Attached files
| file | filename |
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| 8-K - 8-K - FIFTH THIRD BANCORP | d854681d8k.htm |
| EX-99.1 - EX-99.1 - FIFTH THIRD BANCORP | d854681dex991.htm |
| EX-99.3 - EX-99.3 - FIFTH THIRD BANCORP | d854681dex993.htm |
| EX-99.4 - EX-99.4 - FIFTH THIRD BANCORP | d854681dex994.htm |
 ©
Fifth Third Bank | All Rights Reserved
4Q14 Earnings Conference Call
January 21, 2015
Refer to earnings release dated January 21, 2015 for further information.
Exhibit 99.2 |
 2
©
Fifth Third Bank | All Rights Reserved
Cautionary statement
This
report
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
3b-6
promulgated
thereunder.
These
statements
relate
to
our
financial
condition,
results
of
operations,
plans,
objectives,
future
performance
or
business.
They
usually
can
be
identified
by
the
use
of
forward-looking
language
such
as
“will
likely
result,”
“may,”
“are
expected
to,”
“is
anticipated,”
“estimate,”
“forecast,”
“projected,”
“intends
to,”
or
may
include
other
similar
words
or
phrases
such
as
“believes,”
“plans,”
“trend,”
“objective,”
“continue,”
“remain,”
or
similar
expressions,
or
future
or
conditional
verbs
such
as
“will,”
“would,”
“should,”
“could,”
“might,”
“can,”
or
similar
verbs.
You
should
not
place
undue
reliance
on
these
statements,
as
they
are
subject
to
risks
and
uncertainties,
including
but
not
limited
to
the
risk
factors
set
forth
in
our
most
recent
Annual
Report
on
Form
10-K
as
updated
by
our
Quarterly
Reports
on
Form
10-Q.
When
considering
these
forward-looking
statements,
you
should
keep
in
mind
these
risks
and
uncertainties,
as
well
as
any
cautionary
statements
we
may
make.
Moreover,
you
should
treat
these
statements
as
speaking
only
as
of
the
date
they
are
made
and
based
only
on
information
then
actually
known
to
us.
There
are
a
number
of
important
factors
that
could
cause
future
results
to
differ
materially
from
historical
performance
and
these
forward-
looking
statements.
Factors
that
might
cause
such
a
difference
include,
but
are
not
limited
to:
(1)
general
economic
conditions
and
weakening
in
the
economy,
specifically
the
real
estate
market,
either
nationally
or
in
the
states
in
which
Fifth
Third,
one
or
more
acquired
entities
and/or
the
combined
company
do
business,
are
less
favorable
than
expected;
(2)
deteriorating
credit
quality;
(3)
political
developments,
wars
or
other
hostilities
may
disrupt
or
increase
volatility
in
securities
markets
or
other
economic
conditions;
(4)
changes
in
the
interest
rate
environment
reduce
interest
margins;
(5)
prepayment
speeds,
loan
origination
and
sale
volumes,
charge-offs
and
loan
loss
provisions;
(6)
Fifth
Third’s
ability
to
maintain
required
capital
levels
and
adequate
sources
of
funding
and
liquidity;
(7)
maintaining
capital
requirements
and
adequate
sources
of
funding
and
liquidity
may
limit
Fifth
Third’s
operations
and
potential
growth;
(8)
changes
and
trends
in
capital
markets;
(9)
problems
encountered
by
larger
or
similar
financial
institutions
may
adversely
affect
the
banking
industry
and/or
Fifth
Third;
(10)
competitive
pressures
among
depository
institutions
increase
significantly;
(11)
effects
of
critical
accounting
policies
and
judgments;
(12)
changes
in
accounting
policies
or
procedures
as
may
be
required
by
the
Financial
Accounting
Standards
Board
(FASB)
or
other
regulatory
agencies;
(13)
legislative
or
regulatory
changes
or
actions,
or
significant
litigation,
adversely
affect
Fifth
Third,
one
or
more
acquired
entities
and/or
the
combined
company
or
the
businesses
in
which
Fifth
Third,
one
or
more
acquired
entities
and/or
the
combined
company
are
engaged,
including
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act;
(14)
ability
to
maintain
favorable
ratings
from
rating
agencies;
(15)
fluctuation
of
Fifth
Third’s
stock
price;
(16)
ability
to
attract
and
retain
key
personnel;
(17)
ability
to
receive
dividends
from
its
subsidiaries;
(18)
potentially
dilutive
effect
of
future
acquisitions
on
current
shareholders’
ownership
of
Fifth
Third;
(19)
effects
of
accounting
or
financial
results
of
one
or
more
acquired
entities;
(20)
difficulties
from
Fifth
Third’s
investment
in,
relationship
with,
and
nature
of
the
operations
of
Vantiv,
LLC;
(21)
loss
of
income
from
any
sale
or
potential
sale
of
businesses
that
could
have
an
adverse
effect
on
Fifth
Third’s
earnings
and
future
growth;
(22)
ability
to
secure
confidential
information
and
deliver
products
and
services
through
the
use
of
computer
systems
and
telecommunications
networks;
and
(23)
the
impact
of
reputational
risk
created
by
these
developments
on
such
matters
as
business
generation
and
retention,
funding
and
liquidity.
You
should
refer
to
our
periodic
and
current
reports
filed
with
the
Securities
and
Exchange
Commission,
or
“SEC,”
for
further
information
on
other
factors,
which
could
cause
actual
results
to
be
significantly
different
from
those
expressed
or
implied
by
these
forward-looking
statements. |
 3
©
Fifth Third Bank | All Rights Reserved
4Q14 in review
Balancing current earnings results with prudent decisions to increase long-term
shareholder value ($ in millions)
4Q14
Seq.
YOY
Average Balances
Total loans & leases
1
$91,041
$242
$3,146
Core deposits
$96,350
$3,190
$7,081
Income Statement Data
Net interest income (taxable equivalent)
$888
(2%)
(2%)
Provision for loan and lease losses
99
40%
87%
Noninterest income
653
26%
(7%)
Noninterest expense
918
3%
(7%)
Net income attributable to Bancorp
$385
13%
(4%)
Net income available to common
shareholders
$362
10%
(6%)
Financial Ratios
Earnings per share, diluted
0.43
10%
-
Net interest margin
2.96%
(14bps)
(25bps)
Efficiency ratio
59.6%
(250bps)
(190bps)
Return on average assets
1.13%
11bps
(11bps)
Return on avg common equity
10.0%
80bps
(80bps)
Return
on
avg
tangible
common
equity
2
12.1%
100bps
(100bps)
Tangible
book
value
per
share
2
$14.40
3%
11%
Note:
The
percentages
in
all
of
the
tables
in
this
presentation
are
calculated
on
actual
dollar
amounts
and
not
the
rounded
dollar
amounts.
1
Excludes loans held-for-sale
2
Non-GAAP measure; see Reg. G reconciliation in appendix
Significant pre-tax items in 4Q14 results:
—
$56MM positive valuation
adjustment on Vantiv warrant
—
$23MM of provision expense related
to the transfer of $720MM
residential mortgage TDRs to held-
for-sale
—
$19MM negative valuation
adjustment on Visa total return
swap
2014 operating results reflect core
deposit growth, conservative lending,
and well-controlled expenses
Credit quality continues to improve
—
Excluding $87MM of NCOs related
to TDR transfer, NCOs down 10%
compared with 3Q14
—
NPAs down 7% compared with
3Q14
Strong capital ratios; tangible book
value per share²
up 11% from 4Q13 |
 4
©
Fifth Third Bank | All Rights Reserved
Balance sheet
Loan balances ($B)
•
Continuing to target prudent risk/reward
profile in lending
•
Average commercial loans flat
sequentially and up 6% year-over-year
–
Year-over-year commercial loan
growth driven primarily by C&I and
commercial construction, partially
offset by lower commercial mortgage
–
End of period commercial line
utilization 32%; flat sequentially
•
Consumer loan growth driven by
residential mortgage and bankcard
•
Average transaction deposits up $3.1
billion sequentially with increases in
money market, demand, and interest
checking deposit balances
–
Consumer average transaction
deposits up 2% sequentially and up
6% year-over-year
–
Commercial average transaction
deposits up 5% sequentially and up
10% year-over-year
•
Core deposit to loan ratio of 106%
Average core deposit balances ($B)
•
Average securities up $4.0B from 4Q13
•
Securities portfolio / total assets of 16.5%
in 4Q14, up from 14.7% a year ago
•
End of period short-term investments
increased $4.3B sequentially, reflecting
higher cash balances held at the Federal
Reserve
Average securities and short-term
investments ($B) |
 5
©
Fifth Third Bank | All Rights Reserved
Net interest income
NII and NIM (FTE)
•
Net interest income down $20MM from 3Q14
–
Decrease driven by the effects of loan repricing and higher interest expense from
3Q14 debt issuance, partially offset by the benefit of loan growth
•
Sequential decline in asset yield lowest we have seen in 2014
•
NIM decreased 14 bps sequentially reflecting elevated cash balances
•
Year-over-year NII decreased $17MM and NIM decreased 25 bps
–
NII decrease driven by loan repricing and debt issuances, partially offset by higher
investment securities and loan balances
–
NIM decrease due to the impact of loan repricing
•
Expect lower 1Q15 NII, reflecting decline related to changes to deposit advance
product and negative impact from lower day count
Yield Analysis
4Q13
3Q14
4Q14
Seq.
(bps)
YoY
(bps)
Commercial and industrial loans
3.46%
3.25%
3.21%
(4)
(25)
Commercial mortgage loans
3.53%
3.34%
3.28%
(6)
(25)
Commercial construction loans
3.46%
3.49%
3.30%
(19)
(16)
Commercial leases
3.10%
2.96%
2.96%
-
(14)
Residential mortgage loans
3.88%
3.84%
3.80%
(4)
(8)
Home equity
3.62%
3.69%
3.68%
(1)
6
Automobile loans
2.96%
2.72%
2.73%
1
(23)
Credit card
9.90%
9.87%
10.08%
21
18
Other consumer loans and leases
43.19%
36.98%
31.97%
(501)
(1,122)
Total loans and leases
3.79%
3.61%
3.58%
(3)
(21)
Taxable securities
3.32%
3.32%
3.28%
(4)
(4)
Tax exempt securities
5.65%
5.34%
4.42%
(92)
(123)
Other short-term investments
0.26%
0.26%
0.26%
-
-
Total interest-earning assets
3.57%
3.49%
3.38%
(11)
(19)
Total interest-bearing liabilities
0.52%
0.56%
0.61%
5
9
Net interest rate spread
3.05%
2.93%
2.77%
(16)
(28) |
 6
©
Fifth Third Bank | All Rights Reserved
•
4Q14 and 4Q13 include $23MM and $9MM, respectively, of
payments received from Vantiv pursuant to TRA
•
Expect lower 1Q15 fee income due to seasonal impacts on
deposit service charges and card and processing revenue
and the absence of the Vantiv TRA payment
4Q14
Seq.
YOY
($ in millions)
Service charges on deposits
$142
(2%)
-
Corporate banking revenue
120
20%
27%
Mortgage banking net revenue
61
-
(51%)
Investment advisory revenue
100
(2%)
2%
Card and processing revenue
76
2%
7%
Other noninterest income
1
150
NM
(13%)
Securities gains, net
4
15%
NM
Securities gains (losses), net -
-
-
-
non-qualifying hedges on MSRs
Total noninterest income
$653
26%
(7%)
Noninterest income
1
Net credit-related costs recognized in other noninterest income were $1MM
in 4Q14. This compares with immaterial net credit-related costs in 3Q14, $4MM in 2Q14, $10MM in 1Q14, and
$5MM in 4Q13.
Compared with 3Q14
•
Corporate banking revenue results driven by higher
syndication, business lending, and foreign exchange fees
•
Retail service changes on deposits decreased due to a
decrease in overdraft occurrences
Compared with 4Q13
•
Decrease in mortgage banking results reflect lower
production, partially due to exiting broker channel in early
2014
•
Card and processing revenue reflects greater card
utilization and higher consumer purchase volume
•
Investment advisory revenue reflects increase in personal
asset management fees
4Q13
1Q14
2Q14
3Q14
4Q14
Reported noninterest income
$703
$564
$736
$520
$653
Gain on sale of Vantiv shares
-
-
(125)
-
-
Vantiv warrant valuation
(91)
36
(63)
53
(56)
Other Vantiv-related items
-
-
12
-
-
Valuation of Visa total return swap
18
(1)
16
3
19
Land valuation adjustments
-
-
17
-
-
Securities (gains) / losses
(2)
(7)
(8)
(3)
(4)
Adjusted noninterest income
$628
$592
$585
$573
$612
Components of noninterest income
5 quarter trend ($MM)
Adjustments to remove (benefit) / detriment |
 7
©
Fifth Third Bank | All Rights Reserved
Noninterest expense
1
Net
credit-related
costs
recognized
in
other
noninterest
expense
were
$33MM
in
4Q14.
This
compares
with
net
credit-related
costs
of
$13MM
in
3Q14,
$6MM
in
2Q14,
$9MM
in
1Q14,
and
($12MM)
in
4Q13.
•
Expenses increased sequentially due to higher
credit-related
costs¹
and personnel expenses
•
7% year-over-year decline reflects impact of credit-
related costs¹ in both periods, as well as lower
employee-related costs
—
Retail FTE down 10% from 4Q13 as branch roles
are consolidated and redefined
•
Expect higher 1Q15 expenses primarily due to
seasonally higher FICA and unemployment expense
4Q14
Seq.
YOY
($ in millions)
Salaries, wages and incentives
$366
3%
(6%)
Employee benefits
79
5%
1%
Net occupancy expense
77
(1%)
-
Technology and communications
54
2%
2%
Equipment expense
30
-
3%
Card and processing expense
36
(1%)
(2%)
Other noninterest expense¹
276
7%
(16%)
Total noninterest expense
$918
3%
(7%)
4Q13
1Q14
2Q14
3Q14
4Q14
Reported noninterest expense
$989
$950
$954
$888
$918
Litigation reserve charges
(69)
(51)
(61)
(4)
3
Severance expense
(8)
(4)
(1)
(2)
(6)
Debt extinguishment costs
(8)
-
-
-
-
Donation to Fifth Third Foundation
(8)
-
-
-
-
Adjusted noninterest expense
$896
$895
$892
$882
$915
5 quarter trend ($MM)
Components of noninterest expense
Adjustments to remove benefit / (detriment) |
 8
©
Fifth Third Bank | All Rights Reserved
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
Income before income taxes (U.S. GAAP) (a)
$561
$438
$606
$464
$519
Add: Provision expense (U.S. GAAP) (b)
53
69
76
71
99
PPNR (a) + (b)
$614
$507
$682
$535
$618
Adjustments
to
remove
(benefit)
/
detriment
:
2
In
noninterest
income:
Gain from sales of Vantiv shares
-
-
(125)
-
-
Vantiv warrant valuation
(91)
36
(63)
53
(56)
Reduction in equity method income from interest in Vantiv
-
-
12
-
-
Land valuation adjusments
-
-
17
-
-
Valuation of 2009 Visa total return swap
18
(1)
16
3
19
Securities (gains) / losses
(2)
(7)
(8)
(3)
(4)
In
noninterest
expense:
Debt extinguishment (gains) / losses
8
-
-
-
-
Severance expense
8
4
1
2
6
Donation to Fifth Third Foundation
8
-
-
-
-
Litigation reserve charges
69
51
61
4
(3)
Adjusted PPNR
$632
$590
$593
$594
$580
Credit-related items:
In noninterest income
5
10
4
(0)
1
In noninterest expense
(12)
9
6
13
33
Credit-adjusted PPNR³
$625
$609
$603
$607
$614
Pre-tax pre-provision earnings
1
PPNR trend
1
Non-GAAP
measure;
see
Reg.
G
reconciliation
in
appendix.
2
Prior
quarters
include
similar
adjustments.
3
There
are
limitations
on
the
usefulness
of
credit-adjusted
PPNR,
including
the
significant
degree
to
which
changes
in
credit
and
fair
value
are
integral,
recurring
components
of
the
Bancorp’s
core
operations
as
a
financial
institution.
This
measure
has
been
included
herein
to
facilitate
a
greater
understanding
of
the
Bancorp’s
financial
condition.
Note:
4Q14
included
an
immaterial
amount
of
mortgage
repurchase
provision.
3Q14,
2Q14,
and
1Q14
included
the
impact
of
$3MM,
$1MM,
and
$3MM,
respectively
in
mortgage
repurchase
provision.
4Q13
included
a
benefit
to
the
mortgage
repurchase
provision
of
$26MM.
These
impacts
are
reflected
in
“Credit-related
items”
and
“Adjusted
Efficiency
Ratio”
listed
above.
PPNR increased 16% sequentially, reflecting
impact of $38MM in net benefit in 4Q14 and
$59MM in net detriment in 3Q14 from significant
items. Excluding those items, adjusted PPNR
decreased 2% sequentially, reflecting higher
expense, partially offset by the $23MM Vantiv
TRA payment.
PPNR reconciliation
Efficiency ratio |
 9
©
Fifth Third Bank | All Rights Reserved
Credit quality overview
Net charge-offs ($MM)
$148
$101
NCO ratio
0.67%
0.76%
0.45%
0.50%
0.83%
$168
HFI Nonperforming assets ($MM)
$796
$744
$980
$832
$946
NPAs down 24% from 4Q13;
lowest level since 2007
Reserve Coverage
Accruing Past Due ($MM)
$379
$337
$337
Includes 4Q14 provision expense of $99MM, reflecting $23MM
impact of TDR transaction;
reserve coverage levels remain solid
Total delinquencies declined 11% from 4Q13
NPA ratio
1.10% 1.05% 0.92%
0.88% 0.82%
Excluding TDR transfer, net charge-offs down 10% sequentially
$115
$366
$191
$337 |
 10
©
Fifth Third Bank | All Rights Reserved
Strong capital position
1
Non-GAAP
measure;
See
Reg.
G
reconciliation
in
appendix.
2
Capital
ratios
estimated;
presented
under
current
U.S.
capital
regulations.
The
pro
forma
Basel
III
Tier
I
common
equity
ratio
is
management’s
estimate
based
upon
its
current
interpretation
of
the
Basel
III
Final
Rule
approved
in
July
2013.
3
1Q15
end
of
period
and
average
share
impacts
reflect
settlement
of
the
$180MM
share
repurchase
transaction
as
described
in
the
Form
8-K
filed
on
January
5, 2015.
Tier 1 common equity
1
Avg. Diluted Shares Outstanding (MM)
•
Returned $1.1 billion to common shareholders in
2014 in dividends and share repurchases
•
2014 CCAR plan included the potential repurchase of
common shares in an amount up to $669MM
–
Announced $180MM of share repurchases in
4Q14; completed on 1/5/15
3
•
2015 CCAR submitted in early January; capital plan
subject to regulatory non-objection
EOP share impact
(MM)
Average share impact
(MM)
3Q14
4Q14
1Q15
3Q14
4Q14
1Q15
$150MM ASR
1.0
-
-
2.8
0.2
-
$225MM ASR
9.4
1.9
-
7.0
4.0
0.3
$180MM ASR
3
-
8.3
0.8
-
6.3
2.7
10.4
10.2
0.8
9.8
10.5
3.0
Capital Actions
Impact of Share Repurchases
9.5%
9.5%
9.6%
9.6%
2
9.7%
and
Tangible
Book
Value
per
share
1 |
 11
©
Fifth Third Bank | All Rights Reserved
Appendix |
 12
©
Fifth Third Bank | All Rights Reserved
Mortgage banking results
•
$1.7B in originations; 57% purchase volume
–
Discontinued broker channel originations in 1Q14
•
4Q14 mortgage drivers:
–
Origination fees and gain on sale revenue up $1.4MM
–
Gain on sale margin up 60 bps sequentially
–
Retaining conforming ARMs and shorter-term fixed-rate production on balance
sheet –
MSR valuation adjustments of negative $2MM; servicing rights amortization of negative
$32MM –
$60MM in gross servicing fees
Mortgage originations ($B) and gain on sale
margin¹ Mortgage Banking Net Revenue ($MM)
Note: Numbers may not sum due to rounding.
1
Gain on sale margin represents gains on all loans originated for sale.
$61
$78
$126
$109
1
$61 |
 13
Available and contingent borrowing capacity
(4Q14):
–
FHLB ~$14.3B available
–
Federal Reserve ~$27.4B
Holding Company cash at 12/31/14: $2.4B
Cash currently sufficient to satisfy all fixed
obligations in a stressed environment for over
24 months (debt maturities, common and
preferred dividends, interest and other
expenses) without accessing capital markets,
relying on future dividends from subsidiaries,
or any other discretionary actions
Holding company unsecured debt maturities ($MM)
Bank
unsecured
debt
maturities
($MM
–
excl.
Brokered
CDs)
Heavily core funded
Strong liquidity profile
S-T
wholesale
2%
©
Fifth Third Bank | All Rights Reserved |
 14
©
Fifth Third Bank | All Rights Reserved
Interest rate risk management
1
Repricing
percentage
or
“beta”
is
the
estimated
change
in
yield
over
12
months
as
a
result
of
a
shock
or
ramp
100
bps
parallel
shift
in
the
yield
curve.
2
Actual
results
may
vary
from
these
simulated
results
due
to
timing,
magnitude,
and
frequency
of
interest
rate
changes,
as
well
as
changes
in
market
conditions
and
management
strategies.
Strategically
positioned
balance
sheet
to
limit
risk
to
downside
rate
scenarios
•
Balance sheet is well positioned for a rising rate environment
—
64% of total loans are floating rate (81% of commercial and 39% of consumer)
—
Investment portfolio duration of approximately 5 years
—
Short-term wholesale funding represents only 2% of total funding
—
$16B in wholesale funding will reprice beyond 1 year
•
Interest rate sensitivities are based on conservative deposit assumptions
—
Weighted-average deposit beta of 70% (2004 –
2006 cycle betas ~50%)
1
—
No modeled lag in deposit repricing
—
Modeled DDA runoff of approximately $2.5B (approximately 8%) for
each 100 bps increase in rates
—
For every $1B of incremental DDA runoff beyond what is modeled, asset sensitivity
decreases: –
15 bps in year 1 and 28 bps in year 2 in a 100 bps ramp
–
35 bps in both year 1 and year 2 in a 100 bps shock
•
Forecasted balances represent our current
expectations regarding balance sheet trends
•
Static balances assume current composition of
balance sheet remains constant
•
In ramp scenarios, rate changes occur evenly over
the first four quarters
•
In shock scenarios, rate changes are instantaneous
+100 bps
+200 bps
+100 bps
+200 bps
NII - Asset Sensitivity²
Forecast Balances
Static Balances
Year 1
1.2%
2.2%
1.0%
2.0%
Year 2
4.2%
6.5%
4.2%
6.5%
Year 1
3.4%
6.3%
3.1%
5.8%
Year 2
6.1%
10.0%
6.2%
10.1%
+100 bps
+200 bps
(0.6%)
(2.2%)
EVE at Risk |
 15
©
Fifth Third Bank | All Rights Reserved
NPL rollforward
NPL HFI Rollforward
Commercial
4Q13
1Q14
2Q14
3Q14
4Q14
521
458
464
396
385
Transfers to nonperforming
107
164
141
116
99
Transfers to performing
(1)
(2)
(20)
-
-
Transfers to performing (restructured)
(2)
(1)
(47)
-
(1)
Transfers from held for sale
-
-
-
-
-
Transfers to held for sale
-
-
(1)
(3)
-
Loans sold from portfolio
(19)
(2)
(24)
(12)
(5)
Loan paydowns/payoffs
(61)
(43)
(54)
(39)
(45)
Transfers to other real estate owned
(12)
(7)
(18)
(9)
(7)
Charge-offs
(78)
(105)
(46)
(66)
(62)
Draws/other extensions of credit
3
2
1
2
3
458
464
396
385
367
Consumer
4Q13
1Q14
2Q14
3Q14
4Q14
248
293
269
244
235
Transfers to nonperforming
165
93
85
90
86
Transfers to performing
(25)
(28)
(24)
(15)
(14)
Transfers to performing (restructured)
(22)
(22)
(20)
(25)
(19)
Transfers to held for sale
-
-
-
-
(24)
Loans sold from portfolio
-
-
-
-
-
Loan paydowns/payoffs
(24)
(29)
(11)
(5)
(5)
Transfers to OREO/other repossessed property
(20)
(24)
(24)
(21)
(20)
Charge-offs
(30)
(15)
(30)
(33)
(27)
Draws/other extensions of credit
1
1
(1)
-
-
293
269
244
235
212
Total NPL
751
733
640
620
579
272
257
226
206
185
Beginning NPL amount
Ending Commercial NPL
Beginning NPL amount
Ending Consumer NPL
Total new nonaccrual loans - HFI
|
 16
Commercial & industrial
Loans by geography
Credit trends
Loans by industry
Comments
•
Commercial & industrial loans represented 45% of total loans
and 23% of net charge-offs
•
C&I loans were down 1% sequentially and increased 4% since
4Q13
* Excludes loans held-for-sale.
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
EOP Balance*
$39,316
$40,591
$41,299
$41,072
$40,765
Avg Loans*
$38,835
$40,377
$41,374
$41,477
$41,277
90+ days delinquent
-
$1
-
-
-
as % of loans
NM
NM
NM
NM
NM
NPAs*
$290
$304
$265
$278
$246
as % of loans
0.74%
0.75%
0.64%
0.68%
0.60%
Net charge-offs
$66
$97
$31
$50
$44
as % of loans
0.67%
0.97%
0.30%
0.48%
0.43%
C&I
©
Fifth Third Bank | All Rights Reserved |
     17
Commercial real estate
Loans by geography
Credit trends
Loans by industry
Comments
•
Commercial mortgage loans represented 8% of total loans
—
Non-owner occupied 4Q14 NCO ratio of 1.1%
—
Loans from FL/MI represented 34% of portfolio loans
and $8MM of portfolio losses in 4Q14
•
Commercial construction loans represented 2% of total loans
—
Portfolio focused on large professional developers
—
Top 3 categories: Apartments, REIT, and office
* Excludes loans held-for-sale.
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
EOP Balance*
$1,039
$1,218
$1,424
$1,702
$2,069
Avg Loans*
$952
$1,116
$1,362
$1,563
$1,909
NPAs*
$59
$46
$31
$19
$16
as % of loans
5.53%
3.68%
2.17%
1.09%
0.75%
Net charge-offs
$4
$5
$8
-
-
as % of loans
1.65%
1.66%
2.26%
(0.11%)
(0.01%)
Commercial construction
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
EOP Balance*
$8,066
$7,958
$7,805
$7,564
$7,399
Avg Loans*
$8,047
$7,981
$7,885
$7,633
$7,480
NPAs*
$252
$240
$212
$186
$195
as % of loans
3.09%
2.98%
2.69%
2.43%
2.62%
Net charge-offs
$8
$3
$9
$5
$10
as % of loans
0.40%
0.16%
0.44%
0.24%
0.53%
Commercial mortgage
©
Fifth Third Bank | All Rights Reserved |
  18
©
Fifth Third Bank | All Rights Reserved
Residential mortgage
1
st
liens: 100%; weighted average LTV: 73.5%
Weighted average origination FICO: 754
Origination FICO distribution: <660 5%; 660-689 5%; 690-719 9%;
720-749 14%; 750+ 61%; Other^ 6%
(note: loans <660 includes CRA loans and FHA/VA loans)
Origination LTV distribution: <=70 39%; 70.1-80 36%; 80.1-90 7%;
90.1-95 5%; >95 13%
Vintage distribution: 2014: 18%, 2013: 21%; 2012 21%; 2011 12%;
2010 7%; 2009 4%; 2008 3%; 2007 3%; 2006 3%; 2005 4%; 2004
and prior 4%
15%
originated
through
3
rd
party;
performance
similar
to
direct
Loans by geography
Credit trends
Portfolio details
Comments
^ Includes acquired loans where FICO at origination is not available
* Excludes loans held-for-sale
•
Residential
mortgage
loans
represented
14%
of
total
loans
and
49% of net charge-offs; 7% excluding TDR transaction
•
Net charge-offs increased by $85MM in 4Q14 and included
$87MM related to the transfer of TDRs to held-for-sale
—
OH, FL, and MI account for 30%, 22%, and 19% of
residential mortgage net charge-offs, respectively
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
EOP Balance*
$12,680
$12,626
$12,652
$12,941
$12,389
Avg Loans*
$12,609
$12,659
$12,611
$12,785
$13,046
90+ days delinquent
$66
$56
$60
$57
$55
as % of loans
0.52%
0.44%
0.47%
0.44%
0.44%
NPAs*
$223
$201
$172
$164
$126
as % of loans
1.76%
1.59%
1.36%
1.27%
1.01%
Net charge-offs
$13
$15
$8
$9
$94
as % of loans
0.39%
0.49%
0.24%
0.28%
2.87%
Residential mortgage |
 19
©
Fifth Third Bank | All Rights Reserved
Home equity loans represented 10% of total loans and 6% of net
charge-offs
Approximately 12% of portfolio in broker product generated 25% total
loss
38%
of
Fifth
Third
2
nd
liens
are
behind
Fifth
Third
1
st
liens
2005/2006 vintages represent approximately 23% of portfolio; account
for 48% of losses
Home equity
1
st
liens: 34%; 2
nd
liens: 66%
Weighted average origination FICO: 753
Origination FICO distribution^: <660 3%; 660-689 7%; 690-719 12%;
720-749 16%; 750+ 54%; Other 8%
Average CLTV: 72%; Origination CLTV distribution: <=70 41%; 70.1-
80 24%; 80.1-90 18%; 90.1-95 6%; >95 11%
Vintage distribution: 2014: 8%, 2013: 6%; 2012 4%; 2011 3%; 2010
2%; 2009 3%; 2008 9%; 2007 9%; 2006 12%; 2005 11%; 2004 and
prior 33%
% through broker channels: 12% WA FICO: 734 brokered, 756 direct;
WA CLTV: 88% brokered; 70% direct
Portfolio details
Comments
Brokered loans by geography
Direct loans by geography
Credit trends
Note:
Brokered
and
direct
home
equity
net
charge-off
ratios
are
calculated
based
on
end
of
period
loan
balances
^
Includes
acquired
loans
where
FICO
at
origination
is
not
available
*
Excludes
loans
held-for-sale
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
EOP Balance*
$1,190
$1,155
$1,131
$1,094
$1,062
90+ days delinquent
-
-
-
-
-
as % of loans
NM
NM
NM
NM
NM
Net charge-offs
$8
$5
$7
$4
$3
as % of loans
2.81%
1.85%
2.35%
1.42%
1.05%
Home equity - brokered
($ in millions)
4Q13
1Q14
2Q14
3Q14
4Q14
EOP Balance*
$8,056
$7,970
$7,925
$7,893
$7,824
90+ days delinquent
-
-
-
-
-
as % of loans
NM
NM
NM
NM
NM
Net charge-offs
$18
$11
$11
$10
$8
as % of loans
0.87%
0.55%
0.58%
0.51%
0.42%
Home equity - direct |
 20
©
Fifth Third Bank | All Rights Reserved
Regulation G Non-GAAP reconciliation
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconcilation
$ and shares in millions
(unaudited)
December
September
June
March
December
2014
2014
2014
2014
2013
Income before income taxes (U.S. GAAP)
519
464
606
438
561
Add:
Provision expense (U.S. GAAP)
99
71
76
69
53
Pre-provision net revenue
618
535
682
507
614
Net income available to common shareholders (U.S. GAAP)
362
328
416
309
383
Add:
Intangible amortization, net of tax
1
1
1
1
1
Tangible net income available to common shareholders
363
329
417
310
384
Tangible net income available to common shareholders (annualized) (a)
1,440
1,305
1,673
1,257
1,523
Average Bancorp shareholders' equity (U.S. GAAP)
15,644
15,486
15,157
14,862
14,757
Less:
Average preferred stock
(1,331)
(1,331)
(1,119)
(1,034)
(703)
Average goodwill
(2,416)
(2,416)
(2,416)
(2,416)
(2,416)
Average intangible assets and other servicing rights
(17)
(16)
(17)
(19)
(20)
Average tangible common equity
(b) 11,880
11,723
11,605
11,393
11,618
Total Bancorp shareholders' equity (U.S. GAAP)
15,626
15,404
15,469
14,826
14,589
Less:
Preferred stock
(1,331)
(1,331)
(1,331)
(1,034)
(1,034)
Goodwill
(2,416)
(2,416)
(2,416)
(2,416)
(2,416)
Intangible assets and other servicing rights
(16)
(16)
(17)
(18)
(19)
Tangible common equity, including
unrealized gains / losses (c) 11,863
11,641
11,705
11,358
11,120
Less: Accumulated other comprehensive income
(429)
(301)
(382)
(196)
(82)
Tangible common equity, excluding
unrealized gains / losses (d) 11,434
11,340
11,323
11,162
11,038
Total assets (U.S. GAAP)
138,706
134,188
132,562
129,654
130,443
Less:
Goodwill
(2,416)
(2,416)
(2,416)
(2,416)
(2,416)
Intangible assets and other servicing rights
(16)
(16)
(17)
(18)
(19)
Tangible assets, including
unrealized gains / losses (e) 136,274
131,756
130,129
127,220
128,008
Less: Accumulated other comprehensive income / loss, before tax
(660)
(463)
(588)
(302)
(126)
Tangible assets, excluding unrealized gains / losses
(f) 135,614
131,293
129,541
126,918
127,882
Common shares outstanding (g)
824
834
844
848
855
Ratios:
Return on average tangible common equity (a) / (b)
12.1%
11.1%
14.4%
11.0%
13.1%
Tangible common equity (excluding unrealized gains/losses) (d) / (f)
8.43%
8.64%
8.74%
8.79%
8.63%
Tangible common equity (including unrealized gains/losses) (c) / (e)
8.71%
8.84%
9.00%
8.93%
8.69%
Tangible book value per share (c) / (g)
$14.40
$13.95
$13.86
$13.40
$13.00
For the Three Months Ended |
 21
©
Fifth Third Bank | All Rights Reserved
Regulation G Non-GAAP reconciliation
Fifth Third Bancorp and Subsidiaries
Regulation G Non-GAAP Reconcilation
$ and shares in millions
(unaudited)
December
September
June
March
December
2014
2014
2014
2014
2013
Total Bancorp shareholders' equity (U.S. GAAP)
15,626
15,404
15,469
14,826
14,589
Goodwill and certain other intangibles
(2,476)
(2,484)
(2,484)
(2,490)
(2,492)
Unrealized gains
(429)
(301)
(382)
(196)
(82)
Qualifying trust preferred
securities 60
60
60
60
60
Other
(17)
(18)
(19)
(18)
19
Tier I capital
12,764
12,661
12,644
12,182
12,094
Less:
Preferred stock
(1,331)
(1,331)
(1,331)
(1,034)
(1,034)
Qualifying trust preferred securities
(60)
(60)
(60)
(60)
(60)
Qualifying noncontrolling interest
in consolidated subsidiaries (1)
(1)
(1)
(1)
(37)
Tier I common equity (a)
11,372
11,269
11,252
11,087
10,963
Risk-weighted assets, determined in accordance with
prescribed regulatory requirements (b)
117,887
116,917
117,117
116,622
115,969
Ratio:
Tier I common equity (a) / (b)
9.65%
9.64%
9.61%
9.51%
9.45%
Basel III - Estimated Tier 1 common equity ratio
December
September
June
March
December
2014
2014
2014
2014
2013
Tier 1 common equity (Basel I)
11,372
11,269
11,252
11,087
10,963
Add:
Adjustment related to capital components
84
99
96
99
82
Estimated Tier 1 common equity under final Basel III rules without AOCI (opt out)(c)
11,456
11,368
11,348
11,186
11,045
Add:
Adjustment related to AOCI
429
301
382
196
82
Estimated Tier 1 common equity under final Basel III rules with AOCI (non opt out)(d)
11,885
11,669
11,730
11,382
11,127
Estimated risk-weighted assets under final Basel III rules (e)
122,027
121,219
122,465
122,659
122,074
Estimated Tier 1 common equity ratio under final Basel III rules (opt out) (c) / (e)
9.39%
9.38%
9.27%
9.12%
9.05%
Estimated Tier 1 common equity ratio under final Basel III rules (non opt out) (d) / (e)
9.74%
9.63%
9.58%
9.28%
9.12%
(c), (d)
(e)
Under the final Basel III rules, non-advanced approach banks are permitted to make a one-time
election to opt out of the requirement to include AOCI in Tier 1 common equity. Other adjustments
include mortgage servicing rights and deferred tax assets subject to threshold limitations and
deferred tax liabilities related to intangible assets. Key differences under Basel III in the
calculation of risk-weighted assets compared to Basel I include: (1) Risk weighting for commitments under 1 year; (2) Higher risk weighting for exposures to
securitizations, past due loans, foreign banks and certain commercial real estate; (3) Higher risk
weighting for mortgage servicing rights and deferred tax assets that are under certain thresholds as
a percent of Tier 1 capital; and (4) Derivatives are differentiated between exchange clearing and
over-the-counter and the 50% risk-weight cap is removed. For the Three Months
Ended |