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Getting Back to Business John Augustine, CFA Chief Investment Strategist Fifth Third Bank February, 2011.

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Presentation on theme: "Getting Back to Business John Augustine, CFA Chief Investment Strategist Fifth Third Bank February, 2011."— Presentation transcript:

1 Getting Back to Business John Augustine, CFA Chief Investment Strategist Fifth Third Bank February, 2011

2 2 Overview * As of 4Q10 ** Fortune magazine, March 16, 2009 $111 billion assets - #13 nationally * 1,312 banking centers 2,445 ATMs 15 affiliates in 12 states Fifth Third Bank has been dedicated to serving the needs families and businesses for more than 150 years Top 10 Superregional Bank for 8 consecutive years ** Naples Raleigh Cincinnati Florence Louisville Lexington Nashville Atlanta Augusta Orlando Tampa Naples Raleigh Charlotte Huntington Pittsburgh Cleveland Columbus Toledo Detroit Grand Rapids Traverse City Chicago Evansville Jacksonville Indianapolis St. Louis

3 3 *Reflects only Fifth Third Securities managed assets associated with Fifth Third Private Bank, and does not reflect all assets managed through Fifth Third Securities, a wholly owned subsidiary of Fifth Third Bank. Investment Advisors Division - Managed Assets Mix

4 4 1) 2011 Overview

5 5 1.US economic growth in the 3% range – due to twin monetary & fiscal policy accommodation. 2.Continuation of economic rebuilding should = continuation of investment portfolio rebuilding. 3.Stocks have potential for a double-digit return year; bond 30- year bull market recedes. 4.Federal government continues to step back from economic & business influence. 5.US risks reside around commodity prices, Treasury yields, housing & regulatory overhang; global risks around Chinese growth and German reaction to supporting European debt. 2011 Theme – Getting Back to Business

6 6 2) The Expansion Begins

7 7 US nominal GDP at a new high in 2010 – the economy is in expansion Source = FactSet

8 8 Household Net Worth – still recovering Source = FactSet

9 9 Small Business Optimism – improving Source = FactSet

10 10 3) The Sustainability is debated

11 11 Source = FactSet Pressure Point #1 – Closing the Resource Utilization gap

12 12 Pressure Point #2 – Closing the mortgage debt/owners equity gap Source = FactSet

13 13 Pressure Point #3 – Government spending vs. austerity Source = FactSet $1.3 trillion!

14 14 Pressure Point #4 – Global inflation

15 15 4) Local trends

16 16 Atlanta/Georgia – Housing Trends Source = FactSet

17 17 Atlanta/Georgia – Employment Trends Source = FactSet

18 18 Georgia – Business Openings & Closings Source = FactSet

19 19 5) Markets React

20 20 US Stocks – room-to-run and catch earnings Source = FactSet

21 21 10-year Treasury yield – staying in a range Source = FactSet

22 22 Commodity prices – moving uncomfortably higher

23 23 6) Focus on: individual investors institutional investors business

24 24 1)Capital Appreciation (9%) Continue to structure for growth; reinvest profits incrementally. Total return, broadly diversified investing still operative in a low yield environment. 2)Income Focused (3-6% yields) Focus on corporate yields debt and equity yields Blue-chip stock dividends, REITs, corporate bonds, municipal bonds, preferred stocks, high yield bonds 3)Principal Preservation (cover inflation rate = 1.5% YoY) Focus on corporate debt; manage yield/credit quality/maturity trade-offs. Short-term corporate debt, income-paying absolute return funds, intermediate term treasuries. Individuals & Institutions – keep rebuilding

25 25 Business – prudent expansion 1.Don’t Fall Behind the Expansion Focus on what you do best. Continue to enhance productivity. Expand your balance sheet to buy competitors/assets to take advantage of low financing rates and accelerated depreciation. 2.Rationalize Land, Labor & Capital Focus on return-on-equity (DuPont Model) Assume three to five year top-line domestic growth in 3% range. Utilize spare capacity via exports – where applicable ( 3.Focus on the evolving Value-Proposition of Consumers Observe trends at the meetings, check-out lines, phone/internet center Stay ahead of demographic and ethnic trends ( Monitor the spending and social trends

26 26 7) Staying connected

27 27 Information & Insight 1.Daily Morning Market Report ( 2.Weekly Economic Beat ( 3.Monthly Market Letter (Fifth Third representative) 4.Quarterly Investment Strategy ( Accounts Types & Names  Agency, Custody, Trust, 401k, Brokerage, Pension, Foundation, Endowment 1.Passageway 2.Funds Management Account 3.CustomPlus Portfolios Summary

28 28 The opinions expressed herein are those of Fifth Third Bank, Investment Advisors Division, and may not actually come to pass. This information is current as of the date of the presentation and is subject to change at any time, based on market and other conditions. Prior to making any financial or investment decision, you should assess, or seek advice from a professional regarding, whether any particular transaction is relevant or appropriate to your individual circumstances. Index performance is used throughout this presentation to illustrate historical market trends and performance. Indexes are unmanaged and do not incur investment management fees. An investor is unable to invest in an index. Past performance is no guarantee of future results. Fifth Third Asset Management, Inc (FTAM) is an indirect, wholly owned subsidiary of Fifth Third Bancorp and an affiliated company with Fifth Third Bank Investment Advisors division. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries. Investments and Investment Services are: Not FDIC InsuredOffer No Bank GuaranteeMay Lose Value Not Insured By Any Federal Government AgencyNot A Deposit Disclosures and Disclaimers

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