Slide 1: Fifth Third Bancorp 2Q23 Earnings Presentation
Fifth Third Bancorp 2Q23 Earnings Presentation July 20, 2023 Refer to earnings release dated July 20, 2023 for further information. © Fifth Third Bancorp | All Rights Reserved Ó Fifth Third Bancorp | 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: 2Q23 highlights
2Q23 highlights Reported1 Adjusted1 • Period-end total deposits increased 1% compared to 1Q23; EPS $0.82 $0.87 average total deposits were flat sequentially ROA 1.17% 1.23% • Revenue increased 8%, PPNR1 increased 6% (adjusted PPNR1 increased 8%), net income increased 7% compared to 2Q22 ROE 13.9% 14
Slide 4: Net interest income
Net interest income1 1Q23 to 2Q23 Reported NII & NIM Walk NII $ in millions; NIM change in bps NII NIM 1Q23 $1,522 3.29% Net market rate impact (44) (9) Total net interest income; $ millions Loan balances / mix 16 1 Securities portfolio 8 4 Excess cash growth - (4) Deposit/wholesale funding (53) (11
Slide 5: Noninterest income
Noninterest income 2Q23 vs. 1Q23 • Adjusted noninterest income1 up $26 million, or 4% Total noninterest income; $ millions • Primary drivers: ‒ Other noninterest income (up 236%) attributable to equity fund and direct investment income ‒ Service charges on deposits (up 5%) reflecting an increase in
Slide 6: Noninterest expense
Noninterest expense 2Q23 vs. 1Q23 • Adjusted noninterest expense1 down $100 million, or 8% • Primary drivers: ‒ Compensation and benefits (down 14%) Total noninterest expense; $ millions ‒ Technology and communications (down 3%) ‒ Leasing business expense (down 9%) ‒ Partially offset by other nonint
Slide 7: Interest earning assets
Interest earning assets Average loan & lease balances Average securities1 and short-term investments $ in billions; loan & lease balances excluding HFS $ in billions % change % change QoQ YoY QoQ YoY — +5% +48% (19%) — +5% (2%) +5% Period-end loan & lease balances Period-end HFS loan & lease balance
Slide 8: Deposits and wholesale funding
Deposits and wholesale funding Average deposit balances Average wholesale funding balances $ in billions $ in billions % change % change $0.7 $4.3 $5.4 QoQ YoY QoQ YoY +24% NM +8% +62% (1%) (4%) CDs > $250K Core deposits Total interest bearing deposit costs Total wholesale funding Wholesale funding
Slide 9: We have a high-quality deposit franchise
We have a high-quality deposit franchise High concentration of operating deposit balances which has proven to be stickier in this environment Consumer franchise highlights Deposit mix by segment Commercial franchise highlights as of 6/30/23 • 88% FDIC insured1 • 26% FDIC insured1 • 92% of consumers
Slide 10: Credit quality overview
Credit quality overview Early stage delinquencies and NPAs ACL as % of portfolio loans and leases 0.65% 0.61% 0.47% 0.54% 0.51% 0.33% 0.26% 0.25% 0.26% 0.28% 2Q20 2Q21 2Q22 1Q23 2Q23 NPA ratio1 30-89 days past due as a % of portfolio loans1 Net charge-offs (NCOs) 0.50% 0.29% 0.26% 0.42% 0.16% • Driv
Slide 11: Allowance for credit losses
Allowance for credit losses Allocation of allowance by product 2Q23 Change in rate $ in millions Compared to: % of portfolio Allowance for loan & lease losses Amount loans & leases 1Q23 CECL Day 1 Commercial and industrial loans 841 1.48% 0.07% 0.26% Commercial mortgage loans 277 2.45% 0.27% 0.88% C
Slide 12: Strong liquidity and capital position
Strong liquidity and capital position Liquidity position Capital position $ in billions Common equity tier 1 ratio1 Liquidity Sources 3/31/23 6/30/23 Fed Reserves ~$9 ~$11 Unpledged Investment Securities ~$31 ~$28 Available FHLB Borrowing Capacity ~$8 ~$10 Current Fed Discount Window Availability ~$
Slide 13: Current expectations: FY 2023
Current expectations FY 2023 compared to FY 2022 Avg. loans & leases up 1 – 2% (including HFS) Total revenue1 up 3 – 4% (FY22 baseline: $8.487BN; Includes securities g/l) Net interest income1 up 3 – 5% (FY22 baseline: $5.625BN) assumes a 25 basis point hike in July 2023, remaining at 5.50% for remai
Slide 14: Current expectations: 3Q23
Current expectations 3Q23 compared to 2Q23 Avg. loans & leases down 1 – 2% (including HFS) Total revenue1 down 2 – 4% (2Q23 baseline: $2.219BN; Includes securities g/l) Net interest income1 down 2 – 3% (2Q23 baseline: $1.463BN) assumes a 25 basis point rate hike in July 2023 Noninterest income1 down
Slide 15: Appendix
Appendix 15 © Fifth Third Bancorp | All Rights Reserved
Slide 16: 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 well-being of Purpose our communities Our Vision Be the One Bank people most value and trust Our Work as One Bank Take Accountability Core Values Be Respectful Act with Integrity Our purpose, vision,
Slide 17: Sustainability priorities and metrics
Sustainability priorities and metrics Keeping the Demonstrating our Addressing climate Promoting inclusion Strengthening our customer at the commitment to change and diversity communities center employees ~$30BN in sustainable financing $2.9BN in lending, investments, 12MM customer outreach calls, $
Slide 18: A recognized leader in sustainability among peers
A recognized leader in sustainability among peers Actions Demonstrating Leadership Third-party recognitions Published 2022 Sustainability report Received highest overall rating possible on most recent Available on ir.53.com Community Reinvestment Act performance examination Announced 10-year $100BN
Slide 19: Strong liquidity profile
Strong liquidity profile Unsecured debt maturities $ millions – excl. Retail Brokered & Institutional CDs Holding company: • Holding Company cash as of June 30, 2023: $5.1BN • Cash on hand at Holding Company currently sufficient to satisfy all fixed obligations for ~24 months (debt maturities, commo
Slide 20: Balance sheet positioning
Balance sheet positioning Commercial loans1,2,3 Consumer loans1 Investment portfolio Long-term debt4 $25.2BN fixed 3 | $51.2BN variable 1,2 $38.3BN fixed | $7.2BN variable 1 $6.4BN fixed | $5.9BN variable4 • 64% allocation to bullet/ locked- • 1M based: 44% 7,12 • 1M based: 1% 8,12 • 1M based: 0%9 o
Slide 21: Limited office CRE exposure with strong credit quality
Limited office CRE exposure with strong credit quality Office represents 1.3% of total loans Office CRE portfolio stats As of 6/30/23; CRE is non-owner occupied As of 2Q23; Non-owner occupied Average loan commitment $9.7 million Total Bancorp loans $123BN NCOs / average loans (LTM) (0.01)% Delinquen
Slide 22: Investment portfolio composition
Investment portfolio composition Total securities portfolio CMBS portfolio is AAA-rated AFS portfolio; amortized cost basis; as of 6/30/23 Agency CMBS • $29BN portfolio • ~86% in Fannie/Freddie deals risk weighted at 20% and remaining ~14% are GNMA and risk weighted at 0% • Same financial backing as
Slide 23: Managing rate risk against conservative outcomes
Managing rate risk against conservative outcomes Estimated NII sensitivity profile and ALCO policy limits % Change NII (FTE) ALCO policy limit 13 to 24 13 to 24 Change in interest rates (bps) 12 months months 12 months months +200 Ramp over 12 months (3.9%) (5.7%) (4.0%) (6.0%) Rate Risk models assu
Slide 24: Cash flow hedges to protect NIM in a down-rate scenario
Cash flow hedges to protect NIM in a down-rate scenario Floors and receive-fixed swaps continue to protect NIM1 EOP notional value of cash flow hedges ($ in billions) Forward starting receive- Floors Existing receive-fixed swaps4 ($3BN @ 2.25% 1- fixed swaps3 month LIBOR strike)2 5 Actual weighted a
Slide 25: Mortgage banking results
Mortgage banking results Mortgage banking net revenue Mortgage originations and margins $ in millions $ in billions Rate lock margin 0.84% 0.95% 0.74% 1.05% 1.52% Gain-on-sale margin 0.85% 0.80% 0.86% 1.21% 1.71% Rate lock margin represents gains recorded associated with salable rate locks divided b
Slide 26: Future TRA payment schedule
Future TRA payment schedule Estimated potential GAAP noninterest income recognition1,2 $ in millions; pre-tax 26 © Fifth Third Bancorp | All Rights Reserved For end note descriptions, see end note summary starting on page 40
Slide 27: Preferred dividend schedule
Preferred dividend schedule Upcoming preferred dividend schedule1 3Q23 4Q23 1Q24 2Q24 $ in millions Series H ~$13 ~$13 ~$13 ~$13 Floating (3ML + 3.033%)2 Series I ~$8 ~$8 ~$11 ~$11 Series J ~$7 ~$7 ~$7 ~$7 Floating (3ML + 3.129%)2 Series K ~$3 ~$3 ~$3 ~$3 Series L ~$4 ~$4 ~$4 ~$4 Class B Series A ~$
Slide 28: Total commercial portfolio overview
Total commercial portfolio overview Portfolio loans and leases Key statistics $ in billions Average QoQ change 2Q22 1Q23 2Q23 4.2% 1.9% 1.4% 0.8% 0.4% NCO ratio1 0.19% 0.17% 0.16% Period-end QoQ change 30-89 Delinquencies 0.16% 0.17% 0.16% 2.9% 1.0% 0.8% 1.1% (1.1%) 90+ Delinquencies 0.01% 0.02% 0.0
Slide 29: Commercial & industrial overview
Commercial & industrial overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q22 1Q23 2Q23 5.5% 2.1% 1.8% 0.9% —% NCO ratio1 0.24% 0.21% 0.22% Period-end QoQ change 30-89 Delinquencies 0.19% 0.17% 0.13% 4.1% 0.6% 1.4% 0.9% (1.4%) 90+ Delinquencies 0.01% 0.03% 0.01% Nonperforming
Slide 30: Commercial real estate overview
Commercial real estate overview Portfolio loans Key statistics $ in billions Average QoQ change 2Q22 1Q23 2Q23 1.1% 1.5% 0.8% 1.1% 1.7% NCO ratio1 0.07% 0.04% 0.00% Period-end QoQ change 30-89 Delinquencies 0.07% 0.04% 0.17% (0.1%) 2.6% (0.4%) 2.0% 0.1% 90+ Delinquencies 0.00% 0.00% 0.12% Nonperform
Slide 31: Total consumer portfolio overview
Total consumer portfolio overview Portfolio loans Key statistics $ in billions 2Q22 1Q23 2Q23 Average QoQ change NCO ratio1 0.24% 0.42% 0.50% 3.0% 1.3% 1.5% 1.9% 0.5% 30-89 Delinquencies 0.40% 0.44% 0.48% Period-end QoQ change 90+ Delinquencies 0.07% 0.06% 0.05% 2.0% 1.0% 2.0% 1.2% (0.2%) Nonperform
Slide 32: Residential Mortgage overview
Residential Mortgage overview Portfolio loans Key statistics $ in billions 2Q22 1Q23 2Q23 Average QoQ change NCO ratio1 (0.02%) 0.00% 0.00% 5.2% 1.5% (0.2%) — (0.4%) 30-89 Delinquencies 0.09% 0.10% 0.11% Period-end QoQ change 90+ Delinquencies 0.05% 0.05% 0.04% 2.5% 0.2% 0.2% (0.1%) (0.6%) Nonperfor
Slide 33: Home equity overview
Home equity overview Portfolio balances Key statistics $ in billions 2Q22 1Q23 2Q23 Average QoQ change NCO ratio1 (0.06%) (0.04%) 0.06% (2.8%) 1.6% 1.7% (0.5%) (1.7%) 30-89 Delinquencies 0.56% 0.58% 0.61% Period-end QoQ change 90+ Delinquencies 0.05% 0.03% 0.03% (0.3%) 2.4% 1.0% (2.0%) (1.2%) Nonper
Slide 34: Indirect secured consumer overview
Indirect secured consumer overview Portfolio loans Key statistics $ in billions 2Q22 1Q23 2Q23 Average QoQ change NCO ratio1 0.13% 0.34% 0.38% 0.6% (2.8%) (1.3%) 0.4% (1.9%) 30-89 Delinquencies 0.59% 0.67% 0.76% Period-end QoQ change 90+ Delinquencies 0.05% 0.00% 0.00% (2.3%) (2.2%) (0.6%) (0.4%) (2
Slide 35: Credit card overview
Credit card overview Portfolio loans Key statistics $ in billions 2Q22 1Q23 2Q23 Average QoQ change NCO ratio1 3.26% 3.43% 3.61% 0.8% 3.1% 2.2% (0.8%) 0.2% 30-89 Delinquencies 0.96% 1.02% 1.10% Period-end QoQ change 90+ Delinquencies 0.74% 1.02% 0.94% 4.3% 0.4% 5.9% (6.0%) 3.2% Nonperforming Loans2
Slide 36: NPL Rollforward
NPL1 Rollforward Commercial $ in millions 2Q22 3Q22 4Q22 1Q23 2Q23 Balance, beginning of period $323 $319 $298 $263 $334 Transfers to nonaccrual status 49 91 68 121 185 Transfers to accrual status — — (5) (1) (58) Transfers to held for sale — (19) — — (4) Loan paydowns/payoffs (17) (48) (63) (22) (7
Slide 37: 2Q23 adjustments and notable items
2Q23 adjustments and notable items Adjusted EPS of $0.871 2Q23 reported EPS of $0.82 included a negative $0.05 impact from the following notable items: • $30 million pre-tax (~$23 million after-tax2) charge related to the valuation of the Visa total return swap • $12 million pre-tax (~9 million afte
Slide 38: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidaries For the Three Months Ended $ and shares in millions June March December September June (unaudited) 2023 2023 2022 2022 2022 Net income (U.S. GAAP) (a) $601 $558 $737 $653 $562 Net income (U.S. GAAP) (annualized) (b) $2,411 $2,263 $2,924 $2,
Slide 39: Non-GAAP reconciliation
Non-GAAP reconciliation Fifth Third Bancorp and Subsidiaries For Three Months Ended $ and shares in millions June March December September June (unaudited) 2023 2023 2022 2022 2022 Average interest-earning assets (a) $189,060 $187,407 $187,640 $185,378 $184,406 Net interest income (U.S. GAAP) (b) $1
Slide 40: 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 38 and 39 of this presentation and the use of non-GAAP measures on pages 27-29 of t
Slide 41: Earnings presentation end notes
Earnings presentation end notes Slide 17 end notes Data is for fiscal year 2022, unless otherwise noted. 1. Data is through 3/31/2023 2. Three-year $2.8BN commitment to Accelerate Racial Equity, Equality and Inclusion initiative timeframe is from 1/1/21 - 12/31/23 3. Data is through 4/30/2023; Three
Slide 42: Earnings presentation end notes
Earnings presentation end notes Slide 26 end notes 1. Assumes FIS will have sufficient taxable income to utilize TRA related deductions and have a marginal tax rate of 25%. 2. Represents forward looking statement, please refer to page 2 of this presentation regarding forward-looking non-GAAP measure
Slide 43: Earnings presentation end notes
Earnings presentation end notes Slide 35 end notes 1. Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis. 2. Nonperforming portfolio loans and leases as a percent of portfolio loans and leases. 3. FICO distributions at origination exclude ~$80