FIFTH THIRD BANCORP - FORM 8-K - EX-99.2

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8-K - FORM 8-K - FIFTH THIRD BANCORP	d285237d8k.htm

4Q16 Earnings Presentation

January 24, 2017

Refer to earnings release dated January 24, 2017 for further information.

Exhibit 99.2

Cautionary statement

This presentation contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule

175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 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

the use of forward-looking language such as “will

likely result,” “may,” “are expected to,” “anticipates,” “potential,” “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 from time to time 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 is a risk that additional information may become known during the company’s quarterly closing process or

as a result of subsequent events that could affect the accuracy of the statements and financial information contained herein.

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 or real estate market conditions, either nationally or in the states in which Fifth Third, one or more

acquired entities and/or the combined company do business, weaken or 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

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; (22) difficulties in

separating the operations of any branches or other assets divested; (23) losses or adverse impacts on the carrying values of branches and long-lived assets in connection with

their sales or anticipated sales; (24) inability to achieve expected benefits from branch consolidations and planned sales within desired timeframes, if at all; (25) ability to secure

confidential information and deliver products and services through the use of computer systems and telecommunications networks; and (26) 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.

In this presentation, we may sometimes provide non-GAAP financial information. Please note that although non-GAAP financial measures provide useful insight to analysts,

investors and regulators, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures. We provide GAAP reconciliations for non-

GAAP measures in a later slide in this presentation as well as in our earnings release, both of which are available in the investor relations section of our website, www.53.com.

Management has provided forward-looking guidance on certain non-GAAP measures in connection with this presentation in order to facilitate comparability with the Bancorp’s

historical performance and financial condition as reflected in these non-GAAP measures. Such forward-looking non-GAAP measures include return on tangible common equity;

net interest margin (FTE); net interest income (FTE); adjusted noninterest income excluding mortgage banking net revenue; and adjusted noninterest income, excluding certain

transactions and adjustments related to the Bancorp’s investment in Vantiv, Visa total return swap, and branch sales, closures and consolidations. Bancorp’s management does

not estimate on a forward-looking basis the impact of items similar to those that it has excluded to generate these non-GAAP measures on a historical basis because the

occurrence and amounts of items such as these are difficult to predict. As a result, the Bancorp has not provided reconciliations of its forward-looking non-GAAP measures.

Adjusted

NII of $925 million, up $12 million

sequentially; adjusted

NIM of 2.91%, up 3 bps

sequentially

Reported NII decreased $4 million vs. 3Q16; NIM

(FTE) decreased 2 bps to 2.86%

vs. 3Q16

Adjusted

noninterest income up 2% vs. 3Q16

Reported noninterest income down 26% vs. 3Q16

primarily driven by Vantiv-related items

Tightly-managed operating expenses; adjusted

noninterest expenses down 2% vs. 3Q16

Reported noninterest expenses down 1% vs. 3Q16

Improving charge-offs and criticized assets;

commercial full year NCO ratio at 15 year low

Executing on North Star initiatives

Overall solid credit quality in-line with expectations

Fourth quarter 2016

Diluted EPS

$0.49

Included $0.01 net positive

impact for certain items

Net income

$395 million

Fourth quarter 2016

highlights

Non-GAAP

measure:

See

Reg

reconciliation

pages

and

this

presentation

and

use

non-GAAP

measures

page

the

earnings

release

See page 4

of the presentation for impact of certain items

Full year 2016

Diluted EPS

$1.93

Net Income

$1.6 billion

Pre-tax items included in 4Q16 results

had a net positive $0.01 EPS impact:

A $16 million pre-tax (~$10 million

after-tax ) reduction to net interest

income for refunds offered to

certain card customers

A $9 million pre-tax (~$6 million

after-tax ) gain from the net exercise

of the Vantiv warrant

A $6 million pre-tax (~$4 million

after-tax ) benefit related to the

valuation of the Visa total return

swap

A $6 million tax benefit from the

early adoption of an accounting

standard

Credit trends

NCO ratio of 31 bps; down 14

bps

vs. 3Q16

Portfolio NPA ratio of 80 bps; up 5

bps vs. 3Q16

4Q16 in review

Non-GAAP

measure:

See

Reg

reconciliation

pages

and

this

presentation

and

use

non-GAAP

measures

page

the

earnings

release

Assumes a 35% tax rate

($ millions)

4Q16

Seq.

YOY

Loans & leases

(ex. HFS)

$92,964

(1%)

Core deposits

$100,949

Net interest income

$903

Taxable equivalent adjustment

20%

Net interest income (taxable equivalent)

909

Provision for loan and lease losses

(33%)

(41%)

Noninterest income

620

(26%)

(44%)

Noninterest expense

960

(1%)

Net income attributable to Bancorp

$395

(23%)

(40%)

Net income available to common

shareholders

$372

(26%)

(41%)

Earnings per share, diluted

0.49

(25%)

(38%)

Net interest margin (FTE)

2.86%

(2bps)

1bp

Efficiency ratio (FTE)

62.8%

730bps

1480bps

Return on average assets

1.11%

(33bps)

(72bps)

Return on average common equity

9.7%

(310bps)

(750bps)

Return on average tangible common equity

11.6%

(360bps)

(900bps)

Tangible book value per share

$ 16.60

(4%)

Average

Balances

Income

Statement

Data

Financial

Ratios

Avg +1% YoY

$95.7

$94.7

$94.9

$97.0

94%

95%

92%

4Q15

1Q16

2Q16

3Q16

4Q16

$29.0

$29.7

$30.1

$29.8

$30.8

4Q15

1Q16

2Q16

3Q16

4Q16

Average securities

Short-term investments

FY: 2% loan growth (EOP, excluding HFS)

Continuing to maintain pricing discipline

$93.6

$93.3

$93.9

$93.5

$93.0

4Q15

1Q16

2Q16

3Q16

4Q16

Balance sheet

Loan & lease balances

($ billions)

•

Transaction deposits up 2% vs. 3Q16,

driven by increased:

–

Commercial interest checking

–

Consumer money market

•

Average loan-to-core deposit ratio of 92%

•

Modified LCR of 128% at 4Q16

Core deposit balances

($ billions)

$100.9

$99.7

Securities and

short-term investments

($ billions)

•

Average securities up $1.8B YoY

driven by:

–

Opportunistically deploying cash

at more attractive entry points

than those experienced in prior

quarters

•

Securities portfolio / total assets of

21.7% compared to 20.4% in 4Q15

All balances are on an average basis; loans balances exclude HFS

•

Commercial down 1% vs. 3Q16; flat YoY

–

C&I down 1% vs. 3Q16 and 1% YoY

–

CRE up 1% vs. 3Q16 and 7% YoY

•

Consumer flat vs. 3Q16; down 2% YoY

–

Auto down 3% vs. 3Q16 and 13% YoY

–

HE down 2% vs. 3Q16 and 7% YoY

–

Mortgage up 3% vs. 3Q16 and 10% YoY

$98.9

$99.0

$98.7

Transaction

Other time

Loan-to-core

deposit ratio

Current Outlook:

Avg -1% YoY

$31.3

$31.6

$32.0

$31.7

$32.6

FY: NII (FTE) up 3.5 -

5% and NIM (FTE) of 2.95 –

3.00%

Q1: NII (FTE) up 1.5 –

2% and NIM (FTE) up 8 -

9 bps from reported results

(lower-end of FY ranges assumes no additional rate hikes, higher-end assumes June & September rate hikes)

Non-GAAP measure: See Reg

G reconciliation on pages 22 and 23 of this presentation and use of non-GAAP measures on page 32 of the earnings release

$925

•

Adjusted NII & NIM performance driven

by:

improved short-term market rates

continued pricing discipline

•

NII was up $21 million, or 2%

•

NIM up 6 bps

4Q16 vs. 3Q16

4Q16 vs. 4Q15

•

Adjusted NII & NIM performance driven

by:

improved short-term market rates

continued pricing discipline

•

NII was up $12 million, or 1%

•

NIM up 3 bps

Current Outlook

NII and NIM (FTE)

($ millions)

Net interest income

$1,104

$637

$599

$840

$620

$623

$578

$602

$596

$608

4Q15

1Q16

2Q16

3Q16

4Q16

Noninterest income

($ millions)

Noninterest income

Adjusted noninterest income

FY: adjusted up 3.5 -

4%, excluding mortgage

Q1: adjusted flat sequentially, excluding mortgage and TRA payment

(mortgage revenue excluded given volatility from significant increase in interest rates at the end of 2016)

Noninterest income

Non-GAAP

measure:

See

Reg

reconciliation

pages

and

this

presentation

and

use

non-GAAP

measures

page

the

earnings

release

2016 excludes all items previously disclosed in the “noninterest income excluding certain items” section of the 2016 earnings releases, including all Vantiv transactions and gains, branch

valuation adjustments and gains, the Visa total return swap, the impact of transferring certain nonconforming investments to HFS, the gain on the agent card portfolio, the gain on non-branch

facility, and gains/losses on securities, resulting in $2.384BN in 2016 ($2.1BN excluding all mortgage banking net revenue)

Adjusted

noninterest income up $12

million, or 2%; performance driven by:

Annual Vantiv TRA payment

Partially offset by lower corporate

banking revenue

4Q16 vs. 3Q16

4Q16 vs. 4Q15

Adjusted

noninterest income down $15

million, or 2%; performance driven by:

Decrease in mortgage banking net

revenue

Current Outlook

1,2

Noninterest expense

Non-GAAP measure: See Reg

G reconciliation on pages 22 and 23 of this presentation and use of non-GAAP measures on page 32 of the earnings release

FY: 1% annual growth

Q1: 2% growth year-over-year

$963

$986

$983

$973

$960

$951

$971

$966

$951

4Q15

1Q16

2Q16

3Q16

4Q16

Noninterest expense

Adjusted noninterest expense

Noninterest expense

($ millions)

•

Adjusted

noninterest expense down

2%; performance driven by:

Decrease

in tech and comm. expense

Decrease in provision for unfunded

commitments

Seasonally lower marketing expense

4Q16 vs. 3Q16

4Q16 vs. 4Q15

•

Adjusted

noninterest expense

flat;

performance driven by:

Lower card and processing expense

Lower net occupancy

•

Partially offset by increased compensation

expense as a result of personnel additions

in risk and compliance and IT

Current Outlook:

•

Expense growth in 2017 includes the impact of North Star initiatives

•

Excluding the impact of these incremental expenses, 2017 expenses would be

expected to decrease by 50 bps compared to our guidance of 1% growth

year-end

2017

Select North Star Initiatives

Expanded mortgage capacity via new system

Teller automation

Omni-channel distribution investments

New credit card products and investments in analytics

GreenSky -

originations

Specialty and Asset-Based Lending growth

New vertical build-outs

End-to-end process re-design

Continued capital markets growth

Enhanced profitability measurement capabilities

Treasury Mgmt. product expansion and optimization

Compensation plan re-design / headcount rationalization

Renegotiate major vendor contracts

Automation and robotics initiatives

Non-branch rationalization and workspace management

Primary Focus

Revenue / Expense

R + E

Ongoing initiatives

<50%

50-75%

76-100%

year-end

2018

year-end

2019

Progress towards full

financial run-rate impact

GreenSky -

full channel integration & digital capabilities

North Star initiatives

•

4Q16

net charge-offs of 0.31%, down 14

bps

from 3Q16, including a $36MM decrease in C&I

loan NCOs

•

4Q16 portfolio NPAs up $40MM from 3Q16

Single credit drove increase in NPAs

•

4Q16 criticized asset ratio down 53 bps; lowest

since 2007

•

4Q16 reserve of 1.36% down 1 bp

sequentially

Credit quality overview

NCOs range-bound with potential quarterly variability

Provision reflective of loan growth

$1,272

$1,295

$1,299

$1,272

$1,253

1.37%

1.38%

1.37%

1.36%

4Q15

1Q16

2Q16

3Q16

4Q16

Reserve coverage

($ millions)

Allowance for Loan & Lease Losses (ALLL)

ALLL / Loans and Leases

$80

$96

$87

$107

$73

Current Outlook:

$46

$42

$41

$44

$45

4Q15

1Q16

2Q16

3Q16

4Q16

Net charge-offs

($ millions)

Commercial

Consumer

Total NCO Ratio

$419

$611

$602

$513

$564

$228

$214

$203

$185

$174

0.70%

0.88%

0.86%

0.75%

0.80%

$647

$825

$805

$698

$738

4Q15

1Q16

2Q16

3Q16

4Q16

Commercial

Consumer

Total NPA Ratio

HFI non-performing assets

($ millions)

$54

$46

$63

$28

0.34%

0.42%

0.37%

0.45%

0.31%

$34

Strong capital and liquidity position

Current period regulatory capital ratios are estimated

Net of issuance for employee stock compensation; including the issuance, gross payout ratios were 77% in 2014, 78% in 2015, and 66% in 2016

Capital Update

CET1 strong and improved to 10.40%, up 23 bps sequentially and 58 bps from 4Q15

Tier I risk-based capital 11.51%; Total risk-based capital 15.00%; Leverage 9.90%

Share repurchases reduced common shares outstanding by 35

million shares in 2016

$986 million of total capital returned to common shareholders

Liquidity Update

Modified LCR of 128% in 4Q16, up from 115% in 3Q16

9.8%

9.9%

10.2%

10.4%

4Q15

1Q16

2Q16

3Q16

4Q16

Common Equity Tier 1 Ratio (Basel III)

Impacted by 3Q16 Vantiv TRA gains

recognized but not realized; excluding

impact, payout rate was 66%

42%

48%

37%

30%

26%

72%

74%

63%

2014

2015

2016

Share Repurchases

Dividends

Total Capital Returned to Common Shareholders

Current outlook

Non-GAAP

measure:

See

Reg

reconciliation

pages

and

this

presentation

and

use

non-GAAP

measures

page

the

earnings

release

2016 excludes all items previously disclosed in the “noninterest income excluding certain items” section of the earnings release, including all Vantiv transactions and gains, branch valuation

adjustments

and

gains,

the

Visa

total

return

swap,

the

impact

transferring

certain

nonconforming

investments

HFS,

the

gain

the

agent

card

portfolio,

the

gain

non-branch

facility,

and gains/losses on securities, resulting in $2.384B in 2016 ($2.1B excluding all mortgage banking revenue)

Note: Previous and current outlook excludes potential, but currently unforecasted, items, such as any potential additional Vantiv gains or losses, future capital actions, or changes in regulatory

or accounting guidance

Outlook as of January 24, 2017;

please see cautionary statement on slide 2 regarding forward-looking statements

Total loans & leases

(excl. HFS)

Net

interest

income

(FTE)

Net

interest

margin

(FTE)

Noninterest income

1,2

Noninterest expense

Effective tax rate

Credit items

FY 2017: 2% annual growth (EOP)

FY 2017: Up 3.5 –

5% (lower-end w/ no additional hikes, higher-end w/ June & Sept hikes)

Q1 2017: Up 1.5 –

2% from the reported fourth quarter NII

FY 2017: 2.95% -

3.00% (lower-end w/ no additional hikes, higher-end w/ June & Sept hikes)

Q1 2017: Up by 8 -

9 bps from the reported fourth quarter NIM

FY 2017: Adjusted up 3.5 –

4%, excluding mortgage

Q1 2017: Adjusted flat, excluding mortgage and Q4 TRA payment

mortgage revenue excluded given volatility from significant increase in interest rates at the end of 2016

FY 2017: 1% annual growth

Q1 2017: 2% growth year-over-year

FY 2017: mid 25% range (assumes no Federal corporate tax reform)

NCOs range-bound with potential quarterly variability

Provision reflective of loan growth

Appendix

PPNR

and

efficiency

ratio

trends

Non-GAAP

measures:

See

Reg

reconciliation

pages

and

this

presentation

and

use

non-GAAP

measures

page

the

earnings

release

Prior quarters include similar adjustments

($ in millions)

4Q15

1Q16

2Q16

3Q16

4Q16

Net interest income (FTE)

$904

$909

$908

$913

$909

Add: Noninterest income

1,104

637

599

840

620

Less: Noninterest expense

963

986

983

973

960

Pre-provision net revenue

$1,045

$560

$524

$780

$569

Adjustments

remove

(benefit)

detriment

net

interest

income:

Bankcard refunds

noninterest

income:

Gain on sale of Vantiv shares

(331)

Gain on Vantiv warrant actions

(89)

(9)

Vantiv TRA settlement payment

(49)

Gain from termination and settlement of Vativ

TRA

(280)

Gain on sale from the sale of a non-branch facility

(11)

Branch and land valuation adjustments

Valuation of 2009 Visa total return swap

(1)

(6)

Transfer of nonconforming investments under Volcker to HFS

Vantiv warrant valuation

(21)

(47)

(19)

Gain on sale of certain branches

(8)

(11)

Gain on sale of the agented bankcard loan portfolio

(11)

Gain from sales of troubled debt restructurings

Impairment associated with aircraft leases

Securities (gains) / losses

(1)

(3)

(6)

(4)

noninterest

expense:

Contribution to Fifth Third Foundation

Severance expense

Retirement eligibility changes

Executive Retirements

Adjusted PPNR

$576

$516

$539

$543

$582

PPNR reconciliation

•

Adjusted PPNR up 7% vs. 3Q16 driven by:

–

Improvements in NII, noninterest income and

noninterest expense resulted in ~200 bps decline in

adjusted efficiency ratio

•

Adjusted PPNR up 1% YoY

–

Improvement in NII and flat expenses, partially offset

by lower noninterest income resulted in ~20 bps

decline in adjusted efficiency ratio

$576

$516

$539

$543

$582

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

4Q15

1Q16

2Q16

3Q16

4Q16

PPNR Trend

($ millions)

Adjusted PPNR

Reported PPNR

48.0%

63.8%

65.3%

55.5%

62.8%

62.2%

65.3%

64.3%

64.0%

62.0%

4Q15

1Q16

2Q16

3Q16

4Q16

Efficiency ratio

Efficiency Ratio

Adjusted Efficiency Ratio

Strong liquidity profile

Available and contingent borrowing capacity (4Q16):

–

FHLB ~$10.8B available, ~$14.7B total

–

Federal Reserve ~$31.5B

Holding Company:

Modified LCR of 128%

Holding Company cash at 12/31/16: $2.4B

Cash currently sufficient to satisfy all fixed obligations in a stressed

environment for ~24

months (debt maturities, common and preferred

dividends, interest and other expenses) without accessing capital

markets, relying on dividends from subsidiaries or any other actions

$500MM maturity in 1Q17

Bank Entity:

$250MM of debt matured in 4Q16

The Bank did not issue any additional debt in 4Q16

2017 Funding Plans:

The $650MM debt maturity at the Bank will take place in 2Q17

Fifth Third would not be required to replace 2017 debt maturities to

maintain our current senior debt ratings under the Moody’s LGF

methodology

Any additional debt issuance in 2017 would result from general balance

sheet management and prudent liquidity risk management

$500

$1,100

$2,312

2017

2018

2019

2020

2021

2022 on

Fifth Third Bancorp

Fifth Third Capital Trust (Bancorp)

Holding company unsecured debt maturities

($ millions)

$650

$1,850

$2,600

$2,100

$750

2017

2018

2019

2020

2021

2022 on

Bank unsecured debt maturities

millions –

excl. Retail Brokered & Institutional CDs)

Demand

25%

Interest

checking

19%

Savings/

MMDA

24%

Consumer

time

Foreign

Office

Non-Core

Deposits

S-T

borrowings

Other

liabilities

Equity

11%

L-T debt

10%

Heavily core funded as of 12/31/2016

S-T

wholesale

Balance sheet positioning

Commercial

Loans

1,2

Investment

Portfolio

Consumer

Loans1

Note: Data as of 12/31/16

Includes HFS Loans & Leases

Fifth Third had $4.48BN 1ML receive-fix swaps outstanding against C&I loans, which are being included in fixed

Fifth Third had $3.46BN 3ML receive-fix swaps outstanding against long term debt, which are being included in floating, long term debt with swaps outstanding reflected at fair value

•

Fixed: $14.0B

1, 2

•

Float: $42.5B

1, 2

•

1ML based: 62%

(of total commercial)

•

3ML based: 8% (of total commercial)

•

Prime based: 4% (of total commercial)

•

Weighted avg. life: 1.65 years

•

50% allocation to bullet/locked-out

cash flow securities

•

Investment portfolio yield: 3.17%

•

Duration: 4.9 years

•

Net unrealized pre-tax gain: $159MM

•

99% AFS

•

Fixed:

$25.1B

•

Float:

$11.3B

•

12ML based: 3% (of total consumer)

•

Prime based: 24% (of total consumer)

•

Weighted avg. life: 3.76 years

•

Auto weighted avg. life: 1.39 years

Long Term

Debt3

Key Characteristics

Balance Sheet Mix

Fixed vs. Floating

Level 1

100% Fix / 0% Float

Level 2A

100% Fix / 0% Float

Non-HQLA

/Other

78% Fix / 22% Float

C&I

20% Fix / 80% Float

Commercial

Mortgage

24% Fix / 76% Float

2% Fix / 98% Float

Commercial

Construction

100% Fix / 0% Float

Commercial

Lease

Resi Mtg &

Construction

88% Fix / 12% Float

Auto

99% Fix / 1% Float

8% Fix / 92% Float

Home Equity

30% Fix / 70% Float

Credit Card

100% Fix / 0% Float

Other

•

Fixed: $10.3B

•

Float:

$4.0B

•

1ML based: <1% (of total long term debt)

•

3ML based: 28% (of total long term debt)

•

Weighted avg. life: 4.38 years

Senior Debt

76% Fix / 24% Float

Sub Debt

55% Fix / 45% Float

97% Fix / 3% Float

Auto Securiz.

Proceeds

0% Fix / 100% Float

TRUPS

100% Fix / 0% Float

Other

34%

46%

20%

74%

12%

64%

27%

<1%

21%

28%

43%

Interest rate risk management

Data as of 12/31/16

Actual

results

may

vary

from

these

simulated

results

due

differences

between

forecasted

and

actual

balance

sheet

composition,

timing,

magnitude,

and

frequency

interest

rate

changes, as well as other changes in market conditions and management strategies.

Re-pricing 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

•

NII benefits from asset rate reset in a rising rate environment

–

58% of total loans are floating rate considering impacts of interest rate swaps (75% of

total commercial and

31% of total consumer)

–

Investment portfolio duration of 4.9 years

–

Short-term borrowings represent approximately 18% of total wholesale funding, or 3% of total funding

–

Approximately $12 billion in non-core funding matures beyond one year

•

Interest rate sensitivity tables are based on conservative deposit assumptions

–

70% beta on all interest-bearing deposit and sweep balances (~50% betas experienced in 2004 –

2006 Fed

tightening cycle)

–

No modeled re-pricing lag

–

Modeled non-interest bearing commercial DDA runoff of approximately $2.5 billion (about 10%) for each 100

bps increase in rates

–

DDA runoff rolls into an interest bearing product with a 100% beta

Change in Interest Rates (bps)

+200 Shock

Change in Interest Rates (bps)

+100 Shock

+200 Ramp over 12 months

1.88%

6.78%

(4.00%)

+25 Shock

+100 Ramp over 12 months

1.13%

4.32%

-75 Shock

-75 Ramp over 6 months

(5.77%)

(10.62%)

Betas 25% Higher

Betas 25% Lower

Change in Interest Rates (bps)

Months

13-24

Months

Change in Interest Rates (bps)

Months

13-24

Months

13-24

Months

+200 Ramp over 12 months

1.61%

6.24%

2.15%

+200 Ramp over 12 months

(1.56%)

(0.10%)

5.32%

13.66%

+100 Ramp over 12 months

1.00%

4.05%

1.27%

+100 Ramp over 12 months

(0.59%)

0.88%

2.85%

7.76%

7.31%

4.58%

Estimated NII Sensitivity with Demand Deposit Balance Changes

% Change in NII (FTE)

(12.00%)

% Change in NII (FTE)

$1B Balance Decrease

$1B Balance Increase

13-24

Months

(4.96%)

Estimated NII Sensivity with Deposit Beta Changes

(2.00%)

(6.00%)

(0.36%)

(0.14%)

Months

13-24

Months

13-24

Months

Estimated NII Sensitivity Profile and ALCO Policy Limits

Estimated EVE Sensitivity Profile and ALCO Policy Limits

% Change in

NII (FTE)

ALCO Policy Limits

Change in EVE

ALCO Policy Limit

Mortgage banking results

•

$2.7B in originations, up 54% YoY; 41% purchase volume

•

4Q16 mortgage banking drivers:

–

Origination fees and gain on sale revenue down $31MM, or 51%, vs. 3Q16

–

Gain on sale margin down 132 bps vs. 3Q16

–

Net MSR valuation adjustments of positive $23MM; servicing rights amortization of $35MM

–

$48MM in gross servicing fees

•

YoY decline in mortgage banking revenue driven primarily by lower origination fees and gains

on loan sales

Gain on sale margin represents gains on all loans originated for sale

$1.11

$1.06

$1.70

$1.79

$1.66

$0.66

$0.70

$1.05

$1.09

$1.06

2.89%

3.47%

2.62%

3.01%

1.69%

4Q15

1Q16

2Q16

3Q16

4Q16

Originations for sale

Originations HFI

Margin

Mortgage originations and gain-on-sale margins

($ billions)

(29)

(27)

(35)

(9)

4Q15

1Q16

2Q16

3Q16

4Q16

Mortgage banking revenue

($ millions)

•

4Q16 warrant net exercise and share sale successfully executed; resulted

in ~$6MM after-tax gain and 4 bps increase in CET1

•

Vantiv gains monetized since 4Q15 resulting in ~$493MM in after-tax value

to shareholders:

–

4Q15: $32MM related to TRA termination and settlement

–

4Q15: $273MM related to warrant cancellation and share sale gains

–

3Q16: $182MM related to TRA termination and settlement

–

4Q16: $6MM warrant net exercise and share sale gains

•

Transactions reduce future volatility in reported results

•

17.9% ownership interest in Vantiv Holdings LLC

•

Will continue to account for ownership under equity method of accounting

•

Significant contractual arrangements between Fifth Third and Vantiv

Continuing to monetize our Vantiv stake

NPL rollforward

NPL HFI Rollforward

Commercial

4Q15

1Q16

2Q16

3Q16

4Q16

286

341

543

539

460

Transfers to nonaccrual status

165

306

104

145

162

Transfers to accrual status

(3)

(6)

(4)

Transfers from held for sale

Transfers to held for sale

(12)

(3)

(36)

(3)

Loans sold from portfolio

(2)

(6)

(2)

(3)

Loan paydowns/payoffs

(37)

(39)

(52)

(112)

(53)

Transfers to OREO

(13)

(1)

(3)

(1)

(3)

Charge-offs

(46)

(60)

(51)

(81)

(40)

Draws/other extensions of credit

341

543

539

460

524

Consumer

4Q15

1Q16

2Q16

3Q16

4Q16

172

165

158

154

141

Transfers to nonaccrual status

Transfers to accrual status

(28)

(33)

(31)

(28)

(21)

Transfers from held for sale

Transfers to held for sale

Loans sold from portfolio

Loan paydowns/payoffs

(10)

(9)

(11)

(10)

(8)

Transfers to OREO

(9)

(6)

(7)

(5)

Charge-offs

(16)

(14)

(11)

(13)

(14)

Draws/other extensions of credit

165

158

154

141

136

Total NPL

506

701

693

601

660

Total new nonaccrual loans - HFI

221

361

160

190

205

Beginning NPL amount

Ending Commercial NPL

Beginning NPL amount

Ending Consumer NPL

Credit trends

Residential Mortgage

Commercial & Industrial

Home Equity & Automobile

Commercial Real Estate

* Excludes loans held-for-sale

Regulation G non-GAAP reconciliation

See page 32 of the earnings release for a discussion on the use of non-GAAP financial measures

Regulation G non-GAAP reconciliation

See page 32 of the earnings release for a discussion on the use of non-GAAP financial measures

Attached files

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Investing forum