Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q4 2020 Earnings Presentation
32 slides from Fifth Third Bancorp's earnings presentation, Jan 21, 2021
Slide 1: All Rights Reserved
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved
Slide 2: Forward-looking statements
Classification: Internal Use Fifth Third Banc rp | 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 Secu
Slide 3: Fourth quarter highlights
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved • Strong reported and adjusted return metrics, reflecting solid operating results • Strong PPNR performance driven by fee growth, including record commercial banking revenue • Solid credit quality, with stable NCOs and a decline
Slide 4: Loans and securities balances
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Securities1Commercial Consumer Total loan yield $ in billions; loan & lease balances exclude HFS Short-term investments Taxable securities yield Commercial Consumer Commercial Consumer $ in billions $ in billions $ in billions ~
Slide 5: Deposits and wholesale funding
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Commercial Consumer Total IB core deposit rate $ in billions $ in billions Total wholesale funding Wholesale funding cost Total wholesale fundingCommercial Consumer $ in billions $ in billions Totals shown above may not foot due
Slide 6: Net interest income
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved T o ta l n e t in te re s t in co m e ; $ m ill io n s NII $ in millions; NIM change in bps (net of deposit actions) (including loan runoff) Cumulative quarterly impact of hedge portfolio; 4Q20 For end note descriptions, see end
Slide 7: Noninterest income
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved (excl. securities (gains)/losses)1 • Adjusted noninterest income1 up $111 million, or 16% • Primary drivers: ‒ Other noninterest income (up 260%) ‒ Commercial banking revenue (up 13%) ‒ Service charges on deposits (up 1%) ‒ Part
Slide 8: Noninterest expense
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved • Adjusted noninterest expense1 up $41 million, or 4% (up 3% excluding impact of NQDC) • Primary drivers: ‒ Compensation and benefits (up 7%) ‒ Marketing expense (up 30%) ‒ Partially offset by other noninterest expense (down 6%)
Slide 9: COVID high impact industry exposures
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Restaurants ($1.6BN) Hotels ($1.4BN) Retail non- Essential ($1.9BN) Casinos ($1.6BN) Healthcare Facilities ($2.5BN) Leisure Travel ($0.4BN) • • • • • • • • ~65% of portfolio in QSR, mostly to top-tier brands and national chains
Slide 10: Commercial real estate and COVID high impact exposures
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Apartment Office Home Builder Retail Hospitality Industrial Student Housing Self Storage Non-CRE Collateral Other Casinos COVID high impact Exposures by property typeTotal loans and leases ex. PPP • • • • • • Balance Deferral Ra
Slide 11: Credit quality summary
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Incurred Loss Method CECL Including MB unamortized loan discount Ex. PPP • ACL ratio of 2.41% declined 8 bps sequentially, driven primarily by improved macroeconomic environment and credit results • NCO ratio of 0.43% up 8 bps f
Slide 12: Allowance for credit losses
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Commercial and industrial loans Commercial mortgage loans Commercial construction loans Commercial leases Residential mortgage Home equity loans Indirect secured consumer loans Credit card loans Other consumer loans 105 33 297 2
Slide 13: Liquidity and capital
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved • Unprecedented levels of short-term liquidity currently ~21x higher than 2019 average • Loan-to-core deposit ratio of 69% (66% ex. PPP) • ~$104 billion of available liquidity sources • $4.9B in Holding Company cash, sufficient
Slide 14: Balance outlook and PPP
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved (including HFS) (FY20 baseline: $4.79BN) (FY20 baseline: $2.92BN) (FY20 baseline: $4.55N) ($ BN; Average Balance) Currently expect yields for all rounds in the 2.4% range, excluding accelerated forgiveness (~$50MM remaining from
Slide 15: Outlook
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved (4Q20 baseline: $814MM) (4Q20 baseline: $1.169BN) (including HFS) (4Q20 baseline: $1.185BN) For end note descriptions, see end note summary starting on page 31
Slide 16: All Rights Reserved
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved
Slide 17: All Rights Reserved
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved
Slide 18: Loans in payment deferral programs
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Commercial loans & leases: 5% 1% 0% Commercial and industrial loans 3% 0% 0% Commercial mortgage 15% 3% 1% Commercial construction 7% 3% 0% Commercial leases 4% 0% 0% Consumer Loans: 8% 4% 2% Residential mortgage loans2 9% 7% 4%
Slide 19: Hedge portfolio
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Floors Swaps ($3BN @ 2.25% 1-month LIBOR strike) ($8BN @ 3.02% receive fixed / pay 1-month LIBOR) Notional value of cash flow hedges ($ Billions) Assuming no change to 1ML beyond 1/21/2021
Slide 20: Fixed and variable rate composition
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved 100% Fix | 0% Variable 65% Fix | 35% Variable $21.3BN fixed 3 | $42.9BN variable 1,2 $31.5BN fixed | $8.3BN variable 1 $12.1BN fixed | $2.9BN variable 4 • 1ML based: 54%6 • 3ML based: 7%6 • Prime based: 5%6 • Other based: 1%6,9
Slide 21: Interest rate sensitivity
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved • As of December 31, 2020, 49% of HFI loans were variable rate net of existing hedges (61% of total commercial; 21% of total consumer)1 • ~87% of $47BN commercial portfolio indexed to 1ML have floors at or above a 0% • Investmen
Slide 22: Funding and liquidity
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved $ millions – excl. Retail Brokered & Institutional CDs Demand 28% Interest checking 23% Savings/ MMDA 24%Consumer time 1% Foreign Office <1% Non-core deposits 1% Short term borrowings 1% Other liabilities 3% Equity 11% Long- ter
Slide 23: Mortgage banking
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved $ millions $ billions • Mortgage banking revenue decreased $51 million from prior quarter and decreased $48 million from year-ago quarter • $3.9 billion in originations, up 4% compared to the year-ago quarter and down 13% from p
Slide 24: All Rights Reserved $ Millions; pre-tax Includes deferred 2019 benefit For end note descriptions,
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved $ Millions; pre-tax Includes deferred 2019 benefit For end note descriptions, see end note summary starting on page 31
Slide 25: Net charge-offs by portfolio
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Average portfolio balance NCOs as a % of average portfolio loans For end note descriptions, see end note summary starting on page 31
Slide 26: All Rights Reserved $ millions $ millions $ millions For end note descriptions,
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved $ millions $ millions $ millions For end note descriptions, see end note summary starting on page 31
Slide 27: ESG highlights
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved $18 Minimum wage 60% Women in workforce 27% Persons of color in workforce $63MM Diverse supplier spend $2.8BN commitment To accelerate racial equity, equality and inclusion 147,293 Hours of community service 5.2MM Meals provided
Slide 28: Notable items
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved • $30 million pre-tax (~$23 million after-tax2) charge related to the valuation of the Visa total return swap • $27 million pre-tax (~$21 million after-tax2) charge related to net business acquisition and disposition charges • $
Slide 29: Non-GAAP reconciliation
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved For the Year Ended $ and shares in millions December September June March December (unaudited) 2020 2020 2020 2020 2019 2020 Add: Intangible amortization, net of tax 9 9 9 10 11 38 Less: Average goodwill (4,261) (4,261) (4,261)
Slide 30: Non-GAAP reconciliation
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved For end note descriptions, see end note summary starting on page 31; totals shown above may not foot due to rounding For the Three Months Ended For the Year Ended $ and shares in millions December September June March December (
Slide 31: End notes
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved 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 29 and 30 of this presentation and the use of non-GAAP measur
Slide 32: End notes
Classification: Internal Use Fifth Third Banc rp | All Rights Reserved Note: Data as of 12/31/20. 1. Excludes HFS Loans & Leases. 2. Fifth Third had $11B of variable loans classified as fixed given the impacts of $3BN in floors with a 2.25% 1ML strike and $8BN in receive-fix swaps. 3. Excludes ~$5B