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Fifth Third Announces Third Quarter 2018 Results

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Fifth Third Bancorp (FITB):






















 


Key Highlights


Strengthened balance sheet



Commercial criticized ratio of 3.45% (17+ year low)




Total NPA ratio of 0.48% (14 year low)




Modified LCR of 119%(e)


Focused on profitable relationship growth




Households up 4% compared to 3Q17




Adjusted PPNR(a) up 9% compared to 3Q17




Core deposits up 3% compared to 3Q17




NIM(a) up 16 bps compared to 3Q17


Disciplined expense management




Expenses down 3% compared to prior quarter




Full-time equivalent employees down 4% compared to prior quarter


On-track to achieve NorthStar targets(a)




ROTCE – 13.5% (adjusted 14%)




ROA – 1.21% (adjusted 1.26%)




Efficiency ratio ex. LIH – 60.2% (adjusted 59.3%)


 

































3Q18 Key Financial Data


$ in millions for all balance sheet and income statement items


 

3Q18

2Q18

3Q17

 

Income Statement Data

Net income available to common shareholders

$418

$563

$999

Net interest income (U.S. GAAP)

1,043

1,020

970

Net interest income (FTE)(a)

1,047

1,024

977

Noninterest income

563

743

1,561

Noninterest expense

1,008

1,037

975

 

Per Share Data

Earnings per share, basic

$0.62

$0.81

$1.37

Earnings per share, diluted

0.61

0.80

1.35

Book value per share

21.92

21.97

21.30

Tangible book value per share(a)

18.17

18.30

17.86

 

Balance Sheet & Credit Quality

Average portfolio loans and leases

$93,192

$92,557

$91,906

Average deposits

104,666

103,945

101,834

Net charge-off ratio(b)

0.30

%

0.41

%

0.29

%

Nonperforming asset ratio(c)

0.48

0.52

0.60

 

Financial Ratios, as reported

Return on average assets

1.21

%

1.66

%

2.85

%

Return on average common equity

11.2

15.3

25.6

Return on average tangible common equity(a)

13.5

18.4

30.4

CET1 capital(d)(e)

10.67

10.91

10.59

Net interest margin(a)

3.23

3.21

3.07

Efficiency(a)

62.6

58.7

38.4





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
. LIH refers to low
income housing expense.


 


CEO Commentary


“Our strong quarterly results again reflected the progress we have
made toward achieving our long-term financial targets. Our balance sheet
continued to become more resilient, as evidenced by the consistent
improvement in key credit quality metrics. Although market dynamics
remained challenging during the quarter, our net interest margin
increased and we generated solid loan, deposit, and household growth. We
continued to diligently manage expenses as we drive toward achieving our
long-term efficiency target.


“Five months after we initially announced our planned acquisition of
MB Financial, we remain confident in our ability to achieve the expected
financial synergies from the transaction. We have received the necessary
shareholder approvals for the acquisition and have recently re-submitted
our pro-forma capital plans. We continue to expect the transaction to
close in the first quarter of 2019.


“With improving returns and a strengthened balance sheet, we remain
very confident in our ability to achieve our long-term financial targets
under Project NorthStar and remain well-positioned to outperform through
the cycle.”


-Greg D. Carmichael, Chairman, President and CEO
























 

 

 

 

 

 

 

 

 

 

Income Statement Highlights

($ in millions, except per-share data)

For the Three Months Ended

 

% Change

September

June

September

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Condensed Statements of Income

Net interest income (NII)(a)


$1,047


$1,024

$977

2%

7%

Provision for loan and lease losses

86

33

67

161%

28%

Noninterest income

563

743

1,561

(24%)

(64%)

Noninterest expense

 

1,008

 

1,037

 

975

 

(3%)

 

3%

Income before income taxes (a)

 

$516

 

$697

 

$1,496

 

(26%)

 

(66%)

 

Taxable equivalent adjustment

4

4

7

-

(43%)

Applicable income tax expense

 

79

 

107

 

475

 

(26%)

 

(83%)

Net income

$433

$586

$1,014

(26%)

(57%)

Less: Net income attributable to noncontrolling interests

 

-

 

-

 

-

 

NM

 

NM

Net income attributable to Bancorp

$433

$586

$1,014

(26%)

(57%)

Dividends on preferred stock

 

15

 

23

 

15

 

(35%)

 

-

Net income available to common shareholders

 

$418

 

$563

 

$999

 

(26%)

 

(58%)

 

Earnings per share, diluted

 

$0.61

 

$0.80

 

$1.35

 

(24%)

 

(55%)

 


Fifth Third Bancorp (Nasdaq: FITB) today reported third quarter 2018 net
income of $433 million compared to net income of $1.0 billion in the
year-ago quarter. Net income available to common shareholders was $418
million, or $0.61 per diluted share, compared to $999 million, or $1.35
per diluted share in the year-ago quarter. Prior quarter net income was
$586 million and net income available to common shareholders was $563
million, or $0.80 per diluted share.













Diluted earnings per share impact of certain items

 

 

($ in millions, except per-share data)

 

 


Valuation of Visa total return swap, after-tax(f)


$14


GreenSky equity securities losses, after-tax(f)


 

$6


After-tax impact(f)


$20

 

Average diluted common shares outstanding (thousands)

679,199

 

Diluted earnings per share impact

$0.03





















 

 

 

 

 

 

 

Net Interest Income

 

 

 

 

 

(FTE; $ in millions)(a)

For the Three Months Ended

 

% Change

September

June

September

2018

 

2018

2017

 

Seq

 

Yr/Yr

Interest Income

Interest income

$1,319

$1,273

$1,159

4%

14%

Interest expense

 

272

 

249

182

 

9%

49%

Net interest income (NII)

 

$1,047

 

$1,024

$977

 

2%

7%

 

Average Yield/Rate Analysis

bps Change

Yield on interest-earning assets

4.07%

3.98%

3.64%

9

43

Rate paid on interest-bearing liabilities

1.20%

1.12%

0.85%

8

35

 

Ratios

Net interest rate spread

2.87%

2.86%

2.79%

1

8

 

Net interest margin

 

3.23%

 

3.21%

3.07%

 

2

 

16

 


Compared to the year-ago quarter, NII increased $70 million, or 7
percent, reflecting higher short-term market rates and growth in
interest-earning assets, partially offset by an increase in funding
costs. NIM increased 16 bps, primarily driven by higher short-term
market rates.


Compared to the prior quarter, NII increased $23 million, or 2 percent,
reflecting higher short-term market rates and a higher day count. NIM
increased 2 bps, primarily driven by higher short-term market rates,
loan growth, and an increase in higher-yielding consumer loans,
partially offset by a higher day count.



















 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

($ in millions)

For the Three Months Ended

 

% Change

September

June

September

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Noninterest Income

Service charges on deposits

$139

$137

$138

1%

1%

Corporate banking revenue

100

120

101

(17%)

(1%)

Mortgage banking net revenue

49

53

63

(8%)

(22%)

Wealth and asset management revenue

114

108

102

6%

12%

Card and processing revenue

82

84

79

(2%)

4%

Other noninterest income

86

250

1,076

(66%)

(92%)

Securities (losses) gains, net

(6)

(5)

-

(20%)

NM

 


Securities (losses) gains, net – non-qualifying hedges on mortgage
servicing rights


 

(1)

 

(4)

 

2

 

75%

 

NM

 

Total noninterest income

 

$563

 

$743

 

$1,561

 

(24%)

 

(64%)

 


Reported noninterest income decreased $998 million, or 64 percent, from
the year-ago quarter, and decreased $180 million, or 24 percent, from
the prior quarter. The comparisons reflect the impact of certain
significant items in the table shown below.


Compared to the year-ago quarter, corporate banking revenue decreased $1
million, or 1 percent, as a decline in loan syndication and equity
capital markets revenue was partially offset by higher financial risk
management fees. Mortgage banking net revenue decreased $14 million, or
22 percent, primarily driven by lower origination fees and gains on loan
sales. Mortgage originations of $1.9 billion decreased 12 percent.
Wealth and asset management revenue increased $12 million, or 12
percent, primarily driven by higher personal asset management revenue
and brokerage fees. Card and processing revenue increased $3 million, or
4 percent, due to higher credit card spend volume and higher debit
transaction volume, partially offset by higher rewards.


Compared to the prior quarter, corporate banking revenue decreased $20
million, or 17 percent, primarily driven by decreases in loan
syndication revenue and corporate bond fees. Mortgage banking net
revenue decreased $4 million, or 8 percent, primarily driven by lower
origination fees and gains on loan sales as well as elevated negative
net valuation adjustments. Mortgage originations decreased 12 percent.
Wealth and asset management revenue increased $6 million, or 6 percent,
primarily driven by higher personal asset management revenue and
brokerage fees. Card and processing revenue decreased $2 million, or 2
percent, reflecting higher rewards.


















 

 

Noninterest Income excluding certain items

($ in millions)

 

For the Three Months Ended

 

% Change

September

 

June

 

September

 

 

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Noninterest Income excluding certain items

Noninterest income (U.S. GAAP)

$563

$743

$1,561

Valuation of Visa total return swap

17

10

47

Branch and land network impairment charge

-

30

-

Gain from GreenSky IPO

-

(16)

-

Gain on sale of Worldpay shares

-

(205)

(1,037)

GreenSky equity securities losses

8

5

-

Securities losses / (gains), net (excluding GreenSky)

 

(2)

 

 

-

 

 

-

 

 

 

 

 

 

Noninterest income excluding certain items(a)

 

$586

 

 

$567

 

 

$571

 

 

3%

 

3%

 


Compared to the year-ago quarter, noninterest income excluding the items
in the table above increased $15 million, or 3 percent. Compared to the
prior quarter, noninterest income excluding these items increased $19
million, or 3 percent.


Other noninterest income on a reported basis in the current and previous
quarters was impacted by the items disclosed in the table above with the
exception of all securities losses / (gains). Excluding these items,
other noninterest income of $103 million increased $17 million, or 20
percent compared to the year-ago quarter. Compared to the prior quarter,
other noninterest income excluding these items increased $34 million, or
49 percent. Performance compared to the year-ago and prior quarter
reflected higher private equity investment income.


















 

 

 

 

 

 

 

Noninterest Expense

($ in millions)

For the Three Months Ended

 

% Change

September

June

September

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Noninterest Expense

Salaries, wages and incentives

$421

$471

$407

(11%)

3%

Employee benefits

82

78

77

5%

6%

Net occupancy expense

70

74

74

(5%)

(5%)

Technology and communications

71

67

62

6%

15%

Equipment expense

31

30

30

3%

3%

Card and processing expense

31

30

32

3%

(3%)

Other noninterest expense

 

302

 

 

287

 

 

293

 

 

5%

 

3%

 

Total noninterest expense

 

$1,008

 

 

$1,037

 

 

$975

 

 

(3%)

 

3%

 


Compared to the year-ago quarter, noninterest expense increased $33
million, or 3 percent, primarily driven by higher compensation related
expense as well as technology and communication expense.


Compared to the prior quarter, noninterest expense decreased $29
million, or 3 percent. Excluding both a $19 million compensation
expense, primarily related to a staffing review, and a $10 million
contribution to the Fifth Third Foundation from the prior quarter,
noninterest expense was flat. Performance primarily reflected lower
compensation expense partially offset by higher technology and
communications expense, as well as increased marketing expense.




























 

 

 

 

 

 

 

Average Interest-Earning Assets

($ in millions)

For the Three Months Ended

 

 

% Change

September

June

September

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Average Portfolio Loans and Leases

Commercial loans and leases:

Commercial and industrial loans

$42,494

$42,292

$41,302

-

3%

Commercial mortgage loans

6,635

6,514

6,807

2%

(3%)

Commercial construction loans

4,870

4,743

4,533

3%

7%

Commercial leases

 

3,738

 

 

3,847

 

 

4,072

 

 

(3%)

 

(8%)

Total commercial loans and leases

$57,737

$57,396

$56,714

1%

2%

Consumer loans:

Residential mortgage loans

$15,598

$15,581

$15,523

-

-

Home equity

6,529

6,672

7,207

(2%)

(9%)

Automobile loans

8,969

8,968

9,267

-

(3%)

Credit card

2,299

2,221

2,140

4%

7%

Other consumer loans

 

2,060

 

 

1,719

 

 

1,055

 

 

20%

 

95%

Total consumer loans

$35,455

$35,161

$35,192

1%

1%

 

Portfolio loans and leases

$93,192

$92,557

$91,906

1%

1%

Loans held for sale

785

675

711

16%

10%

Securities and other short-term investments

 

34,822

 

 

34,935

 

 

33,826

 

 

-

 

3%

 

Total average interest-earning assets

 

$128,799

 

 

$128,167

 

 

$126,443

 

 

-

 

2%

 


Compared to the year-ago quarter, average portfolio loans and leases
increased 1 percent, primarily driven by higher commercial and
industrial (C&I) and other consumer loans, partially offset by declines
in home equity loans, commercial leases, and automobile loans. Period
end portfolio loans and leases increased 2 percent. Compared to the
prior quarter, average portfolio loans and leases increased 1 percent,
primarily driven by higher other consumer and C&I loans, partially
offset by a decline in home equity loans. Period end portfolio loans and
leases increased 2 percent.


Compared to the year-ago quarter, average commercial portfolio loans and
leases increased 2 percent, primarily driven by higher C&I loans led by
growth in corporate banking and middle market lending. Compared to the
prior quarter, average commercial portfolio loans and leases increased 1
percent, primarily driven by growth in C&I and commercial real estate
loans. Period end commercial line utilization was 35 percent, stable
compared to both the year-ago and prior quarter.


Compared to the year-ago quarter, average consumer portfolio loans
increased 1 percent, primarily driven by higher other consumer loans,
partially offset by declines in home equity and automobile loans.
Compared to the prior quarter, average consumer portfolio loans
increased 1 percent, primarily driven by higher other consumer loans,
partially offset by a decline in home equity.


Average securities and other short-term investments were $34.8 billion
compared to $33.8 billion in the year-ago quarter, and $34.9 billion in
the prior quarter. Average available-for-sale debt and other securities
of $32.6 billion were up 4 percent compared to the year-ago quarter, and
flat compared to the prior quarter.






















 

 

 

 

 

Average Deposits

 

($ in millions)

For the Three Months Ended

 

% Change

September

June

September

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Average Deposits

Demand

$32,333

$32,834

$34,850

(2%)

(7%)

Interest checking

29,681

28,715

25,765

3%

15%

Savings

13,231

13,618

13,889

(3%)

(5%)

Money market

21,753

22,036

20,028

(1%)

9%

Foreign office(g)

 

317

 

 

371

 

 

395

 

 

(15%)

 

(20%)

Total transaction deposits

$97,315

$97,574

$94,927

-

3%

Other time

 

4,177

 

 

4,018

 

 

3,722

 

 

4%

 

12%

Total core deposits

$101,492

$101,592

$98,649

-

3%

Certificates – $100,000 and over

2,596

2,155

2,625

20%

(1%)

Other deposits

 

578

 

 

198

 

 

560

 

 

192%

 

3%

 

Total average deposits

 

$104,666

 

 

$103,945

 

 

$101,834

 

 

1%

 

3%

 


Compared to the year-ago quarter, both average transaction and core
deposits increased 3 percent. Performance was primarily driven by higher
commercial interest checking deposits and consumer money market
deposits, partially offset by lower commercial demand deposits.
Commercial transaction deposits increased 2 percent and consumer
transaction deposits increased 3 percent.


Compared to the prior quarter, both average transaction and core
deposits were flat. Performance continued to reflect migration from
demand deposits to interest-bearing accounts. Commercial transaction
deposits increased 1 percent, and consumer transaction deposits
decreased 1 percent.
















 

Average Wholesale Funding

 

($ in millions)

 

For the Three Months Ended

 

% Change

September

 

June

 

September

 

 

2018

 

2018

 

2017

 

Seq

 

Yr/Yr

Average Wholesale Funding

Certificates – $100,000 and over

$2,596

$2,155

$2,625

20%

(1%)

Other deposits

578

198

560

192%

3%

Federal funds purchased

1,987

1,080

675

84%

194%

Other short-term borrowings

1,018

2,452

4,212

(58%)

(76%)

Long-term debt

 

14,434

 

 

14,579

 

 

13,457

 

 

(1%)

 

7%

 

Total average wholesale funding

 

$20,613

 

 

$20,464

 

 

$21,529

 

 

1%

 

(4%)

 


Compared to the year-ago quarter, average wholesale funding decreased 4
percent, as strong deposit growth outpaced growth in interest-earning
assets. Compared to the prior quarter, average wholesale funding
increased 1 percent. Performance reflected higher federal funds
borrowings, partially offset by a decline in other short-term borrowings.













































 

Credit Quality Summary

 

($ in millions)

 

For the Three Months Ended

September

 

June

 

March

 

December

 

September

2018

 

2018

 

2018

 

2017

 

2017

 

Total nonaccrual portfolio loans and leases (NPLs)

$403

$437

$452

$437

$506

Repossessed property

8

7

9

9

10

OREO

 

37

 

 

36

 

 

43

 

 

43

 

 

39

Total nonperforming portfolio assets (NPAs)

$448

$480

$504

$489

$555

 

NPL ratio(h)

0.43%

0.47%

0.49%

0.48%

0.55%

NPA ratio(c)

0.48%

0.52%

0.55%

0.53%

0.60%

 

Total loans and leases 30-89 days past due (accrual)

270

217

299

280

252

Total loans and leases 90 days past due (accrual)

87

89

107

97

77

 

Allowance for loan and lease losses, beginning

$1,077

$1,138

$1,196

$1,205

$1,226

Total net losses charged-off

(72)

(94)

(81)

(76)

(68)

Provision for loan and lease losses

86

33

23

67

67

Deconsolidation of a variable interest entity

 

-

 

 

-

 

 

-

 

 

-

 

 

(20)

Allowance for loan and lease losses, ending

$1,091

$1,077

$1,138

$1,196

$1,205

 

Reserve for unfunded commitments, beginning

$131

$151

$161

$157

$162

(Benefit from) provision for unfunded commitments

 

(2)

 

 

(20)

 

 

(10)

 

 

4

 

 

(5)

Reserve for unfunded commitments, ending

$129

$131

$151

$161

$157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total allowance for credit losses

$1,220

$1,208

$1,289

$1,357

$1,362

 

Allowance for loan and lease losses ratio

As a percent of portfolio loans and leases

1.17%

1.17%

1.24%

1.30%

1.31%

As a percent of nonperforming portfolio loans and leases

270%

247%

252%

274%

238%

As a percent of nonperforming portfolio assets

243%

224%

226%

245%

217%

 

Total losses charged-off

$(112)

$(118)

$(103)

$(94)

$(85)

Total recoveries of losses previously charged-off

 

40

 

 

24

 

 

22

 

 

18

 

 

17

Total net losses charged-off

$(72)

$(94)

$(81)

$(76)

$(68)

 

Net charge-off ratio (NCO ratio)(b)

0.30%

0.41%

0.36%

0.33%

0.29%

Commercial NCO ratio

0.19%

0.34%

0.21%

0.22%

0.21%

Consumer NCO ratio

 

0.50%

 

 

0.52%

 

 

0.60%

 

 

0.51%

 

 

0.43%

 


Compared to the year-ago quarter, NPLs decreased $103 million, or 20
percent, with the resulting NPL ratio of 0.43 percent decreasing 12 bps.
Repossessed personal property decreased $2 million and OREO balances
decreased $2 million. NPAs decreased $107 million, or 19 percent, with
the resulting NPA ratio of 0.48 percent, decreasing 12 bps.


Compared to the prior quarter, NPLs decreased $34 million, or 8 percent,
with the resulting NPL ratio decreasing 4 bps. Repossessed personal
property increased $1 million and OREO balances increased $1 million.
NPAs decreased $32 million, or 7 percent, with the resulting NPA ratio
decreasing 4 bps.


The provision for loan and lease losses totaled $86 million in the
current quarter compared to $67 million in the year-ago quarter and $33
million in the prior quarter. The resulting allowance for loan and lease
loss ratio represented 1.17 percent of total portfolio loans and leases
outstanding in the current quarter, compared with 1.31 percent in the
year-ago quarter and 1.17 in the prior quarter. The allowance for loan
and lease losses represented 270 percent of nonperforming loans and
leases, and 243 percent of nonperforming assets in the current quarter.


Net losses charged-off totaled $72 million in the current quarter
compared to $68 million in the year-ago quarter and $94 million in the
prior quarter. The resulting NCO ratio of 0.30 percent in the current
quarter increased 1 bp compared to the year-ago quarter and decreased 11
bps compared to the prior quarter.





















 

Capital and Liquidity Position

 

 

 

For the Three Months Ended

September

 

June

 

March

 

December

 

September

2018

 

2018

 

2018

 

2017

 

2017

Capital Position

Average total Bancorp shareholders’ equity as a percent of average
assets

11.39%

11.38%

11.52%

11.69%

11.93%

Tangible equity(a)

10.07%

10.29%

10.09%

9.90%

9.84%

Tangible common equity (excluding unrealized gains/losses)(a)

9.12%

9.33%

9.14%

8.94%

8.89%

Tangible common equity (including unrealized gains/losses)(a)

8.63%

8.98%

8.89%

8.99%

9.00%

 

Regulatory Capital and Liquidity Ratios(e)

CET1 capital(d)

10.67%

10.91%

10.82%

10.61%

10.59%

Tier I risk-based capital(d)

11.78%

12.02%

11.95%

11.74%

11.72%

Total risk-based capital(d)

15.01%

15.21%

15.25%

15.16%

15.16%

Tier I leverage

10.10%

10.24%

10.11%

10.01%

9.97%

 

Modified liquidity coverage ratio (LCR)

 

119%

 

 

116%

 

 

113%

 

129%

 

 

124%

 


Capital ratios remained strong during the quarter. The CET1 ratio was
10.67 percent, the tangible common equity to tangible assets ratio was
9.12 percent (excluding unrealized gains/losses), and 8.63 percent
(including unrealized gains/losses). The Tier I risk-based capital ratio
was 11.78 percent, the Total risk-based capital ratio was 15.01 percent,
and the Tier I leverage ratio was 10.10 percent.


During the third quarter of 2018, Fifth Third entered into open market
repurchase transactions of 16.9 million shares, or approximately $500
million, of its outstanding common stock, which settled between July 24,
2018 and August 6, 2018.


Tax Rate


The effective tax rate was 15.6 percent compared with 31.9 percent in
the year-ago quarter and 15.5 percent in the prior quarter.


Other


Fifth Third has re-submitted its CCAR 2018 capital plan to the Federal
Reserve, recognizing the pro forma impact of the combined Fifth Third MB
Financial post-merger entity. In the meantime, Fifth Third expects to
resume capital distribution activities consistent with the
originally-submitted April 2018 capital plan. The timing and amount of
this activity is subject to market conditions and applicable securities
laws.


On September 18, 2018, MB Financial, Inc. common stockholders approved
Fifth Third’s acquisition originally announced May 21, 2018. The
acquisition is expected to close in the first quarter of 2019, subject
to regulatory approvals and other customary closing conditions.


As of September 30, 2018, Fifth Third Bank owned approximately 10.3
million units representing a 3.3 percent interest in Worldpay Holding,
LLC, convertible into shares of Worldpay, Inc., a publicly traded firm.
Based upon Worldpay’s closing price of $101.27 on September 30, 2018,
Fifth Third’s interest in Worldpay was valued at approximately $1.04
billion. The difference between the market value and the book value of
Fifth Third’s interest in Worldpay’s shares is not recognized in Fifth
Third’s equity or capital.


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. Additionally, a telephone replay of the conference call will be
available after the conference call until approximately November 6, 2018
by dialing 800-585-8367 for domestic access or 404-537-3406 for
international access (passcode 4083528#).


Corporate Profile


Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. As of September 30, 2018, the Company
had $142 billion in assets and operates 1,152 full-service Banking
Centers, and 2,443 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. As of September 30,
2018, Fifth Third also had a 3.3% interest in Worldpay Holding, LLC, a
subsidiary of Worldpay, Inc. Fifth Third is among the largest money
managers in the Midwest and, as of September 30, 2018, had $376 billion
in assets under care, of which it managed $38 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 25 in Exhibit 99.1 of 8-K filing
dated 10/23/2018


(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 and liquidity ratios are
estimated


(f)


Assumes a 21% 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


IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT


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


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


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


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


FORWARD-LOOKING STATEMENTS


This communication contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
including, but not limited to, Fifth Third Bancorp’s and MB Financial,
Inc.’s expectations or predictions of future financial or business
performance or conditions. Forward-looking statements are typically
identified by words such as “believe,” “expect,” “anticipate,” “intend,”
“target,” “estimate,” “continue,” “positions,” “plan,” “predict,”
“project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,”
“possible” or “potential,” by future conditional verbs such as “assume,”
“will,” “would,” “should,” “could” or “may”, or by variations of such
words or by similar expressions. These forward-looking statements are
subject to numerous assumptions, risks and uncertainties, which change
over time. Forward-looking statements speak only as of the date they are
made and we assume no duty to update forward-looking statements. Actual
results may differ materially from current projections.


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


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

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4 things kids need to know about money

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(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

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20 Percent Of Americans In Relationships Are Committing Financial Infidelity

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Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from CreditCards.com. That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to CreditCards.com industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard

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Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of taxvanta.com, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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