EX-99.1 2 q22020earningsrelease.htm EX-99.1 Document

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Fifth Third Announces Second Quarter 2020 Results
Reported diluted earnings per share of $0.23
Reported results included a negative $0.07 impact from certain items on page 2

Key Financial DataKey Highlights
$ millions for all balance sheet and income statement items
2Q20
1Q20
2Q19
Continue to provide support in response to the pandemic
Proactive outreach with customers, including those transitioning out of COVID-19 hardship programs
Originated $5.5 billion in Paycheck Protection Program (PPP) loans to approximately 38,000 small and mid-sized businesses
Taking measures to ensure continued employee & customer safety and remote workforce productivity
Second quarter 2020
Pre-provision net revenue(a) up 4% from the prior quarter and up 10% from the year-ago quarter despite continued rate headwinds
Record capital markets revenue
Significant improvement in reported and adjusted efficiency ratio compared to both the prior and year-ago quarter
NCO ratio lower than low end of previous guidance range
9.7% CET1 up 35 bps sequentially; exceeds required minimum (including indicative stress capital buffer) by over 270 bps
Record deposit growth exceeding loan growth, resulting in excess liquidity (loan-to-core deposit ratio of 75%)
IB core deposit costs down 41 bps, more than previous guidance; NIM primarily impacted by excess liquidity (29 bps of the sequential decline); NIM also impacted by decline in market rates
Income Statement Data
Net income available to common shareholders$163$29$427
Net interest income (U.S. GAAP)1,2001,2291,245
Net interest income (FTE)(a)
1,2031,2331,250
Noninterest income650671660
Noninterest expense1,1211,2001,243
Per Share Data
Earnings per share, basic$0.23$0.04$0.57
Earnings per share, diluted0.230.040.57
Book value per share28.8828.2626.17
Tangible book value per share(a)
22.6622.0220.03
Balance Sheet & Credit Quality
Average portfolio loans and leases$118,506$110,779$110,095
Average deposits150,598126,789124,345
Net charge-off ratio(b)
0.44 %0.44 %0.29 %
Nonperforming asset ratio(c)
0.65  0.60  0.51  
Financial Ratios
Return on average assets0.40 %0.11 %1.08 %
Return on average common equity3.2  0.6  9.1  
Return on average tangible common equity(a)
4.3  1.0  12.3  
CET1 capital(d)(e)
9.72  9.37  9.57  
Net interest margin(a)
2.75  3.28  3.37  
Efficiency(a)
60.5  63.0  65.1  
Other than the Quarterly Financial Review tables beginning on page 14, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis.

CEO Commentary

“Our second quarter performance once again highlighted the strength of our franchise and our ability to navigate the dynamic environment and mitigate the impact of lower rates through well-diversified fee revenues and continued expense discipline. Our CET1 capital ratio of 9.7% and loan-to-core deposit ratio of 75% are both indicative of our balance sheet strength which will serve us well during this challenging environment.

We have now generated year-over-year adjusted positive operating leverage in seven out of the past eight quarters, and also grew tangible book value per share for five consecutive quarters.

We expect credit quality to remain relatively stable in the near-term, reflecting our disciplined client selection, decade-long focus on improving our credit performance in the event of a downturn, and proactive risk management actions. Additionally, our allowance for credit losses continues to incorporate our expectation of a protracted downturn followed by a prolonged recovery period due to the economic fallout from the pandemic.

We remain intently focused on taking appropriate action for our customers, our employees, and our communities during these uncertain times. I am very proud of the way our employees have responded to support our customers and each other.”

-Greg D. Carmichael, Chairman, President and CEO
Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed Loyd (513) 534-6397 July 23, 2020


Income Statement Highlights
($ in millions, except per share data)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Condensed Statements of Income
Net interest income (NII)(a)
$1,203$1,233$1,250(2)%(4)%
Provision for credit losses48564085(24)%471%
Noninterest income650671660(3)%(2)%
Noninterest expense1,1211,2001,243(7)%(10)%
Income before income taxes(a)
$247$64$582286%(58)%
Taxable equivalent adjustment$3$4$5(25)%(40)%
Applicable income tax expense4914124250%(60)%
Net income$195$46$453324%(57)%
Dividends on preferred stock32172688%23%
Net income available to common shareholders$163$29$427462%(62)%
Earnings per share, diluted$0.23$0.04$0.57475%(60)%
Fifth Third Bancorp (NASDAQ®: FITB) today reported second quarter 2020 net income of $195 million compared to net income of $46 million in the prior quarter and $453 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $163 million, or $0.23 per diluted share, compared to $29 million, or $0.04 per diluted share, in the prior quarter and $427 million, or $0.57 per diluted share, in the year-ago quarter.

Diluted earnings per share impact of certain items - 2Q20
(after-tax impacts(f); $ in millions, except per share data)
Valuation of Visa total return swap within other noninterest income$(22)
Branch and non-branch real estate charges within other noninterest income(10)
COVID-19-related expenses(9)
Merger-related expenses(7)
FHLB debt extinguishment charge within other noninterest expense(4)
After-tax impact(f) of certain items
$(52)
Diluted earnings per share impact of certain items$(0.07)
Diluted earnings per share impact reflect 717.572 million average diluted shares outstanding

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Net Interest Income
(FTE; $ in millions)(a)
For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Interest Income
Interest income$1,406 $1,529 $1,641 (8)%(14)%
Interest expense203296391(31)%(48)%
Net interest income (NII)$1,203 $1,233 $1,250 (2)%(4)%
Adjusted NII(a)
$1,188$1,217$1,232(2)%(4)%
Average Yield/Rate Analysisbps Change
Yield on interest-earning assets3.21 %4.07 %4.42 %(86)(121)
Rate paid on interest-bearing liabilities0.66 %1.09 %1.47 %(43)(81)
Ratios
Net interest rate spread2.55 %2.98 %2.95 %(43)(40)
Net interest margin (NIM)2.75 %3.28 %3.37 %(53)(62)
Adjusted NIM(a)
2.71 %3.24 %3.32 %(53)(61)
Compared to the prior quarter, reported NII decreased $30 million, or 2%. Excluding purchase accounting accretion of $15 million in the current quarter and $16 million in the prior quarter, adjusted NII decreased $29 million, or 2%. The decrease was driven by the impact of lower market rates on commercial loans, decreased mortgage loan balances due to an increase in prepayment activity, as well as a decline in home equity and credit card balances reflecting generally subdued demand. These impacts were partially offset by elevated average commercial revolving line of credit balances and growth from lower yielding PPP loans, as well as continued focus on reducing deposit costs and the favorable impact of previously executed hedges. Compared to the prior quarter, reported and adjusted NIM decreased 53 bps, also driven by lower market rates and the unfavorable impact from elevated cash balances (29 bps), and lower yielding PPP loans (1 bp), partially offset by benefits from lower deposit costs and previously executed hedges.
Compared to the year-ago quarter, reported NII decreased $47 million, or 4%. Excluding purchase accounting accretion, adjusted NII decreased $44 million, or 4%, primarily reflecting lower market rates, partially offset by the impact of elevated average commercial line draws and lower yielding PPP loans, as well as a continued focus on reducing deposit costs and the favorable impact of previously executed hedges. Compared to the year-ago quarter, reported NIM decreased 62 bps. Excluding purchase accounting accretion, adjusted NIM decreased 61 bps, primarily reflecting the impact of lower market rates on commercial loans and significantly elevated cash balances, partially offset by benefits from lower deposit costs and previously executed hedges.
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Noninterest Income
($ in millions)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Noninterest Income
Service charges on deposits$122$148$143(18)%(15)%
Commercial banking revenue13712410710%28%
Mortgage banking net revenue9912063(18)%57%
Wealth and asset management revenue120134122(10)%(2)%
Card and processing revenue828692(5)%(11)%
Leasing business revenue577376(22)%(25)%
Other noninterest income1274771%(74)%
Securities gains (losses), net21(24)8NM163%
Securities gains, net - non-qualifying hedges
   on mortgage servicing rights32(100)%(100)%
Total noninterest income$650$671$660(3)%(2)%
Reported noninterest income decreased $21 million, or 3%, from the prior quarter, and decreased $10 million, or 2%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below. Reported noninterest income results include securities gains/losses which were attributable predominantly to mark-to-market impacts related to non-qualified deferred compensation assets, and were offset in noninterest expense, resulting in an immaterial impact to pre-tax income.

Noninterest Income excluding certain items
($ in millions)For the Three Months Ended
JuneMarchJune
202020202019
Noninterest Income excluding certain items
Noninterest income (U.S. GAAP)$650 $671 $660 
Valuation of Visa total return swap292222
Branch and non-branch real estate charges12
Net impairment on private equity investments15
Securities (gains) losses, net (excluding GreenSky)(21)24(8)
Noninterest income excluding certain items(a)
$670 $732 $674 
Compared to the prior quarter, noninterest income excluding certain items decreased $62 million, or 8%. Compared to the year-ago quarter, noninterest income excluding certain items decreased $4 million, or 1%.
Compared to the prior quarter, service charges on deposits decreased $26 million, or 18%, reflecting lower consumer and commercial deposit fees which were impacted by the record growth in deposit balances as well as hardship-related fee waivers granted throughout the quarter. Commercial banking revenue increased $13 million, or 10%, reflecting increases in both debt and equity capital markets revenue, as well as increased institutional brokerage revenue. Mortgage banking net revenue decreased $21 million, or 18%, as strong origination fees and gains on loan sales (reflecting improved margins) in the current quarter were more than offset by the MSR net valuation adjustment that returned to normalized levels compared to the prior quarter favorability, as well as lower origination volume and a decrease in gross servicing fee revenue in the current quarter. Current quarter mortgage originations of $3.4 billion decreased 15% compared to the prior quarter and were impacted by the decision to temporarily pause correspondent channel production. Mortgage originations excluding correspondent channel production increased 22% compared to the prior quarter. Wealth and asset management revenue decreased $14 million, or 10%, primarily driven by lower revenue given the equity market performance and seasonally strong tax preparation fees from the prior quarter. Card and processing revenue decreased
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$4 million, or 5%, resulting from lower credit and debit volumes throughout the quarter reflecting customer behavioral changes in response to the pandemic, partially offset by lower rewards. Leasing business revenue decreased $16 million, or 22%, primarily driven by a decrease in lease syndication revenue.
Compared to the year-ago quarter, service charges on deposits decreased $21 million, or 15%, driven by lower consumer and commercial deposit fees, which were impacted by the record growth in deposit balances as well as hardship-related fee waivers granted throughout the quarter. Commercial banking revenue increased $30 million, or 28%, reflecting increases in both debt and equity capital markets revenue, as well as increased institutional brokerage and financial risk management revenue. Mortgage banking net revenue increased $36 million, or 57% primarily driven by strong origination fees and gains on loan sales reflecting improved margins. Originations excluding the correspondent channel increased 41% compared to the year-ago quarter. Wealth and asset management revenue decreased $2 million, or 2%. Card and processing revenue decreased by $10 million, or 11%, reflecting decreases in debit and credit volumes, partially offset by lower rewards. Leasing business revenue decreased $19 million, or 25% primarily reflecting lower business solutions revenue.

Noninterest Expense
($ in millions)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Noninterest Expense
Compensation and benefits$627 $647 $641 (3)%(2)%
Net occupancy expense828288-(7)%
Technology and communications9093136(3)%(34)%
Equipment expense323233-(3)%
Card and processing expense293134(6)%(15)%
Leasing business expense333538(6)%(13)%
Marketing expense203141(35)%(51)%
Intangible amortization expense121314(8)%(14)%
Other noninterest expense196236218(17)%(10)%
Total noninterest expense$1,121 $1,200 $1,243 (7)%(10)%
Impacts of Merger-Related Expenses
($ in millions)For the Three Months Ended
JuneMarchJune
202020202019
Merger-Related Expenses
Compensation and benefits$2 $2 $41 
Net occupancy expense216
Technology and communications4349
Equipment expense1
Card and processing expense1
Leasing business expense
Marketing expense3
Intangible amortization expense
Other noninterest expense118
Total merger-related expenses$9 $7 $109 
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Noninterest Expense excluding Merger-Related Expenses(a)
($ in millions)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Noninterest Expense excluding Merger-Related Expenses
Compensation and benefits$625 $645 $600 (3)%4%
Net occupancy expense808182(1)%(2)%
Technology and communications869087(4)%(1)%
Equipment expense323232—%—%
Card and processing expense293133(6)%(12)%
Leasing business expense333538(6)%(13)%
Marketing expense203138(35)%(47)%
Intangible amortization expense121314(8)%(14)%
Other noninterest expense195235210(17)%(7)%
Total noninterest expense excluding merger-related expenses$1,112 $1,193 $1,134 (7)%(2)%
Compared to the prior quarter, reported noninterest expense decreased $79 million, or 7%. Excluding certain noninterest expense items shown on page 2 and in the reconciliation tables of the earnings release (including COVID-19-related expenses), as well as intangible amortization expense, noninterest expense decreased $62 million, or 5%, primarily reflecting lower compensation and benefits (which included $22 million from non-qualified deferred compensation expense in the current quarter compared to an expense benefit of $26 million in the prior quarter), lower other noninterest expense, declines in expenses directly associated with revenue-generating activities, and continued discipline managing expenses throughout the Company. Excluding the impacts of non-qualified deferred compensation expense (offset in noninterest income), expenses decreased $110 million, or 9%, compared to the prior quarter.
Compared to the year-ago quarter, reported noninterest expense decreased $122 million, or 10%. Excluding certain noninterest expenses shown on page 2 and in the reconciliation tables of the earnings release (including COVID-19-related expenses), as well as intangible amortization expense, noninterest expense decreased $38 million, or 3%, primarily reflecting lower marketing expense, lower other noninterest expense, and declines in expenses directly associated with business activities, partially offset by elevated compensation and benefits expenses (which included $22 million from non-qualified deferred compensation expense in the current quarter compared to $7 million in the year-ago quarter). Excluding the impacts of non-qualified deferred compensation expense (offset in noninterest income), expenses decreased $53 million, or 5%, compared to the year-ago quarter.
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Average Interest-Earning Assets
($ in millions)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Average Portfolio Loans and Leases
Commercial loans and leases:
Commercial and industrial loans$59,040 $51,586 $52,078 14%13%
Commercial mortgage loans11,22211,01910,6322%6%
Commercial construction loans5,5485,1325,2488%6%
Commercial leases3,0563,2013,809(5)%(20)%
Total commercial loans and leases$78,866$70,938$71,76711%10%
Consumer loans:
Residential mortgage loans$16,561$16,732$16,804(1)%(1)%
Home equity5,8206,0066,376(3)%(9)%
Indirect secured consumer loans12,12411,80910,1903%19%
Credit card2,2482,4982,408(10)%(7)%
Other consumer loans2,8872,7962,5503%13%
Total consumer loans$39,640$39,841$38,328(1)%3%
Total average portfolio loans and leases$118,506 $110,779 $110,095 7%8%
Average Loans and Leases Held for Sale
Commercial loans and leases held for sale$68$108$113(37)%(40)%
Consumer loans held for sale8441,293785(35)%8%
Total average loans and leases held for sale$912$1,401$898(35)%2%
Securities and other short-term investments$56,806$39,033$37,79746%50%
Total average interest-earning assets$176,224$151,213$148,79017%18%
Compared to the prior quarter, total average portfolio loans and leases increased 7%, reflecting growth in commercial and industrial (C&I) loans, commercial construction and indirect secured consumer loans (predominantly indirect automobile). Average commercial portfolio loans and leases increased 11%, reflecting elevated C&I revolving line of credit utilization and the impact of PPP loans in the current quarter, as well as growth in commercial construction and commercial mortgage loans, partially offset by lower commercial leases. Average consumer portfolio loans decreased 1%, reflecting declines in credit card and home equity loans, partially offset by growth in indirect secured consumer loans.
Compared to the year-ago quarter, total average portfolio loans and leases increased 8%, reflecting growth in C&I loans as well as continued growth in indirect secured consumer loans (predominantly indirect automobile). Average commercial portfolio loans and leases increased 10%, reflecting elevated C&I balances predominantly from elevated corporate banking client line of credit utilization for part of the quarter, PPP loans, and growth in commercial mortgage loans, partially offset by a decline in commercial leases. Average consumer portfolio loans increased 3%, as higher indirect secured consumer loans were partially offset by lower credit card and home equity loans.

Total period-end commercial portfolio loans and leases of $75 billion included $5.2 billion in PPP loan balances and decreased $3 billion, or 3%, from the prior quarter, and increased $5 billion, or 7%, from the year-ago quarter, reflecting a normalization of commercial revolving line utilization throughout the current quarter. Period-end commercial revolving line utilization was 38%, compared to 47% in the prior quarter and 37% in the year-ago quarter.
Average available-for-sale debt and other securities of $36.1 billion increased 3% compared to the prior quarter and increased 4% compared to the year-ago quarter. Average other short-term investments (which includes interest-bearing cash) of $19.8 billion increased $16.9 billion compared to the prior quarter and increased $17.5 billion compared to the year-ago quarter.
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Average Deposits
($ in millions)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Average Deposits
Demand$45,761 $35,765 $35,818 28%28%
Interest checking49,76040,29836,51423%36%
Savings16,35414,71514,41811%13%
Money market30,02227,10925,93411%16%
Foreign office(g)
182209163(13)%12%
Total transaction deposits$142,079$118,096$112,84720%26%
Other time4,4215,0815,678(13)%(22)%
Total core deposits$146,500$123,177$118,52519%24%
Certificates - $100,000 and over4,0673,3555,78021%(30)%
Other deposits3125740(88)%(23)%
Total average deposits$150,598 $126,789 $124,345 19%21%
Compared to the prior quarter, average core deposits increased 19%, with double-digit growth in all deposit captions except other time and foreign office deposits. Average demand deposits represented 31% of total core deposits in the current quarter compared to 29% in the prior quarter. Average commercial transaction deposits increased 34% and average consumer transaction deposits increased 8%.
Compared to the year-ago quarter, average core deposits increased 24%, reflecting record growth in commercial and consumer balances. Average commercial transaction deposits increased 45% and average consumer transaction deposits increased 10%.
The period end loan-to-core deposit ratio was 75% in the current quarter, compared to 89% in the prior quarter and 91% in the year-ago quarter.

Average Wholesale Funding
($ in millions)For the Three Months Ended% Change
JuneMarchJune
202020202019SeqYr/Yr
Average Wholesale Funding
Certificates - $100,000 and over$4,067 $3,355 $5,780 21%(30)%
Other deposits3125740(88)%(23)%
Federal funds purchased3096541,151(53)%(73)%
Other short-term borrowings2,3771,7501,11936%112%
Long-term debt16,95515,81615,5437%9%
Total average wholesale funding$23,739$21,832$23,6339%—%
Compared to the prior quarter, average wholesale funding increased 9%, driven primarily by debt issuances of $1.25 billion during the quarter, as well as increases in jumbo CD balances and other short-term borrowings reflecting $3 billion in FHLB advances which were initiated in the first month of the quarter and subsequently extinguished, partially offset by decreased federal funds borrowings and other deposits. Compared to the year-ago quarter, average wholesale funding remained flat as decreases in jumbo CD balances, federal funds borrowings and other deposits were offset by increases in long-term debt and other short-term borrowings.
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Credit Quality Summary
($ in millions)As of and For the Three Months Ended
JuneMarchDecemberSeptemberJune
20202020201920192019
Total nonaccrual portfolio loans and leases (NPLs)$700$647$618$482$521
Repossessed property4101098
OREO4352522831
Total nonperforming portfolio loans and leases and OREO (NPAs)$747$709$680$519$560
NPL ratio(h)
0.61 %0.55 %0.56 %0.44 %0.48 %
NPA ratio(c)
0.65 %0.60 %0.62 %0.47 %0.51 %
Total loans and leases 30-89 days past due (accrual)$381$409$364$402$383
Total loans and leases 90 days past due (accrual)136151130132128
Allowance for loan and lease losses (ALLL), beginning$2,348 $1,202 $1,143 $1,115 $1,115 
Impact of CECL adoption643
Total net losses charged-off(130)(122)(113)(99)(78)
Provision for loan and lease losses47862517212778
ALLL, ending$2,696$2,348$1,202$1,143$1,115
Reserve for unfunded commitments, beginning$169$144$154$147$133
Impact of CECL adoption10
Reserve for acquired commitments7
Provision for (benefit from) the reserve for unfunded commitments715(10)77
Reserve for unfunded commitments, ending$176$169$144$154$147
Total allowance for credit losses (ACL)$2,872 $2,517 $1,346 $1,297 $1,262 
ACL ratios:
As a % of portfolio loans and leases2.50 % 2.13 % 1.23 % 1.19 % 1.15 % 
As a % of nonperforming portfolio loans and leases410 % 389 % 218 % 269 % 242 % 
As a % of nonperforming portfolio assets385 % 355 % 198 % 250 % 225 % 
ALLL as a % of portfolio loans and leases2.34 %1.99 %1.10 %1.04 %1.02 %
Total losses charged-off$(163)$(159)$(152)$(130)$(119)
Total recoveries of losses previously charged-off3337393141
Total net losses charged-off$(130)$(122)$(113)$(99)$(78)
Net charge-off ratio (NCO ratio)(b)
0.44 %0.44 %0.41 %0.36 %0.29 %
Commercial NCO ratio0.40 %0.32 %0.20 %0.18 %0.13 %
Consumer NCO ratio0.52 %0.66 %0.78 %0.68 %0.59 %
Nonperforming portfolio loans and leases were $700 million in the current quarter, with the resulting NPL ratio of 0.61%. Compared to the prior quarter, NPLs increased $53 million with the NPL ratio increasing 6 bps. Compared to the year-ago quarter, NPLs increased $179 million with the NPL ratio increasing 13 bps.
Nonperforming portfolio assets were $747 million in the current quarter, with the resulting NPA ratio of 0.65%. Compared to the prior quarter, NPAs increased $38 million with the NPA ratio increasing 5 bps. Compared to the year-ago quarter, NPAs increased $187 million with the NPA ratio increasing 14 bps.

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The provision for credit losses totaled $485 million in the current quarter. The allowance for credit loss ratio represented 2.50% of total portfolio loans and leases in the current quarter, compared with 2.13% in the prior quarter and 1.15% in the year-ago quarter (using the incurred loss methodology). In the current quarter, the allowance for credit losses represented 410% of nonperforming portfolio loans and leases and 385% of nonperforming portfolio assets. The allowance for loan and lease losses ratio represented 2.34% of total portfolio loans and leases in the current quarter.
Net charge-offs were $130 million in the current quarter, with the resulting NCO ratio of 0.44%. Compared to the prior quarter, net charge-offs increased $8 million and the NCO ratio remained flat. Compared to the year-ago quarter, net charge-offs increased $52 million and the NCO ratio increased 15 bps.

Capital Position
As of and For the Three Months Ended
JuneMarchDecemberSeptemberJune
20202020201920192019
Capital Position
Average total Bancorp shareholders' equity as a % of average assets11.30 %12.63 %12.58%12.43%12.02 %
Tangible equity(a)
7.68 %8.41 %9.52%9.29%9.09 %
Tangible common equity (excluding AOCI)(a)
6.77 %7.41 %8.44%8.21%8.27 %
Tangible common equity (including AOCI)(a)
8.13 %8.65 %9.08%9.09%8.91 %
Regulatory Capital Ratios(e)
CET1 capital(d)
9.72 %9.37 %9.75%9.56%9.57 %
Tier I risk-based capital(d)
10.95 %10.56 %10.99%10.81%10.62 %
Total risk-based capital(d)
14.23 %13.59 %13.84%13.68%13.53 %
Tier I leverage8.16 %9.37 %9.54%9.36%9.24 %
Capital ratios remained strong during the quarter. The CET1 capital ratio was 9.72%, the tangible common equity to tangible assets ratio was 6.77% excluding AOCI, and 8.13% including AOCI. The Tier I risk-based capital ratio was 10.95%, the Total risk-based capital ratio was 14.23%, and the Tier I leverage ratio was 8.16%. Certain capital ratios, including the Tier I leverage ratio, were impacted by the significant increase in assets throughout the quarter, predominantly from growth in 0% risk-weighted assets resulting from an increase in interest-bearing cash as well as PPP loans.
On June 30, 2020, Fifth Third released its indicative stress capital buffer requirement resulting from the Federal Reserve Board’s 2020 Comprehensive Capital Analysis and Review results incorporating the supervisory severely adverse scenario published in February 2020. Fifth Third’s indicative stress capital buffer under this scenario is 2.5%, effective October 1, 2020. The stress capital buffer of 2.5% is the floor under the regulatory capital rules. Without the floor, Fifth Third estimates its buffer would have been approximately 2.1%.

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Tax Rate
The effective tax rate was 19.9% compared with 22.6% in the prior quarter and 21.5% in the year-ago quarter. The tax rate in the current quarter reflected a one-time $2 million tax benefit primarily due to various state items.
Conference Call
Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor Relations”).
Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address.
Corporate Profile
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. As of June 30, 2020, the Company had $203 billion in assets and operates 1,122 full-service Banking Centers, and 2,456 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 53,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2020, had $405 billion in assets under care, of which it managed $49 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)Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 27.
(b)Net losses charged-off as a percent of average portfolio loans and leases.
(c)Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO.
(d)Under the U.S. 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 values are added together resulting in the Bancorp’s total risk-weighted assets.
(e)Current period regulatory capital ratios are estimated.
(f)Assumes a 23% tax rate.
(g)Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.
(h)Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO.
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FORWARD-LOOKING STATEMENTS

This release 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,” “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 by our filings with the U.S. Securities and Exchange Commission (“SEC”). 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. We undertake no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this document.

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) effects of the global COVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Third’s capital plan; (21) regulation of Fifth Third’s derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates; (28) changes and trends in capital markets; (29) fluctuation of Fifth Third’s stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (35) risks relating to Fifth Third’s ability to realize the anticipated benefits of the merger with MB Financial, Inc.; (36) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (37) potential dilution from future acquisitions; (38) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (39) results of investments or acquired entities; (40) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (41) inaccuracies or other failures from the use of models; (42) effects of critical accounting policies and judgments or the use of inaccurate estimates; (43) weather-related events, other natural disasters, or health emergencies; and (44) the impact of reputational risk created by these or other 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.
# # #


12


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Quarterly Financial Review for June 30, 2020

Table of Contents


Financial Highlights14-15
Consolidated Statements of Income16-17
Consolidated Balance Sheets18-19
Consolidated Statements of Changes in Equity20
Average Balance Sheet and Yield Analysis21-22
Summary of Loans and Leases23
Regulatory Capital24
Summary of Credit Loss Experience25
Asset Quality26
Regulation G Non-GAAP Reconciliation27-29
Segment Presentation30


13


Fifth Third Bancorp and Subsidiaries
Financial Highlights% / bps% / bps
$ in millions, except per share dataFor the Three Months EndedChangeYear to DateChange
(unaudited)JuneMarchJuneJuneJune
202020202019SeqYr/Yr20202019Yr/Yr
Income Statement Data
Net interest income$1,200$1,229$1,245(2%)(4%)$2,429$2,3274%
Net interest income (FTE)(a)
1,2031,2331,250(2%)(4%)2,4362,3364%
Noninterest income650671660(3%)(2%)1,3211,761(25%)
Total revenue (FTE)(a)
1,8531,9041,910(3%)(3%)3,7574,097(8%)
Provision for credit losses48564085(24%)471%1,125175543%
Noninterest expense1,1211,2001,243(7%)(10%)2,3212,341(1%)
Net income19546453324%(57%)2431,228(80%)
Net income available to common shareholders16329427462%(62%)1931,187(84%)
Earnings Per Share Data
Net income allocated to common shareholders$162$28$423479%(62%)$191$1,176(84%)
Average common shares outstanding (in thousands):
Basic714,767713,556738,051(3%)714,161699,7672%
Diluted717,572720,363747,750(4%)718,967709,4301%
Earnings per share, basic$0.23$0.04$0.57475%(60%)$0.27$1.68(84%)
Earnings per share, diluted0.230.040.57475%(60%)0.271.66(84%)
Common Share Data
Cash dividends per common share$0.27$0.27$0.24-13%$0.54$0.4617%
Book value per share28.8828.2626.172%10%28.8826.1710%
Market price per share19.2814.8527.9030%(31%)19.2827.90(31%)
Common shares outstanding (in thousands)712,202711,306731,474(3%)712,202731,474(3%)
Market capitalization$13,731$10,563$20,40830%(33%)$13,731$20,408(33%)
Financial Ratios
Return on average assets0.40 %0.11 %1.08 %29  (68) 0.26 %1.56 %(130) 
Return on average common equity3.2 %0.6 %9.1 %260  (590) 1.9 %13.9 %(1,200) 
Return on average tangible common equity(a)
4.3 %1.0 %12.3 %330  (800) 2.7 %17.8 %(1,510) 
Noninterest income as a percent of total revenue(a)
35.0 %35.0 %35.0 %—  —  35.0 %43.0 %(800) 
Dividend payout117.4%675.0%42.1%(5,576) 753  200.0%27.4%1,726  
Average total Bancorp shareholders' equity as a percent of average assets11.30 %12.63 %12.02 %(133) (72) 11.92 %11.74 %18  
Tangible common equity(a)
6.77 %7.41 %8.27 %(64) (150) 6.76 %8.27 %(151) 
Net interest margin (FTE)(a)
2.75 %3.28 %3.37 %(53) (62) 2.99 %3.33 %(34) 
Efficiency (FTE)(a)
60.5 %63.0 %65.1 %(250) (460) 61.8 %57.1 %470  
Effective tax rate19.9 %22.6 %21.5 %(270) (160) 20.4 %21.9 %(150) 
Credit Quality
Net losses charged-off$130$122$78%67 %$252$15662 %
Net losses charged-off as a percent of average portfolio loans and leases0.44 %0.44 %0.29 %150.44 %0.30 %14
ALLL as a percent of portfolio loans and leases2.34 %1.99 %1.02 %351322.34 %1.02 %132
ACL as a percent of portfolio loans and leases(g)
2.50 %2.13 %1.15 %371352.50 %1.15 %135
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO0.65 %0.60 %0.51 %5140.65 %0.51 %14
Average Balances
Loans and leases, including held for sale$119,418$112,180$110,9936%8%$115,799$104,71211%
Securities and other short-term investments56,80639,03337,79746%50%47,92036,95330%
Assets198,387171,871167,57815%18%185,129158,32417%
Transaction deposits(b)
142,079118,096112,84720%26%130,087106,78022%
Core deposits(c)
146,500123,177118,52519%24%134,838112,05120%
Wholesale funding(d)
23,73921,83223,6339%22,78622,915(1%)
Bancorp shareholders' equity22,42021,71320,1353%11%22,06618,58819%
Regulatory Capital Ratios(e)
CET1 capital(f)
9.72 %9.37 %9.57 %35159.72