FIFTH THIRD BANCORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - FIFTH THIRD BANCORP	d551221d8k.htm

Exhibit 99.1

Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2018 net income of $586 million versus net income of $704 million in the first quarter of 2018 and $367 million in the second quarter of 2017. After preferred dividends, net income available to common shareholders was $563 million, or $0.80 per diluted share, in the second quarter of 2018, compared with $689 million, or $0.97 per diluted share, in the first quarter of 2018, and $344 million, or $0.45 per diluted share, in the second quarter of 2017.

Earnings Highlights


	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Income Statement Data ($ in millions)
Net income attributable to Bancorp	$	586	$	704	$	509	$	1,014	$	367		(17%)		60%
Net income available to common shareholders	$	563	$	689	$	486	$	999	$	344		(18%)		64%

Earnings Per Share Data
Average common shares outstanding (in thousands):
Basic		683,345		689,820		703,372		721,280		741,401		(1%)		(8%)
Diluted		696,210		704,101		716,908		733,285		752,328		(1%)		(7%)
Earnings per share, basic	$	0.81	$	0.99	$	0.68	$	1.37	$	0.46		(18%)		76%
Earnings per share, diluted		0.80		0.97		0.67		1.35		0.45		(18%)		78%

Common Share Data
Cash dividends per common share	$	0.18	$	0.16	$	0.16	$	0.16	$	0.14		13%		29%
Book value per share		21.97		21.68		21.67		21.30		20.42		1%		8%
Tangible book value per share^(b)		18.30		18.05		18.10		17.86		17.11		1%		7%
Common shares outstanding (in thousands)		678,162		684,942		693,805		705,474		738,873		(1%)		(8%)

Financial Ratios												bps Change

Return on average assets		1.66%		2.02%		1.43%		2.85%		1.05%		(36)		61
Return on average common equity		15.3		18.6		12.7		25.6		9.0		(330)		630
Return on average tangible common equity^(b)		18.4		22.4		15.2		30.4		10.7		(400)		770
CET1 capital^(c)		10.91		10.82		10.61		10.59		10.63		9		28
Tier I risk-based capital^(c)		12.02		11.95		11.74		11.72		11.76		7		26
Taxable equivalent net interest margin^(b)		3.21		3.18		3.02		3.07		3.01		3		20
Taxable equivalent efficiency^(b)		58.7		54.8		69.7		38.4		63.4		390		(470)

Income Statement Highlights


($ in millions, except per-share data)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Condensed Statements of Income
Taxable equivalent net interest income^(b)	$	1,024	$	999	$	963	$	977	$	945		3%		8%
Provision for loan and lease losses		33		23		67		67		52		43%		(37%)
Total noninterest income		743		909		577		1,561		564		(18%)		32%
Total noninterest expense		1,037		1,046		1,073		975		957		(1%)		8%

Taxable equivalent income before income taxes ^(b)	$	697	$	839	$	400	$	1,496	$	500		(17%)		39%

Taxable equivalent adjustment		4		3		7		7		6		33%		(33%)
Applicable income tax expense (benefit)		107		132		(116)		475		127		(19%)		(16%)

Net income	$	586	$	704	$	509	$	1,014	$	367		(17%)		60%
Less: Net income attributable to noncontrolling interests		—		—		—		—		—		NM		NM

Net income attributable to Bancorp	$	586	$	704	$	509	$	1,014	$	367		(17%)		60%
Dividends on preferred stock		23		15		23		15		23		53%		—

Net income available to common shareholders	$	563	$	689	$	486	$	999	$	344		(18%)		64%

Earnings per share, diluted	$	0.80	$	0.97	$	0.67	$	1.35	$	0.45		(18%)		78%

Net Interest Income


(Taxable equivalent basis; $ in millions)^(b)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Interest Income
Total interest income	$	1,273	$	1,209	$	1,151	$	1,159	$	1,112		5%		14%
Total interest expense		249		210		188		182		167		19%		49%

Taxable equivalent net interest income (NII)	$	1,024	$	999	$	963	$	977	$	945		3%		8%


Average Yield											bps Change
Yield on interest-earning assets		3.98%		3.85%		3.61%		3.64%		3.54%		13		44
Adjusted yield on interest-earning assets		3.98%		3.85%		3.69%		3.64%		3.54%		13		44
Rate paid on interest-bearing liabilities		1.12%		0.97%		0.88%		0.85%		0.79%		15		33

Ratios
Taxable equivalent net interest rate spread		2.86%		2.88%		2.73%		2.79%		2.75%		(2)		11
Taxable equivalent net interest margin (NIM)		3.21%		3.18%		3.02%		3.07%		3.01%		3		20
Adjusted taxable equivalent NIM		3.21%		3.18%		3.10%		3.07%		3.01%		3		20

Average Balances											% Change
Loans and leases, including held for sale	$	93,232	$	92,869	$	92,865	$	92,617	$	92,653		—		1%
Total securities and other short-term investments		34,935		34,677		33,756		33,826		33,481		1%		4%
Total interest-earning assets		128,167		127,546		126,621		126,443		126,134		—		2%
Total interest-bearing liabilities		89,222		87,607		84,820		85,328		85,320		2%		5%
Bancorp shareholders’ equity		16,108		16,313		16,493		16,820		16,615		(1%)		(3%)

Taxable equivalent NII of $1.024 billion in the second quarter of 2018 increased $25 million, or 3 percent, from the prior quarter. Performance reflected higher short-term market rates, a higher day count and growth in middle market commercial and industrial (C&I) loans. Taxable equivalent NIM of 3.21 percent in the second quarter of 2018 increased 3 bps from the prior quarter, primarily driven by higher short-term market rates, partially offset by a higher day count.

Compared to the second quarter of 2017, taxable equivalent NII increased $79 million, or 8 percent. Performance reflected higher short-term rates and an increase in investment portfolio balances. Taxable equivalent NIM increased 20 bps from the second quarter of 2017, primarily driven by higher short-term market rates.

Securities

Average securities and other short-term investments were $34.9 billion in the second quarter of 2018 compared to $34.7 billion in the previous quarter and $33.5 billion in the second quarter of 2017. Average available-for-sale debt and other securities of $32.6 billion in the second quarter of 2018 were up $395 million, or 1 percent, sequentially and up $1.3 billion, or 4 percent, from the second quarter of 2017.

Loans


($ in millions)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Average Portfolio Loans and Leases
Commercial loans and leases:
Commercial and industrial loans	$	42,292	$	41,782	$	41,438	$	41,302	$	41,601		1%		2%
Commercial mortgage loans		6,514		6,582		6,751		6,807		6,845		(1%)		(5%)
Commercial construction loans		4,743		4,671		4,660		4,533		4,306		2%		10%
Commercial leases		3,847		3,960		4,016		4,072		4,036		(3%)		(5%)

Total commercial loans and leases	$	57,396	$	56,995	$	56,865	$	56,714	$	56,788		1%		1%

Consumer loans:
Residential mortgage loans	$	15,581	$	15,575	$	15,590	$	15,523	$	15,417		—		1%
Home equity		6,672		6,889		7,066		7,207		7,385		(3%)		(10%)
Automobile loans		8,968		9,064		9,175		9,267		9,410		(1%)		(5%)
Credit card		2,221		2,224		2,202		2,140		2,080		—		7%
Other consumer loans		1,719		1,587		1,352		1,055		892		8%		93%

Total consumer loans	$	35,161	$	35,339	$	35,385	$	35,192	$	35,184		(1%)		—

Total average portfolio loans and leases	$	92,557	$	92,334	$	92,250	$	91,906	$	91,972		—		1%

Average loans held for sale	$	675	$	535	$	615	$	711	$	681		26%		(1%)

Average portfolio loan and lease balances were flat sequentially and up 1 percent year-over-year. Sequential performance was primarily driven by increases in C&I and other consumer loans, offset by decreases in home equity loans and commercial leases. Year-over-year performance was primarily driven by increases in other consumer and C&I loans, partially offset by decreases in home equity and automobile loans. Period end portfolio loans and leases of $92.0 billion were flat sequentially and up 1 percent year-over-year.

Average commercial portfolio loan and lease balances were up 1 percent both sequentially and from the second quarter of 2017. Sequential performance was primarily driven by an increase in C&I loans reflecting solid growth in middle market lending, partially offset by a decrease in commercial leases consistent with the planned reduction in indirect non-relationship based lease originations. Within commercial real estate, commercial mortgage balances decreased 1 percent and commercial construction balances were up 2 percent sequentially. Year-over-year overall commercial performance was primarily driven by an increase in C&I and commercial construction loans, partially offset by a decrease in commercial mortgage. Period end commercial line utilization was 35 percent in both the first and second quarter of 2018, compared to 34 percent in the second quarter of 2017.

Average consumer portfolio loan and lease balances were down 1 percent sequentially and were flat year-over-year. Sequential performance was primarily driven by a decline in home equity and automobile loan balances, partially offset by an increase in other consumer loans. Year-over-year performance was primarily driven by an increase in other consumer and residential mortgage loans, offset by lower home equity and automobile loan balances.

Deposits


($ in millions)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Average Deposits
Demand	$	32,834	$	33,825	$	35,519	$	34,850	$	34,915		(3%)		(6%)
Interest checking		28,715		28,403		26,992		25,765		26,014		1%		10%
Savings		13,618		13,546		13,593		13,889		14,238		1%		(4%)
Money market		22,036		20,750		20,023		20,028		20,278		6%		9%
Foreign office^(d)		371		494		323		395		380		(25%)		(2%)

Total transaction deposits	$	97,574	$	97,018	$	96,450	$	94,927	$	95,825		1%		2%
Other time		4,018		3,856		3,792		3,722		3,745		4%		7%

Total core deposits	$	101,592	$	100,874	$	100,242	$	98,649	$	99,570		1%		2%
Certificates - $100,000 and over		2,155		2,284		2,429		2,625		2,623		(6%)		(18%)
Other		198		379		119		560		264		(48%)		(25%)

Total average deposits	$	103,945	$	103,537	$	102,790	$	101,834	$	102,457		—		1%

Average core deposits increased 1 percent sequentially and were up 2 percent year-over-year. Average transaction deposits increased 1 percent sequentially and were up 2 percent compared with the second quarter of 2017. The sequential performance continued to reflect deposit migration from demand deposits to interest-bearing accounts. Sequential and year-over-year growth was primarily driven by increases in consumer money market account balances and commercial interest checking deposits, partially offset by lower commercial demand deposit account balances. Other time deposits increased by 4 percent sequentially and 7 percent year-over-year.

Average total commercial transaction deposits of $42 billion decreased 1 percent sequentially and were flat from the second quarter of 2017. Average total consumer transaction deposits of $55 billion increased 2 percent sequentially and increased 3 percent from the second quarter of 2017.

Wholesale Funding


($ in millions)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over	$	2,155	$	2,284	$	2,429	$	2,625	$	2,623		(6%)		(18%)
Other deposits		198		379		119		560		264		(48%)		(25%)
Federal funds purchased		1,080		692		602		675		311		56%		247%
Other short-term borrowings		2,452		2,423		2,316		4,212		4,194		1%		(42%)
Long-term debt		14,579		14,780		14,631		13,457		13,273		(1%)		10%

Total average wholesale funding	$	20,464	$	20,558	$	20,097	$	21,529	$	20,665		—		(1%)

Average wholesale funding of $20.5 billion decreased $94 million sequentially and decreased $201 million, or 1 percent, from the second quarter of 2017. The sequential decrease in average wholesale funding reflected lower long-term debt balances resulting from maturities in the first and second quarter of 2018 exceeding a debt issuance in the second quarter of 2018 as well as lower other deposits and jumbo CD balances, partially offset by an increase in Federal funds borrowings. The year-over-year decrease primarily resulted from the ability to fund interest-earning asset growth with core deposits.

Noninterest Income


($ in millions)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Noninterest Income
Service charges on deposits	$	137	$	137	$	138	$	138	$	139		—		(1%)
Corporate banking revenue		120		88		77		101		101		36%		19%
Mortgage banking net revenue		53		56		54		63		55		(5%)		(4%)
Wealth and asset management revenue		108		113		106		102		103		(4%)		5%
Card and processing revenue		84		79		80		79		79		6%		6%
Other noninterest income		250		460		123		1,076		85		(46%)		194%
Securities gains (losses), net		(5)		(11)		1		—		—		55%		NM
Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights		(4)		(13)		(2)		2		2		69%		NM

Total noninterest income	$	743	$	909	$	577	$	1,561	$	564		(18%)		32%

Noninterest income of $743 million decreased $166 million sequentially and increased $179 million year-over-year. The sequential and year-over-year comparisons reflect the impact of the following items:

Noninterest Income excluding certain items


($ in millions)	For the Three Months Ended						% Change
	June		March		June
	2018		2018		2017		Seq		Yr/Yr
Noninterest Income excluding certain items
Noninterest income (U.S. GAAP)	$	743	$	909	$	564
Worldpay step-up gain		—		(414)		—
Gain on sale of Worldpay shares		(205)		—		—
Gain from GreenSky IPO		(16)		—		—
Branch and land network impairment charge		30		8		—
Valuation of Visa total return swap		10		39		9
Securities losses / (gains), net		5		11		—

Noninterest income excluding certain items^(b)	$	567	$	553	$	573		3%		(1%)

Excluding the items in the table above, noninterest income of $567 million increased $14 million, or 3 percent, from the previous quarter and decreased 1 percent from the second quarter of 2017. The sequential performance was primarily driven by increases in corporate banking revenue and card and processing revenue, partially offset by a decrease in wealth and asset management revenue compared to the seasonally strong performance in the first quarter of 2018.

Corporate banking revenue of $120 million was up 36 percent sequentially and up 19 percent year-over-year. The sequential and year-over-year increase was primarily driven by strong, broad-based capital markets revenue growth, led by corporate bond fees and loan syndication revenue.

Mortgage Banking Net Revenue


($ in millions)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Mortgage Banking Net Revenue
Origination fees and gains on loan sales	$	28	$	24	$	32	$	40	$	37		17%		(24%)
Net mortgage servicing revenue:
Gross mortgage servicing fees		54		53		54		56		49		2%		10%
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs		(29)		(21)		(32)		(33)		(31)		38%		(6%)

Net mortgage servicing revenue		25		32		22		23		18		(22%)		39%

Total mortgage banking net revenue	$	53	$	56	$	54	$	63	$	55		(5%)		(4%)

Mortgage banking net revenue was $53 million in the second quarter of 2018, down 5 percent from the first quarter of 2018 and down 4 percent from the second quarter of 2017. The sequential decrease was driven by elevated negative net valuation adjustments, partially offset by higher origination fees and gains on loan sales. The year-over-year decrease was driven by lower origination fees and gains on loan sales, partially offset by higher gross mortgage servicing fees. Originations of $2.1 billion in the current quarter increased 35 percent sequentially and decreased 7 percent from the second quarter of 2017.

Wealth and asset management revenue of $108 million decreased 4 percent from the first quarter of 2018 and increased 5 percent from the second quarter of 2017. The sequential decrease was primarily driven by seasonally strong tax-related private client service revenue in the first quarter of 2018 and a decrease in personal asset management revenue. The year-over-year increase was primarily driven by higher personal asset management revenue.

Card and processing revenue of $84 million in the second quarter of 2018 increased 6 percent both sequentially and year-over-year. The sequential increase reflected seasonally higher credit card spend volume and higher debit transaction volume. The year-over-year increase in card and processing revenue was due to higher credit card spend volume and higher debit transaction volume.

Other noninterest income totaled $250 million in the second quarter of 2018, compared with $460 million in the previous quarter, and $85 million in the second quarter of 2017. As disclosed in the table on page 8, the reported results included the impact of Worldpay gains, a gain from the GreenSky IPO, valuation adjustments from the Visa total return swap, and branch impairment charges. For the second quarter of 2018, excluding these items, other noninterest income of $69 million decreased $24 million, or 26 percent, from the first quarter of 2018 and decreased $25 million, or 27 percent, from the second quarter of 2017. The sequential decrease was primarily due to lower private equity investment income. The year-over-year results also reflected a decline in equity method earnings from the ownership interest in Worldpay.

Net losses on investment securities were $5 million in the second quarter of 2018 (primarily due to the ownership stake in GreenSky), compared with net losses of $11 million in the first quarter of 2018 and no net gains/losses in the second quarter of 2017. Net losses on securities held as non-qualifying hedges for the MSR portfolio were $4 million in the second quarter of 2018 and $13 million in the first quarter of 2018.

Noninterest Expense


($ in millions)	For the Three Months Ended										% Change
	June		March		December		September		June
	2018		2018		2017		2017		2017		Seq		Yr/Yr
Noninterest Expense
Salaries, wages and incentives	$	471	$	447	$	418	$	407	$	397		5%		19%
Employee benefits		78		110		82		77		86		(29%)		(9%)
Net occupancy expense		74		75		74		74		70		(1%)		6%
Technology and communications		67		68		68		62		57		(1%)		18%
Equipment expense		30		31		29		30		29		(3%)		3%
Card and processing expense		30		29		34		32		33		3%		(9%)
Other noninterest expense		287		286		368		293		285		—		1%

Total noninterest expense	$	1,037	$	1,046	$	1,073	$	975	$	957		(1%)		8%

Noninterest expense of $1.037 billion decreased $9 million, or 1 percent, compared with the first quarter of 2018, and increased $80 million, or 8 percent, compared with the second quarter of 2017. Excluding the $19 million compensation expense primarily related to the previously announced staffing review and the $10 million contribution to the Fifth Third Foundation in the second quarter of 2018, as well as an $8 million litigation reserve charge in the first quarter of 2018, noninterest expense of $1.008 billion decreased $30 million, or 3 percent. The sequential decrease primarily reflected seasonally lower compensation-related expenses and ongoing discipline in managing expenses throughout the company. The year-over-year increase was primarily driven by higher base compensation and technology and communications expense.

Summary of Credit Loss Experience


($ in millions)	For the Three Months Ended
	June		March		December		September		June
	2018		2018		2017		2017		2017
Net losses charged-off
Commercial and industrial loans	($	47)	($	28)	($	32)	($	27)	($	18)
Commercial mortgage loans		(2)		(1)		1		(3)		(5)
Commercial leases		—		—		(1)		—		(1)
Residential mortgage loans		(2)		(3)		(1)		1		(2)
Home equity		(2)		(5)		(4)		(3)		(5)
Automobile loans		(8)		(11)		(10)		(8)		(6)
Credit card		(26)		(25)		(20)		(20)		(22)
Other consumer loans		(7)		(8)		(9)		(8)		(5)

Total net losses charged-off	($	94)	($	81)	($	76)	($	68)	($	64)

Total losses charged-off	($	118)	($	103)	($	94)	($	85)	($	95)
Total recoveries of losses previously charged-off		24		22		18		17		31

Total net losses charged-off	($	94)	($	81)	($	76)	($	68)	($	64)
Ratios (annualized)
Net losses charged-off as a percent of average portfolio loans and leases		0.41%		0.36%		0.33%		0.29%		0.28%
Commercial		0.34%		0.21%		0.22%		0.21%		0.17%
Consumer		0.52%		0.60%		0.51%		0.43%		0.46%

Net charge-offs were $94 million, or 41 bps of average portfolio loans and leases on an annualized basis, in the second quarter of 2018 compared with net charge-offs of $81 million, or 36 bps, in the first quarter of 2018 and $64 million, or 28 bps, in the second quarter of 2017.

Commercial net charge-offs of $49 million, or 34 bps, increased $20 million sequentially. This primarily reflected a $19 million increase in net charge-offs of C&I loans.

Consumer net charge-offs of $45 million, or 52 bps, decreased $7 million sequentially. This primarily reflected a $3 million decrease in net charge-offs on both home equity and automobile loans.


($ in millions)	For the Three Months Ended
	June		March		December		September		June
	2018		2018		2017		2017		2017
Allowance for Credit Losses
Allowance for loan and lease losses, beginning	$	1,138	$	1,196	$	1,205	$	1,226	$	1,238
Total net losses charged-off		(94)		(81)		(76)		(68)		(64)
Provision for loan and lease losses		33		23		67		67		52
Deconsolidation of a variable interest entity (VIE)		—		—		—		(20)		—

Allowance for loan and lease losses, ending	$	1,077	$	1,138	$	1,196	$	1,205	$	1,226

Reserve for unfunded commitments, beginning	$	151	$	161	$	157	$	162	$	159
(Benefit from) provision for unfunded commitments		(20)		(10)		4		(5)		3

Reserve for unfunded commitments, ending	$	131	$	151	$	161	$	157	$	162

Components of allowance for credit losses:
Allowance for loan and lease losses	$	1,077	$	1,138	$	1,196	$	1,205	$	1,226
Reserve for unfunded commitments		131		151		161		157		162

Total allowance for credit losses	$	1,208	$	1,289	$	1,357	$	1,362	$	1,388
Allowance for loan and lease losses ratio
As a percent of portfolio loans and leases		1.17%		1.24%		1.30%		1.31%		1.34%
As a percent of nonperforming portfolio loans and leases^(e)		247%		252%		274%		238%		200%
As a percent of nonperforming portfolio assets^(e)		224%		226%		245%		217%		185%

The provision for loan and lease losses totaled $33 million in the second quarter of 2018, compared to $23 million in the first quarter of 2018 and $52 million in the second quarter of 2017.

As of quarter end, the allowance for loan and lease loss ratio represented 1.17 percent of total portfolio loans and leases outstanding, compared with 1.24 percent last quarter, and represented 247 percent of nonperforming loans and leases, and 224 percent of nonperforming assets. Performance reflected a significant improvement in criticized assets and non-performing loans.


($ in millions)	As of
	June 2018		March 2018		December 2017		September 2017		June 2017
Nonperforming Assets and Delinquent Loans
Nonaccrual portfolio loans and leases:
Commercial and industrial loans	$	99	$	155	$	144	$	144	$	225
Commercial mortgage loans		8		9		12		14		15
Commercial leases		25		4		—		1		1
Residential mortgage loans		13		16		17		19		19
Home equity		54		55		56		56		52
Automobile loans		3		—		—		—		—
Other consumer loans		1		1		—		—		—

Total nonaccrual portfolio loans and leases (excludes restructured loans)	$	203	$	240	$	229	$	234	$	312
Nonaccrual restructured portfolio commercial loans and leases^(f)		173		154		150		214		244
Nonaccrual restructured portfolio consumer loans and leases		61		58		58		58		58

Total nonaccrual portfolio loans and leases	$	437	$	452	$	437	$	506	$	614
Repossessed property		7		9		9		10		11
OREO		36		43		43		39		37

Total nonperforming portfolio assets^(e)	$	480	$	504	$	489	$	555	$	662
Nonaccrual loans held for sale		5		5		5		18		7
Nonaccrual restructured loans held for sale		18		19		1		2		1

Total nonperforming assets	$	503	$	528	$	495	$	575	$	670


Restructured portfolio consumer loans and leases (accrual)	$	1,029	$	916	$	927	$	929	$	933
Restructured portfolio commercial loans and leases (accrual)^(f)	$	111	$	249	$	249	$	232	$	224

Total loans and leases 30-89 days past due (accrual)	$	217	$	299	$	280	$	252	$	190
Total loans and leases 90 days past due (accrual)	$	89	$	107	$	97	$	77	$	75
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO^(e)		0.47%		0.49%		0.48%		0.55%		0.67%
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO^(e)		0.52%		0.55%		0.53%		0.60%		0.72%

Total nonperforming portfolio assets decreased $24 million, or 5 percent, from the previous quarter to $480 million. Portfolio nonperforming loans and leases (NPLs) at quarter end decreased $15 million from the previous quarter to $437 million. NPLs as a percent of total loans, leases and OREO at quarter end decreased 2 bps from the previous quarter to 0.47 percent.

Commercial portfolio NPLs decreased $17 million from last quarter to $305 million, or 0.54 percent of commercial portfolio loans, leases and OREO. Consumer portfolio NPLs increased $2 million from last quarter to $132 million, or 0.37 percent of consumer portfolio loans, leases and OREO.

OREO balances decreased $7 million from the prior quarter to $36 million, and included $14 million in commercial OREO and $22 million in consumer OREO. Repossessed personal property decreased $2 million from the prior quarter to $7 million.

Loans over 90 days past due and still accruing decreased $18 million from the first quarter of 2018 to $89 million. Loans 30-89 days past due of $217 million decreased $82 million from the previous quarter.

Capital and Liquidity Position


	For the Three Months Ended
	June 2018		March 2018		December 2017		September 2017		June 2017
Capital Position
Average total Bancorp shareholders’ equity as a percent of average assets		11.38%		11.52%		11.69%		11.93%		11.84%
Tangible equity^(b)		10.29%		10.09%		9.90%		9.84%		9.98%
Tangible common equity (excluding unrealized gains/losses)^(b)		9.33%		9.14%		8.94%		8.89%		9.02%
Tangible common equity (including unrealized gains/losses)^(b)		8.98%		8.89%		8.99%		9.00%		9.12%

Regulatory Capital and Liquidity Ratios
CET1 capital^(c)		10.91%		10.82%		10.61%		10.59%		10.63%
Tier I risk-based capital^(c)		12.02%		11.95%		11.74%		11.72%		11.76%
Total risk-based capital^(c)		15.21%		15.25%		15.16%		15.16%		15.22%
Tier I leverage		10.24%		10.11%		10.01%		9.97%		10.07%
Modified liquidity coverage ratio (LCR)		116%		113%		129%		124%		115%

Capital ratios remained strong and increased during the quarter. The CET1 ratio was 10.91 percent, the tangible common equity to tangible assets ratio^(b) was 9.33 percent (excluding unrealized gains/losses), and 8.98 percent (including unrealized gains/losses). The Tier I risk-based capital ratio was 12.02 percent, the Total risk-based capital ratio was 15.21 percent, and the Tier I leverage ratio was 10.24 percent.

On May 25, 2018, Fifth Third initially settled a share repurchase agreement whereby Fifth Third would purchase $235 million of its outstanding stock. The initial settlement reduced second quarter common shares outstanding by 6.4 million shares. On June 15, 2018, Fifth Third settled the forward contract. An additional 1.2 million shares were repurchased in connection with the completion of this agreement.

On June 27, 2018, Fifth Third completed the sale of 5 million shares of Class A common stock of Worldpay, Inc. Fifth Third had previously received these Class A shares in exchange for Class B Units of Vantiv Holding, LLC. Fifth Third recognized a pre-tax gain of approximately $205 million (~ $162 million after tax)^(a) related to the sale. The sale added approximately 16 basis points to Fifth Third’s CET1 ratio. As a result of the sale, Fifth Third beneficially owns approximately 3.3% of Worldpay’s equity through its ownership of approximately 10.3 million Class B Units.

On June 28, 2018, Fifth Third announced that the Board of Governors of the Federal Reserve System did not object to Fifth Third’s 2018 CCAR capital plan for the period beginning July 1, 2018 and ending June 30, 2019. Fifth Third’s capital plan included the following capital actions related to common dividends and share repurchases:

•

The increase in the quarterly common stock dividend to $0.22 from $0.18 beginning 4Q 2018 and to $0.24 beginning 2Q 2019, a 33 percent increase over the current dividend rate

•

The repurchase of common shares in an amount up to $1.651 billion, or a 42 percent increase over the 2017 capital plan. Included in these repurchases are:

•

$81 million in repurchases related to share issuances under employee benefit plans

•

$53 million in repurchases related to previously-recognized Worldpay tax receivable agreement (“TRA”) transaction after-tax gains

•

The additional ability to repurchase common shares in the amount of any after-tax capital generated from the sale of Worldpay common stock (including expected share repurchases associated with the recent sale of 5 million shares of Worldpay which generated approximately $162 million in after-tax capital)^(a)

•

The additional ability to repurchase common shares in the amount of any after-tax cash income generated from the termination and settlement of gross cash flows from existing TRAs with Worldpay or potential future TRAs that may be generated from additional sales of Worldpay

Fifth Third intends to execute open market share repurchases associated with up to $500 million of its 2018 CCAR repurchase plan before the beginning of the proxy solicitation in connection with the MB Financial, Inc. shareholder vote on its merger with Fifth Third, and may repurchase additional shares after the vote. The timing and amount of this repurchase activity is subject to market conditions and applicable securities laws.

Tax Rate

The effective tax rate was 15.5 percent in the second quarter of 2018 compared with 15.8 percent in the previous quarter and 25.9 percent in the second quarter of 2017. The tax rate in the second quarter of 2018 was impacted by a $12 million tax benefit primarily associated with the exercise and vesting of employee equity awards.

Other

On May 20, 2018, Fifth Third Bancorp and MB Financial, Inc. signed a definitive agreement under which MB Financial will merge with Fifth Third in a transaction valued at approximately $4.7 billion as of May 18, 2018. The transaction is expected to reduce Fifth Third’s regulatory common CET1 ratio by approximately 45 basis points. The pro forma tangible common equity to tangible assets (TCE) ratio of the combined entity is projected to be 8.2 percent at closing. The transaction is subject to the satisfaction of all customary closing conditions, including regulatory approvals as well as the approval of MB Financial shareholders.

As of June 30, 2018, Fifth Third Bank owned approximately 10.3 million units representing a 3.3 percent interest in Vantiv Holding, LLC, convertible into shares of Worldpay, Inc., a publicly traded firm. Based upon Worldpay’s closing price of $81.78 on June 30, 2018, our interest in Worldpay was valued at approximately $840 million. The difference between the market value and the book value of Fifth Third’s interest in Worldpay’s shares is not recognized in Fifth Third’s equity or capital.

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of June 30, 2018, the Company had $141 billion in assets and operates 1,158 full-service Banking Centers, and 2,458 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 54,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of June 30, 2018, Fifth Third also had a 3.3% interest in Vantiv Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2018, had $368 billion in assets under care, of which it managed $37 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ^® Global Select Market under the symbol “FITB.”

Earnings Release End Notes

(a)

Assumes a 21% tax rate.

(b)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation.

(c)

Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated according to the standardized approach for risk-weighted assets. The resulting weighted values are added together resulting in the total risk-weighted assets. Current period regulatory capital ratios are estimated.

(d)

Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.

(e)

Excludes nonaccrual loans held for sale.

(f)

As of June 30, 2017 excludes $7 million of restructured accruing loans and $19 million of restructured nonaccrual loans associated with a consolidated VIE in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party.

IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the proposed merger, Fifth Third Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes the Proxy Statement of MB Financial, Inc. and a Prospectus of Fifth Third Bancorp, as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Fifth Third Bancorp and MB Financial, Inc., may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Fifth Third Bancorp at ir.53.com or from MB Financial, Inc. by accessing MB Financial, Inc.’s website at investor.mbfinancial.com.

Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Fifth Third Investor Relations at Fifth Third Investor Relations, MD 1090QC, 38 Fountain Square Plaza, Cincinnati, OH 45263, by calling (866) 670-0468, or by sending an e-mail to ir@53.com or to MB Financial, Attention: Corporate Secretary, at 6111 North River Road, Rosemont, Illinois 60018, by calling (847) 653-1992 or by sending an e-mail to dkoros@mbfinancial.com.

Fifth Third Bancorp and MB Financial, Inc. and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of MB Financial, Inc. in respect of the transaction described in the Proxy Statement/Prospectus. Information regarding Fifth Third Bancorp’s directors and executive officers is contained in Fifth Third Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2017 and its Proxy Statement on Schedule 14A, dated March 6, 2018, which are filed with the SEC. Information regarding MB Financial, Inc.’s directors and executive officers is contained in its Proxy Statement on Schedule 14A filed with the SEC on April 3, 2018. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger. Free copies of this document may be obtained as described in the preceding paragraph.

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 expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections.

In addition to factors previously disclosed in Fifth Third Bancorp’s and MB Financial, Inc.’s reports filed with or furnished to the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval of the merger by MB Financial, Inc.’s stockholders on the expected terms and schedule, including the risk that regulatory approvals required for the merger are not obtained or are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating the businesses of MB Financial, Inc. or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of Fifth Third Bancorp’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

# # #

Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Income

$ in millions

(unaudited)


	For the Three Months Ended						% Change				Year to Date				% Change
	June		March		June						June		June
	2018		2018		2017		Seq		Yr/Yr		2018		2017		Yr/Yr
Interest Income
Interest and fees on loans and leases	$	996	$	938	$	858		6%		16%	$	1,933	$	1,696		14%
Interest on securities		267		263		245		2%		9%		530		490		8%
Interest on other short-term investments		6		5		3		20%		100%		11		6		83%

Total interest income		1,269		1,206		1,106		5%		15%		2,474		2,192		13%

Interest Expense
Interest on deposits		119		95		65		25%		83%		215		124		73%
Interest on federal funds purchased		5		2		1		150%		400%		7		2		250%
Interest on other short-term borrowings		11		8		10		38%		10%		19		12		58%
Interest on long-term debt		114		105		91		9%		25%		217		182		19%

Total interest expense		249		210		167		19%		49%		458		320		43%


Net Interest Income		1,020		996		939		2%		9%		2,016		1,872		8%

Provision for loan and lease losses		33		23		52		43%		(37%)		56		126		(56%)

Net Interest Income After Provision for Loan and Lease Losses		987		973		887		1%		11%		1,960		1,746		12%

Noninterest Income
Service charges on deposits		137		137		139		—		(1%)		275		277		(1%)
Corporate banking revenue		120		88		101		36%		19%		208		175		19%
Mortgage banking net revenue		53		56		55		(5%)		(4%)		109		108		1%
Wealth and asset management revenue		108		113		103		(4%)		5%		221		211		5%
Card and processing revenue		84		79		79		6%		6%		163		153		7%
Other noninterest income		250		460		85		(46%)		194%		708		160		343%
Securities (losses) gains, net		(5)		(11)		—		55%		NM		(15)		1		NM
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights		(4)		(13)		2		69%		NM		(17)		2		NM

Total noninterest income		743		909		564		(18%)		32%		1,652		1,087		52%

Noninterest Expense
Salaries, wages and incentives		471		447		397		5%		19%		918		808		14%
Employee benefits		78		110		86		(29%)		(9%)		188		196		(4%)
Net occupancy expense		74		75		70		(1%)		6%		149		148		1%
Technology and communications		67		68		57		(1%)		18%		135		116		16%
Equipment expense		30		31		29		(3%)		3%		61		57		7%
Card and processing expense		30		29		33		3%		(9%)		60		63		(5%)
Other noninterest expense		287		286		285		—		1%		572		555		3%

Total noninterest expense		1,037		1,046		957		(1%)		8%		2,083		1,943		7%

Income Before Income Taxes		693		836		494		(17%)		40%		1,529		890		72%
Applicable income tax expense		107		132		127		(19%)		(16%)		239		218		10%

Net Income		586		704		367		(17%)		60%		1,290		672		92%
Less: Net income attributable to noncontrolling interests		—		—		—		NM		NM		—		—		—

Net Income Attributable to Bancorp		586		704		367		(17%)		60%		1,290		672		92%
Dividends on preferred stock		23		15		23		53%		—		38		38		—

Net Income Available to Common Shareholders	$	563	$	689	$	344		(18%)		64%	$	1,252	$	634		97%

Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)


	As of						% Change
	June 2018		March 2018		June 2017		Seq		Yr/Yr
Assets
Cash and due from banks	$	2,052	$	2,038	$	2,203		1%		(7%)
Other short-term investments		1,636		1,747		2,163		(6%)		(24%)
Available-for-sale debt and other securities^(a)		31,961		31,819		31,733		—		1%
Held-to-maturity securities^(b)		19		23		26		(17%)		(27%)
Trading debt securities		280		571		490		(51%)		(43%)
Equity securities		475		418		442		14%		7%
Loans and leases held for sale		783		717		766		9%		2%
Portfolio loans and leases:
Commercial and industrial loans		41,403		41,635		40,914		(1%)		1%
Commercial mortgage loans		6,625		6,509		6,868		2%		(4%)
Commercial construction loans		4,687		4,766		4,366		(2%)		7%
Commercial leases		3,788		3,919		4,157		(3%)		(9%)
Residential mortgage loans		15,640		15,563		15,460		—		1%
Home equity		6,599		6,757		7,301		(2%)		(10%)
Automobile loans		8,938		9,018		9,318		(1%)		(4%)
Credit card		2,270		2,188		2,117		4%		7%
Other consumer loans		1,982		1,615		945		23%		110%

Portfolio loans and leases		91,932		91,970		91,446		—		1%
Allowance for loan and lease losses		(1,077)		(1,138)		(1,226)		(5%)		(12%)

Portfolio loans and leases, net		90,855		90,832		90,220		—		1%
Bank premises and equipment		1,915		1,966		2,041		(3%)		(6%)
Operating lease equipment		606		625		719		(3%)		(16%)
Goodwill		2,462		2,462		2,423		—		2%
Intangible assets		30		30		18		—		67%
Servicing rights		959		926		849		4%		13%
Other assets		6,662		7,326		6,974		(9%)		(4%)

Total Assets	$	140,695	$	141,500	$	141,067		(1%)		—


Liabilities
Deposits:
Demand	$	32,680	$	34,066	$	34,965		(4%)		(7%)
Interest checking		29,452		29,627		25,436		(1%)		16%
Savings		13,455		13,751		14,068		(2%)		(4%)
Money market		21,593		21,540		20,191		—		7%
Foreign office		336		374		395		(10%)		(15%)
Other time		4,058		3,945		3,692		3%		10%
Certificates $100,000 and over		2,557		2,042		2,633		25%		(3%)
Other		—		116		500		NM		NM

Total deposits		104,131		105,461		101,880		(1%)		2%
Federal funds purchased		597		178		117		235%		410%
Other short-term borrowings		1,763		1,335		5,389		32%		(67%)
Accrued taxes, interest and expenses		1,206		1,104		1,617		9%		(25%)
Other liabilities		2,425		2,418		2,162		—		12%
Long-term debt		14,321		14,800		13,456		(3%)		6%

Total Liabilities		124,443		125,296		124,621		(1%)		—

Equity
Common stock^(c)		2,051		2,051		2,051		—		—
Preferred stock		1,331		1,331		1,331		—		—
Capital surplus		2,833		2,828		2,751		—		3%
Retained earnings		16,143		15,707		13,862		3%		16%
Accumulated other comprehensive (loss) income		(552)		(389)		163		(42%)		NM
Treasury stock		(5,574)		(5,344)		(3,739)		4%		49%

Total Bancorp shareholders’ equity		16,232		16,184		16,419		—		(1%)
Noncontrolling interests		20		20		27		—		(26%)

Total Equity		16,252		16,204		16,446		—		(1%)

Total Liabilities and Equity	$	140,695	$	141,500	$	141,067		(1%)		—

(a) Amortized cost	$	32,589	$	32,230	$	31,402		1%		4%
(b) Market values		19		23		26		(17%)		(27%)
(c) Common shares, stated value $2.22 per share (in thousands):
Authorized		2,000,000		2,000,000		2,000,000		—		—
Outstanding, excluding treasury		678,162		684,942		738,873		(1%)		(8%)
Treasury		245,731		238,951		185,020		3%		33%

Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)


	As of
	June 2018		March 2018		December 2017		September 2017		June 2017
Assets
Cash and due from banks	$	2,052	$	2,038	$	2,514	$	2,205	$	2,203
Other short-term investments		1,636		1,747		2,753		3,298		2,163
Available-for-sale debt and other securities^(a)		31,961		31,819		31,751		31,391		31,733
Held-to-maturity securities^(b)		19		23		24		25		26
Trading debt securities		280		571		492		511		490
Equity securities		475		418		439		428		442
Loans and leases held for sale		783		717		492		711		766
Portfolio loans and leases:
Commercial and industrial loans		41,403		41,635		41,170		41,011		40,914
Commercial mortgage loans		6,625		6,509		6,604		6,863		6,868
Commercial construction loans		4,687		4,766		4,553		4,652		4,366
Commercial leases		3,788		3,919		4,068		4,043		4,157
Residential mortgage loans		15,640		15,563		15,591		15,588		15,460
Home equity		6,599		6,757		7,014		7,143		7,301
Automobile loans		8,938		9,018		9,112		9,236		9,318
Credit card		2,270		2,188		2,299		2,168		2,117
Other consumer loans		1,982		1,615		1,559		1,179		945

Portfolio loans and leases		91,932		91,970		91,970		91,883		91,446
Allowance for loan and lease losses		(1,077)		(1,138)		(1,196)		(1,205)		(1,226)

Portfolio loans and leases, net		90,855		90,832		90,774		90,678		90,220
Bank premises and equipment		1,915		1,966		2,003		2,018		2,041
Operating lease equipment		606		625		646		663		719
Goodwill		2,462		2,462		2,445		2,423		2,423
Intangible assets		30		30		27		18		18
Servicing rights		959		926		858		848		849
Other assets		6,662		7,326		6,975		7,047		6,974

Total Assets	$	140,695	$	141,500	$	142,193	$	142,264	$	141,067


Liabilities
Deposits:
Demand	$	32,680	$	34,066	$	35,276	$	35,246	$	34,965
Interest checking		29,452		29,627		27,703		26,091		25,436
Savings		13,455		13,751		13,425		13,693		14,068
Money market		21,593		21,540		20,097		19,646		20,191
Foreign office		336		374		484		609		395
Other time		4,058		3,945		3,775		3,756		3,692
Certificates $100,000 and over		2,557		2,042		2,402		2,411		2,633
Other		—		116		—		—		500

Total deposits		104,131		105,461		103,162		101,452		101,880
Federal funds purchased		597		178		174		118		117
Other short-term borrowings		1,763		1,335		4,012		5,688		5,389
Accrued taxes, interest and expenses		1,206		1,104		1,412		2,071		1,617
Other liabilities		2,425		2,418		2,144		2,516		2,162
Long-term debt		14,321		14,800		14,904		14,039		13,456

Total Liabilities		124,443		125,296		125,808		125,884		124,621

Equity
Common stock^(c)		2,051		2,051		2,051		2,051		2,051
Preferred stock		1,331		1,331		1,331		1,331		1,331
Capital surplus		2,833		2,828		2,790		2,682		2,751
Retained earnings		16,143		15,707		15,122		14,748		13,862
Accumulated other comprehensive (loss) income		(552)		(389)		73		185		163
Treasury stock		(5,574)		(5,344)		(5,002)		(4,637)		(3,739)

Total Bancorp shareholders’ equity		16,232		16,184		16,365		16,360		16,419
Noncontrolling interests		20		20		20		20		27

Total Equity		16,252		16,204		16,385		16,380		16,446

Total Liabilities and Equity	$	140,695	$	141,500	$	142,193	$	142,264	$	141,067

(a) Amortized cost	$	32,589	$	32,230	$	31,577	$	31,026	$	31,402
(b) Market values		19		23		24		25		26
(c) Common shares, stated value $2.22 per share (in thousands):
Authorized		2,000,000		2,000,000		2,000,000		2,000,000		2,000,000
Outstanding, excluding treasury		678,162		684,942		693,805		705,474		738,873
Treasury		245,731		238,951		230,088		218,419		185,020

Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Changes in Equity

$ in millions

(unaudited)


	For the Three Months Ended				Year to Date
	June		June		June		June
	2018		2017		2018		2017
Total Equity, Beginning	$	16,204	$	16,457	$	16,385	$	16,232
Net income attributable to Bancorp		586		367		1,290		672
Other comprehensive income, net of tax:
Change in unrealized (losses) gains:
Available-for-sale securities		(167)		93		(620)		109
Qualifying cash flow hedges		3		1		(5)		(7)
Change in accumulated other comprehensive income related to employee benefit plans		1		1		2		2

Comprehensive income		423		462		667		776

Cash dividends declared:
Common stock		(124)		(104)		(235)		(210)
Preferred stock		(23)		(23)		(38)		(38)
Impact of stock transactions under stock compensation plans, net		7		(3)		22		29
Shares acquired for treasury		(235)		(342)		(553)		(342)
Other		—		(1)		—		(1)
Impact of cumulative effect of change in account principles		—		—		4		—

Total Equity, Ending	$	16,252	$	16,446	$	16,252	$	16,446

Fifth Third Bancorp and Subsidiaries

Regulatory Capital

$ in millions

(unaudited)


	As of
	June 2018^(a)		March 2018		December 2017		September 2017		June 2017
Regulatory capital:
Common stock and related surplus (net of treasury stock)	($	690)	($	465)	($	160)	$	96	$	1,063
Retained earnings		16,143		15,707		15,122		14,748		13,862
Common equity tier I capital adjustments and deductions		(2,467)		(2,470)		(2,445)		(2,401)		(2,403)

CET1 capital		12,986		12,772		12,517		12,443		12,522
Additional tier I capital		1,331		1,331		1,331		1,330		1,331

Tier I capital		14,317		14,103		13,848		13,773		13,853
Tier II capital		3,799		3,896		4,039		4,043		4,074

Total regulatory capital	$	18,116	$	17,999	$	17,887	$	17,816	$	17,927

Risk-weighted assets^(b)	$	119,073	$	118,001	$	117,997	$	117,527	$	117,761

Ratios:
Average shareholders’ equity to average assets		11.38%		11.52%		11.69%		11.93%		11.84%

Regulatory Capital Ratios:
Fifth Third Bancorp
CET1 capital^(b)		10.91%		10.82%		10.61%		10.59%		10.63%
Tier I risk-based capital^(b)		12.02%		11.95%		11.74%		11.72%		11.76%
Total risk-based capital^(b)		15.21%		15.25%		15.16%		15.16%		15.22%
Tier I leverage		10.24%		10.11%		10.01%		9.97%		10.07%

Fifth Third Bank
Tier I risk-based capital^(b)		12.43%		12.39%		12.06%		12.30%		12.24%
Total risk-based capital^(b)		14.10%		14.15%		13.88%		14.14%		14.08%
Tier I leverage		10.63%		10.51%		10.32%		10.50%		10.50%

(a)

Current period regulatory capital data and ratios are estimated.

(b)

Use of Non-GAAP Financial Measures

In addition to GAAP measures, management considers various Non-GAAP measures when evaluating the performance of the business, including: “taxable equivalent net interest income,” “adjusted taxable equivalent net interest income,” “taxable equivalent net interest margin,” “adjusted taxable equivalent net interest margin,” “adjusted yield on interest-earning assets,” “efficiency ratio,” “taxable equivalent net interest rate spread,” “taxable equivalent income before income taxes,” “noninterest income excluding certain items,” “tangible net income available to common shareholders,” “average tangible common equity,” “tangible common equity ratio,” “tangible common equity ratio (excluding unrealized gains/ losses)” “tangible common equity ratio (including unrealized gains/ losses)” “tangible equity,” “tangible book value per share,” and certain ratios derived from these measures.

The taxable equivalent basis adjusts for the tax-favored status of income from certain loans and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison between taxable and non-taxable amounts.

Noninterest income excluding certain items is provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted noninterest income. Adjusted taxable equivalent net interest income and adjusted taxable equivalent net interest margin are provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted net interest income.

Management considers various measures when evaluating capital utilization and adequacy, including the tangible equity and tangible common equity (including and excluding unrealized gains/losses), in addition to capital ratios defined by the U.S. banking agencies. These calculations are intended to complement the capital ratios defined by the U.S. banking agencies for both absolute and comparative purposes. These ratios are not formally defined by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to be Non-GAAP financial measures. Management believes that providing the tangible common equity ratio excluding unrealized gains/losses on certain assets and liabilities enables investors and others to assess the Bancorp’s use of equity without the effects of gains or losses some of which are uncertain and providing the tangible common equity ratio including unrealized gains/losses enables investors and others to assess the Bancorp’s use of equity if all unrealized gains or losses were to be monetized.

Management believes tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of a business as it calculates the return available to common shareholders and book value of common stock without the impact of intangible assets and their related amortization. This is useful for evaluating the performance of a business consistently, whether acquired or developed internally, compared to other companies in the industry who present similar measures.

Please note that although Non-GAAP financial measures provide useful insight, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures.

Please see the following Reg. G reconciliations of all historical Non-GAAP measures used in this release to the most directly comparable GAAP measures.

Fifth Third Bancorp and Subsidiaries

Regulation G Non-GAAP Reconciliation

$ and shares in millions

(unaudited)


		For the Three Months Ended
		June		March		December		September		June
		2018		2018		2017		2017		2017
Net interest income (U.S. GAAP)		$	1,020	$	996	$	956	$	970	$	939
Add:	Taxable equivalent adjustment		4		3		7		7		6

Taxable equivalent net interest income (a)			1,024		999		963		977		945

Net interest income (U.S. GAAP) (annualized) (b)			4,091		4,039		3,793		3,848		3,766
Taxable equivalent net interest income (annualized) (c)			4,107		4,052		3,821		3,876		3,790

Taxable equivalent net interest income			1,024		999		963		977		945
Add:	Leveraged lease remeasurement		—		—		27		—		—

Adjusted taxable equivalent net interest income (d)			1,024		999		990		977		945
Adjusted taxable equivalent net interest income (annualized) (e)			4,107		4,052		3,928		3,876		3,790

Interest income (U.S. GAAP)			1,269		1,206		1,144		1,152		1,106
Add:	Taxable equivalent adjustment		4		3		7		7		6

Taxable equivalent interest income			1,273		1,209		1,151		1,159		1,112
Taxable equivalent interest income (annualized) (f)			5,106		4,903		4,566		4,598		4,460

Taxable equivalent interest income			1,273		1,209		1,151		1,159		1,112
Add:	Leveraged lease remeasurement		—		—		27		—		—

Adjusted taxable equivalent interest income (g)			1,273		1,209		1,178		1,159		1,112
Adjusted taxable equivalent interest income (annualized) (h)			5,106		4,903		4,674		4,598		4,460
Interest expense (annualized) (i)			999		852		746		722		670
Noninterest income (j)			743		909		577		1,561		564
Noninterest expense (k)			1,037		1,046		1,073		975		957
Average interest-earning assets (l)			128,167		127,546		126,621		126,443		126,134
Average interest-bearing liabilities (m)			89,222		87,607		84,820		85,328		85,320

Net interest margin (U.S. GAAP) (b) / (l)			3.19%		3.17%		3.00%		3.04%		2.99%
Taxable equivalent net interest margin (c) / (l)			3.21%		3.18%		3.02%		3.07%		3.01%
Adjusted taxable equivalent net interest margin (e) / (l)			3.21%		3.18%		3.10%		3.07%		3.01%
Adjusted taxable equivalent yield on interest-earnings assets (h) / (l)			3.98%		3.85%		3.69%		3.64%		3.54%
Taxable equivalent efficiency ratio (k) / (a) + (j)			58.7%		54.8%		69.7%		38.4%		63.4%
Taxable equivalent net interest rate spread (f) / (l) - (i) / (m)			2.86%		2.88%		2.73%		2.79%		2.75%

Income before income taxes (U.S. GAAP)		$	693	$	836	$	393	$	1,489	$	494
Add:	Taxable equivalent adjustment		4		3		7		7		6

Taxable equivalent income before income taxes		$	697	$	839	$	400	$	1,496	$	500


Net income available to common shareholders (U.S. GAAP)			563		689		486		999		344
Add:	Intangible amortization, net of tax		1		1		—		—		—

Tangible net income available to common shareholders			564		690		486		999		344
Tangible net income available to common shareholders (annualized) (n)			2,262		2,798		1,928		3,963		1,380

Average Bancorp shareholders’ equity (U.S. GAAP)			16,108		16,313		16,493		16,820		16,615
Less:	Average preferred stock		(1,331)		(1,331)		(1,331)		(1,331)		(1,331)
	Average goodwill		(2,462)		(2,455)		(2,437)		(2,423)		(2,424)
	Average intangible assets and other servicing rights		(30)		(27)		(25)		(18)		(18)

Average tangible common equity (o)			12,285		12,500		12,700		13,048		12,842

Total Bancorp shareholders’ equity (U.S. GAAP)			16,232		16,184		16,365		16,360		16,419
Less:	Preferred stock		(1,331)		(1,331)		(1,331)		(1,331)		(1,331)
	Goodwill		(2,462)		(2,462)		(2,445)		(2,423)		(2,423)
	Intangible assets and other servicing rights		(30)		(30)		(27)		(18)		(18)

Tangible common equity, including unrealized gains / losses (p)			12,409		12,361		12,562		12,588		12,647
Less:	Accumulated other comprehensive income		552		389		(73)		(185)		(163)

Tangible common equity, excluding unrealized gains / losses (q)			12,961		12,750		12,489		12,403		12,484
Add:	Preferred stock		1,331		1,331		1,331		1,331		1,331

Tangible equity (r)			14,292		14,081		13,820		13,734		13,815

Total assets (U.S. GAAP)			140,695		141,500		142,193		142,264		141,067
Less:	Goodwill		(2,462)		(2,462)		(2,445)		(2,423)		(2,423)
	Intangible assets and other servicing rights		(30)		(30)		(27)		(18)		(18)

Tangible assets, including unrealized gains / losses (s)			138,203		139,008		139,721		139,823		138,626
Less:	Accumulated other comprehensive income / loss, before tax		699		492		(92)		(285)		(251)

Tangible assets, excluding unrealized gains / losses (t)		$	138,902	$	139,500	$	139,629	$	139,538	$	138,375


Common shares outstanding (u)			678		685		694		705		739

Ratios:
Return on average tangible common equity (n) / (o)			18.4%		22.4%		15.2%		30.4%		10.7%
Tangible equity (r) / (t)			10.29%		10.09%		9.90%		9.84%		9.98%
Tangible common equity (excluding unrealized gains/losses) (q) / (t)			9.33%		9.14%		8.94%		8.89%		9.02%
Tangible common equity (including unrealized gains/losses) (p) / (s)			8.98%		8.89%		8.99%		9.00%		9.12%
Tangible book value per share (p) / (u)		$	18.30	$	18.05	$	18.10	$	17.86	$	17.11

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