Business Wire | Jul 23, 2020 06:30AM EDT

Fifth Third Announces Second Quarter 2020 Results

Jul. 23, 2020

CINCINNATI--(BUSINESS WIRE)--Jul. 23, 2020--Fifth Third Bancorp (FITB):

Key Highlights

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

Key Financial Data$ millions for all balance sheet and income statement items 2Q20 1Q20 2Q19

Income Statement DataNet income available to common $163 $29 $427shareholdersNet interest income (U.S. GAAP) 1,200 1,229 1,245

Net interest income (FTE)^(a) 1,203 1,233 1,250

Noninterest income 650 671 660

Noninterest expense 1,121 1,200 1,243

Per Share DataEarnings per share, basic $0.23 $0.04 $0.57

Earnings per share, diluted 0.23 0.04 0.57

Book value per share 28.88 28.26 26.17

Tangible book value per share^(a) 22.66 22.02 20.03

Balance Sheet & Credit QualityAverage portfolio loans and leases $118,506 $110,779 $110,095

Average deposits 150,598 126,789 124,345

Net charge-off ratio^(b) 0.44 % 0.44 % 0.29 %

Nonperforming asset ratio^(c) 0.65 0.60 0.51

Financial RatiosReturn on average assets 0.40 % 0.11 % 1.08 %

Return on average common equity 3.2 0.6 9.1

Return on average tangible common equity 4.3 1.0 12.3 ^(a)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 of the2Q20 earnings release, commentary is on a fully taxable-equivalent (FTE) basisunless otherwise noted. Consistent with SEC guidance in Industry Guide 3 thatcontemplates the calculation of tax-exempt income on a taxable-equivalentbasis, 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

Income Statement Highlights

($ in millions, except per share For the Three Months % Change data) Ended

June March June

2020 2020 2019 Seq Yr/ Yr

Condensed Statements of Income

Net interest income (NII)^(a) $1,203 $1,233 $1,250 (2)% (4)%

Provision for credit losses 485 640 85 (24) 471% %

Noninterest income 650 671 660 (3)% (2)%

Noninterest expense 1,121 1,200 1,243 (7)% (10) %

Income before income taxes^(a) $247 $64 $582 286% (58) %



Taxable equivalent adjustment $3 $4 $5 (25) (40) % %

Applicable income tax expense 49 14 124 250% (60) %

Net income $195 $46 $453 324% (57) %

Dividends on preferred stock 32 17 26 88% 23%

Net income available to common $163 $29 $427 462% (62) shareholders %

Earnings per share, diluted $0.23 $0.04 $0.57 475% (60) %



Fifth Third Bancorp (NASDAQ(r): 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 $(22) income

Branch and non-branch real estate charges within other (10) noninterest income

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



Net Interest Income

(FTE; $ in millions)^(a) For the Three Months Ended % Change

June March June

2020 2020 2019 Seq Yr/Yr

Interest Income

Interest income $1,406 $1,529 $1,641 (8)% (14)%

Interest expense 203 296 391 (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 Analysis bps Change

Yield on interest-earning assets 3.21 % 4.07 % 4.42 % (86) (121)

Rate paid on interest-bearing 0.66 % 1.09 % 1.47 % (43) (81) liabilities



Ratios

Net interest rate spread 2.55 % 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.

Noninterest Income

($ in millions) For the Three Months % Change Ended

June March June

2020 2020 2019 Seq Yr/Yr

Noninterest Income

Service charges on deposits $122 $148 $143 (18)% (15)%

Commercial banking revenue 137 124 107 10% 28%

Mortgage banking net revenue 99 120 63 (18)% 57%

Wealth and asset management revenue 120 134 122 (10)% (2)%

Card and processing revenue 82 86 92 (5)% (11)%

Leasing business revenue 57 73 76 (22)% (25)%

Other noninterest income 12 7 47 71% (74)%

Securities gains (losses), net 21 (24) 8 NM 163%

Securities gains, net - non-qualifying hedges

on mortgage servicing rights - 3 2 (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

June March June

2020 2020 2019

Noninterest Income excluding certain items

Noninterest income (U.S. GAAP) $650 $671 $660

Valuation of Visa total return swap 29 22 22

Branch and non-branch real estate charges 12 - -

Net impairment on private equity investments - 15 -

Securities (gains) losses, net (excluding (21) 24 (8) GreenSky)

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 $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

June March June

2020 2020 2019 Seq Yr/ Yr

Noninterest Expense

Compensation and benefits $627 $647 $641 (3)% (2)%

Net occupancy expense 82 82 88 - (7)%

Technology and 90 93 136 (3)% (34) communications %

Equipment expense 32 32 33 - (3)%

Card and processing expense 29 31 34 (6)% (15) %

Leasing business expense 33 35 38 (6)% (13) %

Marketing expense 20 31 41 (35) (51) % %

Intangible amortization 12 13 14 (8)% (14) expense %

Other noninterest expense 196 236 218 (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

June March June

2020 2020 2019

Merger-Related Expenses

Compensation and benefits $2 $2 $41

Net occupancy expense 2 1 6

Technology and 4 3 49 communications

Equipment expense - - 1

Card and processing expense - - 1

Leasing business expense - - -

Marketing expense - - 3

Intangible amortization - - - expense

Other noninterest expense 1 1 8

Total merger-related $9 $7 $109 expenses

Noninterest Expense excluding Merger-Related Expenses^(a)

($ in millions) For the Three Months Ended % Change

June March June

2020 2020 2019 Seq Yr/ Yr

Noninterest Expense excluding Merger-Related Expenses

Compensation and benefits $625 $645 $600 (3)% 4%

Net occupancy expense 80 81 82 (1)% (2)%

Technology and communications 86 90 87 (4)% (1)%

Equipment expense 32 32 32 -% -%

Card and processing expense 29 31 33 (6)% (12) %

Leasing business expense 33 35 38 (6)% (13) %

Marketing expense 20 31 38 (35) (47) % %

Intangible amortization expense 12 13 14 (8)% (14) %

Other noninterest expense 195 235 210 (17) (7)% %

Total noninterest expense excluding merger-related $1,112 $1,193 $1,134 (7)% (2)% expenses





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.

Average Interest-Earning Assets

($ in millions) For the Three Months Ended % Change

June March June

2020 2020 2019 Seq Yr/ Yr

Average Portfolio Loans and Leases

Commercial loans and leases:

Commercial and $59,040 $51,586 $52,078 14% 13% industrial loans

Commercial mortgage 11,222 11,019 10,632 2% 6% loans

Commercial construction 5,548 5,132 5,248 8% 6% loans

Commercial leases 3,056 3,201 3,809 (5)% (20) %

Total commercial loans $78,866 $70,938 $71,767 11% 10% and leases

Consumer loans:

Residential mortgage $16,561 $16,732 $16,804 (1)% (1)% loans

Home equity 5,820 6,006 6,376 (3)% (9)%

Indirect secured 12,124 11,809 10,190 3% 19% consumer loans

Credit card 2,248 2,498 2,408 (10) (7)% %

Other consumer loans 2,887 2,796 2,550 3% 13%

Total consumer loans $39,640 $39,841 $38,328 (1)% 3%

Total average portfolio $118,506 $110,779 $110,095 7% 8% loans and leases



Average Loans and Leases Held for Sale

Commercial loans and $68 $108 $113 (37) (40) leases held for sale % %

Consumer loans held for 844 1,293 785 (35) 8% sale %

Total average loans and $912 $1,401 $898 (35) 2% leases held for sale %



Securities and other $56,806 $39,033 $37,797 46% 50% short-term investments

Total average $176,224 $151,213 $148,790 17% 18% interest-earning assets



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.

Average Deposits

($ in millions) For the Three Months Ended % Change

June March June

2020 2020 2019 Seq Yr/ Yr

Average Deposits

Demand $45,761 $35,765 $35,818 28% 28%

Interest checking 49,760 40,298 36,514 23% 36%

Savings 16,354 14,715 14,418 11% 13%

Money market 30,022 27,109 25,934 11% 16%

Foreign office^(g) 182 209 163 (13) 12% %

Total transaction deposits $142,079 $118,096 $112,847 20% 26%

Other time 4,421 5,081 5,678 (13) (22) % %

Total core deposits $146,500 $123,177 $118,525 19% 24%

Certificates - $100,000 4,067 3,355 5,780 21% (30) and over %

Other deposits 31 257 40 (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

June March June

2020 2020 2019 Seq Yr/ Yr

Average Wholesale Funding

Certificates - $100,000 and $4,067 $3,355 $5,780 21% (30) over %

Other deposits 31 257 40 (88) (23) % %

Federal funds purchased 309 654 1,151 (53) (73) % %

Other short-term borrowings 2,377 1,750 1,119 36% 112%

Long-term debt 16,955 15,816 15,543 7% 9%

Total average wholesale $23,739 $21,832 $23,633 9% -% funding



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.

Credit Quality Summary

($ in millions) As of and For the Three Months Ended

June March December September June

2020 2020 2019 2019 2019



Total nonaccrualportfolio loans and $700 $647 $618 $482 $521 leases (NPLs)

Repossessed property 4 10 10 9 8

OREO 43 52 52 28 31

Total nonperformingportfolio loans and $747 $709 $680 $519 $560 leases and OREO (NPAs)



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 leases30-89 days past due $381 $409 $364 $402 $383 (accrual)

Total loans and leases 90 136 151 130 132 128 days past due (accrual)



Allowance for loan andlease losses (ALLL), $2,348 $1,202 $1,143 $1,115 $1,115 beginning

Impact of CECL adoption - 643 - - -

Total net losses (130) (122) (113) (99) (78) charged-off

Provision for loan and 478 625 172 127 78 lease losses

ALLL, ending $2,696 $2,348 $1,202 $1,143 $1,115



Reserve for unfunded $169 $144 $154 $147 $133 commitments, beginning

Impact of CECL adoption - 10 - - -

Reserve for acquired - - - - 7 commitments

Provision for (benefitfrom) the reserve for 7 15 (10) 7 7 unfunded commitments

Reserve for unfunded $176 $169 $144 $154 $147 commitments, ending



Total allowance for $2,872 $2,517 $1,346 $1,297 $1,262 credit losses (ACL)



ACL ratios:

As a % of portfolio loans 2.50 % 2.13 % 1.23 % 1.19 % 1.15 % and leases

As a % of nonperformingportfolio loans and 410 % 389 % 218 % 269 % 242 % leases

As a % of nonperforming 385 % 355 % 198 % 250 % 225 % portfolio assets



ALLL as a % of portfolio 2.34 % 1.99 % 1.10 % 1.04 % 1.02 % loans and leases



Total losses charged-off $(163) $(159) $(152) $(130) $(119)

Total recoveries oflosses previously 33 37 39 31 41 charged-off

Total net losses $(130) $(122) $(113) $(99) $(78) charged-off



Net charge-off ratio (NCO 0.44 % 0.44 % 0.41 % 0.36 % 0.29 % ratio)^(b)

Commercial NCO ratio 0.40 % 0.32 % 0.20 % 0.18 % 0.13 %

Consumer NCO ratio 0.52 % 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.

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

June March December September June

2020 2020 2019 2019 2019

Capital Position

Average total Bancorp shareholders' 11.30 % 12.63 % 12.58% 12.43% 12.02 % equity as a % of average assets

Tangible equity^(a) 7.68 % 8.41 % 9.52% 9.29% 9.09 %

Tangible common equity (excluding 6.77 % 7.41 % 8.44% 8.21% 8.27 % AOCI)^(a)

Tangible common equity (including 8.13 % 8.65 % 9.08% 9.09% 8.91 % AOCI)^(a)



Regulatory Capital Ratios^(e)

CET1 capital^(d) 9.72 % 9.37 % 9.75% 9.56% 9.57 %

Tier I risk-based 10.95 % 10.56 % 10.99% 10.81% 10.62 % capital^(d)

Total risk-based 14.23 % 13.59 % 13.84% 13.68% 13.53 % capital^(d)

Tier I leverage 8.16 % 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%.

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(r) Global Select Market under the symbol "FITB."

Earnings Release End Notes

* Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 27 of the 2Q20 earnings release. * Net losses charged-off as a percent of average portfolio loans and leases. * Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO. * 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. * Current period regulatory capital ratios are estimated. * Assumes a 23% tax rate. * Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts. * Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO. 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.

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CONTACT: Investor contact: Chris Doll (513) 534-2345 | Media contact: Ed Loyd (513) 534-6397