425

Filed by Fifth Third Bancorp

pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: MB Financial, Inc.

SEC File No.: 001-36599

Filer’s SEC File No.: 001-33653

Date: October 23, 2018

 

LOGO

Fifth Third Announces Third Quarter 2018 Results

Diluted earnings per share of $0.61

Reported results included a negative $0.03 from certain items on page 2

 

 

3Q18 Key Financial Data

 

                             

 

Key Highlights

 

  $ millions for all balance sheet and income statement items

 

     
    3Q18     2Q18     3Q17         Strengthened balance sheet
         

Income Statement Data

       

   

 

  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%)

 

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         

 

Other than the Quarterly Financial Review tables beginning on page 13, 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

 

Investor contact: Sameer Gokhale (513) 534-2219 | Media contact: Larry Magnesen (513) 534-8055    October 23, 2018


  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    
          

 

2


                                                                
 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 on page 4.

 

3


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.

 

4


                                                                          
  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.

 

5


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.

 

6


                                                                                              
  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.

 

7


  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

                            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)               (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.

 

8


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.

 

9


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

 

(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

 

10


IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

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

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

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

Fifth Third Bancorp and 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.

# # #

 

11


LOGO

Quarterly Financial Review for September 30, 2018

Table of Contents

 

          

Financial Highlights

     13-14          

Consolidated Statements of Income

     15          

Consolidated Balance Sheets

     16-17          

Consolidated Statements of Changes in Equity

     18          

Average Balance Sheet and Yield/Rate Analysis

     19-20          

Summary of Loans and Leases

     21          

Regulatory Capital

     22          

Summary of Credit Loss Experience

     23          

Asset Quality

     24          

Regulation G Non-GAAP Reconciliation

     26-27          

Segment Presentation

     28          
          

 

12


Fifth Third Bancorp and Subsidiaries

                       

Financial Highlights

                       

$ in millions, except per share data

              % / bps                  % / bps      

(unaudited)

     For the Three Months Ended        Change            Year to Date        Change      
     September        June            September              September        September     
       2018        2018            2017        Seq            Yr/Yr            2018        2017        Yr/Yr          

Income Statement Data

                       

Net interest income

     $1,043        $1,020        $970        2%        8%        $3,059        $2,842        8%  

Net interest income (FTE)(a)

     1,047        1,024        977        2%        7%        3,071        2,861        7%  

Noninterest income

     563        743        1,561        (24%)        (64%)        2,215        2,648        (16%)  

Total revenue (FTE)

     1,610        1,767        2,538        (9%)        -        5,286        5,509        (4%)  

Provision for loan and lease losses

     86        33        67        161%        28%        142        193        (26%)  

Noninterest expense

     1,008        1,037        975        (3%)        3%        3,090        2,918        6%  

Net income attributable to Bancorp

     433        586        1,014        (26%)        (57%)        1,721        1,685        2%  

Net income available to common shareholders

     418        563        999        (26%)        (58%)        1,669        1,633        2%  

Earnings Per Share Data

                       

Net income allocated to common shareholders

     $413        $557        $989        (26%)        (58%)        $1,651        $1,615        2%  

Average common shares outstanding (in thousands):

                       

Basic

     667,624        683,345        721,280        (2%)        (7%)        680,182        736,686        (8%)  

Diluted

     679,199        696,210        733,285        (2%)        (7%)        693,079        748,707        (7%)  

Earnings per share, basic

     $0.62        $0.81        $1.37        (23%)        (55%)        $2.43        $2.19        11%  

Earnings per share, diluted

     0.61        0.80        1.35        (24%)        (55%)        2.38        2.16        10%  

Common Share Data

                       

Cash dividends per common share

     $0.18        $0.18        $0.16        -        13%        $0.52        $0.44        18%  

Book value per share

     21.92        21.97        21.30        -        3%        21.92        21.30        3%  

Market price per share

     27.92        28.70        27.98        (3%)        -        27.92        27.98        -  

Common shares outstanding (in thousands)

     661,373        678,162        705,474        (2%)        (6%)        661,373        705,474        (6%)  

Market capitalization

     $18,466        $19,463        $19,739        (5%)        (6%)        $18,466        $19,739        (6%)  

Financial Ratios

                    

Return on average assets

     1.21%        1.66%        2.85%        (45)        (164)        1.63%        1.60%         

Return on average common equity

     11.2%        15.3%        25.6%        (410)        (1,440)        15.0%        14.3%        70   

Return on average tangible common equity(a)

     13.5%        18.4%        30.4%        (490)        (1,690)        18.1%        17.0%        110   

Noninterest income as a percent of total revenue(a)

     35%        42%        62%        (700)        (2,700)        42%        48%        (600)  

Dividend payout

     29.0%        22.2%        11.7%        680         1,730         21.4%        20.1%        130   

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

     11.39%        11.38%        11.93%               (54)        11.43%        11.83%        (40)  

Tangible common equity(a)

     9.12%        9.33%        8.89%        (21)        23         9.12%        8.89%        23   

Net interest margin (FTE)(a)

     3.23%        3.21%        3.07%               16         3.20%        3.03%        17   

Efficiency (FTE)(a)

     62.6%        58.7%        38.4%        390         2,420         58.5%        53.0%        550   

Effective tax rate

     15.6%        15.5%        31.9%        10         (1,630)        15.7%        29.2%        (1,350)  

Credit Quality

                    

Net losses charged-off

     $72        $94        $68        (23%)        6%        $247        $221        12%  

Net losses charged-off as a percent of average portfolio loans and leases

     0.30%        0.41%        0.29%        (11)               0.36%        0.32%         

ALLL as a percent of portfolio loans and leases

     1.17%        1.17%        1.31%        -        (14)        1.17%        1.31%        (14)  

Allowance for credit losses as a percent of portfolio loans and leases(g)

     1.31%        1.31%        1.48%        -        (17)        1.31%        1.48%        (17)  

Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO

     0.48%        0.52%        0.60%        (4)        (12)        0.48%        0.60%        (12)  

Average Balances

                       

Loans and leases, including held for sale

     $93,977        $93,232        $92,617        1%        1%        $93,363        $92,686        1%  

Securities and other short-term investments

     34,822        34,935        33,826        -        3%        34,813        33,497        4%  

Assets

     141,752        141,529        140,992        -        1%        141,616        140,495        1%  

Transaction deposits(b)

     97,315        97,574        94,927        -        3%        97,303        95,916        1%  

Core deposits(c)

     101,492        101,592        98,649        -        3%        101,321        99,680        2%  

Wholesale funding(d)

     20,613        20,464        21,529        1%        (4%)        20,546        20,450        0%  

Bancorp shareholders’ equity

     16,145        16,108        16,820        -        (4%)        16,187        16,623        (3%)  

Regulatory Capital and Liquidity Ratios(e)

                    

CET1 capital(f)

     10.67%        10.91%        10.59%        (24)               10.67%        10.59%         

Tier I risk-based capital(f)

     11.78%        12.02%        11.72%        (24)               11.78%        11.72%         

Total risk-based capital(f)

     15.01%        15.21%        15.16%        (20)        (15)        15.01%        15.16%        (15)  

Tier I leverage

     10.10%        10.24%        9.97%        (14)        13         10.10%        9.97%        13   

Modified liquidity coverage ratio (LCR)

     119%        116%        124%        3%        (4%)        119%        124%        (4%)  

Operations

                    

Banking centers

     1,152        1,158        1,155        (1%)        -        1,152        1,155        -  

ATMs

     2,443        2,458        2,465        (1%)        (1%)        2,443        2,465        (1%)  

Full-time equivalent employees

     17,512        18,163        17,797        (4%)        (2%)        17,512        17,797        (2%)  
(a)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 25.

(b)

Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.

(c)

Includes transaction deposits plus other time deposits.

(d)

Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt.

(e)

Current period regulatory capital and liquidity ratios are estimates.

(f)

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.

(g)

The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments.

 

13


Fifth Third Bancorp and Subsidiaries                                   
Financial Highlights                                   
$ in millions, except per share data                                   
(unaudited)    For the Three Months Ended  
     September        June            March            December        September    
      2018        2018            2018            2017        2017    

Income Statement Data

              

Net interest income

     $1,043        $1,020        $996        $956        $970  

Net interest income (FTE)(a)

     1,047        1,024        999        963        977  

Noninterest income

     563        743        909        577        1,561  

Total revenue (FTE)

     1,610        1,767        1,908        1,540        2,538  

Provision for loan and lease losses

     86        33        23        67        67  

Noninterest expense

     1,008        1,037        1,046        1,073        975  

Net income attributable to Bancorp

     433        586        704        509        1,014  

Net income available to common shareholders

     418        563        689        486        999  

Earnings Per Share Data

              

Net income allocated to common shareholders

     $413        $557        $681        $482        $989  

Average common shares outstanding (in thousands):

              

Basic

     667,624        683,345        689,820        703,372        721,280  

Diluted

     679,199        696,210        704,101        716,908        733,285  

Earnings per share, basic

     $0.62        $0.81        $0.99        $0.68        1.37  

Earnings per share, diluted

     0.61        0.80        0.97        0.67        1.35  

Common Share Data

              

Cash dividends per common share

     $0.18        $0.18        $0.16        $0.16        $0.16  

Book value per share

     21.92        21.97        21.68        21.67        21.30  

Market value per share

     27.92        28.70        31.75        30.34        27.98  

Common shares outstanding (in thousands)

     661,373        678,162        684,942        693,805        705,474  

Market capitalization

     $18,466        $19,463        $21,747        $21,050        $19,739  

Financial Ratios

     

Return on average assets

     1.21%        1.66%        2.02%        1.43%        2.85%  

Return on average common equity

     11.2%        15.3%        18.6%        12.7%        25.6%  

Return on average tangible common equity(a)

     13.5%        18.4%        22.4%        15.2%        30.4%  

Noninterest income as a percent of total revenue(a)

     35%        42%        48%        37%        62%  

Dividend payout

     29.0%        22.2%        16.2%        23.5%        11.7%  

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

     11.39%        11.38%        11.52%        11.69%        11.93%  

Tangible common equity(a)

     9.12%        9.33%        9.14%        8.94%        8.89%  

Net interest margin (FTE)(a)

     3.23%        3.21%        3.18%        3.02%        3.07%  

Efficiency (FTE)(a)

     62.6%        58.7%        54.8%        69.7%        38.4%  

Effective tax rate

     15.6%        15.5%        15.8%        (29.8%)        31.9%  

Credit Quality

              

Net losses charged-off

     $72        $94        $81        $76        $68  

Net losses charged-off as a percent of average portfolio loans and leases

     0.30%        0.41%        0.36%        0.33%        0.29%  

ALLL as a percent of portfolio loans and leases

     1.17%        1.17%        1.24%        1.30%        1.31%  

Allowance for credit losses as a percent of portfolio loans and leases(g)

     1.31%        1.31%        1.40%        1.48%        1.48%  

Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO

     0.48%        0.52%        0.55%        0.53%        0.60%  

Average Balances

              

Loans and leases, including held for sale

     $93,977        $93,232        $92,869        $92,865        $92,617  

Securities and other short-term investments

     34,822        34,935        34,677        33,756        33,826  

Assets

     141,752        141,529        141,565        141,055        140,992  

Transaction deposits(b)

     97,315        97,574        97,018        96,450        94,927  

Core deposits(c)

     101,492        101,592        100,874        100,242        98,649  

Wholesale funding(d)

     20,613        20,464        20,558        20,097        21,529  

Bancorp shareholders’ equity

     16,145        16,108        16,313        16,493        16,820  

Regulatory Capital and Liquidity Ratios(e)

  

CET1 capital(f)

     10.67%        10.91%        10.82%        10.61%        10.59%  

Tier I risk-based capital(f)

     11.78%        12.02%        11.95%        11.74%        11.72%  

Total risk-based capital(f)

     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%  

Operations

              

Banking centers

     1,152        1,158        1,153        1,154        1,155  

ATMs

     2,443        2,458        2,459        2,469        2,465  

Full-time equivalent employees

     17,512        18,163        18,344        18,125        17,797  
(a)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 25.

(b)

Includes demand, interest checking, savings, money market and foreign office deposits of commercial customers.

(c)

Includes transaction deposits plus other time deposits.

(d)

Includes certificates $100,000 and over, other deposits, federal funds purchased, other short-term borrowings and long-term debt.

(e)

Current period regulatory capital and liquidity ratios are estimates.

(f)

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.

(g)

The allowance for credit losses is the sum of the ALLL and the reserve for unfunded commitments.

 

14


Fifth Third Bancorp and Subsidiaries                                                
Consolidated Statements of Income                                                
$ in millions                                                
(unaudited)                                                
    For the Three Months Ended     % Change     Year to Date     % Change  
    September     June         September                 September     September        
     2018     2018         2017     Seq     Yr/Yr         2018     2017     Yr/Yr     

Interest Income

               

Interest and fees on loans and leases

    $1,040        $996        $899       4%       16%       $2,975        $2,595       15%  

Interest on securities

    269        267        249       1%       8%       798        739       8%  

Interest on other short-term investments

                4       -       50%       17        10       70%  

Total interest income

    1,315        1,269        1,152       4%       14%       3,790        3,344       13%  

Interest Expense

               

Interest on deposits

    144        119        73       21%       97%       359        197       82%  

Interest on federal funds purchased

    10              2       100%       400%       17        4       325%  

Interest on other short-term borrowings

          11        12       (45%)       (50%)       25        24       4%  

Interest on long-term debt

    112        114        95       (2%)       18%       330        277       19%  

Total interest expense

    272        249        182       9%       49%       731        502       46%  

Net Interest Income

    1,043        1,020        970       2%       8%       3,059        2,842       8%  

Provision for loan and lease losses

    86        33        67       161%       28%       142        193       (26%)  

Net Interest Income After Provision for Loan and Lease Losses

    957        987        903       (3%)       6%       2,917        2,649       10%  

Noninterest Income

               

Service charges on deposits

    139        137        138       1%       1%       414        415       -  

Corporate banking revenue

    100        120        101       (17%)       (1%)       308        276       12%  

Mortgage banking net revenue

    49        53        63       (8%)       (22%)       158        170       (7%)  

Wealth and asset management revenue

    114        108        102       6%       12%       335        313       7%  

Card and processing revenue

    82        84        79       (2%)       4%       245        232       6%  

Other noninterest income

    86        250        1,076       (66%)       (92%)       794        1,237       (36%)  

Securities (losses) gains, net

    (6)       (5)       -       (20%)                 NM       (21)       1       NM  

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

    (1)       (4)       2                 75%       NM       (18)       4       NM  

Total noninterest income

    563        743        1,561       (24%)       (64%)       2,215        2,648       (16%)  

Noninterest Expense

               

Salaries, wages and incentives

    421        471        407       (11%)       3%       1,339        1,215       10%  

Employee benefits

    82        78        77       5%       6%       270        274       (1%)  

Net occupancy expense

    70        74        74       (5%)       (5%)       219        221       (1%)  

Technology and communications

    71        67        62       6%       15%       206        177       16%  

Equipment expense

    31        30        30       3%       3%       92        88       5%  

Card and processing expense

    31        30        32       3%       (3%)       91        95       (4%)  

Other noninterest expense

    302        287        293       5%       3%       873        848       3%  

Total noninterest expense

    1,008        1,037        975       (3%)       3%       3,090        2,918       6%  

Income Before Income Taxes

    512        693        1,489       (26%)       (66%)       2,042        2,379       (14%)  

Applicable income tax expense

    79        107        475       (26%)       (83%)       321        694       (54%)  

Net Income

    433        586        1,014       (26%)       (57%)       1,721        1,685       2%  

Less: Net income attributable to noncontrolling interests

                -       NM       NM             -       NM  

Net Income Attributable to Bancorp

    433                586        1,014       (26%)       (57%)       1,721        1,685       2%  

Dividends on preferred stock

    15        23        15       (35%)       -       52        52       -  

Net Income Available to Common Shareholders

    $418        $563        $999       (26%)       (58%)       $1,669        $1,633       2%  

 

15


Fifth Third Bancorp and Subsidiaries

                     

Consolidated Balance Sheets

                     

$ in millions, except per share data

                     

(unaudited)

    As of          % Change  
    September                June                    September                  
      2018                2018                    2017                Seq                    Yr/Yr          

Assets

                     

Cash and due from banks

    $2,100           $2,052           $2,205           2%          (5%)  

Other short-term investments

    1,429           1,636           3,298           (13%)          (57%)  

Available-for-sale debt and other securities(a)

    31,808           31,961           31,391           -          1%  

Held-to-maturity securities(b)

    18           19           25           (5%)          (28%)  

Trading debt securities

    269           280           511           (4%)          (47%)  

Equity securities

    500           475           428           5%          17%  

Loans and leases held for sale

    663           783           711           (15%)          (7%)  

Portfolio loans and leases:

                     

Commercial and industrial loans

    42,631           41,403           41,011           3%          4%  

Commercial mortgage loans

    6,695           6,625           6,863           1%          (2%)  

Commercial construction loans

    4,892           4,687           4,652           4%          5%  

Commercial leases

    3,697           3,788           4,043           (2%)          (9%)  

Residential mortgage loans

    15,585           15,640           15,588           -          -  

Home equity

    6,485           6,599           7,143           (2%)          (9%)  

Automobile loans

    9,002           8,938           9,236           1%          (3%)  

Credit card

    2,325           2,270           2,168           2%          7%  

Other consumer loans

    2,131           1,982           1,179           8%          81%  

Portfolio loans and leases

    93,443           91,932           91,883           2%          2%  

Allowance for loan and lease losses

    (1,091)          (1,077)          (1,205)          1%          (9%)  

Portfolio loans and leases, net

    92,352           90,855           90,678           2%          2%  

Bank premises and equipment

    1,896           1,915           2,018           (1%)          (6%)  

Operating lease equipment

    546           606           663           (10%)          (18%)  

Goodwill

    2,462           2,462           2,423           -          2%  

Intangible assets

    28           30           18           (7%)          56%  

Servicing rights

    1,010           959           848           5%          19%  

Other assets

    6,604           6,662           7,047           (1%)          (6%)  

Total Assets

    $141,685           $140,695           $142,264           1%          -  

Liabilities

                     

Deposits:

                     

Demand

    $31,803           $32,680           $35,246           (3%)          (10%)  

Interest checking

    30,288           29,452           26,091           3%          16%  

Savings

    13,027           13,455           13,693           (3%)          (5%)  

Money market

    21,977           21,593           19,646           2%          12%  

Foreign office

    298           336           609           (11%)          (51%)  

Other time

    4,249           4,058           3,756           5%          13%  

Certificates $100,000 and over

    2,700           2,557           2,411           6%          12%  

Other deposits

                               NM          NM  

Total deposits

    104,342           104,131           101,452           -          3%  

Federal funds purchased

    2,316           597           118           288%          1863%  

Other short-term borrowings

    1,114           1,763           5,688           (37%)          (80%)  

Accrued taxes, interest and expenses

    1,155           1,206           2,071           (4%)          (44%)  

Other liabilities

    2,448           2,425           2,516           1%          (3%)  

Long-term debt

    14,460           14,321           14,039           1%          3%  

Total Liabilities

    125,835           124,443           125,884           1%          -  

Equity

                     

Common stock(c)

    2,051           2,051           2,051           -          -  

Preferred stock

    1,331           1,331           1,331           -          -  

Capital surplus

    2,856           2,833           2,682           1%          6%  

Retained earnings

    16,440           16,143           14,748           2%          11%  

Accumulated other comprehensive (loss) income

    (775)          (552)          185           (40%)          NM  

Treasury stock

    (6,073)          (5,574)          (4,637)          9%          31%  

Total Bancorp shareholders’ equity

    15,830           16,232           16,360           (2%)          (3%)  

Noncontrolling interests

    20           20           20           -          -  

Total Equity

    15,850           16,252           16,380           (2%)          (3%)  

Total Liabilities and Equity

    $141,685           $140,695           $142,264           1%          -  

(a)    Amortized cost

    $32,707           $32,589           $31,026           -          5%  

(b)    Market values

    18           19           25           (5%)          (28%)  

(c)    Common shares, stated value $2.22 per share (in thousands):

                     

    Authorized

    2,000,000           2,000,000           2,000,000           -          -  

    Outstanding, excluding treasury

    661,373           678,162           705,474           (2%)          (6%)  

    Treasury

    262,520           245,731           218,419           7%          20%  

 

16


Fifth Third Bancorp and Subsidiaries

              

Consolidated Balance Sheets

              

$ in millions, except per share data

              

(unaudited)

     As of  
     September              June                  March                  December               September        
       2018              2018                  2018                  2017               2017        

Assets

              

Cash and due from banks

     $2,100         $2,052         $2,038         $2,514         $2,205   

Other short-term investments

     1,429         1,636         1,747         2,753         3,298   

Available-for-sale debt and other securities(a)

     31,808         31,961         31,819         31,751         31,391   

Held-to-maturity securities(b)

     18         19         23         24         25   

Trading debt securities

     269         280         571         492         511   

Equity securities

     500         475         418         439         428   

Loans and leases held for sale

     663         783         717         492         711   

Portfolio loans and leases:

              

Commercial and industrial loans

     42,631         41,403         41,635         41,170         41,011   

Commercial mortgage loans

     6,695         6,625         6,509         6,604         6,863   

Commercial construction loans

     4,892         4,687         4,766         4,553         4,652   

Commercial leases

     3,697         3,788         3,919         4,068         4,043   

Residential mortgage loans

     15,585         15,640         15,563         15,591         15,588   

Home equity

     6,485         6,599         6,757         7,014         7,143   

Automobile loans

     9,002         8,938         9,018         9,112         9,236   

Credit card

     2,325         2,270         2,188         2,299         2,168   

Other consumer loans

     2,131         1,982         1,615         1,559         1,179   

Portfolio loans and leases

     93,443         91,932         91,970         91,970         91,883   

Allowance for loan and lease losses

     (1,091)        (1,077)        (1,138)        (1,196)        (1,205)  

Portfolio loans and leases, net

     92,352         90,855         90,832         90,774         90,678   

Bank premises and equipment

     1,896         1,915         1,966         2,003         2,018   

Operating lease equipment

     546         606         625         646         663   

Goodwill

     2,462         2,462         2,462         2,445         2,423   

Intangible assets

     28         30         30         27         18   

Servicing rights

     1,010         959         926         858         848   

Other assets

     6,604         6,662         7,326         6,975         7,047   

Total Assets

     $141,685         $140,695         $141,500         $142,193         $142,264   

Liabilities

              

Deposits:

              

Demand

     $31,803         $32,680         $34,066         $35,276         $35,246   

Interest checking

     30,288         29,452         29,627         27,703         26,091   

Savings

     13,027         13,455         13,751         13,425         13,693   

Money market

     21,977         21,593         21,540         20,097         19,646   

Foreign office

     298         336         374         484         609   

Other time

     4,249         4,058         3,945         3,775         3,756   

Certificates $100,000 and over

     2,700         2,557         2,042         2,402         2,411   

Other deposits

                   116                 

Total deposits

     104,342         104,131         105,461         103,162         101,452   

Federal funds purchased

     2,316         597         178         174         118   

Other short-term borrowings

     1,114         1,763         1,335         4,012         5,688   

Accrued taxes, interest and expenses

     1,155         1,206         1,104         1,412         2,071   

Other liabilities

     2,448         2,425         2,418         2,144         2,516   

Long-term debt

     14,460         14,321         14,800         14,904         14,039   

Total Liabilities

     125,835         124,443         125,296         125,808         125,884   

Equity

              

Common stock(c)

     2,051         2,051         2,051         2,051         2,051   

Preferred stock

     1,331         1,331         1,331         1,331         1,331   

Capital surplus

     2,856         2,833         2,828         2,790         2,682   

Retained earnings

     16,440         16,143         15,707         15,122         14,748   

Accumulated other comprehensive (loss) income

     (775)        (552)        (389)        73         185   

Treasury stock

     (6,073)        (5,574)        (5,344)        (5,002)        (4,637)  

Total Bancorp shareholders’ equity

     15,830         16,232         16,184         16,365         16,360   

Noncontrolling interests

     20         20         20         20         20   

Total Equity

     15,850         16,252         16,204         16,385         16,380   

Total Liabilities and Equity

     $141,685         $140,695         $141,500         $142,193         $142,264   

(a)    Amortized cost

     $32,707         $32,589         $32,230         $31,577         $31,026   

(b)    Market values

     18         19         23         24         25   

(c)    Common shares, stated value $2.22 per share (in thousands):

              

    Authorized

     2,000,000         2,000,000         2,000,000         2,000,000         2,000,000   

    Outstanding, excluding treasury

     661,373         678,162         684,942         693,805         705,474   

    Treasury

     262,520         245,731         238,951         230,088         218,419   

 

17


Fifth Third Bancorp and Subsidiaries                            
Consolidated Statements of Changes in Equity                            
$ in millions                            
(unaudited)                            
     For the Three Months Ended      Year to Date  
     September         September         September         September     
      2018         2017         2018         2017     

Total Equity, Beginning

     $16,252         $16,446         $16,385         $16,232   

Net income attributable to Bancorp

     433         1,014         1,721         1,685   

Other comprehensive income, net of tax:

           

Change in unrealized (losses) gains:

           

Available-for-sale securities

     (207)        23         (827)        132   

Qualifying cash flow hedges

     (17)        (2)        (22)        (9)  

Change in accumulated other comprehensive income related to employee benefit plans

                           

Comprehensive income

     210         1,036         875         1,811   

Cash dividends declared:

           

Common stock

     (121)        (114)        (355)        (324)  

Preferred stock

     (15)        (15)        (52)        (52)  

Impact of stock transactions under stock compensation plans, net

     24         22         46         51   

Shares acquired for treasury

     (500)        (990)        (1,053)        (1,332)  

Noncontrolling interest

            (7)               (7)  

Other

                           

Impact of cumulative effect of change in account principles

                           

Total Equity, Ending

     $15,850         $16,380         $15,850         $16,380   

 

18


Fifth Third Bancorp and Subsidiaries

                  

Average Balance Sheet and Yield/Rate Analysis

                  

$ in millions, except share data

                  

(unaudited)

                  
     For the Three Months Ended       % Change        Year to Date       % Change  
     September       June           September               September         September      
       2018       2018           2017         Seq            Yr/Yr          2018         2017         Yr/Yr  

Assets

                  

Interest-earning assets:

                  

Commercial and industrial loans

     $42,614       $42,327       $41,314       1%        3%        $42,249       $41,619       2%  

Commercial mortgage loans

     6,664       6,521       6,814       2%        (2%)        6,591       6,873       (4%)  

Commercial construction loans

     4,870       4,743       4,533       3%        7%        4,762       4,277       11%  

Commercial leases

     3,746       3,847       4,079       (3%)        (8%)        3,850       4,008       (4%)  

Residential mortgage loans

     16,226       16,213       16,206       -        -        16,176       16,011       1%  

Home equity

     6,529       6,672       7,207       (2%)        (9%)        6,695       7,389       (9%)  

Automobile loans

     8,969       8,968       9,267       -        (3%)        9,000       9,486       (5%)  

Credit card

     2,299       2,221       2,140       4%        7%        2,248       2,121       6%  

Other consumer loans

     2,060       1,720       1,057       20%        95%        1,792       902       99%  

Taxable securities

     33,301       33,380       32,289       -        3%        33,272       32,067       4%  

Tax exempt securities

     69       81       65       (15%)        6%        75       63       19%  

Other short-term investments

     1,452       1,474       1,472       (1%)        (1%)        1,466       1,367       7%  

Total interest-earning assets

     128,799       128,167       126,443       -        2%        128,176       126,183       2%  

Cash and due from banks

     2,193       2,179       2,227       1%        (2%)        2,182       2,202       (1%)  

Other assets

     11,837       12,320       13,532       (4%)        (13%)        12,394       13,343       (7%)  

Allowance for loan and lease losses

     (1,077     (1,137     (1,210     (5%)        (11%)        (1,136     (1,233     (8%)  

Total Assets

     $141,752       $141,529       $140,992       -        1%        $141,616       $140,495       1%  

Liabilities

                  

Interest-bearing liabilities:

                  

Interest checking deposits

     $29,681       $28,715       $25,765       3%        15%        $28,938       $26,176       11%  

Savings deposits

     13,231       13,618       13,889       (3%)        (5%)        13,463       14,081       (4%)  

Money market deposits

     21,753       22,036       20,028       (1%)        9%        21,517       20,301       6%  

Foreign office deposits

     317       371       395       (15%)        (20%)        393       409       (4%)  

Other time deposits

     4,177       4,018       3,722       4%        12%        4,018       3,764       7%  

Total interest-bearing core deposits

     69,159       68,758       63,799       1%        8%        68,329       64,731       6%  

Certificates $100,000 and over

     2,596       2,155       2,625       20%        (1%)        2,346       2,609       (10%)  

Other deposits

     578       198       560       192%        3%        385       330       17%  

Federal funds purchased

     1,987       1,080       675       84%        194%        1,258       542       132%  

Other short-term borrowings

     1,018       2,452       4,212       (58%)        (76%)        1,959       3,441       (43%)  

Long-term debt

     14,434       14,579       13,457       (1%)        7%        14,598       13,528       8%  

Total interest-bearing liabilities

     89,772       89,222       85,328       1%        5%        88,875       85,181       4%  

Demand deposits

     32,333       32,834       34,850       (2%)        (7%)        32,992       34,949       (6%)  

Other liabilities

     3,482       3,345       3,973       4%        (12%)        3,541       3,717       (5%)  

Total Liabilities

     125,587       125,401       124,151       -        1%        125,408       123,847       1%  

Total Equity

     16,165       16,128       16,841       -        (4%)        16,208       16,648       (3%)  

Total Liabilities and Equity

     $141,752       $141,529       $140,992       -        1%        $141,616       $140,495       1%  
     For the Three Months Ended       bps Change        Year to Date       bps Change  
     September       June           September               September         September      

Yield/Rate Analysis

     2018       2018           2017         Seq            Yr/Yr          2018         2017         Yr/Yr  

Interest-earning assets:

                  

Commercial and industrial loans(a)

     4.32%       4.26%       3.75%              57         4.18%       3.61%       57  

Commercial mortgage loans(a)

     4.57%       4.43%       3.85%       14         72         4.40%       3.68%       72  

Commercial construction loans(a)

     5.14%       4.94%       4.23%       20         91         4.90%       4.01%       89  

Commercial leases(a)

     2.85%       2.82%       2.70%              15         2.82%       2.71%       11  

Residential mortgage loans

     3.58%       3.56%       3.48%              10         3.58%       3.53%       5  

Home equity

     5.03%       4.85%       4.39%       18         64         4.83%       4.19%       64  

Automobile loans

     3.47%       3.26%       2.96%       21         51         3.29%       2.88%       41  

Credit card

     12.17%       11.96%       11.63%       21         54         12.16%       11.84%       32  

Other consumer loans

     6.98%       6.75%       6.89%       23                6.79%       6.70%       9  

Total loans and leases

     4.41%       4.30%       3.88%       11         53         4.28%       3.77%       51  

Taxable securities

     3.20%       3.20%       3.06%              14         3.20%       3.08%       12  

Tax exempt securities(a)

     4.35%       4.03%       5.33%       32         (98)        3.28%       5.38%       (210

Other short-term investments

     1.74%       1.62%       1.16%       12         58         1.58%       0.97%       61  

Total interest-earning assets

     4.07%       3.98%       3.64%              43         3.97%       3.56%       41  

Interest-bearing liabilities:

                  

Interest checking deposits

     0.88%       0.76%       0.44%       12         44         0.76%       0.38%       38  

Savings deposits

     0.11%       0.10%       0.06%                     0.09%       0.06%       3  

Money market deposits

     0.80%       0.71%       0.39%              41         0.68%       0.35%       33  

Foreign office deposits

     0.33%       0.45%       0.21%       (12)        12         0.28%       0.17%       11  

Other time deposits

     1.48%       1.34%       1.23%       14         25         1.36%       1.23%       13  

Total interest-bearing core deposits

     0.74%       0.65%       0.39%              35         0.64%       0.35%       29  

Certificates $100,000 and over

     1.85%       1.35%       1.38%       50         47         1.58%       1.36%       22  

Other deposits

     1.95%       1.80%       1.16%       15         79         1.76%       1.03%       73  

Federal funds purchased

     1.96%       1.76%       1.16%       20         80         1.80%       0.94%       86  

Other short-term borrowings

     2.22%       1.84%       1.09%       38         113         1.70%       0.92%       78  

Long-term debt

     3.09%       3.11%       2.82%       (2)        27         3.02%       2.75%       27  

Total interest-bearing liabilities

     1.20%       1.12%       0.85%              35         1.10%       0.79%       31  

(a) Presented on an FTE basis.

 

      

 

19


                                                                                                        

Fifth Third Bancorp and Subsidiaries

          

Average Balance Sheet and Yield/Rate Analysis

          

$ in millions, except share data

     For the Three Months Ended  

(unaudited)

     September       June           March           December         September    
       2018       2018           2018           2017         2017    

Assets

          

Interest-earning assets:

          

Commercial and industrial loans

     $42,614       $42,327       $41,799       $41,455       $41,314  

Commercial mortgage loans

     6,664       6,521       6,588       6,757       6,814  

Commercial construction loans

     4,870       4,743       4,671       4,660       4,533  

Commercial leases

     3,746       3,847       3,960       4,018       4,079  

Residential mortgage loans

     16,226       16,213       16,086       16,178       16,206  

Home equity

     6,529       6,672       6,889       7,066       7,207  

Automobile loans

     8,969       8,968       9,064       9,175       9,267  

Credit card

     2,299       2,221       2,224       2,202       2,140  

Other consumer loans

     2,060       1,720       1,588       1,354       1,057  

Taxable securities

     33,301       33,380       33,133       32,222       32,289  

Tax exempt securities

     69       81       73       75       65  

Other short-term investments

     1,452       1,474       1,471       1,459       1,472  

Total interest-earning assets

     128,799       128,167       127,546       126,621       126,443  

Cash and due from banks

     2,193       2,179       2,175       2,288       2,227  

Other assets

     11,837       12,320       13,039       13,351       13,532  

Allowance for loan and lease losses

     (1,077     (1,137     (1,195     (1,205     (1,210

Total Assets

     $141,752       $141,529       $141,565       $141,055       $140,992  

Liabilities

          

Interest-bearing liabilities:

          

Interest checking deposits

     $29,681       $28,715       $28,403       $26,992       $25,765  

Savings deposits

     13,231       13,618       13,546       13,593       13,889  

Money market deposits

     21,753       22,036       20,750       20,023       20,028  

Foreign office deposits

     317       371       494       323       395  

Other time deposits

     4,177       4,018       3,856       3,792       3,722  

Total interest-bearing core deposits

     69,159       68,758       67,049       64,723       63,799  

Certificates $100,000 and over

     2,596       2,155       2,284       2,429       2,625  

Other deposits

     578       198       379       119       560  

Federal funds purchased

     1,987       1,080       692       602       675  

Other short-term borrowings

     1,018       2,452       2,423       2,316       4,212  

Long-term debt

     14,434       14,579       14,780       14,631       13,457  

Total interest-bearing liabilities

     89,772       89,222       87,607       84,820       85,328  

Demand deposits

     32,333       32,834       33,825       35,519       34,850  

Other liabilities

     3,482       3,345       3,800       4,203       3,973  

Total Liabilities

     125,587       125,401       125,232       124,542       124,151  

Total Equity

     16,165       16,128       16,333       16,513       16,841  

Total Liabilities and Equity

     $141,752       $141,529       $141,565       $141,055       $140,992  

Yield/Rate Analysis

          

Interest-earning assets:

          

Commercial and industrial loans(a)

     4.32%       4.26%       3.96%       3.75%       3.75%  

Commercial mortgage loans(a)

     4.57%       4.43%       4.20%       3.92%       3.85%  

Commercial construction loans(a)

     5.14%       4.94%       4.59%       4.28%       4.23%  

Commercial leases(a)

     2.85%       2.82%       2.78%       0.06%       2.70%  

Residential mortgage loans

     3.58%       3.56%       3.60%       3.52%       3.48%  

Home equity

     5.03%       4.85%       4.62%       4.38%       4.39%  

Automobile loans

     3.47%       3.26%       3.12%       3.06%       2.96%  

Credit card

     12.17%       11.96%       12.36%       11.83%       11.63%  

Other consumer loans

     6.98%       6.75%       6.58%       6.64%       6.89%  

Total loans and leases

     4.41%       4.30%       4.11%       3.80%       3.88%  

Taxable securities

     3.20%       3.20%       3.21%       3.15%       3.06%  

Tax exempt securities(a)

     4.35%       4.03%       1.40%       5.62%       5.33%  

Other short-term investments

     1.74%       1.62%       1.37%       1.24%       1.16%  

Total interest-earning assets

     4.07%       3.98%       3.85%       3.61%       3.64%  

Interest-bearing liabilities:

          

Interest checking deposits

     0.88%       0.76%       0.63%       0.51%       0.44%  

Savings deposits

     0.11%       0.10%       0.07%       0.06%       0.06%  

Money market deposits

     0.80%       0.71%       0.53%       0.42%       0.39%  

Foreign office deposits

     0.33%       0.45%       0.13%       0.30%       0.21%  

Other time deposits

     1.48%       1.34%       1.25%       1.23%       1.23%  

Total interest-bearing core deposits

     0.74%       0.65%       0.52%       0.43%       0.39%  

Certificates $100,000 and over

     1.85%       1.35%       1.49%       1.45%       1.38%  

Other deposits

     1.95%       1.80%       1.44%       1.17%       1.16%  

Federal funds purchased

     1.96%       1.76%       1.43%       1.21%       1.16%  

Other short-term borrowings

     2.22%       1.84%       1.34%       1.10%       1.09%  

Long-term debt

     3.09%       3.11%       2.86%       2.72%       2.82%  

Total interest-bearing liabilities

     1.20%       1.12%       0.97%       0.88%       0.85%  

Ratios:

          

Net interest margin (FTE)(b)

     3.23%       3.21%       3.18%       3.02%       3.07%  

Net interest rate spread (FTE)(b)

     2.87%       2.86%       2.88%       2.73%       2.79%  

Interest-bearing liabilities to interest-earning assets

     69.70%       69.61%       68.69%       66.99%       67.48%  

(a) Presented on an FTE basis.

 

(b) Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 25.

 

 

20


Fifth Third Bancorp and Subsidiaries

              

Summary of Loans and Leases

              

$ in millions

              

(unaudited)

              
     For the Three Months Ended  
     September          June            March            December          September    
       2018          2018            2018            2017          2017    

Average Portfolio Loans and Leases

              

Commercial loans and leases:

              

Commercial and industrial loans

     $42,494        $42,292        $41,782        $41,438        $41,302  

Commercial mortgage loans

     6,635        6,514        6,582        6,751        6,807  

Commercial construction loans

     4,870        4,743        4,671        4,660        4,533  

Commercial leases

     3,738        3,847        3,960        4,016        4,072  

Total commercial loans and leases

     57,737        57,396        56,995        56,865        56,714  

Consumer loans:

              

Residential mortgage loans

     15,598        15,581        15,575        15,590        15,523  

Home equity

     6,529        6,672        6,889        7,066        7,207  

Automobile loans

     8,969        8,968        9,064        9,175        9,267  

Credit card

     2,299        2,221        2,224        2,202        2,140  

Other consumer loans

     2,060        1,719        1,587        1,352        1,055  

Total consumer loans

     35,455        35,161        35,339        35,385        35,192  

Total average portfolio loans and leases

     $93,192        $92,557        $92,334        $92,250        $91,906  

Average loans and leases held for sale

     $785        $675        $535        $615        $711  

End of Period Portfolio Loans and Leases

              

Commercial loans and leases:

              

Commercial and industrial loans

     $42,631        $41,403        $41,635        $41,170        $41,011  

Commercial mortgage loans

     6,695        6,625        6,509        6,604        6,863  

Commercial construction loans

     4,892        4,687        4,766        4,553        4,652  

Commercial leases

     3,697        3,788        3,919        4,068        4,043  

Total commercial loans and leases

     57,915        56,503        56,829        56,395        56,569  

Consumer loans:

              

Residential mortgage loans

     15,585        15,640        15,563        15,591        15,588  

Home equity

     6,485        6,599        6,757        7,014        7,143  

Automobile loans

     9,002        8,938        9,018        9,112        9,236  

Credit card

     2,325        2,270        2,188        2,299        2,168  

Other consumer loans

     2,131        1,982        1,615        1,559        1,179  

Total consumer loans

     35,528        35,429        35,141        35,575        35,314  

Total portfolio loans and leases

     $93,443        $91,932        $91,970        $91,970        $91,883  

Loans and leases held for sale

     $663        $783        $717        $492        $711  

Operating lease equipment

     $546        $606        $625        $646        $663  

Loans and leases serviced for others:(a)

              

Commercial and industrial loans

     $465        $421        $401        $415        $449  

Commercial mortgage loans

     294        263        238        240        228  

Commercial construction loans

     108        82        87        76        72  

Commercial leases

     225        222        243        254        257  

Residential mortgage loans

     63,996        62,247        60,973        60,021        60,783  

Other consumer loans

     50        50        50        -        -  

Total loans and leases serviced for others

     65,138        63,285        61,992        61,006        61,789  

Total loans and leases serviced

     $159,790            $156,606            $155,304        $154,114        $155,046  

(a) Fifth Third sells certain loans and leases and obtains servicing responsibilities.

 

 

21


                                                                                              

Fifth Third Bancorp and Subsidiaries

          

Regulatory Capital

          

$ in millions

          

(unaudited)

          
     As of            
     September         June           March           December         September    
       2018(a)          2018           2018           2017       2017    

Regulatory capital:

          

Common stock and related surplus (net of treasury stock)

     ($1,166     ($690     ($465     ($160     $96  

Retained earnings

     16,440       16,143       15,707       15,122       14,748  

Common equity tier I capital adjustments and deductions

     (2,465     (2,467     (2,470     (2,445     (2,401

CET1 capital

     12,809       12,986       12,772       12,517       12,443  

Additional tier I capital

     1,331       1,331       1,331       1,331       1,330  

Tier I capital

     14,140       14,317       14,103       13,848       13,773  

Tier II capital

     3,869       3,799       3,896       4,039       4,043  

Total regulatory capital

     $18,009       $18,116       $17,999       $17,887       $17,816  

Risk-weighted assets(b)

     $120,002       $119,073       $118,001       $117,997       $117,527  

Ratios:

          

Average shareholders’ equity to average assets

     11.39%       11.38%       11.52%       11.69%       11.93%  

Regulatory Capital Ratios:

          

Fifth Third Bancorp

          

CET1 capital(b)

     10.67%       10.91%       10.82%       10.61%       10.59%  

Tier I risk-based capital(b)

     11.78%       12.02%       11.95%       11.74%       11.72%  

Total risk-based capital(b)

     15.01%       15.21%       15.25%       15.16%       15.16%  

Tier I leverage

     10.10%       10.24%       10.11%       10.01%       9.97%  

Fifth Third Bank

          

Tier I risk-based capital(b)

     12.27%       12.43%       12.39%       12.06%       12.30%  

Total risk-based capital(b)

     13.93%       14.10%       14.15%       13.88%       14.14%  

Tier I leverage

     10.56%       10.63%       10.51%       10.32%       10.50%  
(a)

Current period regulatory capital data and ratios are estimated.

(b)

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.

 

22


Fifth Third Bancorp and Subsidiaries                               
Summary of Credit Loss Experience                               
$ in millions                               
(unaudited)    For the Three Months Ended  
     September         June         March         December         September      
      2018         2018         2018         2017         2017      

Average portfolio loans and leases:

          

Commercial and industrial loans

     $42,494       $42,292       $41,782       $41,438       $41,302  

Commercial mortgage loans

     6,635       6,514       6,582       6,751       6,807  

Commercial construction loans

     4,870       4,743       4,671       4,660       4,533  

Commercial leases

     3,738       3,847       3,960       4,016       4,072  

Residential mortgage loans

     15,598       15,581       15,575       15,590       15,523  

Home equity

     6,529       6,672       6,889       7,066       7,207  

Automobile loans

     8,969       8,968       9,064       9,175       9,267  

Credit card

     2,299       2,221       2,224       2,202       2,140  

Other consumer loans

     2,060       1,719       1,587       1,352       1,055  

Total average portfolio loans and leases

     $93,192       $92,557       $92,334       $92,250       $91,906  

Losses charged-off:

          

Commercial and industrial loans

     ($36     ($51     ($33     ($34     ($30

Commercial mortgage loans

     -       (3     (2     (1     (3

Commercial leases

     -       -       -       (1     -  

Residential mortgage loans

     (3     (4     (4     (3     (2

Home equity

     (6     (5     (7     (8     (6

Automobile loans

     (15     (13     (17     (15     (13

Credit card

     (33     (29     (28     (23     (23

Other consumer loans

     (19     (13     (12     (9     (8

Total losses charged-off

     ($112     ($118     ($103     ($94     ($85

Recoveries of losses previously charged-off:

          

Commercial and industrial loans

     $8       $4       $5       $2       $3  

Commercial mortgage loans

     1       1       1       2       -  

Commercial leases

     -       -       -       -       -  

Residential mortgage loans

     1       2       1       2       3  

Home equity

     3       3       2       4       3  

Automobile loans

     6       5       6       5       5  

Credit card

     12       3       3       3       3  

Other consumer loans

     9       6       4       -       -  

Total recoveries of losses previously charged-off

     $40       $24       $22       $18       $17  

Net losses charged-off:

          

Commercial and industrial loans

     ($28     ($47     ($28     ($32     ($27

Commercial mortgage loans

     1       (2     (1     1       (3

Commercial leases

     -       -       -       (1     -  

Residential mortgage loans

     (2     (2     (3     (1     1  

Home equity

     (3     (2     (5     (4     (3

Automobile loans

     (9     (8     (11     (10     (8

Credit card

     (21     (26     (25     (20     (20

Other consumer loans

     (10     (7     (8     (9     (8

Total net losses charged-off

     ($72     ($94     ($81     ($76     ($68

Net losses charged-off as a percent of average portfolio loans and leases:

          

Commercial and industrial loans

     0.26%       0.44%       0.27%       0.31%       0.26%  

Commercial mortgage loans

     (0.03%     0.11%       0.06%       (0.09%     0.16%  

Commercial leases

     0.00%       0.00%       0.00%       0.08%       0.01%  

Residential mortgage loans

     0.04%       0.05%       0.06%       0.03%       (0.02%

Home equity

     0.16%       0.12%       0.26%       0.25%       0.18%  

Automobile loans

     0.41%       0.33%       0.50%       0.45%       0.35%  

Credit card

     3.53%       4.73%       4.65%       3.74%       3.75%  

Other consumer loans

     1.94%       1.85%       2.16%       2.38%       2.80%  

Total net losses charged-off as a percent of average portfolio loans and leases

     0.30%       0.41%       0.36%       0.33%       0.29%  

 

23


Fifth Third Bancorp and Subsidiaries

          

Asset Quality

          

$ in millions

          

(unaudited)

     For the Three Months Ended  
     September           June           March           December           September      
       2018           2018           2018           2017           2017      

Allowance for Credit Losses

          

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  

Components of allowance for credit losses:

          

Allowance for loan and lease losses

     $1,091       $1,077       $1,138       $1,196       $1,205  

Reserve for unfunded commitments

     129       131       151       161       157  

Total allowance for credit losses

     $1,220       $1,208       $1,289       $1,357       $1,362  
     As of  
     September           June           March           December           September      
       2018           2018           2018           2017           2017      

Nonperforming Assets and Delinquent Loans

          

Nonaccrual portfolio loans and leases:

          

Commercial and industrial loans

     $69       $99       $155       $144       $144  

Commercial mortgage loans

     7       8       9       12       14  

Commercial leases

     22       25       4       -       1  

Residential mortgage loans

     11       13       16       17       19  

Home equity

     58       54       55       56       56  

Automobile loans

     -       3       -       -       -  

Other consumer loans

     1       1       1       -       -  

Total nonaccrual portfolio loans and leases (excludes restructured loans)

     168       203       240       229       234  

Nonaccrual restructured portfolio commercial loans and leases

     180       173       154       150       214  

Nonaccrual restructured portfolio consumer loans and leases

     55       61       58       58       58  

Total nonaccrual portfolio loans and leases

     403       437       452       437       506  

Repossessed property

     8       7       9       9       10  

OREO

     37       36       43       43       39  

Total nonperforming portfolio assets

     448       480       504       489       555  

Nonaccrual loans held for sale

     18       5       5       5       18  

Nonaccrual restructured loans held for sale

     17       18       19       1       2  

Total nonperforming assets

     $483       $503       $528       $495       $575  

Restructured portfolio consumer loans and leases (accrual)

     $987       $1,024       $916       $927       $929  

Restructured portfolio commercial loans and leases (accrual)

     $80       $104       $249       $249       $232  

Loans 90 days past due (accrual):

          

Commercial and industrial loans

     $3       $4       $7       $3       $3  

Commercial mortgage loans

     1       -       1       -       -  

Total commercial loans

     4       4       8       3       3  

Residential mortgage loans

     40       44       62       57       43  

Automobile loans

     11       10       9       10       10  

Credit card

     32       31       28       27       21  

Total consumer loans

     83       85       99       94       74  

Total loans 90 days past due (accrual)(b)

     $87       $89       $107       $97       $77  

Ratios

          

Net losses charged-off as a percent of average portfolio loans and leases

     0.30%       0.41%       0.36%       0.33%       0.29%  

Allowance for loan and lease losses:

          

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(a)

     270%       247%       252%       274%       238%  

As a percent of nonperforming portfolio assets(a)

     243%       224%       226%       245%       217%  

Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO(a)

     0.43%       0.47%       0.49%       0.48%       0.55%  

Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO(a)

     0.48%       0.52%       0.55%       0.53%       0.60%  

Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property

     0.51%       0.54%       0.57%       0.53%       0.62%  

Allowance for credit losses as a percent of nonperforming assets

     272%       252%       256%       278%       245%  

(a) Excludes nonaccrual loans held for sale.

 

(b) Excludes loans held for sale.

 

 

24


Use of Non-GAAP Financial Measures

In addition to GAAP measures, management considers various Non-GAAP measures when evaluating the performance of the business, including: “net interest income (FTE),” “interest income (FTE),” “net interest margin (FTE),” “net interest rate spread (FTE),” “income before income taxes (FTE),” “tangible net income available to common shareholders,” “average tangible common equity,” “return on average tangible common equity,” “tangible common equity (excluding unrealized gains/losses),” “tangible common equity (including unrealized gains/losses),” “tangible equity,” “tangible book value per share,” “adjusted noninterest income,” “adjusted noninterest expense,” “pre-provision net revenue,” “adjusted efficiency ratio,” “adjusted return on average tangible common equity,” “adjusted pre-provision net revenue,” “adjusted return on average assets,” “efficiency ratio,” “efficiency ratio excluding low income housing (LIH) expense,” “adjusted efficiency ratio excluding LIH expense,” and certain ratios derived from these measures. The Bancorp believes these non-GAAP measures provide useful information to investors because these are among the measures used by the Fifth Third management team to evaluate operating performance and make day-to-day operating decisions.

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

The Bancorp believes tangible net income available to common shareholders, average tangible common equity, tangible common equity (excluding unrealized gains/losses), tangible common equity (including unrealized gains/losses), tangible equity, tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of the business without the impacts of intangible items, whether acquired or created internally, compared to other companies in the industry who present similar measures.

The Bancorp believes adjusted noninterest income, noninterest expense, net interest income, pre-provision net revenue, efficiency ratio, return on average tangible common equity, and return on average assets are important measures that adjust for significant, unusual, or large transactions that may occur in a reporting period which management does not consider indicative of on-going financial performance and enhances comparability of results with prior periods. Furthermore, management believes that adjusted efficiency ratio measures incorporating the impact of LIH expense allows the reader to compare to other companies in the industry who may present efficiency ratios that are not impacted by this expense.

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

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

Please see page 26 for Reg. G reconciliations of all historical Non-GAAP measures used in this release to the most directly comparable GAAP measures.

 

25


                                                                                              
    Fifth Third Bancorp and Subsidiaries                               
    Regulation G Non-GAAP Reconciliation                               
    $ and shares in millions                               
    (unaudited)    For the Three Months Ended  
     September     June         March         December       September    
      2018     2018         2018         2017       2017    

Net interest income

     $1,043       $1,020       $996       $956       $970  

Add: Taxable equivalent adjustment

     4       4       3       7       7  

Net interest income (FTE) (a)

     1,047       1,024       999       963       977  
   

Net interest income (annualized) (b)

     4,138       4,091       4,039       3,793       3,848  

Net interest income (FTE) (annualized) (c)

     4,154       4,107       4,052       3,821       3,876  
   

Interest income

     1,315       1,269       1,206       1,144       1,152  

Add:   Taxable equivalent adjustment

     4       4       3       7       7  

Interest income (FTE)

     1,319       1,273       1,209       1,151       1,159  

Interest income (FTE) (annualized) (d)

     5,233       5,106       4,903       4,566       4,598  
   

Interest expense (annualized) (e)

     1,079       999       852       746       722  

Average interest-earning assets (f)

     128,799       128,167       127,546       126,621       126,443  

Average interest-bearing liabilities (g)

     89,772       89,222       87,607       84,820       85,328  
   

Net interest margin (b) / (f)

     3.21%       3.19%       3.17%       3.00%       3.04%  

Net interest margin (FTE) (c) / (f)

     3.23%       3.21%       3.18%       3.02%       3.07%  

Net interest rate spread (FTE) (d) / (f) - (e) / (g)

     2.87%       2.86%       2.88%       2.73%       2.79%  
   

Income before income taxes

     $512       $693       $836       $393       $1,489  

Add:   Taxable equivalent adjustment

     4       4       3       7       7  

Income before income taxes (FTE)

     $516       $697       $839       $400       $1,496  
          

Net income available to common shareholders (h)

     $418       $563       $689       $486       $999  

Add:   Intangible amortization, net of tax

     1       1       1       -       -  

Tangible net income available to common shareholders

     419       564       690       486       999  

Tangible net income available to common shareholders (annualized) (i)

     1,662       2,262       2,798       1,928       3,963  
   

Average Bancorp shareholders’ equity

     16,145       16,108       16,313       16,493       16,820  

Less: Average preferred stock

     (1,331     (1,331     (1,331     (1,331     (1,331

          Average goodwill

     (2,462     (2,462     (2,455     (2,437     (2,423

          Average intangible assets

     (29     (30     (27     (25     (18

Average tangible common equity (j)

     12,323       12,285       12,500       12,700       13,048  
   

Total Bancorp shareholders’ equity

     15,830       16,232       16,184       16,365       16,360  

Less: Preferred stock

     (1,331     (1,331     (1,331     (1,331     (1,331

          Goodwill

     (2,462     (2,462     (2,462     (2,445     (2,423

          Intangible assets

     (28     (30     (30     (27     (18

Tangible common equity, including unrealized gains / losses (k)

     12,009       12,409       12,361       12,562       12,588  

Less: Accumulated other comprehensive income

     775       552       389       (73     (185

Tangible common equity, excluding unrealized gains / losses (l)

     12,784       12,961       12,750       12,489       12,403  

Add:  Preferred stock

     1,331       1,331       1,331       1,331       1,331  

Tangible equity (m)

     14,115       14,292       14,081       13,820       13,734  
   

Total assets

     141,685       140,695       141,500       142,193       142,264  

Less: Goodwill

     (2,462     (2,462     (2,462     (2,445     (2,423

          Intangible assets

     (28     (30     (30     (27     (18

Tangible assets, including unrealized gains / losses (n)

     139,195       138,203       139,008       139,721       139,823  

Less: Accumulated other comprehensive income / loss, before tax

     981       699       492       (92     (285

Tangible assets, excluding unrealized gains / losses (o)

     $140,176       $138,902       $139,500       $139,629       $139,538  
   

Common shares outstanding (p)

 

    

 

661

 

 

 

   

 

678

 

 

 

   

 

685

 

 

 

   

 

694

 

 

 

   

 

705

 

 

 

Tangible equity (m) / (o)

     10.07%       10.29%       10.09%       9.90%       9.84%  

Tangible common equity (excluding unrealized gains/losses) (l) / (o)

     9.12%       9.33%       9.14%       8.94%       8.89%  

Tangible common equity (including unrealized gains/losses) (k) / (n)

     8.63%       8.98%       8.89%       8.99%       9.00%  

Tangible book value per share (k) / (p)

     $18.17       $18.30       $18.05       $18.10       $17.86  

 

26


  Fifth Third Bancorp and Subsidiaries

      

  Regulation G Non-GAAP Reconciliation

      

  $ and shares in millions

      

  (unaudited)

     For the Three Months Ended  
     September           June           September    
       2018           2018           2017    

Net income attributable to Bancorp (q)

     $433       $586       $1,014  

Net income attributable to Bancorp (annualized) (r)

     1,718       2,350       4,023  
   

Net income adjustments (pre-tax items)

        

Branch and land network impairment charge

     -       30       -  

Valuation of Visa total return swap

     17       10       47  

Gain from GreenSky IPO

     -       (16     -  

Securities losses, net (including GreenSky)

     6       5       -  

Fifth Third Foundation contribution

     -       10       -  

Gain on sale of Vantiv/Worldpay shares

     -       (205     (1,037

Staffing review expense

     -       19       -  

Net income adjustments, after-tax (s)

     18       (116     (644
   

Noninterest income (t)

     563       743       1,561  

Branch and land network impairment charge

     -       30       -  

Valuation of Visa total return swap

     17       10       47  

Gain from GreenSky IPO

     -       (16     -  

Securities losses, net (including GreenSky)

     6       5       -  

Gain on sale of Vantiv/Worldpay shares

     -       (205     (1,037

Adjusted noninterest income (u)

     586       567       571  
   

Noninterest expense (v)

     1,008       1,037       975  

Fifth Third Foundation contribution

     -       (10     -  

Staffing review expense

     -       (19     -  

Adjusted noninterest expense (w)

     1,008       1,008       975  

Impairment on affordable housing investments, as reported

     (39     (47     (41

Adjusted noninterest expense excluding low-income housing (LIH) expense (x)

     969       961       934  

Noninterest expense excluding LIH expense (y)

     969       990       934  
   

Adjusted net income attributable to Bancorp (q) + (s)

     451       470       370  

Adjusted net income attributable to Bancorp (annualized) (z)

     1,789       1,885       1,468  
   

Adjusted net income available to common shareholders (h) + (s)

     436       447       355  

Adjusted net income available to common shareholders (annualized) (aa)

     1,730       1,793       1,408  
   

Average assets (ab)

 

    

 

$141,752

 

 

 

   

 

            $141,529

 

 

 

   

 

        $140,992

 

 

 

Return on average tangible common equity (i) / (j)

     13.5%       18.4%       30.4%  

Adjusted return on average tangible common equity (aa) / (j)

     14.0%       14.6%       10.8%  

 

Return on average assets (r) / (ab)

     1.21%       1.66%       2.85%  

Adjusted return on average assets (z) / (ab)

     1.26%       1.33%       1.04%  

Efficiency ratio (v) / [(a) + (t)]

     62.6%       58.7%       38.4%  

Efficiency ratio excluding LIH expense (y) / [(a) + (t)]

     60.2%       56.0%       36.8%  

Adjusted efficiency ratio excluding LIH expense (x) / [(a) + (u)]

     59.3%       60.4%       60.3%  

Adjusted pre-provision net revenue (PPNR) (a) + (u) - (w)

     $625       $583       $573  

 

27


    Fifth Third Bancorp and Subsidiaries

            

    Segment Presentation

            

    $ in millions

            

    (unaudited)

            
            

For the three months ended September 30, 2018

    
Commercial  
Banking  
 
 
   

Branch    

Banking(b)    

 

 

   
Consumer  
Lending
(c)   
 
 
   


Wealth  

and Asset  
Management  

 

 
 

   

Other/  

Eliminations  

 

 

    Total        
   

Net interest income (FTE)(a)

     $431       $525       $60       $46       ($15     $1,047  

(Provision for) benefit from loan and lease losses

     11       (34     (10     (3     (50     (86

Net interest income after provision for loan and lease losses

     442       491       50       43       (65     961  

Noninterest income

     235       204       50       115       (41     563  

Noninterest expense

     (345     (433     (100     (126     (4     (1,008

Income (loss) before income taxes

     332       262       -       32       (110     516  

Applicable income tax (expense) benefit(a)

     (34     (55     -       (7     13       (83

Net income (loss)

     298       207       -       25       (97     433  
            

For the three months ended June 30, 2018

    
Commercial  
Banking  
 
 
   

Branch    

Banking(b)    

 

 

   
Consumer  
Lending
(c)   
 
 
   


Wealth  

and Asset  
Management  

 

 
 

   

Other/  

Eliminations  

 

 

    Total        
   

Net interest income (FTE)(a)

     $431       $499       $59       $45       ($10     $1,024  

(Provision for) benefit from loan and lease losses

     10       (47     (8     11       1       (33

Net interest income after provision for loan and lease losses

     441       452       51       56       (9     991  

Noninterest income

     229       167       52       109       186       743  

Noninterest expense

     (358     (432     (107     (123     (17     (1,037

Income (loss) before income taxes

     312       187       (4     42       160       697  

Applicable income tax (expense) benefit(a)

     (23     (40     1       (9     (40     (111

Net income (loss)

     289       147       (3     33       120       586  
            

For the three months ended March 31, 2018

    
Commercial  
Banking  
 
 
   

Branch    

Banking(b)    

 

 

   
Consumer  
Lending
(c)   
 
 
   


Wealth  

and Asset  
Management  

 

 
 

   

Other/  

Eliminations  

 

 

    Total        
   

Net interest income (FTE)(a)

     $422       $466       $59       $43       $9       $999  

(Provision for) benefit from loan and lease losses

     20       (44     (12     (16     29       (23

Net interest income after provision for loan and lease losses

     442       422       47       27       38       976  

Noninterest income

     219       184       46       116       344       909  

Noninterest expense

     (384     (437     (106     (131     12       (1,046

Income (loss) before income taxes

     277       169       (13     12       394       839  

Applicable income tax (expense) benefit(a)

     (18     (35     3       (3     (82     (135

Net income (loss)

     259       134       (10     9       312       704  
            

For the three months ended December 31, 2017(d)

    
Commercial  
Banking  
 
 
   

Branch    

Banking(b)    

 

 

   
Consumer  
Lending
(c)   
 
 
   


Wealth  

and Asset  
Management  

 

 
 

   

Other/  

Eliminations  

 

 

    Total        
   

Net interest income (FTE)(a)

     $397       $464       $61       $40       $1       $963  

Provision for loan and lease losses

     (13     (37     (10     (4     (3     (67

Net interest income after provision for loan and lease losses

     384       427       51       36       (2     896  

Noninterest income

     192       194       54       107       30       577  

Noninterest expense

     (410     (432     (101     (124     (6     (1,073

Income before income taxes

     166       189       4       19       22       400  

Applicable income tax (expense) benefit(a)

     (23     (66     (2     (7     207       109  

Net income

     143       123       2       12       229       509  
            

For the three months ended September 30, 2017(d)

    
Commercial  
Banking  
 
 
   

Branch    

Banking(b)    

 

 

   
Consumer    
Lending
(c)    
 
 
   


Wealth  

and Asset  
Management  

 

 
 

   

Other/  

Eliminations  

 

 

    Total        
   

Net interest income (FTE)(a)

     $429       $453       $59       $38       ($2     $977  

(Provision for) benefit from loan and lease losses

     3       (35     (8     1       (28     (67

Net interest income after provision for loan and lease losses

     432       418       51       39       (30     910  

Noninterest income

     216       191       68       101       985       1,561  

Noninterest expense

     (341     (419     (101     (111     (3     (975

Income before income taxes

     307       190       18       29       952       1,496  

Applicable income tax expense(a)

     (63     (66     (6     (10     (337     (482

Net income

     244       124       12       19       615       1,014  

(a) Includes taxable equivalent adjustments of $4 million, $4 million, $3 million, $7 million and $7 million for the three months ended September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017 and September 30, 2017, respectively.

 

(b) Branch Banking provides a full range of deposit and loan and lease products to individuals and small businesses through full-service banking centers.

 

(c) Consumer Lending includes the Bancorp’s residential mortgage, home equity, automobile and other indirect lending activities.

 

(d) Prior period balances have been adjusted to reflect changes in internal expense allocation methodologies.

 

 

28