Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Q3 2018 Earnings Presentation
24 slides from Fifth Third Bancorp's earnings presentation, Oct 23, 2018
Slide 1: Fifth Third Bancorp 3Q18 Earnings Presentation
Fifth Third Bancorp 3Q18 Earnings Presentation October 23, 2018 Refer to earnings release dated October 23, 2018 for further information. Exhibit 99.2
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third Bancorp’s and MB Financial, Inc.’s expectations or predictions of future financial or business perfo
Slide 3: Strategic priorities for the company
Strategic priorities for the company 1 3 Implement remaining NorthStar initiatives and achieve standalone financial targets Continue to position company to pursue profitable organic growth opportunities 2 Successfully integrate MB Financial and realize expected financial benefits
Slide 4: 3Q18 highlights
3Q18 highlights Generated strong loan growth NIM expansion exceeded prior guidance; 2% NII growth compared to the prior quarter Disciplined expense management Remain on-track to achieve NorthStar targets1,2 Adjusted PPNR up 9% Adjusted efficiency ratio lowest since 2015 Adjusted ROTCE up 323 bps Adj
Slide 5: 3Q18 in review
3Q18 in review 3Q18 reported EPS of $0.61 included a negative $0.03 impact from the following items: $17MM pre-tax (~$14MM after-tax2) charge related to the valuation of the Visa total return swap $8MM pre-tax (~$6MM after-tax2) securities loss related to our ownership stake in GreenSky 3Q18 adjuste
Slide 6: Balance sheet
Commercial Balance sheet Securities1 and short-term investments Loan & lease balances Core deposit balances Securities1 Short-term investments Commercial Consumer Total IB core deposit rate 1Available-for-sale debt and other securities at amortized cost; previous disclosures included available-for-s
Slide 7: Net interest income
Net interest income1 3Q18 vs. 3Q17 Current 4Q18 outlook 3Q18 vs. 2Q18 NII up $70 million, or 7% NIM up 16 bps Primary NII and NIM performance drivers: Higher short-term market rates Growth in interest-earning assets NII up $23 million, or 2% NIM up 2 bps Primary NII and NIM performance drivers: High
Slide 8: Noninterest income
Noninterest income 3Q18 vs. 3Q17 Current 4Q18 outlook 3Q18 vs. 2Q18 Adjusted noninterest income1 up $15 million, or 3% Performance drivers: Other revenue primarily driven by private equity income Increased wealth and asset management revenue Offset by weakness in mortgage banking revenue Adjusted no
Slide 9: Noninterest expense
Noninterest expense 3Q18 vs. 3Q17 Current 4Q18 outlook 3Q18 vs. 2Q18 Adjusted noninterest expense1 up $33 million, or 3% Performance drivers: Higher compensation-related expense Increase in technology expense and marketing expense Adjusted noninterest expense1 flat Performance drivers: Lower compens
Slide 10: Credit quality overview
Credit quality overview 1Excludes HFS loans; 2Commercial criticized assets as a percentage of total commercial loans excluding HFS See forward-looking statements on page 2 Net charge-offs of 0.30%, up 1 bp compared to the year-ago quarter; down 11 bps compared to the prior quarter Commercial net cha
Slide 11: Strong capital and liquidity position
Strong capital and liquidity position 1Current period regulatory capital ratio is estimated Common Equity Tier 1 ratio (Basel III)1 Modified LCR CET1 ratio of 10.7%, up 8 bps compared to the year-ago quarter and down 24 bps compared to the prior quarter Continue to expect migration towards 9.5% CET1
Slide 12: Current 4Q18 outlook
Current 4Q18 outlook Loans & leases Noninterest expense Effective tax rate Noninterest income NII (FTE)1 NIM (FTE)1 Credit items 1Non-GAAP measure: see forward-looking statements on page 2 of this presentation regarding forward-looking non-GAAP measures and use of non-GAAP measures on pages 25-27 of
Slide 13: MB Financial integration and financial update
MB Financial integration and financial update Integration update All regulatory applications filed and up to date Received ODFI conditional approval pending FRB approval MB common shareholder approval received on 9/18 Highly successful talent and client retention to date; focused on maintaining posi
Slide 14: Strategic priorities for the company
Strategic priorities for the company 1 2 3 Implement remaining NorthStar initiatives and achieve standalone financial targets Successfully integrate MB Financial and realize expected financial benefits Continue to position company to pursue profitable organic growth opportunities Focused on top quar
Slide 15: Appendix
Appendix
Slide 16: Efficiency ratio trend and pre-provision net revenue
Efficiency ratio trend1 Pre-provision net revenue1 3Q18 vs. 3Q17 3Q18 vs. 2Q18 Adjusted PPNR up 9% driven by: NII growth primarily driven by short-term rates Fee growth driven by increased wealth and asset management and other revenue Partially offset by increased technology expense Adjusted PPNR up
Slide 17: Strong liquidity profile
Strong liquidity profile $ millions – excl. Retail Brokered & Institutional CDs Unsecured debt maturities Heavily core funded Holding company: Modified LCR of 119% Holding Company cash as of September 30, 2018: $3.1B Cash currently sufficient to satisfy all fixed obligations in a stressed environmen
Slide 18: Balance sheet positioning
Balance sheet positioning Investment portfolio $13.1B fixed | $44.2B variable 1,2,3 Commercial loans1,2,3 Consumer loans1 Long-term debt4 $26.1B fixed | $10.0B variable 1 $9.8B fixed | $4.6B variable 4 56% allocation to bullet/ locked-out cash flow securities Yield: 3.22% Effective duration of 5.25
Slide 19: Interest rate risk management
Interest rate risk management Estimated NII sensitivity profile and ALCO policy limits Estimated NII sensitivity with deposit beta changes Estimated NII sensitivity with demand deposit balance changes NII is near asset/liability neutral over the next 12 months with betas assumed at 70% and no re-pri
Slide 20: Mortgage banking results
Mortgage banking results $ millions Mortgage banking net revenue $ billions Mortgage originations and gain-on-sale margin1 1Gain-on-sale margin represents gains on all loans originated for sale $1.9B in originations, down 12% compared to the year-ago quarter and prior quarter; 76% purchase volume 3Q
Slide 21: NPL rollforward
NPL rollforward1 1Loan balances exclude nonaccrual loans HFS Commercial $ millions Consumer $ millions Total NPL $ millions
Slide 22: Balance and credit loss trends
Balance and credit loss trends1 Commercial & industrial Residential mortgage Commercial mortgage Commercial construction Home equity Automobile Average Portfolio Balance NCOs as a % of average portfolio loans 1All balances are in billions
Slide 23: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation See pages 25-27 of the earnings release for a discussion on the use of non-GAAP financial measures 1Pre-tax items: for 3Q18, 2Q18, and 1Q18 assume a 21% tax rate, for 4Q17 and prior periods assume a 35% tax rate
Slide 24: Regulation G non-GAAP reconciliation
Regulation G non-GAAP reconciliation See pages 25-27 of the earnings release for a discussion on the use of non-GAAP financial measures