Slide 24: Strong liquidity profile
Strong liquidity profile Holding company: Unsecured debt maturities • Holding Company cash as of March 31, 2021: $4.1B $ millions – excl. Retail Brokered & Institutional CDs • Cash currently sufficient to satisfy all fixed obligations in $3,987 a stressed environment for ~25 months (debt maturities,
Slide 25: Mortgage banking results
Mortgage banking results Mortgage banking net revenue Mortgage originations and margins $ millions $ billions $4.68 $4.53 $120 $99 $76 $85 $4.01 $3.94 $19 $18 $1.11 $1.06 $3.42 Originations HFI $0.82 $1.03 $63 $66 $25 $1.01 $67 $59 $66 $81 $95 $93 $89 Originations HFS $47 $3.19 $2.41 $3.42 $2.91 $3.
Slide 26: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ Millions; pre-tax $44 $45 $22 $11 4Q21 4Q22 4Q23 4Q24 For end note descriptions, see end note summary starting on page 30 26 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 27: NPL rollforward
NPL rollforward1 Commercial $ millions Consumer $ millions Total NPL $ millions For end note descriptions, see end note summary starting on page 30 27 © Fifth Classification: Third Bancorp |Internal Use All Rights Reserved
Slide 28: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions March December September June March (unaudited) 2021 2020 2020 2020 2020 Net income (U.S. GAAP) (a) $694 $604 $581 $195 $46 Net income (U.S. GAAP) (annualized) (b) $2,815 $2,403 $2,311 $7
Slide 29: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For the Three Months Ended $ and shares in millions March December September June March (unaudited) 2021 2020 2020 2020 2020 Average interest-earning assets (a) $182,715 $182,418 $180,704 $176,224 $151,213 Net interest income (U.S. GAAP) (
Slide 30: 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 28 and 29 of this presentation and the use of non-GAAP measures on pages 25-27 of t
Slide 31: Earnings presentation end notes
Earnings presentation end notes Slide 21 end notes 1. 2016-2020. 2. since 2004 3. 2019-2020. 4. Since 2012 Slide 22 end notes 1. Represents forward looking statement, please refer to page 2 of this presentation regarding forward-looking non-GAAP measures. Slide 23 end notes Note: Data as of 3/31/21.