Edgar Filing: MB FINANCIAL INC /MD

Form 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: July 19, 2018

LOGO


CONTACTS:	Sameer Gokhale (Investors)	News Release
	(513) 534-2219
	Larry Magnesen (Media) (513) 534-8055	FOR IMMEDIATE RELEASE July 19, 2018

FIFTH THIRD ANNOUNCES SECOND QUARTER 2018 NET INCOME TO COMMON SHAREHOLDERS OF

$563 MILLION, OR $0.80 PER DILUTED SHARE

•

2Q18 net income available to common shareholders of $563 million, or $0.80 per diluted common share

•

Results included a net positive $0.17 impact on reported 2Q18 EPS:

•

$205 million pre-tax (~$162 million after-tax)^(a) gain related to the sale of Worldpay, Inc. (“Worldpay”) shares

•

$30 million pre-tax (~$24 million after-tax)^(a) charge to other noninterest income related to our branch optimization efforts, including the decision to close 29 branches and sell 21 parcels of land

•

$19 million pre-tax (~$15 million after-tax)^(a) in compensation expense primarily related to the previously announced staffing review

•

$11 million pre-tax (~$9 million after-tax)^(a) gain related to our ownership stake in GreenSky (including a $16 million pre-tax gain from the IPO recorded in other noninterest income, partially offset by a negative $5 million pre-tax securities mark)

•

$10 million pre-tax (~$8 million after-tax)^(a) charge to other noninterest income related to the valuation of the Visa total return swap

•

$10 million pre-tax (~$8 million after-tax)^(a) contribution to the Fifth Third Foundation

•

Reported net interest income (NII) of $1.020 billion; taxable equivalent NII of $1.024 billion^(b), up 3% from 1Q18 and up 8% from 2Q17

•

Taxable equivalent net interest margin (NIM) of 3.21%^(b), up 3 bps from 1Q18 and up 20 bps from 2Q17

•

Average portfolio loans and leases of $92.6 billion, flat from 1Q18 and up 1% from 2Q17

•

Noninterest income of $743 million, compared with $909 million in 1Q18 and $564 million in 2Q17; 2Q18 performance includes the aforementioned gain from the sale of Worldpay shares; 1Q18 results included a $414 million pre-tax Worldpay step-up gain

•

Noninterest expense of $1.037 billion, down 1% from 1Q18 and up 8% from 2Q17; excluding the 2Q18 expenses noted above and an $8 million pre-tax litigation charge in 1Q18, noninterest expense was down 3% from 1Q18

•

Net charge-offs (NCOs) of $94 million, up $13 million from 1Q18 and up $30 million from 2Q17; NCO ratio of 0.41% compared to 0.36% in 1Q18 and 0.28% in 2Q17; criticized assets as a percentage of commercial loans of 3.87% compared to 4.83% in 1Q18 and 5.50% in 2Q17

•

Portfolio nonperforming asset (NPA) ratio of 0.52%, down 3 bps from 1Q18 and down 20 bps from 2Q17

•

2Q18 provision expense of $33 million compared to $23 million in 1Q18 and $52 million in 2Q17

•

Common equity Tier 1 (CET1) ratio of 10.91%^(c); tangible common equity ratio of 8.98%^(b), or 9.33% excluding unrealized gains/losses^(b)

•

Book value per share of $21.97, up 1% from 1Q18 and up 8% from 2Q17; tangible book value per share^(b) of $18.30 up 1% from 1Q18 and up 7% from 2Q17

Fifth Third Bancorp (Nasdaq: FITB) today reported second quarter 2018 net income of $586 million versus net income of $704 million in the first quarter of 2018 and $367 million in the second quarter of 2017. After preferred dividends, net income available to common shareholders was $563 million, or $0.80 per diluted share, in the second quarter of 2018, compared with $689 million, or $0.97 per diluted share, in the first quarter of 2018, and $344 million, or $0.45 per diluted share, in the second quarter of 2017.

Earnings Highlights


	For the Three Months Ended															% Change
	June 2018			March 2018			December 2017			September 2017			June 2017			Seq			Yr/Yr
Income Statement Data ($ in millions)
Net income attributable to Bancorp	$	586		$	704		$	509		$	1,014		$	367			(17	%)		60	%
Net income available to common shareholders	$	563		$	689		$	486		$	999		$	344			(18	%)		64	%

Earnings Per Share Data
Average common shares outstanding (in thousands):
Basic		683,345			689,820			703,372			721,280			741,401			(1	%)		(8	%)
Diluted		696,210			704,101			716,908			733,285			752,328			(1	%)		(7	%)
Earnings per share, basic	$	0.81		$	0.99		$	0.68		$	1.37		$	0.46			(18	%)		76	%
Earnings per share, diluted		0.80			0.97			0.67			1.35			0.45			(18	%)		78	%

Common Share Data
Cash dividends per common share	$	0.18		$	0.16		$	0.16		$	0.16		$	0.14			13	%		29	%
Book value per share		21.97			21.68			21.67			21.30			20.42			1	%		8	%
Tangible book value per share^(b)		18.30			18.05			18.10			17.86			17.11			1	%		7	%
Common shares outstanding (in thousands)		678,162			684,942			693,805			705,474			738,873			(1	%)		(8	%)

Financial Ratios																bps Change
Return on average assets		1.66	%		2.02	%		1.43	%		2.85	%		1.05	%		(36	)		61
Return on average common equity		15.3			18.6			12.7			25.6			9.0			(330	)		630
Return on average tangible common equity^(b)		18.4			22.4			15.2			30.4			10.7			(400	)		770
CET1 capital^(c)		10.91			10.82			10.61			10.59			10.63			9			28
Tier I risk-based capital^(c)		12.02			11.95			11.74			11.72			11.76			7			26
Taxable equivalent net interest margin^(b)		3.21			3.18			3.02			3.07			3.01			3			20
Taxable equivalent efficiency^(b)		58.7			54.8			69.7			38.4			63.4			390			(470	)

“We had a very productive second quarter and remained focused on achieving our long-term objectives. Our quarterly results were very strong, as evidenced by the continued expansion in our net interest margin, lower operating expenses, record capital markets revenue and another very significant decline in the level of criticized assets. Our commercial middle market loan originations were also very strong and we expect this trend to continue over the remainder of the year,” said Greg D. Carmichael, Chairman, President and CEO of Fifth Third Bancorp.

“During the quarter, we continued to execute on expense initiatives and also took further actions to optimize our branch network. We are very excited about reallocating our resources to grow branches in high-growth markets which should significantly boost household growth. I am confident that these decisions are in the best long-term interests of our shareholders. We remain focused on achieving our enhanced profitability targets.”

“Also during the second quarter we announced the acquisition of MB Financial, which will create a leading retail and commercial franchise in the attractive Chicago market. We are purchasing a well-respected and successful bank, and combining forces will allow us to build scale in the strategically important Chicago market. Since the announcement in May, we have made significant progress in finalizing the composition of the management team in Chicago. We are very confident that the talent we have in place will help us achieve the financial outcomes that we discussed during the announcement. We are looking forward to completing the merger as soon as possible so that we can begin realizing the substantial cost and revenue synergies we have identified.”

“Lastly, the recently announced CCAR results provide further proof of our commitment to our shareholders. Over the next four quarters, we expect to return a significant amount of capital through a 33% increase in our quarterly common dividend and a 42% increase in share repurchases compared to last year’s capital plan. We are also pleased that a resubmission of our capital plan, given the pending acquisition of MB Financial, will not delay our capital distribution plans.”

Income Statement Highlights


($ in millions, except per-share data)	For the Three Months Ended											% Change
($ in millions, except per-share data)	June 2018		March 2018		December 2017			September 2017		June 2017		Seq			Yr/Yr
Condensed Statements of Income
Taxable equivalent net interest income^(b)	$	1,024	$	999	$	963		$	977	$	945		3	%		8	%
Provision for loan and lease losses		33		23		67			67		52		43	%		(37	%)
Total noninterest income		743		909		577			1,561		564		(18	%)		32	%
Total noninterest expense		1,037		1,046		1,073			975		957		(1	%)		8	%

Taxable equivalent income before income taxes^(b)	$	697	$	839	$	400		$	1,496	$	500		(17	%)		39	%

Taxable equivalent adjustment		4		3		7			7		6		33	%		(33	%)
Applicable income tax expense (benefit)		107		132		(116	)		475		127		(19	%)		(16	%)

Net income	$	586	$	704	$	509		$	1,014	$	367		(17	%)		60	%

Less: Net income attributable to noncontrolling interests		_—		_—		_—			_—		_—		NM			NM

Net income attributable to Bancorp	$	586	$	704	$	509		$	1,014	$	367		(17	%)		60	%
Dividends on preferred stock		23		15		23			15		23		53	%		_—

Net income available to common shareholders	$	563	$	689	$	486		$	999	$	344		(18	%)		64	%

Earnings per share, diluted	$	0.80	$	0.97	$	0.67		$	1.35	$	0.45		(18	%)		78	%

Net Interest Income


(Taxable equivalent basis; $ in millions)^(b)	For the Three Months Ended															% Change
	June 2018			March 2018			December 2017			September 2017			June 2017			Seq			Yr/Yr
Interest Income
Total interest income	$	1,273		$	1,209		$	1,151		$	1,159		$	1,112			5	%		14	%
Total interest expense		249			210			188			182			167			19	%		49	%

Taxable equivalent net interest income (NII)	$	1,024		$	999		$	963		$	977		$	945			3	%		8	%


Average Yield																bps Change
Yield on interest-earning assets		3.98	%		3.85	%		3.61	%		3.64	%		3.54	%		13			44
Adjusted yield on interest-earning assets		3.98	%		3.85	%		3.69	%		3.64	%		3.54	%		13			44
Rate paid on interest-bearing liabilities		1.12	%		0.97	%		0.88	%		0.85	%		0.79	%		15			33

Ratios
Taxable equivalent net interest rate spread		2.86	%		2.88	%		2.73	%		2.79	%		2.75	%		(2	)		11
Taxable equivalent net interest margin (NIM)		3.21	%		3.18	%		3.02	%		3.07	%		3.01	%		3			20
Adjusted taxable equivalent NIM		3.21	%		3.18	%		3.10	%		3.07	%		3.01	%		3			20

Average Balances																% Change
Loans and leases, including held for sale	$	93,232		$	92,869		$	92,865		$	92,617		$	92,653			—			1	%
Total securities and other short-term investments		34,935			34,677			33,756			33,826			33,481			1	%		4	%
Total interest-earning assets		128,167			127,546			126,621			126,443			126,134			—			2	%
Total interest-bearing liabilities		89,222			87,607			84,820			85,328			85,320			2	%		5	%
Bancorp shareholders’ equity		16,108			16,313			16,493			16,820			16,615			(1	%)		(3	%)

Taxable equivalent NII of $1.024 billion in the second quarter of 2018 increased $25 million, or 3 percent, from the prior quarter. Performance reflected higher short-term market rates, a higher day count and growth in middle market commercial and industrial (C&I) loans. Taxable equivalent NIM of 3.21 percent in the second quarter of 2018 increased 3 bps from the prior quarter, primarily driven by higher short-term market rates, partially offset by a higher day count.

Compared to the second quarter of 2017, taxable equivalent NII increased $79 million, or 8 percent. Performance reflected higher short-term rates and an increase in investment portfolio balances. Taxable equivalent NIM increased 20 bps from the second quarter of 2017, primarily driven by higher short-term market rates.

Securities

Average securities and other short-term investments were $34.9 billion in the second quarter of 2018 compared to $34.7 billion in the previous quarter and $33.5 billion in the second quarter of 2017. Average available-for-sale debt and other securities of $32.6 billion in the second quarter of 2018 were up $395 million, or 1 percent, sequentially and up $1.3 billion, or 4 percent, from the second quarter of 2017.

Loans


($ in millions)	For the Three Months Ended										% Change
	June 2018		March 2018		December 2017		September 2017		June 2017		Seq			Yr/Yr
Average Portfolio Loans and Leases
Commercial loans and leases:
Commercial and industrial loans	$	42,292	$	41,782	$	41,438	$	41,302	$	41,601		1	%		2	%
Commercial mortgage loans		6,514		6,582		6,751		6,807		6,845		(1	%)		(5	%)
Commercial construction loans		4,743		4,671		4,660		4,533		4,306		2	%		10	%
Commercial leases		3,847		3,960		4,016		4,072		4,036		(3	%)		(5	%)

Total commercial loans and leases	$	57,396	$	56,995	$	56,865	$	56,714	$	56,788		1	%		1	%

Consumer loans:
Residential mortgage loans	$	15,581	$	15,575	$	15,590	$	15,523	$	15,417		—			1	%
Home equity		6,672		6,889		7,066		7,207		7,385		(3	%)		(10	%)
Automobile loans		8,968		9,064		9,175		9,267		9,410		(1	%)		(5	%)
Credit card		2,221		2,224		2,202		2,140		2,080		—			7	%
Other consumer loans		1,719		1,587		1,352		1,055		892		8	%		93	%

Total consumer loans	$	35,161	$	35,339	$	35,385	$	35,192	$	35,184		(1	%)		—

Total average portfolio loans and leases	$	92,557	$	92,334	$	92,250	$	91,906	$	91,972		—			1	%

Average loans held for sale	$	675	$	535	$	615	$	711	$	681		26	%		(1	%)

Average portfolio loan and lease balances were flat sequentially and up 1 percent year-over-year. Sequential performance was primarily driven by increases in C&I and other consumer loans, offset by decreases in home equity loans and commercial leases. Year-over-year performance was primarily driven by increases in other consumer and C&I loans, partially offset by decreases in home equity and automobile loans. Period end portfolio loans and leases of $92.0 billion were flat sequentially and up 1 percent year-over-year.

Average commercial portfolio loan and lease balances were up 1 percent both sequentially and from the second quarter of 2017. Sequential performance was primarily driven by an increase in C&I loans reflecting solid growth in middle market lending, partially offset by a decrease in commercial leases consistent with the planned reduction in indirect non-relationship based lease originations. Within commercial real estate, commercial mortgage balances decreased 1 percent and commercial construction balances were up 2 percent sequentially. Year-over-year overall commercial performance was primarily driven by an increase in C&I and commercial construction loans, partially offset by a decrease in commercial mortgage. Period end commercial line utilization was 35 percent in both the first and second quarter of 2018, compared to 34 percent in the second quarter of 2017.

Average consumer portfolio loan and lease balances were down 1 percent sequentially and were flat year-over-year. Sequential performance was primarily driven by a decline in home equity and automobile loan balances, partially offset by an increase in other consumer loans. Year-over-year performance was primarily driven by an increase in other consumer and residential mortgage loans, offset by lower home equity and automobile loan balances.

Deposits


($ in millions)	For the Three Months Ended										% Change
	June 2018		March 2018		December 2017		September 2017		June 2017		Seq			Yr/Yr
Average Deposits
Demand	$	32,834	$	33,825	$	35,519	$	34,850	$	34,915		(3	%)		(6	%)
Interest checking		28,715		28,403		26,992		25,765		26,014		1	%		10	%
Savings		13,618		13,546		13,593		13,889		14,238		1	%		(4	%)
Money market		22,036		20,750		20,023		20,028		20,278		6	%		9	%
Foreign office^(d)		371		494		323		395		380		(25	%)		(2	%)

Total transaction deposits	$	97,574	$	97,018	$	96,450	$	94,927	$	95,825		1	%		2	%
Other time		4,018		3,856		3,792		3,722		3,745		4	%		7	%

Total core deposits	$	101,592	$	100,874	$	100,242	$	98,649	$	99,570		1	%		2	%
Certificates - $100,000 and over		2,155		2,284		2,429		2,625		2,623		(6	%)		(18	%)
Other		198		379		119		560		264		(48	%)		(25	%)

Total average deposits	$	103,945	$	103,537	$	102,790	$	101,834	$	102,457		—			1	%

Average core deposits increased 1 percent sequentially and were up 2 percent year-over-year. Average transaction deposits increased 1 percent sequentially and were up 2 percent compared with the second quarter of 2017. The sequential performance continued to reflect deposit migration from demand deposits to interest-bearing accounts. Sequential and year-over-year growth was primarily driven by increases in consumer money market account balances and commercial interest checking deposits, partially offset by lower commercial demand deposit account balances. Other time deposits increased by 4 percent sequentially and 7 percent year-over-year.

Average total commercial transaction deposits of $42 billion decreased 1 percent sequentially and were flat from the second quarter of 2017. Average total consumer transaction deposits of $55 billion increased 2 percent sequentially and increased 3 percent from the second quarter of 2017.

Wholesale Funding


($ in millions)	For the Three Months Ended										% Change
	June 2018		March 2018		December 2017		September 2017		June 2017		Seq			Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over	$	2,155	$	2,284	$	2,429	$	2,625	$	2,623		(6	%)		(18	%)
Other deposits		198		379		119		560		264		(48	%)		(25	%)
Federal funds purchased		1,080		692		602		675		311		56	%		247	%
Other short-term borrowings		2,452		2,423		2,316		4,212		4,194		1	%		(42	%)
Long-term debt		14,579		14,780		14,631		13,457		13,273		(1	%)		10	%

Total average wholesale funding	$	20,464	$	20,558	$	20,097	$	21,529	$	20,665		—			(1	%)

Average wholesale funding of $20.5 billion decreased $94 million sequentially and decreased $201 million, or 1 percent, from the second quarter of 2017. The sequential decrease in average wholesale funding reflected lower long-term debt balances resulting from maturities in the first and second quarter of 2018 exceeding a debt issuance in the second quarter of 2018 as well as lower other deposits and jumbo CD balances, partially offset by an increase in Federal funds borrowings. The year-over-year decrease primarily resulted from the ability to fund interest-earning asset growth with core deposits.

Noninterest Income


($ in millions)	For the Three Months Ended													% Change
	June 2018			March 2018			December 2017			September 2017		June 2017		Seq			Yr/Yr
Noninterest Income
Service charges on deposits	$	137		$	137		$	138		$	138	$	139		—			(1	%)
Corporate banking revenue		120			88			77			101		101		36	%		19	%
Mortgage banking net revenue		53			56			54			63		55		(5	%)		(4	%)
Wealth and asset management revenue		108			113			106			102		103		(4	%)		5	%
Card and processing revenue		84			79			80			79		79		6	%		6	%
Other noninterest income		250			460			123			1,076		85		(46	%)		194	%
Securities gains (losses), net		(5	)		(11	)		1			—		—		55	%		NM
Securities gains (losses), net - non-qualifying hedges on mortgage servicing rights		(4	)		(13	)		(2	)		2		2		69	%		NM

Total noninterest income	$	743		$	909		$	577		$	1,561	$	564		(18	%)		32	%

Noninterest income of $743 million decreased $166 million sequentially and increased $179 million year-over-year. The sequential and year-over-year comparisons reflect the impact of the following items:

Noninterest Income excluding certain items


($ in millions)	For the Three Months Ended								% Change
	June 2018			March 2018			June 2017		Seq			Yr/Yr
Noninterest Income excluding certain items
Noninterest income (U.S. GAAP)	$	743		$	909		$	564
Worldpay step-up gain		—			(414	)		—
Gain on sale of Worldpay shares		(205	)		—			—
Gain from GreenSky IPO		(16	)		—			—
Branch and land network impairment charge		30			8			—
Valuation of Visa total return swap		10			39			9
Securities losses / (gains), net		5			11			—

Noninterest income excluding certain items^(b)	$	567		$	553		$	573		3	%		(1	%)

Excluding the items in the table above, noninterest income of $567 million increased $14 million, or 3 percent, from the previous quarter and decreased 1 percent from the second quarter of 2017. The sequential performance was primarily driven by increases in corporate banking revenue and card and processing revenue, partially offset by a decrease in wealth and asset management revenue compared to the seasonally strong performance in the first quarter of 2018.

Corporate banking revenue of $120 million was up 36 percent sequentially and up 19 percent year-over-year. The sequential and year-over-year increase was primarily driven by strong, broad-based capital markets revenue growth, led by corporate bond fees and loan syndication revenue.

Mortgage Banking Net Revenue


($ in millions)	For the Three Months Ended															% Change
	June 2018			March 2018			December 2017			September 2017			June 2017			Seq			Yr/Yr
Mortgage Banking Net Revenue
Origination fees and gains on loan sales	$	28		$	24		$	32		$	40		$	37			17	%		(24	%)
Net mortgage servicing revenue:
Gross mortgage servicing fees		54			53			54			56			49			2	%		10	%
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs		(29	)		(21	)		(32	)		(33	)		(31	)		38	%		(6	%)

Net mortgage servicing revenue		25			32			22			23			18			(22	%)		39	%

Total mortgage banking net revenue	$	53		$	56		$	54		$	63		$	55			(5	%)		(4	%)

Mortgage banking net revenue was $53 million in the second quarter of 2018, down 5 percent from the first quarter of 2018 and down 4 percent from the second quarter of 2017. The sequential decrease was driven by elevated negative net valuation adjustments, partially offset by higher origination fees and gains on loan sales. The year-over-year decrease was driven by lower origination fees and gains on loan sales, partially offset by higher gross mortgage servicing fees. Originations of $2.1 billion in the current quarter increased 35 percent sequentially and decreased 7 percent from the second quarter of 2017.

Wealth and asset management revenue of $108 million decreased 4 percent from the first quarter of 2018 and increased 5 percent from the second quarter of 2017. The sequential decrease was primarily driven by seasonally strong tax-related private client service revenue in the first quarter of 2018 and a decrease in personal asset management revenue. The year-over-year increase was primarily driven by higher personal asset management revenue.

Card and processing revenue of $84 million in the second quarter of 2018 increased 6 percent both sequentially and year-over-year. The sequential increase reflected seasonally higher credit card spend volume and higher debit transaction volume. The year-over-year increase in card and processing revenue was due to higher credit card spend volume and higher debit transaction volume.

Other noninterest income totaled $250 million in the second quarter of 2018, compared with $460 million in the previous quarter, and $85 million in the second quarter of 2017. As disclosed in the table on page 8, the reported results included the impact of Worldpay gains, a gain from the GreenSky IPO, valuation adjustments from the Visa total return swap, and branch impairment charges. For the second quarter of 2018, excluding these items, other noninterest income of $69 million decreased $24 million, or 26 percent, from the first quarter of 2018 and decreased $25 million, or 27 percent, from the second quarter of 2017. The sequential decrease was primarily due to lower private equity investment income. The year-over-year results also reflected a decline in equity method earnings from the ownership interest in Worldpay.

Net losses on investment securities were $5 million in the second quarter of 2018 (primarily due to the ownership stake in GreenSky), compared with net losses of $11 million in the first quarter of 2018 and no net gains/losses in the second quarter of 2017. Net losses on securities held as non-qualifying hedges for the MSR portfolio were $4 million in the second quarter of 2018 and $13 million in the first quarter of 2018.

Noninterest Expense


($ in millions)	For the Three Months Ended										% Change
	June 2018		March 2018		December 2017		September 2017		June 2017		Seq			Yr/Yr
Noninterest Expense
Salaries, wages and incentives	$	471	$	447	$	418	$	407	$	397		5	%		19	%
Employee benefits		78		110		82		77		86		(29	%)		(9	%)
Net occupancy expense		74		75		74		74		70		(1	%)		6	%
Technology and communications		67		68		68		62		57		(1	%)		18	%
Equipment expense		30		31		29		30		29		(3	%)		3	%
Card and processing expense		30		29		34		32		33		3	%		(9	%)
Other noninterest expense		287		286		368		293		285		—			1	%

Total noninterest expense	$	1,037	$	1,046	$	1,073	$	975	$	957		(1	%)		8	%

Noninterest expense of $1.037 billion decreased $9 million, or 1 percent, compared with the first quarter of 2018, and increased $80 million, or 8 percent, compared with the second quarter of 2017. Excluding the $19 million compensation expense primarily related to the previously announced staffing review and the $10 million contribution to the Fifth Third Foundation in the second quarter of 2018, as well as an $8 million litigation reserve charge in the first quarter of 2018, noninterest expense of $1.008 billion decreased $30 million, or 3 percent. The sequential decrease primarily reflected seasonally lower compensation-related expenses and ongoing discipline in managing expenses throughout the company. The year-over-year increase was primarily driven by higher base compensation and technology and communications expense.

Summary of Credit Loss Experience


($ in millions)	For the Three Months Ended
	June 2018			March 2018			December 2017			September 2017			June 2017
Net losses charged-off
Commercial and industrial loans	($	47	)	($	28	)	($	32	)	($	27	)	($	18	)
Commercial mortgage loans		(2	)		(1	)		1			(3	)		(5	)
Commercial leases		—			—			(1	)		—			(1	)
Residential mortgage loans		(2	)		(3	)		(1	)		1			(2	)
Home equity		(2	)		(5	)		(4	)		(3	)		(5	)
Automobile loans		(8	)		(11	)		(10	)		(8	)		(6	)
Credit card		(26	)		(25	)		(20	)		(20	)		(22	)
Other consumer loans		(7	)		(8	)		(9	)		(8	)		(5	)

Total net losses charged-off	($	94	)	($	81	)	($	76	)	($	68	)	($	64	)

Total losses charged-off	($	118	)	($	103	)	($	94	)	($	85	)	($	95	)
Total recoveries of losses previously charged-off		24			22			18			17			31

Total net losses charged-off	($	94	)	($	81	)	($	76	)	($	68	)	($	64	)

Ratios (annualized)
Net losses charged-off as a percent of average portfolio loans and leases		0.41	%		0.36	%		0.33	%		0.29	%		0.28	%
Commercial		0.34	%		0.21	%		0.22	%		0.21	%		0.17	%
Consumer		0.52	%		0.60	%		0.51	%		0.43	%		0.46	%

Net charge-offs were $94 million, or 41 bps of average portfolio loans and leases on an annualized basis, in the second quarter of 2018 compared with net charge-offs of $81 million, or 36 bps, in the first quarter of 2018 and $64 million, or 28 bps, in the second quarter of 2017.

Commercial net charge-offs of $49 million, or 34 bps, increased $20 million sequentially. This primarily reflected a $19 million increase in net charge-offs of C&I loans.

Consumer net charge-offs of $45 million, or 52 bps, decreased $7 million sequentially. This primarily reflected a $3 million decrease in net charge-offs on both home equity and automobile loans.


($ in millions)	For the Three Months Ended
($ in millions)	June 2018			March 2018			December 2017			September 2017			June 2017
Allowance for Credit Losses
Allowance for loan and lease losses, beginning	$	1,138		$	1,196		$	1,205		$	1,226		$	1,238
Total net losses charged-off		(94	)		(81	)		(76	)		(68	)		(64	)
Provision for loan and lease losses		33			23			67			67			52
Deconsolidation of a variable interest entity (VIE)		—			—			—			(20	)		—

Allowance for loan and lease losses, ending	$	1,077		$	1,138		$	1,196		$	1,205		$	1,226

Reserve for unfunded commitments, beginning	$	151		$	161		$	157		$	162		$	159
(Benefit from) provision for unfunded commitments		(20	)		(10	)		4			(5	)		3

Reserve for unfunded commitments, ending	$	131		$	151		$	161		$	157		$	162

Components of allowance for credit losses:
Allowance for loan and lease losses	$	1,077		$	1,138		$	1,196		$	1,205		$	1,226
Reserve for unfunded commitments		131			151			161			157			162

Total allowance for credit losses	$	1,208		$	1,289		$	1,357		$	1,362		$	1,388
Allowance for loan and lease losses ratio
As a percent of portfolio loans and leases		1.17	%		1.24	%		1.30	%		1.31	%		1.34	%
As a percent of nonperforming portfolio loans and leases^(e)		247	%		252	%		274	%		238	%		200	%
As a percent of nonperforming portfolio assets^(e)		224	%		226	%		245	%		217	%		185	%

The provision for loan and lease losses totaled $33 million in the second quarter of 2018, compared to $23 million in the first quarter of 2018 and $52 million in the second quarter of 2017.

As of quarter end, the allowance for loan and lease loss ratio represented 1.17 percent of total portfolio loans and leases outstanding, compared with 1.24 percent last quarter, and represented 247 percent of nonperforming loans and leases, and 224 percent of nonperforming assets. Performance reflected a significant improvement in criticized assets and nonperforming loans.


($ in millions)	As of
	June			March			December			September			June
	2018			2018			2017			2017			2017
Nonperforming Assets and Delinquent Loans
Nonaccrual portfolio loans and leases:
Commercial and industrial loans	$	99		$	155		$	144		$	144		$	225
Commercial mortgage loans		8			9			12			14			15
Commercial leases		25			4			—			1			1
Residential mortgage loans		13			16			17			19			19
Home equity		54			55			56			56			52
Automobile loans		3			—			—			—			—
Other consumer loans		1			1			—			—			—

Total nonaccrual portfolio loans and leases (excludes restructured loans)	$	203		$	240		$	229		$	234		$	312
Nonaccrual restructured portfolio commercial loans and leases^(f)		173			154			150			214			244
Nonaccrual restructured portfolio consumer loans and leases		61			58			58			58			58

Total nonaccrual portfolio loans and leases	$	437		$	452		$	437		$	506		$	614
Repossessed property		7			9			9			10			11
OREO		36			43			43			39			37

Total nonperforming portfolio assets^(e)	$	480		$	504		$	489		$	555		$	662
Nonaccrual loans held for sale		5			5			5			18			7
Nonaccrual restructured loans held for sale		18			19			1			2			1

Total nonperforming assets	$	503		$	528		$	495		$	575		$	670


Restructured portfolio consumer loans and leases (accrual)	$	1,029		$	916		$	927		$	929		$	933
Restructured portfolio commercial loans and leases (accrual)^(f)	$	111		$	249		$	249		$	232		$	224

Total loans and leases 30-89 days past due (accrual)	$	217		$	299		$	280		$	252		$	190
Total loans and leases 90 days past due (accrual)	$	89		$	107		$	97		$	77		$	75

Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO^(e)		0.47	%		0.49	%		0.48	%		0.55	%		0.67	%
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO^(e)		0.52	%		0.55	%		0.53	%		0.60	%		0.72	%

Total nonperforming portfolio assets decreased $24 million, or 5 percent, from the previous quarter to $480 million. Portfolio nonperforming loans and leases (NPLs) at quarter end decreased $15 million from the previous quarter to $437 million. NPLs as a percent of total loans, leases and OREO at quarter end decreased 2 bps from the previous quarter to 0.47 percent.

Commercial portfolio NPLs decreased $17 million from last quarter to $305 million, or 0.54 percent of commercial portfolio loans, leases and OREO. Consumer portfolio NPLs increased $2 million from last quarter to $132 million, or 0.37 percent of consumer portfolio loans, leases and OREO.

OREO balances decreased $7 million from the prior quarter to $36 million, and included $14 million in commercial OREO and $22 million in consumer OREO. Repossessed personal property decreased $2 million from the prior quarter to $7 million.

Loans over 90 days past due and still accruing decreased $18 million from the first quarter of 2018 to $89 million. Loans 30-89 days past due of $217 million decreased $82 million from the previous quarter.

Capital and Liquidity Position


	For the Three Months Ended
	June 2018			March 2018			December 2017			September 2017			June 2017
Capital Position
Average total Bancorp shareholders’ equity as a percent of average assets		11.38	%		11.52	%		11.69	%		11.93	%		11.84	%
Tangible equity^(b)		10.29	%		10.09	%		9.90	%		9.84	%		9.98	%
Tangible common equity (excluding unrealized gains/losses)^(b)		9.33	%		9.14	%		8.94	%		8.89	%		9.02	%
Tangible common equity (including unrealized gains/losses)^(b)		8.98	%		8.89	%		8.99	%		9.00	%		9.12	%

Regulatory Capital and Liquidity Ratios
CET1 capital^(c)		10.91	%		10.82	%		10.61	%		10.59	%		10.63	%
Tier I risk-based capital^(c)		12.02	%		11.95	%		11.74	%		11.72	%		11.76	%
Total risk-based capital^(c)		15.21	%		15.25	%		15.16	%		15.16	%		15.22	%
Tier I leverage		10.24	%		10.11	%		10.01	%		9.97	%		10.07	%
Modified liquidity coverage ratio (LCR)		116	%		113	%		129	%		124	%		115	%

Capital ratios remained strong and increased during the quarter. The CET1 ratio was 10.91 percent, the tangible common equity to tangible assets ratio^(b) was 9.33 percent (excluding unrealized gains/losses), and 8.98 percent (including unrealized gains/losses). The Tier I risk-based capital ratio was 12.02 percent, the Total risk-based capital ratio was 15.21 percent, and the Tier I leverage ratio was 10.24 percent.

On May 25, 2018, Fifth Third initially settled a share repurchase agreement whereby Fifth Third would purchase $235 million of its outstanding stock. The initial settlement reduced second quarter common shares outstanding by 6.4 million shares. On June 15, 2018, Fifth Third settled the forward contract. An additional 1.2 million shares were repurchased in connection with the completion of this agreement.

On June 27, 2018, Fifth Third completed the sale of 5 million shares of Class A common stock of Worldpay, Inc. Fifth Third had previously received these Class A shares in exchange for Class B Units of Vantiv Holding, LLC. Fifth Third recognized a pre-tax gain of approximately $205 million (~ $162 million after tax)^(a) related to the sale. The sale added approximately 16 basis points to Fifth Third’s CET1 ratio. As a result of the sale, Fifth Third beneficially owns approximately 3.3% of Worldpay’s equity through its ownership of approximately 10.3 million Class B Units.

On June 28, 2018, Fifth Third announced that the Board of Governors of the Federal Reserve System did not object to Fifth Third’s 2018 CCAR capital plan for the period beginning July 1, 2018 and ending June 30, 2019. Fifth Third’s capital plan included the following capital actions related to common dividends and share repurchases:

•

The increase in the quarterly common stock dividend to $0.22 from $0.18 beginning 4Q 2018 and to $0.24 beginning 2Q 2019, a 33 percent increase over the current dividend rate

•

The repurchase of common shares in an amount up to $1.651 billion, or a 42 percent increase over the 2017 capital plan. Included in these repurchases are:

•

$81 million in repurchases related to share issuances under employee benefit plans

•

$53 million in repurchases related to previously-recognized Worldpay tax receivable agreement (“TRA”) transaction after-tax gains

•

The additional ability to repurchase common shares in the amount of any after-tax capital generated from the sale of Worldpay common stock (including expected share repurchases associated with the recent sale of 5 million shares of Worldpay which generated approximately $162 million in after-tax capital)^(a)

•

The additional ability to repurchase common shares in the amount of any after-tax cash income generated from the termination and settlement of gross cash flows from existing TRAs with Worldpay or potential future TRAs that may be generated from additional sales of Worldpay

Fifth Third intends to execute open market share repurchases associated with up to $500 million of its 2018 CCAR repurchase plan before the beginning of the proxy solicitation in connection with the MB Financial, Inc. shareholder vote on its merger with Fifth Third, and may repurchase additional shares after the vote. The timing and amount of this repurchase activity is subject to market conditions and applicable securities laws.

Tax Rate

The effective tax rate was 15.5 percent in the second quarter of 2018 compared with 15.8 percent in the previous quarter and 25.9 percent in the second quarter of 2017. The tax rate in the second quarter of 2018 was impacted by a $12 million tax benefit primarily associated with the exercise and vesting of employee equity awards.

Other

On May 20, 2018, Fifth Third Bancorp and MB Financial, Inc. signed a definitive agreement under which MB Financial will merge with Fifth Third in a transaction valued at approximately $4.7 billion as of May 18, 2018. The transaction is expected to reduce Fifth Third’s regulatory common CET1 ratio by approximately 45 basis points. The pro forma tangible common equity to tangible assets (TCE) ratio of the combined entity is projected to be 8.2 percent at closing. The transaction is subject to the satisfaction of all customary closing conditions, including regulatory approvals as well as the approval of MB Financial shareholders.

As of June 30, 2018, Fifth Third Bank owned approximately 10.3 million units representing a 3.3 percent interest in Vantiv Holding, LLC, convertible into shares of Worldpay, Inc., a publicly traded firm. Based upon Worldpay’s closing price of $81.78 on June 30, 2018, our interest in Worldpay was valued at approximately $840 million. 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 August 2, 2018 by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 3569128#).

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of June 30, 2018, the Company had $141 billion in assets and operates 1,158 full-service Banking Centers, and 2,458 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 54,000 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 June 30, 2018, Fifth Third also had a 3.3% interest in Vantiv Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of June 30, 2018, had $368 billion in assets under care, of which it managed $37 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)

Assumes a 21% tax rate.

(b)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31.

(c)

Under the 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 weighted values are added together resulting in the total risk-weighted assets. Current period regulatory capital ratios are estimated.

(d)

Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.

(e)

Excludes nonaccrual loans held for sale.

(f)

As of June 30, 2017 excludes $7 million of restructured accruing loans and $19 million of restructured nonaccrual loans associated with a consolidated VIE in which the Bancorp has no continuing credit risk due to the risk being assumed by a third party.

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 MB financial, Inc. 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 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.

# # #

LOGO

Quarterly Financial Review for June 30, 2018

Table of Contents


Financial Highlights			18-19
Consolidated Statements of Income			20
Consolidated Balance Sheets			21-22
Consolidated Statements of Changes in Equity			23
Average Balance Sheet and Yield Analysis			24-26
Summary of Loans and Leases			27
Regulatory Capital			28
Summary of Credit Loss Experience			29
Asset Quality			30
Regulation G Non-GAAP Reconciliation			32
Segment Presentation			33

Fifth Third Bancorp and Subsidiaries

Financial Highlights

$ in millions, except per share data

(unaudited)


	For the Three Months Ended									% / bps Change						Year to Date						% / bps Change
	June 2018			March 2018			June 2017			Seq			Yr/Yr			June 2018			June 2017			Yr/Yr
Income Statement Data
Taxable equivalent net interest income^(c)	$	1,024		$	999		$	945			3	%		8	%	$	2,023		$	1,884			7	%
Noninterest income		743			909			564			(18	%)		32	%		1,652			1,087			52	%
Taxable equivalent total revenue		1,767			1,908			1,509			(7	%)		17	%		3,675			2,971			24	%
Provision for loan and lease losses		33			23			52			43	%		(37	%)		56			126			(56	%)
Noninterest expense		1,037			1,046			957			(1	%)		8	%		2,083			1,943			7	%
Net income attributable to Bancorp		586			704			367			(17	%)		60	%		1,290			672			92	%
Net income available to common shareholders		563			689			344			(18	%)		64	%		1,252			634			97	%
Earnings Per Share Data
Net income allocated to common shareholders	$	557		$	681		$	340			(18	%)		64	%	$	1,238		$	627			97	%
Average common shares outstanding (in thousands):
Basic		683,345			689,820			741,401			(1	%)		(8	%)		686,565			744,517			(8	%)
Diluted		696,210			704,101			752,328			(1	%)		(7	%)		700,134			756,545			(7	%)
Earnings per share, basic	$	0.81		$	0.99		$	0.46			(18	%)		76	%	$	1.80		$	0.84			114	%
Earnings per share, diluted		0.80			0.97			0.45			(18	%)		78	%		1.77			0.83			113	%
Common Share Data
Cash dividends per common share	$	0.18		$	0.16		$	0.14			13	%		29	%	$	0.34		$	0.28			21	%
Book value per share		21.97			21.68			20.42			1	%		8	%		21.97			20.42			8	%
Market price per share		28.70			31.75			25.96			(10	%)		11	%		28.70			25.96			11	%
Common shares outstanding (in thousands)		678,162			684,942			738,873			(1	%)		(8	%)		678,162			738,873			(8	%)
Market capitalization	$	19,463		$	21,747		$	19,181			(11	%)		1	%	$	19,463		$	19,181			1	%
Financial Ratios
Return on average assets		1.66	%		2.02	%		1.05	%		(36	)		61			1.84	%		0.97	%		87
Return on average common equity		15.3	%		18.6	%		9.0	%		(330	)		630			17.0	%		8.4	%		860
Return on average tangible common equity^(a)(c)		18.4	%		22.4	%		10.7	%		(400	)		770			20.4	%		10.0	%		1,040
Noninterest income as a percent of total revenue		42	%		48	%		37	%		(600	)		500			45	%		37	%		800
Dividend payout ratio		22.2	%		16.2	%		30.4	%		600			(820	)		18.9	%		33.3	%		(1,440	)
Average total Bancorp shareholders’ equity as a percent of average assets		11.38	%		11.52	%		11.84	%		(14	)		(46	)		11.45	%		11.78	%		(33	)
Tangible common equity^(b)(c)		9.33	%		9.14	%		9.02	%		19			31			9.33	%		9.02	%		31
Taxable equivalent net interest margin^(c)		3.21	%		3.18	%		3.01	%		3			20			3.19	%		3.01	%		18
Taxable equivalent efficiency^(c)		58.7	%		54.8	%		63.4	%		390			(470	)		56.7	%		65.4	%		(870	)
Effective tax rate		15.5	%		15.8	%		25.9	%		(30	)		(1,040	)		15.7	%		24.5	%		(880	)
Credit Quality
Net losses charged-off	$	94		$	81		$	64			16	%		47	%	$	175		$	153			14	%
Net losses charged-off as a percent of average portfolio loans and leases		0.41	%		0.36	%		0.28	%		5			13			0.38	%		0.34	%		4
ALLL as a percent of portfolio loans and leases		1.17	%		1.24	%		1.34	%		(7	)		(17	)		1.17	%		1.34	%		(17	)
Allowance for credit losses as a percent of portfolio loans and leases^(j)		1.31	%		1.40	%		1.52	%		(9	)		(21	)		1.31	%		1.52	%		(21	)
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO^(d)		0.52	%		0.55	%		0.72	%		(3	)		(20	)		0.52	%		0.72	%		(20	)
Average Balances
Loans and leases, including held for sale	$	93,232		$	92,869		$	92,653			—			1	%	$	93,051		$	92,721			—
Total securities and other short-term investments		34,935			34,677			33,481			1	%		4	%		34,806			33,329			4	%
Total assets		141,529			141,565			140,344			—			1	%		141,547			140,243			1	%
Transaction deposits^(e)		97,574			97,018			95,825			1	%		2	%		97,298			96,419			1	%
Core deposits^(f)		101,592			100,874			99,570			1	%		2	%		101,235			100,205			1	%
Wholesale funding^(g)		20,464			20,558			20,665			—			(1	%)		20,511			19,900			3	%
Bancorp shareholders’ equity		16,108			16,313			16,615			(1	%)		(3	%)		16,209			16,522			(2	%)
Regulatory Capital and Liquidity Ratios^(h)
CET1 capital⁽ⁱ⁾		10.91	%		10.82	%		10.63	%		9			28			10.91	%		10.63	%		28
Tier I risk-based capital⁽ⁱ⁾		12.02	%		11.95	%		11.76	%		7			26			12.02	%		11.76	%		26
Total risk-based capital⁽ⁱ⁾		15.21	%		15.25	%		15.22	%		(4	)		(1	)		15.21	%		15.22	%		(1	)
Tier I leverage		10.24	%		10.11	%		10.07	%		13			17			10.24	%		10.07	%		17
Modified liquidity coverage ratio (LCR)		116	%		113	%		115	%		3	%		1	%		116	%		115	%		1	%
Operations
Banking centers		1,158			1,153			1,157			—			—			1,158			1,157			—
ATMs		2,458			2,459			2,461			—			—			2,458			2,461			—
Full-time equivalent employees		18,163			18,344			17,744			(1	%)		2	%		18,163			17,744			2	%

(a)

The return on average tangible common equity is calculated as tangible net income available to common shareholders (excluding tax effected amortization of intangibles) divided by average tangible common equity (average common equity less goodwill and intangible assets).

(b)

The tangible common equity ratio is calculated as tangible common equity [shareholders’ equity less preferred stock, goodwill, intangible assets and accumulated other comprehensive income divided by tangible assets (total assets less goodwill, intangible assets and AOCI)].

(c)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31.

(d)

Excludes nonaccrual loans held for sale.

(e)

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

(f)

Includes transaction deposits plus other time deposits.

(g)

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

(h)

Current period regulatory capital and liquidity ratios are estimates.

(i)

Under the banking agencies’ Basel III Final Rule, assets and credit equivalent amounts of off-balance sheet exposures are calculated based upon the standardized approach for risk-weighted assets. The resulting values are added together resulting in the Bancorp’s total risk-weighted assets.

(j)

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

Fifth Third Bancorp and Subsidiaries

Financial Highlights

$ in millions, except per share data

(unaudited)


	For the Three Months Ended
	June 2018			March 2018			December 2017			September 2017			June 2017
Income Statement Data
Taxable equivalent net interest income^(c)	$	1,024		$	999		$	963		$	977		$	945
Noninterest income		743			909			577			1,561			564
Taxable equivalent total revenue		1,767			1,908			1,540			2,538			1,509
Provision for loan and lease losses		33			23			67			67			52
Noninterest expense		1,037			1,046			1,073			975			957
Net income attributable to Bancorp		586			704			509			1,014			367
Net income available to common shareholders		563			689			486			999			344
Earnings Per Share Data
Net income allocated to common shareholders	$	557		$	681		$	482		$	989		$	340
Average common shares outstanding (in thousands):
Basic		683,345			689,820			703,372			721,280			741,401
Diluted		696,210			704,101			716,908			733,285			752,328
Earnings per share, basic	$	0.81		$	0.99		$	0.68		$	1.37			0.46
Earnings per share, diluted		0.80			0.97			0.67			1.35			0.45
Common Share Data
Cash dividends per common share	$	0.18		$	0.16		$	0.16		$	0.16		$	0.14
Book value per share		21.97			21.68			21.67			21.30			20.42
Market value per share		28.70			31.75			30.34			27.98			25.96
Common shares outstanding (in thousands)		678,162			684,942			693,805			705,474			738,873
Market capitalization	$	19,463		$	21,747		$	21,050		$	19,739		$	19,181
Financial Ratios
Return on average assets		1.66	%		2.02	%		1.43	%		2.85	%		1.05	%
Return on average common equity		15.3	%		18.6	%		12.7	%		25.6	%		9.0	%
Return on average tangible common equity^(a)(c)		18.4	%		22.4	%		15.2	%		30.4	%		10.7	%
Noninterest income as a percent of total revenue		42	%		48	%		37	%		62	%		37	%
Dividend payout ratio		22.2	%		16.2	%		23.5	%		11.7	%		30.4	%
Average total Bancorp shareholders’ equity as a percent of average assets		11.38	%		11.52	%		11.69	%		11.93	%		11.84	%
Tangible common equity^(b)(c)		9.33	%		9.14	%		8.94	%		8.89	%		9.02	%
Taxable equivalent net interest margin^(c)		3.21	%		3.18	%		3.02	%		3.07	%		3.01	%
Taxable equivalent efficiency ratio^(c)		58.7	%		54.8	%		69.7	%		38.4	%		63.4	%
Effective tax rate		15.5	%		15.8	%		(29.8	%)		31.9	%		25.9	%
Credit Quality
Net losses charged-off	$	94		$	81		$	76		$	68		$	64
Net losses charged-off as a percent of average portfolio loans and leases		0.41	%		0.36	%		0.33	%		0.29	%		0.28	%
ALLL as a percent of portfolio loans and leases		1.17	%		1.24	%		1.30	%		1.31	%		1.34	%
Allowance for credit losses as a percent of portfolio loans and leases^(j)		1.31	%		1.40	%		1.48	%		1.48	%		1.52	%
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO^(d)		0.52	%		0.55	%		0.53	%		0.60	%		0.72	%
Average Balances
Loans and leases, including held for sale	$	93,232		$	92,869		$	92,865		$	92,617		$	92,653
Total securities and other short-term investments		34,935			34,677			33,756			33,826			33,481
Total assets		141,529			141,565			141,055			140,992			140,344
Transaction deposits^(e)		97,574			97,018			96,450			94,927			95,825
Core deposits^(f)		101,592			100,874			100,242			98,649			99,570
Wholesale funding^(g)		20,464			20,558			20,097			21,529			20,665
Bancorp shareholders’ equity		16,108			16,313			16,493			16,820			16,615
Regulatory Capital and Liquidity Ratios^(h)
CET1 capital⁽ⁱ⁾		10.91	%		10.82	%		10.61	%		10.59	%		10.63	%
Tier I risk-based capital⁽ⁱ⁾		12.02	%		11.95	%		11.74	%		11.72	%		11.76	%
Total risk-based capital⁽ⁱ⁾		15.21	%		15.25	%		15.16	%		15.16	%		15.22	%
Tier I leverage		10.24	%		10.11	%		10.01	%		9.97	%		10.07	%
Modified liquidity coverage ratio (LCR)		116	%		113	%		129	%		124	%		115	%
Operations
Banking centers		1,158			1,153			1,154			1,155			1,157
ATMs		2,458			2,459			2,469			2,465			2,461
Full-time equivalent employees		18,163			18,344			18,125			17,797			17,744

(a)

(b)

(c)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31.

(d)

Excludes nonaccrual loans held for sale.

(e)

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

(f)

Includes transaction deposits plus other time deposits.

(g)

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

(h)

Current period regulatory capital and liquidity ratios are estimates.

(i)

(j)

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

Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Income

$ in millions

(unaudited)


	For the Three Months Ended								% Change						Year to Date					% Change
	June			March			June								June			June
	2018			2018			2017		Seq			Yr/Yr			2018			2017		Yr/Yr
Interest Income
Interest and fees on loans and leases	$	996		$	938		$	858		6	%		16	%	$	1,933		$	1,696		14	%
Interest on securities		267			263			245		2	%		9	%		530			490		8	%
Interest on other short-term investments		6			5			3		20	%		100	%		11			6		83	%

Total interest income		1,269			1,206			1,106		5	%		15	%		2,474			2,192		13	%

Interest Expense
Interest on deposits		119			95			65		25	%		83	%		215			124		73	%
Interest on federal funds purchased		5			2			1		150	%		400	%		7			2		250	%
Interest on other short-term borrowings		11			8			10		38	%		10	%		19			12		58	%
Interest on long-term debt		114			105			91		9	%		25	%		217			182		19	%

Total interest expense		249			210			167		19	%		49	%		458			320		43	%

Net Interest Income		1,020			996			939		2	%		9	%		2,016			1,872		8	%

Provision for loan and lease losses		33			23			52		43	%		(37	%)		56			126		(56	%)

Net Interest Income After Provision for Loan and Lease Losses		987			973			887		1	%		11	%		1,960			1,746		12	%

Noninterest Income
Service charges on deposits		137			137			139		—			(1	%)		275			277		(1	%)
Corporate banking revenue		120			88			101		36	%		19	%		208			175		19	%
Mortgage banking net revenue		53			56			55		(5	%)		(4	%)		109			108		1	%
Wealth and asset management revenue		108			113			103		(4	%)		5	%		221			211		5	%
Card and processing revenue		84			79			79		6	%		6	%		163			153		7	%
Other noninterest income		250			460			85		(46	%)		194	%		708			160		343	%
Securities (losses) gains, net		(5	)		(11	)		—		55	%		NM			(15	)		1		NM
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights		(4	)		(13	)		2		69	%		NM			(17	)		2		NM

Total noninterest income		743			909			564		(18	%)		32	%		1,652			1,087		52	%

Noninterest Expense
Salaries, wages and incentives		471			447			397		5	%		19	%		918			808		14	%
Employee benefits		78			110			86		(29	%)		(9	%)		188			196		(4	%)
Net occupancy expense		74			75			70		(1	%)		6	%		149			148		1	%
Technology and communications		67			68			57		(1	%)		18	%		135			116		16	%
Equipment expense		30			31			29		(3	%)		3	%		61			57		7	%
Card and processing expense		30			29			33		3	%		(9	%)		60			63		(5	%)
Other noninterest expense		287			286			285		—			1	%		572			555		3	%

Total noninterest expense		1,037			1,046			957		(1	%)		8	%		2,083			1,943		7	%

Income Before Income Taxes		693			836			494		(17	%)		40	%		1,529			890		72	%
Applicable income tax expense		107			132			127		(19	%)		(16	%)		239			218		10	%

Net Income		586			704			367		(17	%)		60	%		1,290			672		92	%
Less: Net income attributable to noncontrolling interests		—			—			—		NM			NM			—			—		—

Net Income Attributable to Bancorp		586			704			367		(17	%)		60	%		1,290			672		92	%
Dividends on preferred stock		23			15			23		53	%		—			38			38		—

Net Income Available to Common Shareholders	$	563		$	689		$	344		(18	%)		64	%	$	1,252		$	634		97	%

Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)


	As of									% Change
	June 2018			March 2018			June 2017			Seq			Yr/Yr
Assets
Cash and due from banks	$	2,052		$	2,038		$	2,203			1	%		(7	%)
Other short-term investments		1,636			1,747			2,163			(6	%)		(24	%)
Available-for-sale debt and other securities^(a)		31,961			31,819			31,733			—			1	%
Held-to-maturity securities^(b)		19			23			26			(17	%)		(27	%)
Trading debt securities		280			571			490			(51	%)		(43	%)
Equity securities		475			418			442			14	%		7	%
Loans and leases held for sale		783			717			766			9	%		2	%
Portfolio loans and leases:
Commercial and industrial loans		41,403			41,635			40,914			(1	%)		1	%
Commercial mortgage loans		6,625			6,509			6,868			2	%		(4	%)
Commercial construction loans		4,687			4,766			4,366			(2	%)		7	%
Commercial leases		3,788			3,919			4,157			(3	%)		(9	%)
Residential mortgage loans		15,640			15,563			15,460			—			1	%
Home equity		6,599			6,757			7,301			(2	%)		(10	%)
Automobile loans		8,938			9,018			9,318			(1	%)		(4	%)
Credit card		2,270			2,188			2,117			4	%		7	%
Other consumer loans		1,982			1,615			945			23	%		110	%

Portfolio loans and leases		91,932			91,970			91,446			—			1	%
Allowance for loan and lease losses		(1,077	)		(1,138	)		(1,226	)		(5	%)		(12	%)

Portfolio loans and leases, net		90,855			90,832			90,220			—			1	%
Bank premises and equipment		1,915			1,966			2,041			(3	%)		(6	%)
Operating lease equipment		606			625			719			(3	%)		(16	%)
Goodwill		2,462			2,462			2,423			—			2	%
Intangible assets		30			30			18			—			67	%
Servicing rights		959			926			849			4	%		13	%
Other assets		6,662			7,326			6,974			(9	%)		(4	%)

Total Assets	$	140,695		$	141,500		$	141,067			(1	%)		—

Liabilities
Deposits:
Demand	$	32,680		$	34,066		$	34,965			(4	%)		(7	%)
Interest checking		29,452			29,627			25,436			(1	%)		16	%
Savings		13,455			13,751			14,068			(2	%)		(4	%)
Money market		21,593			21,540			20,191			—			7	%
Foreign office		336			374			395			(10	%)		(15	%)
Other time		4,058			3,945			3,692			3	%		10	%
Certificates $100,000 and over		2,557			2,042			2,633			25	%		(3	%)
Other		—			116			500			NM			NM

Total deposits		104,131			105,461			101,880			(1	%)		2	%
Federal funds purchased		597			178			117			235	%		410	%
Other short-term borrowings		1,763			1,335			5,389			32	%		(67	%)
Accrued taxes, interest and expenses		1,206			1,104			1,617			9	%		(25	%)
Other liabilities		2,425			2,418			2,162			—			12	%
Long-term debt		14,321			14,800			13,456			(3	%)		6	%

Total Liabilities		124,443			125,296			124,621			(1	%)		—

Equity
Common stock^(c)		2,051			2,051			2,051			—			—
Preferred stock		1,331			1,331			1,331			—			—
Capital surplus		2,833			2,828			2,751			—			3	%
Retained earnings		16,143			15,707			13,862			3	%		16	%
Accumulated other comprehensive (loss) income		(552	)		(389	)		163			(42	%)		NM
Treasury stock		(5,574	)		(5,344	)		(3,739	)		4	%		49	%

Total Bancorp shareholders’ equity		16,232			16,184			16,419			—			(1	%)
Noncontrolling interests		20			20			27			—			(26	%)

Total Equity		16,252			16,204			16,446			—			(1	%)

Total Liabilities and Equity	$	140,695		$	141,500		$	141,067			(1	%)		—

(a) Amortized cost	$	32,589		$	32,230		$	31,402			1	%		4	%
(b) Market values		19			23			26			(17	%)		(27	%)
(c) Common shares, stated value $2.22 per share (in thousands):
Authorized		2,000,000			2,000,000			2,000,000			—			—
Outstanding, excluding treasury		678,162			684,942			738,873			(1	%)		(8	%)
Treasury		245,731			238,951			185,020			3	%		33	%

Fifth Third Bancorp and Subsidiaries

Consolidated Balance Sheets

$ in millions, except per share data

(unaudited)


	As of
	June 2018			March 2018			December 2017			September 2017			June 2017
Assets
Cash and due from banks	$	2,052		$	2,038		$	2,514		$	2,205		$	2,203
Other short-term investments		1,636			1,747			2,753			3,298			2,163
Available-for-sale debt and other securities^(a)		31,961			31,819			31,751			31,391			31,733
Held-to-maturity securities^(b)		19			23			24			25			26
Trading debt securities		280			571			492			511			490
Equity securities		475			418			439			428			442
Loans and leases held for sale		783			717			492			711			766
Portfolio loans and leases:
Commercial and industrial loans		41,403			41,635			41,170			41,011			40,914
Commercial mortgage loans		6,625			6,509			6,604			6,863			6,868
Commercial construction loans		4,687			4,766			4,553			4,652			4,366
Commercial leases		3,788			3,919			4,068			4,043			4,157
Residential mortgage loans		15,640			15,563			15,591			15,588			15,460
Home equity		6,599			6,757			7,014			7,143			7,301
Automobile loans		8,938			9,018			9,112			9,236			9,318
Credit card		2,270			2,188			2,299			2,168			2,117
Other consumer loans		1,982			1,615			1,559			1,179			945

Portfolio loans and leases		91,932			91,970			91,970			91,883			91,446
Allowance for loan and lease losses		(1,077	)		(1,138	)		(1,196	)		(1,205	)		(1,226	)

Portfolio loans and leases, net		90,855			90,832			90,774			90,678			90,220
Bank premises and equipment		1,915			1,966			2,003			2,018			2,041
Operating lease equipment		606			625			646			663			719
Goodwill		2,462			2,462			2,445			2,423			2,423
Intangible assets		30			30			27			18			18
Servicing rights		959			926			858			848			849
Other assets		6,662			7,326			6,975			7,047			6,974

Total Assets	$	140,695		$	141,500		$	142,193		$	142,264		$	141,067

Liabilities
Deposits:
Demand	$	32,680		$	34,066		$	35,276		$	35,246		$	34,965
Interest checking		29,452			29,627			27,703			26,091			25,436
Savings		13,455			13,751			13,425			13,693			14,068
Money market		21,593			21,540			20,097			19,646			20,191
Foreign office		336			374			484			609			395
Other time		4,058			3,945			3,775			3,756			3,692
Certificates $100,000 and over		2,557			2,042			2,402			2,411			2,633
Other		—			116			—			—			500

Total deposits		104,131			105,461			103,162			101,452			101,880
Federal funds purchased		597			178			174			118			117
Other short-term borrowings		1,763			1,335			4,012			5,688			5,389
Accrued taxes, interest and expenses		1,206			1,104			1,412			2,071			1,617
Other liabilities		2,425			2,418			2,144			2,516			2,162
Long-term debt		14,321			14,800			14,904			14,039			13,456

Total Liabilities		124,443			125,296			125,808			125,884			124,621

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		2,833			2,828			2,790			2,682			2,751
Retained earnings		16,143			15,707			15,122			14,748			13,862
Accumulated other comprehensive (loss) income		(552	)		(389	)		73			185			163
Treasury stock		(5,574	)		(5,344	)		(5,002	)		(4,637	)		(3,739	)

Total Bancorp shareholders’ equity		16,232			16,184			16,365			16,360			16,419
Noncontrolling interests		20			20			20			20			27

Total Equity		16,252			16,204			16,385			16,380			16,446

Total Liabilities and Equity	$	140,695		$	141,500		$	142,193		$	142,264		$	141,067

(a) Amortized cost	$	32,589		$	32,230		$	31,577		$	31,026		$	31,402
(b) Market values		19			23			24			25			26
(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		678,162			684,942			693,805			705,474			738,873
Treasury		245,731			238,951			230,088			218,419			185,020

Fifth Third Bancorp and Subsidiaries

Consolidated Statements of Changes in Equity

$ in millions

(unaudited)


	For the Three Months Ended						Year to Date
	June			June			June			June
	2018			2017			2018			2017
Total Equity, Beginning	$	16,204		$	16,457		$	16,385		$	16,232
Net income attributable to Bancorp		586			367			1,290			672
Other comprehensive income, net of tax:
Change in unrealized (losses) gains:
Available-for-sale securities		(167	)		93			(620	)		109
Qualifying cash flow hedges		3			1			(5	)		(7	)
Change in accumulated other comprehensive income related to employee benefit plans		1			1			2			2

Comprehensive income		423			462			667			776
Cash dividends declared:
Common stock		(124	)		(104	)		(235	)		(210	)
Preferred stock		(23	)		(23	)		(38	)		(38	)
Impact of stock transactions under stock compensation plans, net		7			(3	)		22			29
Shares acquired for treasury		(235	)		(342	)		(553	)		(342	)
Other		—			(1	)		—			(1	)
Impact of cumulative effect of change in account principles		—			—			4			—

Total Equity, Ending	$	16,252		$	16,446		$	16,252		$	16,446

Fifth Third Bancorp and Subsidiaries

Average Balance Sheet and Yield Analysis

$ in millions, except share data

(unaudited)


	For the Three Months Ended									% Change
	June			March			June
	2018			2018			2017			Seq			Yr/Yr
Assets
Interest-earning assets:
Commercial and industrial loans	$	42,327		$	41,799		$	41,656			1	%		2	%
Commercial mortgage loans		6,521			6,588			6,861			(1	%)		(5	%)
Commercial construction loans		4,743			4,671			4,306			2	%		10	%
Commercial leases		3,847			3,960			4,039			(3	%)		(5	%)
Residential mortgage loans		16,213			16,086			16,024			1	%		1	%
Home equity		6,672			6,889			7,385			(3	%)		(10	%)
Automobile loans		8,968			9,064			9,410			(1	%)		(5	%)
Credit card		2,221			2,224			2,080			—			7	%
Other consumer loans		1,720			1,588			892			8	%		93	%
Taxable securities		33,380			33,133			32,092			1	%		4	%
Tax exempt securities		81			73			68			11	%		19	%
Other short-term investments		1,474			1,471			1,321			—			12	%

Total interest-earning assets		128,167			127,546			126,134			_—			2	%
Cash and due from banks		2,179			2,175			2,175			—			—
Other assets		12,320			13,039			13,272			(6	%)		(7	%)
Allowance for loan and lease losses		(1,137	)		(1,195	)		(1,237	)		(5	%)		(8	%)

Total Assets	$	141,529		$	141,565		$	140,344			—			1	%

Liabilities
Interest-bearing liabilities:
Interest checking deposits	$	28,715		$	28,403		$	26,014			1	%		10	%
Savings deposits		13,618			13,546			14,238			1	%		(4	%)
Money market deposits		22,036			20,750			20,278			6	%		9	%
Foreign office deposits		371			494			380			(25	%)		(2	%)
Other time deposits		4,018			3,856			3,745			4	%		7	%

Total interest-bearing core deposits		68,758			67,049			64,655			3	%		6	%
Certificates $100,000 and over		2,155			2,284			2,623			(6	%)		(18	%)
Other deposits		198			379			264			(48	%)		(25	%)
Federal funds purchased		1,080			692			311			56	%		247	%
Other short-term borrowings		2,452			2,423			4,194			1	%		(42	%)
Long-term debt		14,579			14,780			13,273			(1	%)		10	%

Total interest-bearing liabilities		89,222			87,607			85,320			2	%		5	%
Demand deposits		32,834			33,825			34,915			(3	%)		(6	%)
Other liabilities		3,345			3,800			3,467			(12	%)		(4	%)

Total Liabilities		125,401			125,232			123,702			—			1	%
Total Equity		16,128			16,333			16,642			(1	%)		(3	%)

Total Liabilities and Equity	$	141,529		$	141,565		$	140,344			—			1	%


	For the Three Months Ended									bps Change
	June			March			June
	2018			2018			2017			Seq			Yr/Yr
Yield Analysis
Interest-earning assets:
Commercial and industrial loans^(a⁾		4.26	%		3.96	%		3.60	%		30			66
Commercial mortgage loans^(a)		4.43	%		4.20	%		3.65	%		23			78
Commercial construction loans^(a)		4.94	%		4.59	%		4.01	%		35			93
Commercial leases^(a)		2.82	%		2.78	%		2.73	%		4			9
Residential mortgage loans		3.56	%		3.60	%		3.54	%		(4	)		2
Home equity		4.85	%		4.62	%		4.20	%		23			65
Automobile loans		3.26	%		3.12	%		2.87	%		14			39
Credit card		11.96	%		12.36	%		10.95	%		(40	)		101
Other consumer loans		6.75	%		6.58	%		6.63	%		17			12

Total loans and leases		4.30	%		4.11	%		3.74	%		19			56
Taxable securities		3.20	%		3.21	%		3.05	%		(1	)		15
Tax exempt securities^(a)		4.03	%		1.40	%		5.10	%		263			(107	)
Other short-term investments		1.62	%		1.37	%		0.99	%		25			63

Total interest-earning assets		3.98	%		3.85	%		3.54	%		13			44

Interest-bearing liabilities:
Interest checking deposits		0.76	%		0.63	%		0.38	%		13			38
Savings deposits		0.10	%		0.07	%		0.06	%		3			4
Money market deposits		0.71	%		0.53	%		0.34	%		18			37
Foreign office deposits		0.45	%		0.13	%		0.18	%		32			27
Other time deposits		1.34	%		1.25	%		1.23	%		9			11

Total interest-bearing core deposits		0.65	%		0.52	%		0.34	%		13			31
Certificates $100,000 and over		1.35	%		1.49	%		1.36	%		(14	)		(1	)
Other deposits		1.80	%		1.44	%		0.98	%		36			82
Federal funds purchased		1.76	%		1.43	%		0.94	%		33			82
Other short-term borrowings		1.84	%		1.34	%		0.93	%		50			91
Long-term debt		3.11	%		2.86	%		2.76	%		25			35

Total interest-bearing liabilities		1.12	%		0.97	%		0.79	%		15			33

Ratios:
Taxable equivalent net interest margin^(b)		3.21	%		3.18	%		3.01	%		3			20
Taxable equivalent net interest rate spread^(b)		2.86	%		2.88	%		2.75	%		(2	)		11
Interest-bearing liabilities to interest-earning assets		69.61	%		68.69	%		67.64	%		92			197

(a)

Presented on a fully taxable equivalent basis.

(b)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31.

Fifth Third Bancorp and Subsidiaries

Average Balance Sheet and Yield Analysis

$ in millions, except share data

(unaudited)


	For the Three Months Ended
	June			March			December			September			June
	2018			2018			2017			2017			2017
Assets
Interest-earning assets:
Commercial and industrial loans	$	42,327		$	41,799		$	41,455		$	41,314		$	41,656
Commercial mortgage loans		6,521			6,588			6,757			6,814			6,861
Commercial construction loans		4,743			4,671			4,660			4,533			4,306
Commercial leases		3,847			3,960			4,018			4,079			4,039
Residential mortgage loans		16,213			16,086			16,178			16,206			16,024
Home equity		6,672			6,889			7,066			7,207			7,385
Automobile loans		8,968			9,064			9,175			9,267			9,410
Credit card		2,221			2,224			2,202			2,140			2,080
Other consumer loans		1,720			1,588			1,354			1,057			892
Taxable securities		33,380			33,133			32,222			32,289			32,092
Tax exempt securities		81			73			75			65			68
Other short-term investments		1,474			1,471			1,459			1,472			1,321

Total interest-earning assets		128,167			127,546			126,621			126,443			126,134
Cash and due from banks		2,179			2,175			2,288			2,227			2,175
Other assets		12,320			13,039			13,351			13,532			13,272
Allowance for loan and lease losses		(1,137	)		(1,195	)		(1,205	)		(1,210	)		(1,237	)

Total Assets	$	141,529		$	141,565		$	141,055		$	140,992		$	140,344

Liabilities
Interest-bearing liabilities:
Interest checking deposits	$	28,715		$	28,403		$	26,992		$	25,765		$	26,014
Savings deposits		13,618			13,546			13,593			13,889			14,238
Money market deposits		22,036			20,750			20,023			20,028			20,278
Foreign office deposits		371			494			323			395			380
Other time deposits		4,018			3,856			3,792			3,722			3,745

Total interest-bearing core deposits		68,758			67,049			64,723			63,799			64,655
Certificates $100,000 and over		2,155			2,284			2,429			2,625			2,623
Other deposits		198			379			119			560			264
Federal funds purchased		1,080			692			602			675			311
Other short-term borrowings		2,452			2,423			2,316			4,212			4,194
Long-term debt		14,579			14,780			14,631			13,457			13,273

Total interest-bearing liabilities		89,222			87,607			84,820			85,328			85,320
Demand deposits		32,834			33,825			35,519			34,850			34,915
Other liabilities		3,345			3,800			4,203			3,973			3,467

Total Liabilities		125,401			125,232			124,542			124,151			123,702
Total Equity		16,128			16,333			16,513			16,841			16,642

Total Liabilities and Equity	$	141,529		$	141,565		$	141,055		$	140,992		$	140,344

Yield Analysis
Interest-earning assets:
Commercial and industrial loans^(a)		4.26	%		3.96	%		3.75	%		3.75	%		3.60	%
Commercial mortgage loans^(a)		4.43	%		4.20	%		3.92	%		3.85	%		3.65	%
Commercial construction loans^(a)		4.94	%		4.59	%		4.28	%		4.23	%		4.01	%
Commercial leases^(a)		2.82	%		2.78	%		0.06	%		2.70	%		2.73	%
Residential mortgage loans		3.56	%		3.60	%		3.52	%		3.48	%		3.54	%
Home equity		4.85	%		4.62	%		4.38	%		4.39	%		4.20	%
Automobile loans		3.26	%		3.12	%		3.06	%		2.96	%		2.87	%
Credit card		11.96	%		12.36	%		11.83	%		11.63	%		10.95	%
Other consumer loans		6.75	%		6.58	%		6.64	%		6.89	%		6.63	%

Total loans and leases		4.30	%		4.11	%		3.80	%		3.88	%		3.74	%
Taxable securities		3.20	%		3.21	%		3.15	%		3.06	%		3.05	%
Tax exempt securities^(a)		4.03	%		1.40	%		5.62	%		5.33	%		5.10	%
Other short-term investments		1.62	%		1.37	%		1.24	%		1.16	%		0.99	%

Total interest-earning assets		3.98	%		3.85	%		3.61	%		3.64	%		3.54	%

Interest-bearing liabilities:
Interest checking deposits		0.76	%		0.63	%		0.51	%		0.44	%		0.38	%
Savings deposits		0.10	%		0.07	%		0.06	%		0.06	%		0.06	%
Money market deposits		0.71	%		0.53	%		0.42	%		0.39	%		0.34	%
Foreign office deposits		0.45	%		0.13	%		0.30	%		0.21	%		0.18	%
Other time deposits		1.34	%		1.25	%		1.23	%		1.23	%		1.23	%

Total interest-bearing core deposits		0.65	%		0.52	%		0.43	%		0.39	%		0.34	%
Certificates $100,000 and over		1.35	%		1.49	%		1.45	%		1.38	%		1.36	%
Other deposits		1.80	%		1.44	%		1.17	%		1.16	%		0.98	%
Federal funds purchased		1.76	%		1.43	%		1.21	%		1.16	%		0.94	%
Other short-term borrowings		1.84	%		1.34	%		1.10	%		1.09	%		0.93	%
Long-term debt		3.11	%		2.86	%		2.72	%		2.82	%		2.76	%

Total interest-bearing liabilities		1.12	%		0.97	%		0.88	%		0.85	%		0.79	%

Ratios:
Taxable equivalent net interest margin^(b)		3.21	%		3.18	%		3.02	%		3.07	%		3.01	%
Taxable equivalent net interest rate spread^(b)		2.86	%		2.88	%		2.73	%		2.79	%		2.75	%
Interest-bearing liabilities to interest-earning assets		69.61	%		68.69	%		66.99	%		67.48	%		67.64	%

(a)

Presented on a fully taxable equivalent basis.

(b)

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 31.

Fifth Third Bancorp and Subsidiaries

Average Balance Sheet and Yield Analysis

$ in millions, except share data

(unaudited)


	Year to Date						% Change
	June 2018			June 2017			Yr/Yr
Assets
Interest-earning assets:
Commercial and industrial loans	$	42,064		$	41,773			1	%
Commercial mortgage loans		6,555			6,903			(5	%)
Commercial construction loans		4,707			4,147			14	%
Commercial leases		3,903			3,972			(2	%)
Residential mortgage loans		16,150			15,912			1	%
Home equity		6,780			7,482			(9	%)
Automobile loans		9,016			9,597			(6	%)
Credit card		2,223			2,111			5	%
Other consumer loans		1,653			824			101	%
Taxable securities		33,257			31,954			4	%
Tax exempt securities		77			61			26	%
Other short-term investments		1,472			1,314			12	%

Total interest-earning assets		127,857			126,050			1	%
Cash and due from banks		2,177			2,190			(1	%)
Other assets		12,679			13,248			(4	%)
Allowance for loan and lease losses		(1,166	)		(1,245	)		(6	%)

Total Assets	$	141,547		$	140,243			1	%

Liabilities
Interest-bearing liabilities:
Interest checking deposits	$	28,560		$	26,385			8	%
Savings deposits		13,582			14,178			(4	%)
Money market deposits		21,397			20,440			5	%
Foreign office deposits		432			417			4	%
Other time deposits		3,937			3,786			4	%

Total interest-bearing core deposits		67,908			65,206			4	%
Certificates $100,000 and over		2,220			2,601			(15	%)
Other deposits		288			213			35	%
Federal funds purchased		887			474			87	%
Other short-term borrowings		2,438			3,050			(20	%)
Long-term debt		14,678			13,562			8	%

Total interest-bearing liabilities		88,419			85,106			4	%
Demand deposits		33,327			34,999			(5	%)
Other liabilities		3,571			3,589			(1	%)

Total Liabilities		125,317			123,694			1	%
Total Equity		16,230			16,549			(2	%)

Total Liabilities and Equity	$	141,547		$	140,243			1	%


	Year to Date						bps Change
Yield Analysis	June 2018			June 2017			Yr/Yr
Interest-earning assets:
Commercial and industrial loans^(a)		4.11	%		3.53	%		58
Commercial mortgage loans^(a)		4.32	%		3.60	%		72
Commercial construction loans^(a)		4.77	%		3.89	%		88
Commercial leases^(a)		2.80	%		2.71	%		9
Residential mortgage loans		3.58	%		3.55	%		3
Home equity		4.74	%		4.09	%		65
Automobile loans		3.19	%		2.84	%		35
Credit card		12.16	%		11.95	%		21
Other consumer loans		6.67	%		6.57	%		10

Total loans and leases		4.21	%		3.72	%		49
Taxable securities		3.21	%		3.08	%		13
Tax exempt securities^(a)		2.79	%		5.41	%		(262	)
Other short-term investments		1.50	%		0.86	%		64

Total interest-earning assets		3.91	%		3.53	%		38
Interest-bearing liabilities:
Interest checking deposits		0.70	%		0.34	%		36
Savings deposits		0.08	%		0.05	%		3
Money market deposits		0.62	%		0.33	%		29
Foreign office deposits		0.27	%		0.15	%		12
Other time deposits		1.30	%		1.23	%		7

Total interest-bearing core deposits		0.58	%		0.33	%		25
Certificates $100,000 and over		1.42	%		1.36	%		6
Other deposits		1.57	%		0.85	%		72
Federal funds purchased		1.63	%		0.78	%		85
Other short-term borrowings		1.60	%		0.81	%		79
Long-term debt		2.98	%		2.71	%		27

Total interest-bearing liabilities		1.05	%		0.76	%		29

(a)

Presented on a fully taxable equivalent basis.

Fifth Third Bancorp and Subsidiaries

Summary of Loans and Leases

$ in millions

(unaudited)


	For the Three Months Ended
	June 2018		March 2018		December 2017		September 2017		June 2017
Average Portfolio Loans and Leases
Commercial loans and leases:
Commercial and industrial loans	$	42,292	$	41,782	$	41,438	$	41,302	$	41,601
Commercial mortgage loans		6,514		6,582		6,751		6,807		6,845
Commercial construction loans		4,743		4,671		4,660		4,533		4,306
Commercial leases		3,847		3,960		4,016		4,072		4,036

Total commercial loans and leases		57,396		56,995		56,865		56,714		56,788
Consumer loans:
Residential mortgage loans		15,581		15,575		15,590		15,523		15,417
Home equity		6,672		6,889		7,066		7,207		7,385
Automobile loans		8,968		9,064		9,175		9,267		9,410
Credit card		2,221		2,224		2,202		2,140		2,080
Other consumer loans		1,719		1,587		1,352		1,055		892

Total consumer loans		35,161		35,339		35,385		35,192		35,184

Total average portfolio loans and leases	$	92,557	$	92,334	$	92,250	$	91,906	$	91,972

Average loans held for sale	$	675	$	535	$	615	$	711	$	681

End of Period Portfolio Loans and Leases
Commercial loans and leases:
Commercial and industrial loans	$	41,403	$	41,635	$	41,170	$	41,011	$	40,914
Commercial mortgage loans		6,625		6,509		6,604		6,863		6,868
Commercial construction loans		4,687		4,766		4,553		4,652		4,366
Commercial leases		3,788		3,919		4,068		4,043		4,157

Total commercial loans and leases		56,503		56,829		56,395		56,569		56,305
Consumer loans:
Residential mortgage loans		15,640		15,563		15,591		15,588		15,460
Home equity		6,599		6,757		7,014		7,143		7,301
Automobile loans		8,938		9,018		9,112		9,236		9,318
Credit card		2,270		2,188		2,299		2,168		2,117
Other consumer loans		1,982		1,615		1,559		1,179		945

Total consumer loans		35,429		35,141		35,575		35,314		35,141

Total portfolio loans and leases	$	91,932	$	91,970	$	91,970	$	91,883	$	91,446

Total loans and leases held for sale	$	783	$	717	$	492	$	711	$	766

Operating lease equipment	$	606	$	625	$	646	$	663	$	719

Loans and leases serviced for others:^(a)
Commercial and industrial loans	$	421	$	401	$	415	$	449	$	495
Commercial mortgage loans		263		238		240		228		242
Commercial construction loans		82		87		76		72		62
Commercial leases		222		243		254		257		261
Residential mortgage loans		62,247		60,973		60,021		60,783		61,803
Other consumer loans		50		50		—		—		—

Total loans and leases serviced for others		63,285		61,992		61,006		61,789		62,863

Total loans and leases serviced	$	156,606	$	155,304	$	154,114	$	155,046	$	155,794

(a)

Fifth Third sells certain loans and leases and obtains servicing responsibilities.

Fifth Third Bancorp and Subsidiaries

Regulatory Capital

$ in millions

(unaudited)


	As of
	June			March			December			September			June
	2018^(a)			2018			2017			2017			2017
Regulatory capital:
Common stock and related surplus (net of treasury stock)	($	690	)	($	465	)	($	160	)	$	96		$	1,063
Retained earnings		16,143			15,707			15,122			14,748			13,862
Common equity tier I capital adjustments and deductions		(2,467	)		(2,470	)		(2,445	)		(2,401	)		(2,403	)

CET1 capital		12,986			12,772			12,517			12,443			12,522
Additional tier I capital		1,331			1,331			1,331			1,330			1,331

Tier I capital		14,317			14,103			13,848			13,773			13,853
Tier II capital		3,799			3,896			4,039			4,043			4,074

Total regulatory capital	$	18,116		$	17,999		$	17,887		$	17,816		$	17,927

Risk-weighted assets^(b)	$	119,073		$	118,001		$	117,997		$	117,527		$	117,761

Ratios:
Average shareholders’ equity to average assets		11.38	%		11.52	%		11.69	%		11.93	%		11.84	%

Regulatory Capital Ratios:
Fifth Third Bancorp
CET1 capital^(b)		10.91	%		10.82	%		10.61	%		10.59	%		10.63	%
Tier I risk-based capital^(b)		12.02	%		11.95	%		11.74	%		11.72	%		11.76	%
Total risk-based capital^(b)		15.21	%		15.25	%		15.16	%		15.16	%		15.22	%
Tier I leverage		10.24	%		10.11	%		10.01	%		9.97	%		10.07	%

Fifth Third Bank
Tier I risk-based capital^(b)		12.43	%		12.39	%		12.06	%		12.30	%		12.24	%
Total risk-based capital^(b)		14.10	%		14.15	%		13.88	%		14.14	%		14.08	%
Tier I leverage		10.63	%		10.51	%		10.32	%		10.50	%		10.50	%

(a)

Current period regulatory capital data and ratios are estimated.

(b)

Fifth Third Bancorp and Subsidiaries

Summary of Credit Loss Experience

$ in millions

(unaudited)


	For the Three Months Ended
	June 2018			March 2018			December 2017			September 2017			June 2017
Average portfolio loans and leases:
Commercial and industrial loans	$	42,292		$	41,782		$	41,438		$	41,302		$	41,601
Commercial mortgage loans		6,514			6,582			6,751			6,807			6,845
Commercial construction loans		4,743			4,671			4,660			4,533			4,306
Commercial leases		3,847			3,960			4,016			4,072			4,036
Residential mortgage loans		15,581			15,575			15,590			15,523			15,417
Home equity		6,672			6,889			7,066			7,207			7,385
Automobile loans		8,968			9,064			9,175			9,267			9,410
Credit card		2,221			2,224			2,202			2,140			2,080
Other consumer loans		1,719			1,587			1,352			1,055			892

Total average portfolio loans and leases	$	92,557		$	92,334		$	92,250		$	91,906		$	91,972

Losses charged-off:
Commercial and industrial loans	($	51	)	($	33	)	($	34	)	($	30	)	($	34	)
Commercial mortgage loans		(3	)		(2	)		(1	)		(3	)		(6	)
Commercial leases		—			—			(1	)		—			(1	)
Residential mortgage loans		(4	)		(4	)		(3	)		(2	)		(4	)
Home equity		(5	)		(7	)		(8	)		(6	)		(9	)
Automobile loans		(13	)		(17	)		(15	)		(13	)		(12	)
Credit card		(29	)		(28	)		(23	)		(23	)		(24	)
Other consumer loans		(13	)		(12	)		(9	)		(8	)		(5	)

Total losses charged-off	($	118	)	($	103	)	($	94	)	($	85	)	($	95	)

Recoveries of losses previously charged-off:
Commercial and industrial loans	$	4		$	5		$	2		$	3		$	16
Commercial mortgage loans		1			1			2			—			1
Commercial leases		—			—			—			—			—
Residential mortgage loans		2			1			2			3			2
Home equity		3			2			4			3			4
Automobile loans		5			6			5			5			6
Credit card		3			3			3			3			2
Other consumer loans		6			4			—			—			—

Total recoveries of losses previously charged-off	$	24		$	22		$	18		$	17		$	31

Net losses charged-off:
Commercial and industrial loans	($	47	)	($	28	)	($	32	)	($	27	)	($	18	)
Commercial mortgage loans		(2	)		(1	)		1			(3	)		(5	)
Commercial leases		—			—			(1	)		—			(1	)
Residential mortgage loans		(2	)		(3	)		(1	)		1			(2	)
Home equity		(2	)		(5	)		(4	)		(3	)		(5	)
Automobile loans		(8	)		(11	)		(10	)		(8	)		(6	)
Credit card		(26	)		(25	)		(20	)		(20	)		(22	)
Other consumer loans		(7	)		(8	)		(9	)		(8	)		(5	)

Total net losses charged-off	($	94	)	($	81	)	($	76	)	($	68	)	($	64	)

Net losses charged-off as a percent of average portfolio loans and leases:
Commercial and industrial loans		0.44	%		0.27	%		0.31	%		0.26	%		0.17	%
Commercial mortgage loans		0.11	%		0.06	%		(0.09	%)		0.16	%		0.33	%
Commercial leases		0.00	%		0.00	%		0.08	%		0.01	%		0.06	%
Residential mortgage loans		0.05	%		0.06	%		0.03	%		(0.02	%)		0.04	%
Home equity		0.12	%		0.26	%		0.25	%		0.18	%		0.27	%
Automobile loans		0.33	%		0.50	%		0.45	%		0.35	%		0.27	%
Credit card		4.73	%		4.65	%		3.74	%		3.75	%		4.22	%
Other consumer loans		1.85	%		2.16	%		2.38	%		2.80	%		2.31	%

Total net losses charged-off as a percent of average portfolio loans and leases		0.41	%		0.36	%		0.33	%		0.29	%		0.28	%

Fifth Third Bancorp and Subsidiaries

Asset Quality

$ in millions

(unaudited)


	For the Three Months Ended
	June 2018			March 2018			December 2017			September 2017			June 2017
Allowance for Credit Losses
Allowance for loan and lease losses, beginning	$	1,138		$	1,196		$	1,205		$	1,226		$	1,238
Total net losses charged-off		(94	)		(81	)		(76	)		(68	)		(64	)
Provision for loan and lease losses		33			23			67			67			52
Deconsolidation of a variable interest entity		—			—			—			(20	)		—

Allowance for loan and lease losses, ending	$	1,077		$	1,138		$	1,196		$	1,205		$	1,226

Reserve for unfunded commitments, beginning	$	151		$	161		$	157		$	162		$	159
(Benefit from) provision for unfunded commitments		(20	)		(10	)		4			(5	)		3

Reserve for unfunded commitments, ending	$	131		$	151		$	161		$	157		$	162

Components of allowance for credit losses:
Allowance for loan and lease losses	$	1,077		$	1,138		$	1,196		$	1,205		$	1,226
Reserve for unfunded commitments		131			151			161			157			162

Total allowance for credit losses	$	1,208		$	1,289		$	1,357		$	1,362		$	1,388


	As of
	June 2018			March 2018			December 2017			September 2017			June 2017
Nonperforming Assets and Delinquent Loans
Nonaccrual portfolio loans and leases:
Commercial and industrial loans	$	99		$	155		$	144		$	144		$	225
Commercial mortgage loans		8			9			12			14			15
Commercial leases		25			4			—			1			1
Residential mortgage loans		13			16			17			19			19
Home equity		54			55			56			56			52
Automobile loans		3			—			—			—			—
Other consumer loans		1			1			—			—			—

Total nonaccrual portfolio loans and leases (excludes restructured loans)		203			240			229			234			312
Nonaccrual restructured portfolio commercial loans and leases		173			154			150			214			244
Nonaccrual restructured portfolio consumer loans and leases		61			58			58			58			58

Total nonaccrual portfolio loans and leases		437			452			437			506			614
Repossessed property		7			9			9			10			11
OREO		36			43			43			39			37

Total nonperforming portfolio assets		480			504			489			555			662
Nonaccrual loans held for sale		5			5			5			18			7
Nonaccrual restructured loans held for sale		18			19			1			2			1

Total nonperforming assets	$	503		$	528		$	495		$	575		$	670

Restructured portfolio consumer loans and leases (accrual)	$	1,029		$	916		$	927		$	929		$	933
Restructured portfolio commercial loans and leases (accrual)	$	111		$	249		$	249		$	232		$	224

Loans 90 days past due (accrual):
Commercial and industrial loans	$	4		$	7		$	3		$	3		$	3
Commercial mortgage loans		—			1			—			—			—

Total commercial loans		4			8			3			3			3

Residential mortgage loans		44			62			57			43			45
Automobile loans		10			9			10			10			7
Credit card		31			28			27			21			20

Total consumer loans		85			99			94			74			72

Total loans 90 days past due (accrual)^(b)	$	89		$	107		$	97		$	77		$	75

Ratios
Net losses charged-off as a percent of average portfolio loans and leases		0.41	%		0.36	%		0.33	%		0.29	%		0.28	%
Allowance for loan and lease losses:
As a percent of portfolio loans and leases		1.17	%		1.24	%		1.30	%		1.31	%		1.34	%
As a percent of nonperforming portfolio loans and leases^(a)		247	%		252	%		274	%		238	%		200	%
As a percent of nonperforming portfolio assets^(a)		224	%		226	%		245	%		217	%		185	%
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases and OREO^(a)		0.47	%		0.49	%		0.48	%		0.55	%		0.67	%
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO^(a)		0.52	%		0.55	%		0.53	%		0.60	%		0.72	%
Nonperforming assets as a percent of total loans and leases, OREO, and repossessed property		0.54	%		0.57	%		0.53	%		0.62	%		0.73	%
Allowance for credit losses as a percent of nonperforming assets		252	%		256	%		278	%		245	%		210	%

(a)

Excludes nonaccrual loans held for sale.

(b)

Excludes loans held for sale.

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: “taxable equivalent net interest income,” “adjusted taxable equivalent net interest income,” “taxable equivalent net interest margin,” “adjusted taxable equivalent net interest margin,” “adjusted yield on interest-earning assets,” “efficiency ratio,” “taxable equivalent net interest rate spread,” “taxable equivalent income before income taxes,” “noninterest income excluding certain items,” “tangible net income available to common shareholders,” “average tangible common equity,” “tangible common equity ratio,” “tangible common equity ratio (excluding unrealized gains/ losses)” “tangible common equity ratio (including unrealized gains/ losses)” “tangible equity,” “tangible book value per share,” and certain ratios derived from these measures.

The taxable equivalent 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.

Noninterest income excluding certain items is provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted noninterest income. Adjusted taxable equivalent net interest income and adjusted taxable equivalent net interest margin are provided by management to assist the reader in identifying significant, unusual, or large transactions that impacted net interest income.

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.

Management believes tangible book value per share and return on average tangible common equity are important measures for evaluating the performance of a business as it calculates the return available to common shareholders and book value of common stock without the impact of intangible assets and their related amortization. This is useful for evaluating the performance of a business consistently, whether acquired or developed internally, compared to other companies in the industry who present similar measures.

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

Fifth Third Bancorp and Subsidiaries

Regulation G Non-GAAP Reconciliation

$ and shares in millions

(unaudited)


	For the Three Months Ended
	June 2018			March 2018			December 2017			September 2017			June 2017
Net interest income (U.S. GAAP)	$	1,020		$	996		$	956		$	970		$	939
Add: Taxable equivalent adjustment		4			3			7			7			6

Taxable equivalent net interest income (a)		1,024			999			963			977			945

Net interest income (U.S. GAAP) (annualized) (b)		4,091			4,039			3,793			3,848			3,766
Taxable equivalent net interest income (annualized) (c)		4,107			4,052			3,821			3,876			3,790

Taxable equivalent net interest income		1,024			999			963			977			945
Add: Leveraged lease remeasurement		—			—			27			—			—

Adjusted taxable equivalent net interest income (d)		1,024			999			990			977			945
Adjusted taxable equivalent net interest income (annualized) (e)		4,107			4,052			3,928			3,876			3,790

Interest income (U.S. GAAP)		1,269			1,206			1,144			1,152			1,106
Add: Taxable equivalent adjustment		4			3			7			7			6

Taxable equivalent interest income		1,273			1,209			1,151			1,159			1,112
Taxable equivalent interest income (annualized) (f)		5,106			4,903			4,566			4,598			4,460

Taxable equivalent interest income		1,273			1,209			1,151			1,159			1,112
Add: Leveraged lease remeasurement		—			—			27			—			—

Adjusted taxable equivalent interest income (g)		1,273			1,209			1,178			1,159			1,112
Adjusted taxable equivalent interest income (annualized) (h)		5,106			4,903			4,674			4,598			4,460
Interest expense (annualized) (i)		999			852			746			722			670
Noninterest income (j)		743			909			577			1,561			564
Noninterest expense (k)		1,037			1,046			1,073			975			957
Average interest-earning assets (l)		128,167			127,546			126,621			126,443			126,134
Average interest-bearing liabilities (m)		89,222			87,607			84,820			85,328			85,320
Net interest margin (U.S. GAAP) (b) / (l)		3.19	%		3.17	%		3.00	%		3.04	%		2.99	%
Taxable equivalent net interest margin (c) / (l)		3.21	%		3.18	%		3.02	%		3.07	%		3.01	%
Adjusted taxable equivalent net interest margin (e) / (l)		3.21	%		3.18	%		3.10	%		3.07	%		3.01	%

Adjusted taxable equivalent yield on interest-earnings assets (h) / (l)		3.98	%		3.85	%		3.69	%		3.64	%		3.54	%
Taxable equivalent efficiency ratio (k) / (a) + (j)		58.7	%		54.8	%		69.7	%		38.4	%		63.4	%
Taxable equivalent net interest rate spread (f) / (l) - (i) / (m)		2.86	%		2.88	%		2.73	%		2.79	%		2.75	%

Income before income taxes (U.S. GAAP)	$	693		$	836		$	393		$	1,489		$	494
Add: Taxable equivalent adjustment		4			3			7			7			6

Taxable equivalent income before income taxes	$	697		$	839		$	400		$	1,496		$	500

Net income available to common shareholders (U.S. GAAP)		563			689			486			999			344
Add: Intangible amortization, net of tax		1			1			—			—			—

Tangible net income available to common shareholders		564			690			486			999			344
Tangible net income available to common shareholders (annualized) (n)		2,262			2,798			1,928			3,963			1,380

Average Bancorp shareholders’ equity (U.S. GAAP)		16,108			16,313			16,493			16,820			16,615
Less: Average preferred stock		(1,331	)		(1,331	)		(1,331	)		(1,331	)		(1,331	)
Average goodwill		(2,462	)		(2,455	)		(2,437	)		(2,423	)		(2,424	)
Average intangible assets and other servicing rights		(30	)		(27	)		(25	)		(18	)		(18	)

Average tangible common equity (o)		12,285			12,500			12,700			13,048			12,842

Total Bancorp shareholders’ equity (U.S. GAAP)		16,232			16,184			16,365			16,360			16,419
Less: Preferred stock		(1,331	)		(1,331	)		(1,331	)		(1,331	)		(1,331	)
Goodwill		(2,462	)		(2,462	)		(2,445	)		(2,423	)		(2,423	)
Intangible assets and other servicing rights		(30	)		(30	)		(27	)		(18	)		(18	)

Tangible common equity, including unrealized gains / losses (p)		12,409			12,361			12,562			12,588			12,647
Less: Accumulated other comprehensive income		552			389			(73	)		(185	)		(163	)

Tangible common equity, excluding unrealized gains / losses (q)		12,961			12,750			12,489			12,403			12,484
Add: Preferred stock		1,331			1,331			1,331			1,331			1,331

Tangible equity (r)		14,292			14,081			13,820			13,734			13,815

Total assets (U.S. GAAP)		140,695			141,500			142,193			142,264			141,067
Less: Goodwill		(2,462	)		(2,462	)		(2,445	)		(2,423	)		(2,423	)
Intangible assets and other servicing rights		(30	)		(30	)		(27	)		(18	)		(18	)

Tangible assets, including unrealized gains / losses (s)		138,203			139,008			139,721			139,823			138,626
Less: Accumulated other comprehensive income / loss, before tax		699			492			(92	)		(285	)		(251	)

Tangible assets, excluding unrealized gains / losses (t)	$	138,902		$	139,500		$	139,629		$	139,538		$	138,375


Common shares outstanding (u)		678			685			694			705			739
Ratios:
Return on average tangible common equity (n) / (o)		18.4	%		22.4	%		15.2	%		30.4	%		10.7	%
Tangible equity (r) / (t)		10.29	%		10.09	%		9.90	%		9.84	%		9.98	%
Tangible common equity (excluding unrealized gains/losses) (q) / (t)		9.33	%		9.14	%		8.94	%		8.89	%		9.02	%
Tangible common equity (including unrealized gains/losses) (p) / (s)		8.98	%		8.89	%		8.99	%		9.00	%		9.12	%
Tangible book value per share (p) / (u)	$	18.30		$	18.05		$	18.10		$	17.86		$	17.11

Fifth Third Bancorp and Subsidiaries

Segment Presentation

$ in millions

(unaudited)


For the three months ended June 30, 2018	Commercial Banking			Branch *Banking^(b)***			Consumer *Lending^(c)***			Wealth and Asset Management			Other/ Eliminations			Total
Taxable equivalent net interest income^(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
Total noninterest income		229			167			52			109			186			743
Total 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
Taxable equivalent net interest income^(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
Total noninterest income		219			184			46			116			344			909
Total 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
Taxable equivalent net interest income^(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
Total noninterest income		192			194			54			107			30			577
Total noninterest expense		(410	)		(432	)		(101	)		(124	)		(6	)		(1,073	)

Income before income taxes		166			189			4			19			22			400
Applicable income tax expense^(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
Taxable equivalent net interest income^(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
Total noninterest income		216			191			68			101			985			1,561
Total 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



For the three months ended June 30, 2017^(d)	Commercial Banking			Branch *Banking^(b)***			Consumer *Lending^(c)***			Wealth and Asset Management			Other/ Eliminations			Total
Taxable equivalent net interest income^(a)	$	421		$	437		$	59		$	37		($	9	)	$	945
(Provision for) benefit from loan and lease losses		(22	)		(39	)		(7	)		1			15			(52	)

Net interest income after provision for loan and lease losses		399			398			52			38			6			893
Total noninterest income		228			189			62			101			(16	)		564
Total noninterest expense		(330	)		(416	)		(109	)		(113	)		11			(957	)

Income before income taxes		297			171			5			26			1			500
Applicable income tax benefit ^(a)		(60	)		(60	)		(2	)		(9	)		(2	)		(133	)

Net income		237			111			3			17			(1	)		367

(a)

Includes taxable equivalent adjustments of $4 million, $3 million, $7 million, $7 million and $6 million for the three months ended June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 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.