Board of Governors of the Federal Reserve System

Washington, DC 20551

February 5, 2019

Mr. Greg D. Carmichael, CEO

Fifth Third Bancorp

38 Fountain Square Plaza

Cincinnati, OH 45263

Dear Mr. Carmichael:

Fifth Third Bancorp (“Fifth Third”) is subject to section 165 ofthe Dodd-Frank Wall

Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and, accordingly, would be

required to participate in supervisory and company-run stress tests in 2019.1 For the reasons

stated below, the Board is providing Fifth Third relieffrom all regulatory requirements,

including disclosure requirements, related to supervisory stress testing and company-run stress

testing for the 2019 stress test cycle and is providing related relieffrom certain capital planning

and regulatory reporting requirements that would otherwise apply in the 2019 stress test cycle.

In addition, as discussed in detail below, Fifth Third will not be required to submit a capital plan

to the Board in 2019 or participate in the 2019 Comprehensive Capital Analysis and Review

(“CCAR 2019”).2

1 Pub. L. No. 111-203, 124 Stat. 1376 (2010); see 12 CFR part 252, subparts E and F.

2 Fifth Third remains subject to the requirement to develop and maintain a capital plan, and the

board of directors of Fifth Third (or designated subcommittee thereof) remains subject to the

requirement to review and approve the firm’s capital plan.

I. Background

Section 165 ofthe Dodd-Frank Act, as enacted, directed the Board to establish enhanced

prudential standards for bank holding companies with total consolidated assets of $50 billion or

more, including annual supervisory stress tests, and issue regulations requiring these bank
holding companies to conduct company-run stress tests (collectively, “stress test rules”).3

Pursuant to the Board’s stress test rules, the Board has conducted supervisory stress tests of bank

holding companies with total consolidated assets of $50 billion or more, and these bank holding

companies are required to conduct annual and mid-cycle company-run stress tests.4 In

conducting the supervisory stress tests, the Board projects balance sheets, risk-weighted assets,

net income, and resulting post stress capital levels and regulatory capital ratios over a planning

horizon under baseline, adverse, and severely adverse scenarios, incorporating capital action

assumptions prescribed in the Board’s stress test rules.5 For the annual company-run stress tests,

a bank holding company uses the same planning horizon, capital action assumptions, and

baseline, adverse, and severely adverse scenarios used in the supervisory stress test.6

3 12 CFR part 252, subparts E and F.

4 On July 6, 2018, the Board issued a statement regarding the impact ofthe Economic Growth,

Regulatory Relief, and Consumer Protection Act. The Board announced that it will not take

action to require bank holding companies with total consolidated assets greater than or equal to

$50 billion but less than $100 billion to comply with the Board’s stress test rules. See

www.federalreserve.gov/newsevents/pressreleases/files/bcreg20180706b1.pdf.

5 See 12 CFR 252.44

6 See 12 CFR 252.54.

7 Pub. L. No. 115-174, 132 Stat. 1296(2018).

8 Eighteen months after the date ofEGRRCPA’s enactment, bank holding companies with total

consolidated assets ofless than $250 billion will no longer be subject to section 165, provided

that the Board may apply any enhanced prudential standard to a bank holding company with

between $100 billion and $250 billion in total consolidated assets ifthe Board determines that

application ofthe prudential standard is appropriate to prevent or mitigate risks to the financial

stability ofthe United States, or to promote safety and soundness.

9 EGRRCPA § 401(d)(3). Pub. L.No. 115-174, 132 Stat. 1296 (2018).

On May 24, 2018, Congress enacted the Economic Growth, Regulatory Relief, and

Consumer Protection Act (“EGRRCPA”).7 EGRRCPA amended section 165 ofthe Dodd-Frank

Act to increase the threshold for application of enhanced prudential standards to bank holding

companies.8 Prior to eighteen months after the date ofEGRRCPA’s enactment, the Board may

exempt by order any bank holding company with total consolidated assets ofless than

$250 billion from any prudential standard under section 165 ofthe Dodd-Frank Act.9

II. Relief from Board’s stress test rules for the 2019 stress test cycle

In prescribing more stringent prudential standards under section 165, including stress test

requirements, the Board must differentiate among bank holding companies on an individual basis

or by category, taking into consideration their capital structure, riskiness, complexity, financial
activities (including the financial activities oftheir subsidiaries), size, and any other risk-related

factors that the Board deems appropriate.10

10 EGRRCPA § 401 (a)(l)(B)(i) (to be codified at 12 U.S.C. § 5365(a)(2)(A)).

11 Measured as total exposure, as defined on FR Y-15, minus total consolidated assets, as

reported on the Consolidated Financial Statements for Holding Companies (FR Y-9C).

12 By letter dated September 7, 2018, the Director ofthe Division of Supervision of Regulation,

acting under authority delegated by the Board, determined that Fifth Third’s planned acquisition

of MB Financial, Inc., would likely result in a material change in Fifth Third’s risk profile and

corporate structure, and required Fifth Third to update and resubmit its capital plan.

In assessing a bank holding company’s risk profile, the Board takes into consideration the

company’s size, scope of operations, activities, and systemic importance. Size provides a

measure ofthe extent to which customers or counterparties may be exposed to a risk ofloss or

suffer a disruption in the provision ofservices if a bank holding company were to experience

distress and can serve as an indicator of operational and managerial complexity. Nonbank assets

may involve a broader range ofrisks than those associated with purely banking activities, and

reflect the degree to which a firm may be engaged in activities through legal entities that are not

subject to separate capital requirements or to the direct regulation and supervision applicable to a

regulated banking entity. Other measures ofrisk include cross-jurisdictional activity, off-balance

sheet exposure, and weighted short-term wholesale funding, which provide measures of a bank

holding company’s complexity, interconnectedness, and liquidity risk. As of

September 30, 2018, Fifth Third reported total consolidated assets of $141.1 billion, $1.7 billion

in nonbank assets, $31.6 billion in off-balance sheet exposure,11 $9.8 billion in weighted shortterm wholesale funding, and $3.1 billion in cross-jurisdictional activity.

In assessing Fifth Third’s risk profile, the Board also considered reports of examination

and other supervisory information, including a review of Fifth Third’s 2018 capital plan, the

capital plan Fifth Third resubmitted on October 4, 2018 (“Resubmitted Capital Plan),12 Fifth

Third’s capital planning process, and the results ofthe Board’s 2018 supervisory stress test and

quantitative assessment ofthe Resubmitted Capital Plan, as well as other publicly reported

information. In 2018, Fifth Third received notice that the Federal Reserve did not object to its

2018 capital plan or planned capital actions. Subsequently, on December 27, 2018, Fifth Third

received notice that the Federal Reserve did not object to the Resubmitted Capital Plan.

Based on this information, the Board has determined by order, through this letter, to

provide Fifth Third relieffrom the regulatory requirements ofthe Board’s stress test rules for the
2019 stress test cycle.13 Specifically, Fifth Third is not required to participate in the Board’s

supervisory stress test or conduct a company-run stress test for the 2019 stress test cycle.

13 EGRRCPA § 401(d)(3). The Board’s stress test rules also permit the Board to extend any

deadline relating to company-run or supervisory stress testing. 12 CFR 252.3(b).

14 12 CFR 225.8(e)(1)(ii).

15 Id.

16 12 CFR 225.8(e)(1)(i), (iii).

17 Nothing in this letter should be construed as a determination by the Board on the pending

application by Fifth Third to acquire MB Financial, Inc., Chicago, Illinois, pursuant to section 3

ofthe Bank Holding Company Act, and the related application by Fifth Third Bank to merge

with MB Financial Bank, N.A., Chicago, Illinois, pursuant to section 18(c) ofthe Federal

Deposit Insurance Act.

III.Extension of 2019 capital plan submission requirement

Pursuant to the capital plan rule, Fifth Third is required to submit a capital plan to the

Federal Reserve on an annual basis.14 Consistent with the relief described above, the Board is

providing a one-year extension ofthe requirement to submit a capital plan until April 5, 2020.15

Fifth Third is not required to participate in CCAR 2019. Fifth Third remains subject to the

requirement to develop and maintain a capital plan, and the board of directors ofFifth Third (or

designated subcommittee thereof) must review and approve the firm’s capital plan.16 The

Federal Reserve will continue to review the capital planning and risk-management practices of

Fifth Third through the regular supervisory process.

As noted above, Fifth Third received notice that the Federal Reserve did not object to the

capital plan submitted in 2018 or to the Resubmitted Capital Plan, including distributions

planned for the period beginning July 1, 2018, through June 30, 2019. As provided below, the

amount of capital distributions that the Board is approving for the period beginning July 1, 2019,

through June 30, 2020, is conditioned on whether Fifth Third consummates its planned merger

with MB Financial, Inc., by June 30, 2019.17

In the case that Fifth Third does not consummate the merger with MB Financial, Inc., by

June 30, 2019, Fifth Third is authorized to distribute, net of any issuance of capital, up to the sum

ofthe following: (1) the additional capital the firm could have distributed in CCAR 2018 and

remained above minimum requirements; plus (2) capital accretion, as measured by the change in

its capital ratios since CCAR 2018; plus (3) its approved planned capital distributions for the

period January 1, 2018, through June 30, 2019, as described in its original capital plan for CCAR
2018; minus (4) its actual capital distributions in the first quarter of 2019 and its planned capital

distributions for the second quarter of 2019.18

18 This letter also constitutes approval under 12 CFR 217.20 for any repurchases or redemptions

of capital instruments made by Fifth Third that are included in the amount of capital distributions

approved as part ofthis order. Such repurchases or redemptions must be included on the firm’s

list of planned distributions provided to the Board by April 5, 2019.

19 12 CFR 252.57(a)(1). If Fifth Third’s capital plan includes any material business plan

changes, it may be required to provide supplemental information on any ofthese changes. The

Board may request additional information regarding Fifth Third’s capital adequacy and capital

planning. 12 CFR 225.8(e)(3).

20 If Fifth Third wishes to make additional capital distributions beyond the amount approved

under this letter, Fifth Third may submit a capital plan to the Board or submit a request to the

Federal Reserve for approval to make such distributions before March 1, 2019, or after

July 1,2019. 12 CFR 225.8(g)(4).

21 See, e.g., 12CFR217.11.

If Fifth Third consummates the planned merger with MB Financial, Inc., by June 30,

2019, Fifth Third is authorized to distribute, net of any issuance of capital, up to the sum ofthe

following: (1) the additional capital the firm could have distributed in the Federal Reserve’s

assessment ofthe Resubmitted Capital Plan and remained above minimum requirements; plus (2)

capital accretion, as measured by the change in its capital ratios since CCAR 2018; plus (3) its

approved planned capital distributions for the period January 1, 2018, through June 30, 2019, as

described in the Resubmitted Capital Plan; minus (4) its actual capital distributions in the first

quarter of 2019 and its planned capital distributions for the second quarter of 2019. For the

purposes ofthis calculation, issuance of common stock will be net of any goodwill associated

with the merger with MB Financial, Inc.

In addition, the Board is extending the deadline for submission of Schedule A -

Summary, Schedule B - Scenario, and Schedule F - Business Plan Changes ofthe FR Y-14A

until April 5, 2020.19 Fifth Third must continue to submit Schedule C -Regulatory Capital

Instruments and Schedule E - Operational Risk ofthe FR Y-14A, as well as all FR Y-14M and

FR Y-14Q reports.

Fifth Third must submit its planned capital actions for the period between July 1, 2019,

through June 30, 2020, by April 5, 2019.20 If Fifth Third chooses to submit a capital plan to the

Board in the 2019 capital plan cycle notwithstanding the Board’s approval ofthe additional

capital distributions described above, Fifth Third must submit the capital plan to the Board by

April 5, 2019, in accordance with the Board’s capital plan rule, and the firm will be subject to a 

supervisory stress test by the Board, notwithstanding the relief provided in this letter.

The actions ofthe Board are based on the foregoing and all the facts ofrecord. The

actions should not be construed as granting relieffrom any other conditions or commitments to

which Fifth Third may be subject, including regulatory capital requirements21 and any
requirements under the Board’s stress test rules and related reporting requirements in the year

2020. Please contact Celeste Molleur at 202-452-2783 if you have questions.

Sincerely yours,

(signature)

Ann Misback

Secretary ofthe Board

cc: Jenni Frazer, Group Vice President

Tyler Burkle, Assistant Vice President

Federal Reserve Bank of Cleveland
Appendix: Details on Federal Reserve’s calculation of maximum approved planned capital

actions for 2019

The Federal Reserve will use the following worksheet to compute the maximum planned capital

distributions that Fifth Third can make from July 1, 2019, through June 30, 2020, without

seeking approval from the Federal Reserve.

Worksheet for determining pre-approved 2019-2020 capital distributions, millions of dollars, if

Fifth Third does not consummate its planned merger with MB Financial, Inc., by June 30, 2019

Line / Item

A

CET1

capital

ratio

B

Tier 1

risk-based

capital

ratio

C

Tier 1

leverage

ratio

D

Total riskbased

capital

ratio

1. CCAR 2018 distributable capital

a. Capital ratio as of 12/31/2018

b. Decline in capital ratio in CCAR 2018 5.1 4.8 4.2 4.9

c. Minimum Requirement 4.5 6.0 4.0 8.0

d. Capital ratio denominator as of 12/31/2018

2. Adjusted CCAR 2018 additional distributable

capital

= ((1.a- 1.b- 1.c)*(1.d/100))

3. Planned capital actions

a. Planned capital actions PQ1-6 of CCAR 2018 [redacted]

b. Actual capital actions 2019:Q1

c. Approved planned capital actions 2019:Q2

4. 2019:Q3 - 2020:Q2 capital distribution capacity

= (2. + 3.a-3.b-3.c)

5. Maximum approved capital actions for 2019:Q3-2020:Q2

a. Net planned distributions from tier 2 capital

=(4.D)

b. Net planned distributions from additional tier 1 capital

= (Min (4.B, 4.C,

4. D - Net planned distributionsfrom tier 2 capital))

c. Net planned distributions from CET1 capital

= (Min (4.A,

4.B - net planned distributionsfrom additional tier 1 capital,

4. C - net planned distributionsfrom additional tier 1 capital,

4.D - netplanned distributionsfrom additional tier 1 and tier 2 capital))

7
Worksheet for determining pre-approved 2019-2020 capital distributions, millions of dollars, if

Fifth Third consummates its planned merger with MB Financial, Inc., by June 30, 2019

Line / Item

A

CET1

capital

ratio

B

Tier 1

risk-based

capital

ratio

C

Tier 1

leverage

ratio

D

Total riskbased

capital

ratio

1. Distributable capital in Resubmitted Capital Plan

a. Capital ratio as of 12/31/2018

b. Decline in capital ratio in Federal Reserve’s

assessment of Resubmitted Capital Plan [redacted]

c. Minimum Requirement 4.5 6.0 4.0 8.0

d. Capital ratio denominator as of 12/31/2018

2. Adjusted CCAR 2018 additional distributable

capital

= ((1.a- 1.b- 1.c)*(1.d/100))

3. Planned capital actions

a. Planned capital actions PQ1-6 of Resubmitted

Capital Plan [redacted]

b. Actual capital actions 2019:Q1

c. Approved planned capital actions 2019:Q2

4. 2019:Q3 - 2020:Q2 capital distribution capacity

 = (2. + 3.a - 3.b - 3.c)

5. Maximum approved capital actions for 2019:Q3-2020:Q2

a. Net planned distributions from tier 2 capital

= (4.D)

b. Net planned distributions from additional tier 1 capital

= (Min (4.B, 4.C,

4. D - Net planned distributionsfrom tier 2 capital))

c. Net planned distributions from CET1 capital

= (Min (4.A,

4.B - netplanned distributionsfrom additional tier 1 capital,

4. C - netplanned distributionsfrom additional tier 1 capital,

4.D - net planned distributionsfrom additional tier 1 and tier 2 capital))

The Federal Reserve will complete the worksheet computing the maximum planned capital

distributions that Fifth Third can make from July 1, 2019, through June 30, 2020, consistent with

the following description of each line item:

Line 1. CCAR 2018 distributable capital. / Distributable capital in 2018 resubmitted

capital plan.

This section includes the information necessary to determine the additional capital distributions

that the firm could have made in CCAR 2018 and remained above minimum capital
requirements in the supervisory quantitative assessment, adjusted for the firm’s updated starting

capital ratios. The instructions for line 1.b. differ based on whether the firm consummates its

planned merger with MB Financial, Inc., by June 30, 2019.

Line 1.a. Capital ratio as of 12/31/2018.

The regulatory capital ratios calculated using the standardized approaches as reported on the

FR Y-9C as of December 31, 2018. Specifically, for line 1.a., column A, the common equity tier

1 capital ratio (BHCAP793); for line 1.a., column B, the Tier 1 capital ratio (BHCA7206); for

line 1.a., column C, the Tier 1 leverage ratio (BHCA7204), and for line 1.a., column D, the total

capital ratio (BHCA7205).

1.b. Decline in capital ratio in CCAR 2018. / Decline in capital ratio in Federal

Reserve’s assessment of resubmitted capital plan.

Ifthe firm does not consummate its planned merger with MB Financial, Inc., by June 30, 2019:

For each capital ratio, the decline in the capital ratio equals the starting capital ratio minus the

minimum capital ratios in the CCAR 2018 supervisory quantitative assessment under the

severely adverse scenario.

Ifthe firm consummates its planned merger with MB Financial, Inc., by June 30, 2019: For each

capital ratio, the decline in the capital ratio equals the starting capital ratio minus the minimum

capital ratios in the supervisory quantitative assessment ofthe firm’s resubmitted capital plan

under the severely adverse scenario.

1.c. Minimum Requirement.

The applicable minimum requirement for each regulatory capital ratio. Specifically, for the line

1.c., column A, a 4.5 percent common equity tier 1 ratio; line 1.c., column B, a 6 percent tier 1

capital ratio; line 1.a., column C, a 4 percent tier 1 leverage ratio, and column D, an 8 percent

total capital ratio.

1. d Capital ratio denominator as of 12/31/2018.

The applicable denominator for each regulatory capital ratio using the standardized approaches

as reported on the FR Y-9C as of December 31, 2018. Specifically, for line 1.d., column A, B,

and D, total risk-weighted assets (BHCAA223) and for line 1.d, column C, total assets for the

leverage ratio (BHCAA224). To align with the format ofthe FR Y-14A, this item is divided by

1,000 so as to be expressed in millions of dollars.

2. Adjusted CCAR 2018 additional distributable capital.

For each column equal to (Line 1.a -line 1.b -line 1.c)*(line 1.d/100)).

This is the amount of additional capital the firm could have distributed in CCAR 2018 or in any

subsequent quantitative assessment conducted to evaluate a resubmitted capital plan and

remained above minimum requirements.
3. Planned capital actions.

The capital ratio declines in line 1.b. include the effect ofthe firm’s 2018 planned capital actions

or the planned capital actions in the Resubmitted Capital Plan. The sum ofthe additional

distributable capital calculated in line 2 and the firm’s relevant 2018 planned capital actions

comprise the maximum planned capital distributions that the firm can make for the 2019 capital

plan cycle without seeking approval from the Federal Reserve.

Lines 3.a, 3.b, and 3.c adjust for any changes to the firm’s planned capital actions for PQ1-6.

The firm’s PQ7-9 planned capital actions from its 2018 capital plan or Resubmitted Capital Plan

are assumed to be representative ofits 2019 PQ7-9 planned capital actions.

The instructions for lines 3.a., 3.b., and 3.c. differ based on whether the firm consummates its

planned merger with MB Financial, Inc., by June 30, 2019.

For column A, common equity tier 1 planned capital actions are the sum of cash dividends

declared on common stock (CPSK4460), cash dividends declared on preferred stock

(CPSK4598), and total share repurchases (CPSDQ288) minus total issuance of common stock

(CPSDQ28 5).22 In the case that the firm consummates its planned merger with MB Financial,

Inc., issuance of common stock will be net of any goodwill associated with the merger, so only

the amount of common stock issuance net of goodwill would be reflected.

22 Fifth Third did not include the issuance associated with the planned merger in “total issuance

of common stock” (CPSDQ285). Consequently, in the case that the firm consummates its

planned merger with MB Financial, the Federal Reserve will incorporate the value of “sale of

treasury stock” (CPSK4782). In its Resubmitted Capital Plan, Fifth Third projected $1,079

million ofsale oftreasury stock in PQ5 ofthe severely adverse scenario.

For column B and C, tier 1 capital planned capital actions are the sum of common equity capital

actions in column A plus the amount recognized in regulatory capital from redemption or

repurchases of non-cumulative perpetual preferred stock (CACIY515) and other additional tier 1

instruments (CACIY527) minus issuance of non-cumulative perpetual preferred stock

(CACIY544) and other additional tier 1 instruments (CACIY556).

For column D, total capital planned capital actions are the sum oftier 1 capital actions in

columns B and C plus the amount recognized in regulatory capital from redemption or

repurchases ofsubordinated debt (CACIY528), cumulative dated preferred (TRUPS) instruments

(CACIY535), and tier 2 capital instruments issued by subsidiaries (CACIY529) minus issuance

ofsubordinated debt (CACIY557), cumulative dated preferred (TRUPS) instruments

(CACIY564), and tier 2 capital instruments issued by subsidiaries (CACIY558).
3.a. Planned capital actions PQ1-6 of CCAR 2018. / Planned capital actions PQ1-6 of

Resubmitted Capital Plan.

Ifthe firm does not consummate its planned merger with MB Financial, Inc., by June 30, 2019:

For each category ofregulatory capital, this is the firm’s planned capital actions for the first

through sixth quarters ofthe CCAR 2018 planning horizon.

Ifthe firm consummates its planned merger with MB Financial, Inc., by June 30, 2019: For each

category ofregulatory capital, this is the firm’s planned capital actions for the first through sixth

quarters ofthe planning horizon in the firm’s Resubmitted Capital Plan as projected in the

severely adverse scenario. As noted, issuance of common stock will be incorporated net of any

goodwill associated with the planned merger.

3.b. Actual capital actions 2019:Q1.

The firm’s actual capital actions taken in 2019:Q1 as reported on the FR Y-9C and FR Y-14. As

noted, ifthe firm consummates its planned merger with MB Financial, Inc., by June 30, 2019,

issuance of common stock will be incorporated net of any goodwill associated with the planned

merger.

3. c Approved planned capital actions 2019:Q2.

The firm’s capital distributions already included in the capital plan from the prior year and not

objected to by the Federal Reserve for that quarter, including any approved requests for

additional planned capital distributions.

As noted, ifthe firm consummates its planned merger with MB Financial, Inc., by June 30, 2019,

issuance of common stock will be incorporated net of any goodwill associated with the planned

merger.

4. 2019:Q3 - 2020:Q2 capital distribution capacity.

For each column equal to Line 2. + line 3.a -line 3.b -line 3.c.

This amount represents the amount of capital above each minimum requirement that the firm

could distribute and still remain adequately capitalized in the severely adverse scenario, based on

the CCAR 2018 supervisory quantitative assessment.

5. Maximum approved capital actions for 2019:Q3 - 2020:Q2.

This section computes the maximum net planned distributions approved for each category of

regulatory capital (i.e. common equity tier 1 capital, additional tier 1 capital, tier 2 capital) that

the firm can make for the period 2019:Q3 through 2020:Q2 without seeking approval from the

Federal Reserve. Each value is expressed in millions of dollars.

5.a. Net planned distributions from tier 2 capital.

Equal to line 4. Column D.
5. b Net planned distributions from additional tier 1 capital.

Equal to the minimum of:

• line 4. Column B;

• line 4. Column C; and

• line 4. Column D - net planned distributions from tier 2 capital.

5. c Net planned distributions from CET1 capital.

Equal to the minimum of:

• line 4. Column A;

• line 4. Column B - net planned distributions fromadditional tier 1 capital;

• line 4. Column C - net planned distributions from additional tier 1 capital; and

• line 4. Column D - net planned distributions from additional tier 1 capital and tier 2

capital.