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Fifth Third Announces Third Quarter 2018 Results
[October 23, 2018]

Fifth Third Announces Third Quarter 2018 Results


Fifth Third Bancorp (FITB):





 

Key Highlights

Strengthened balance sheet

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

Total NPA ratio of 0.48% (14 year low)

Modified LCR of 119%(e)

Focused on profitable relationship growth

Households up 4% compared to 3Q17

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

Core deposits up 3% compared to 3Q17

NIM(a) up 16 bps compared to 3Q17

Disciplined expense management

Expenses down 3% compared to prior quarter

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

On-track to achieve NorthStar targets(a)

ROTCE - 13.5% (adjusted 14%)

ROA - 1.21% (adjusted 1.26%)

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

 

3Q18 Key Financial Data

$ in millions for all balance sheet and income statement items

  3Q18 2Q18 3Q17
 
Income Statement Data
Net income available to common shareholders $418 $563 $999
Net interest income (U.S. GAAP) 1,043 1,020 970
Net interest income (FTE)(a) 1,047 1,024 977
Noninterest income 563 743 1,561
Noninterest expense 1,008 1,037 975
 
Per Share Data
Earnings per share, basic $0.62 $0.81 $1.37
Earnings per share, diluted 0.61 0.80 1.35
Book value per share 21.92 21.97 21.30
Tangible book value per share(a) 18.17 18.30 17.86
 
Balance Sheet & Credit Quality
Average portfolio loans and leases $93,192 $92,557 $91,906
Average deposits 104,666 103,945 101,834
Net charge-off ratio(b) 0.30 % 0.41 % 0.29 %
Nonperforming asset ratio(c) 0.48 0.52 0.60
 
Financial Ratios, as reported
Return on average assets 1.21 % 1.66 % 2.85 %
Return on average common equity 11.2 15.3 25.6
Return on average tangible common equity(a) 13.5 18.4 30.4
CET1 capital(d)(e) 10.67 10.91 10.59
Net interest margin(a) 3.23 3.21 3.07
Efficiency(a) 62.6 58.7 38.4

Commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis. LIH refers to low income housing expense.

 

CEO Commentary

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

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

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

-Greg D. Carmichael, Chairman, President and CEO

                 
  Income Statement Highlights
($ in millions, except per-share data) For the Three Months Ended   % Change
September June September
2018   2018   2017   Seq   Yr/Yr
Condensed Statements of Income
Net interest income (NII)(a)

$1,047

$1,024 $977 2% 7%
Provision for loan and lease losses 86 33 67 161% 28%
Noninterest income 563 743 1,561 (24%) (64%)
Noninterest expense   1,008   1,037   975   (3%)   3%
Income before income taxes (a)   $516   $697   $1,496   (26%)   (66%)
 
Taxable equivalent adjustment 4 4 7 - (43%)
Applicable income tax expense   79   107   475   (26%)   (83%)
Net income $433 $586 $1,014 (26%) (57%)
Less: Net income attributable to noncontrolling interests   -   -   -   NM   NM
Net income attributable to Bancorp $433 $586 $1,014 (26%) (57%)
Dividends on preferred stock   15   23   15   (35%)   -
Net income available to common shareholders   $418   $563   $999   (26%)   (58%)
  Earnings per share, diluted   $0.61   $0.80   $1.35   (24%)   (55%)
 

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

Diluted earnings per share impact of certain items    
($ in millions, except per-share data)  
 

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

$14

GreenSky equity securities losses, after-tax(f)

  $6

After-tax impact(f)

$20
 
Average diluted common shares outstanding (thousands) 679,199
 
Diluted earnings per share impact $0.03
           
  Net Interest Income          
(FTE; $ in millions)(a) For the Three Months Ended   % Change
September June September
2018   2018 2017   Seq   Yr/Yr
Interest Income
Interest income $1,319 $1,273 $1,159 4% 14%
Interest expense   272   249 182   9% 49%
Net interest income (NII)   $1,047   $1,024 $977   2% 7%
 
Average Yield/Rate Analysis bps Change
Yield on interest-earning assets 4.07% 3.98% 3.64% 9 43
Rate paid on interest-bearing liabilities 1.20% 1.12% 0.85% 8 35
 
Ratios
Net interest rate spread 2.87% 2.86% 2.79% 1 8
  Net interest margin   3.23%   3.21% 3.07%   2   16
 

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

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

           
Noninterest Income                    
($ in millions) For the Three Months Ended   % Change
September June September
2018   2018   2017   Seq   Yr/Yr
Noninterest Income
Service charges on deposits $139 $137 $138 1% 1%
Corporate banking revenue 100 120 101 (17%) (1%)
Mortgage banking net revenue 49 53 63 (8%) (22%)
Wealth and asset management revenue 114 108 102 6% 12%
Card and processing revenue 82 84 79 (2%) 4%
Other noninterest income 86 250 1,076 (66%) (92%)
Securities (losses) gains, net (6) (5) - (20%) NM
 

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

  (1)   (4)   2   75%   NM
  Total noninterest income   $563   $743   $1,561   (24%)   (64%)
 

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

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

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

 
  Noninterest Income excluding certain items
($ in millions)   For the Three Months Ended   % Change
September   June   September    
2018   2018   2017   Seq   Yr/Yr
Noninterest Income excluding certain items
Noninterest income (U.S. GAAP) $563 $743 $1,561
Valuation of Visa total return swap 17 10 47
Branch and land network impairment charge - 30 -
Gain from GreenSky IPO - (16) -
Gain on sale of Worldpay shares - (205) (1,037)
GreenSky equity securities losses 8 5 -
Securities losses / (gains), net (excluding GreenSky)   (2)     -     -          
  Noninterest income excluding certain items(a)   $586     $567     $571     3%   3%
 

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

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

           
  Noninterest Expense
($ in millions) For the Three Months Ended   % Change
September June September
2018   2018   2017   Seq   Yr/Yr
Noninterest Expense
Salaries, wages and incentives $421 $471 $407 (11%) 3%
Employee benefits 82 78 77 5% 6%
Net occupancy expense 70 74 74 (5%) (5%)
Technology and communications 71 67 62 6% 15%
Equipment expense 31 30 30 3% 3%
Card and processing expense 31 30 32 3% (3%)
Other noninterest expense   302     287     293     5%   3%
  Total noninterest expense   $1,008     $1,037     $975     (3%)   3%
 

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

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

           
  Average Interest-Earning Assets
($ in millions) For the Three Months Ended     % Change
September June September
2018   2018   2017   Seq   Yr/Yr
Average Portfolio Loans and Leases
Commercial loans and leases:
Commercial and industrial loans $42,494 $42,292 $41,302 - 3%
Commercial mortgage loans 6,635 6,514 6,807 2% (3%)
Commercial construction loans 4,870 4,743 4,533 3% 7%
Commercial leases   3,738     3,847     4,072     (3%)   (8%)
Total commercial loans and leases $57,737 $57,396 $56,714 1% 2%
Consumer loans:
Residential mortgage loans $15,598 $15,581 $15,523 - -
Home equity 6,529 6,672 7,207 (2%) (9%)
Automobile loans 8,969 8,968 9,267 - (3%)
Credit card 2,299 2,221 2,140 4% 7%
Other consumer loans   2,060     1,719     1,055     20%   95%
Total consumer loans $35,455 $35,161 $35,192 1% 1%
 
Portfolio loans and leases $93,192 $92,557 $91,906 1% 1%
Loans held for sale 785 675 711 16% 10%
Securities and other short-term investments   34,822     34,935     33,826     -   3%
  Total average interest-earning assets   $128,799     $128,167     $126,443     -   2%
 

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

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

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

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

         
Average Deposits
 
($ in millions) For the Three Months Ended   % Change
September June September
2018   2018   2017   Seq   Yr/Yr
Average Deposits
Demand $32,333 $32,834 $34,850 (2%) (7%)
Interest checking 29,681 28,715 25,765 3% 15%
Savings 13,231 13,618 13,889 (3%) (5%)
Money market 21,753 22,036 20,028 (1%) 9%
Foreign office(g)   317     371     395     (15%)   (20%)
Total transaction deposits $97,315 $97,574 $94,927 - 3%
Other time   4,177     4,018     3,722     4%   12%
Total core deposits $101,492 $101,592 $98,649 - 3%
Certificates - $100,000 and over 2,596 2,155 2,625 20% (1%)
Other deposits   578     198     560     192%   3%
  Total average deposits   $104,666     $103,945     $101,834     1%   3%
 

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

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

 
Average Wholesale Funding
  ($ in millions)   For the Three Months Ended   % Change
September   June   September    
2018   2018   2017   Seq   Yr/Yr
Average Wholesale Funding
Certificates - $100,000 and over $2,596 $2,155 $2,625 20% (1%)
Other deposits 578 198 560 192% 3%
Federal funds purchased 1,987 1,080 675 84% 194%
Other short-term borrowings 1,018 2,452 4,212 (58%) (76%)
Long-term debt   14,434     14,579     13,457     (1%)   7%
  Total average wholesale funding   $20,613     $20,464     $21,529     1%   (4%)
 

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

 
Credit Quality Summary
  ($ in millions)   For the Three Months Ended
September   June   March   December   September
2018   2018   2018   2017   2017
 
Total nonaccrual portfolio loans and leases (NPLs) $403 $437 $452 $437 $506
Repossessed property 8 7 9 9 10
OREO   37     36     43     43     39
Total nonperforming portfolio assets (NPAs) $448 $480 $504 $489 $555
 
NPL ratio(h) 0.43% 0.47% 0.49% 0.48% 0.55%
NPA ratio(c) 0.48% 0.52% 0.55% 0.53% 0.60%
 
Total loans and leases 30-89 days past due (accrual) 270 217 299 280 252
Total loans and leases 90 days past due (accrual) 87 89 107 97 77
 
Allowance for loan and lease losses, beginning $1,077 $1,138 $1,196 $1,205 $1,226
Total net losses charged-off (72) (94) (81) (76) (68)
Provision for loan and lease losses 86 33 23 67 67
Deconsolidation of a variable interest entity   -     -     -     -     (20)
Allowance for loan and lease losses, ending $1,091 $1,077 $1,138 $1,196 $1,205
 
Reserve for unfunded commitments, beginning $131 $151 $161 $157 $162
(Benefit from) provision for unfunded commitments   (2)     (20)     (10)     4     (5)
Reserve for unfunded commitments, ending $129 $131 $151 $161 $157
                             
Total allowance for credit losses $1,220 $1,208 $1,289 $1,357 $1,362
 
Allowance for loan and lease losses ratio
As a percent of portfolio loans and leases 1.17% 1.17% 1.24% 1.30% 1.31%
As a percent of nonperforming portfolio loans and leases 270% 247% 252% 274% 238%
As a percent of nonperforming portfolio assets 243% 224% 226% 245% 217%
 
Total losses charged-off $(112) $(118) $(103) $(94) $(85)
Total recoveries of losses previously charged-off   40     24     22     18     17
Total net losses charged-off $(72) $(94) $(81) $(76) $(68)
 
Net charge-off ratio (NCO ratio)(b) 0.30% 0.41% 0.36% 0.33% 0.29%
Commercial NCO ratio 0.19% 0.34% 0.21% 0.22% 0.21%
Consumer NCO ratio   0.50%     0.52%     0.60%     0.51%     0.43%
 

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

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

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

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

 
Capital and Liquidity Position
      For the Three Months Ended
September   June   March   December   September
2018   2018   2018   2017   2017
Capital Position
Average total Bancorp shareholders' equity as a percent of average assets 11.39% 11.38% 11.52% 11.69% 11.93%
Tangible equity(a) 10.07% 10.29% 10.09% 9.90% 9.84%
Tangible common equity (excluding unrealized gains/losses)(a) 9.12% 9.33% 9.14% 8.94% 8.89%
Tangible common equity (including unrealized gains/losses)(a) 8.63% 8.98% 8.89% 8.99% 9.00%
 
Regulatory Capital and Liquidity Ratios(e)
CET1 capital(d) 10.67% 10.91% 10.82% 10.61% 10.59%
Tier I risk-based capital(d) 11.78% 12.02% 11.95% 11.74% 11.72%
Total risk-based capital(d) 15.01% 15.21% 15.25% 15.16% 15.16%
Tier I leverage 10.10% 10.24% 10.11% 10.01% 9.97%
  Modified liquidity coverage ratio (LCR)   119%     116%     113%   129%     124%
 

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

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

Tax Rate

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

Other

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

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

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

Conference Call

Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on "About Us" then "Investor Relations").

Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address. Additionally, a telephone replay of the conference call will be available after the conference call until approximately November 6, 2018 by dialing 800-585-8367 for domestic access or 404-537-3406 for international access (passcode 4083528#).

Corporate Profile

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of September 30, 2018, the Company had $142 billion in assets and operates 1,152 full-service Banking Centers, and 2,443 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 53,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of September 30, 2018, Fifth Third also had a 3.3% interest in Worldpay Holding, LLC, a subsidiary of Worldpay, Inc. Fifth Third is among the largest money managers in the Midwest and, as of September 30, 2018, had $376 billion in assets under care, of which it managed $38 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses. Investor information and press releases can be viewed at www.53.com. Fifth Third's common stock is traded on the NASDAQ® Global Select Market under the symbol "FITB."

Earnings Release End Notes

(a)

 

Non-GAAP measure; see discussion of non-GAAP and Reg. G reconciliation beginning on page 25 in Exhibit 99.1 of 8-K filing dated 10/23/2018

(b)

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

(c)

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

(d)

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

(e)

Current period regulatory capital and liquidity ratios are estimated

(f)

Assumes a 21% tax rate

(g)

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

(h)

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

IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

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

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

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

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

FORWARD-LOOKING STATEMENTS

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

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

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


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