Core Viewpoint - Fifth Third Bancorp (FITB) is expected to report year-over-year growth in earnings and revenues for the second quarter of 2025, with key drivers being net interest income (NII) and loan balances, despite challenges in fee income and asset quality [1][10]. Financial Performance - The bank's earnings have consistently beaten estimates, with an average surprise of 3.45% over the last four quarters [2]. - Total average loans and leases are projected to increase by 1% from the previous quarter, estimated at $123 billion, supporting interest-earning assets [3]. - The Zacks Consensus Estimate for average interest-earning assets is $194.7 billion, indicating nearly 1% growth from the prior quarter [4]. Interest Income - Adjusted NII is expected to rise by 2-3% compared to the first quarter of 2025, with the Zacks Consensus Estimate for NII at $1.48 billion, reflecting a 3% sequential increase [5]. Non-Interest Revenues - Advisory revenues are anticipated to improve due to increased M&A activity, with commercial banking revenues estimated at $90.7 million, a 13.3% sequential rise [7]. - Mortgage banking income is expected to reach $59.7 million, suggesting a 4.7% increase from the previous quarter [8]. - Wealth and asset management revenues are projected at $171.2 million, indicating a slight decline from the prior quarter [9]. Expense Management - FITB expects adjusted non-interest expenses to decline by 5% sequentially, reflecting disciplined expense management [12]. Asset Quality - The bank is likely to maintain a modest reserve for potential delinquent loans, with the Zacks Consensus Estimate for non-performing assets at $920.7 million, a 9.5% decline from the previous quarter [13]. Earnings Estimates - The consensus estimate for earnings in the upcoming quarter is 87 cents, representing a 1.2% rise from the prior-year quarter, while revenues are expected to be $2.21 billion, a 6.4% increase year-over-year [15].

Prior to a company's earnings announcement, it is crucial to consider revisions to earnings estimates. This serves as a significant indicator for predicting potential investor actions regarding the stock. Empirical research has consistently demonstrated a robust correlation between trends in earnings estimate revision and the short- term price performance of a stock. While investors typically rely on consensus earnings and revenue estimates to gauge how the business may have fared during the quarter, examin ...

Group 1: Stock Buybacks Overview - Stock buybacks are effective for boosting share prices, especially when supported by strong fundamentals [1] - Companies with healthy balance sheets are combining repurchase plans with strategic capital returns to enhance shareholder value [1] Group 2: Collegium Pharmaceuticals - Collegium Pharmaceuticals focuses on pain management and is expected to see growing revenue and improving profitability in 2025 [2] - The company has a share count reduction of 20% year-over-year in Q1 and has authorized a new $150 million share repurchase [3] - Collegium's balance sheet shows increased cash, reduced intangibles, and flat assets, resulting in improved equity and leverage [4] Group 3: Enovix - Enovix initiated a $60 million buyback plan, which is significant as it exceeds the company's 2025 revenue outlook [6] - The company is expected to experience over 300% revenue growth by 2026, supported by improving manufacturing capabilities and market demand [7] - Enovix's balance sheet indicates a solid cash position of $248 million, equal to its total liabilities, allowing for comfortable share repurchases [7][8] Group 4: Thor Industries - Thor Industries has re-authorized a $400 million buyback plan, which represents over 8% of its market cap [11][12] - The company is experiencing growth and widening margins post-pandemic, providing sufficient cash flow to sustain buybacks and dividends [13] Group 5: Darden Restaurants - Darden Restaurants announced a $1 billion share repurchase authorization, representing 3.8% of its shares, alongside a dividend increase [16] - The decision to sell Bahama Breeze is expected to provide a cash injection and allow Darden to focus on its core business [17][18] Group 6: Fifth Third Bancorp - Fifth Third Bancorp reauthorized a buyback plan worth 100 million shares, with no expiration, to reduce share count quarterly [22] - The company has a robust dividend yield of 3.36%, expected to grow at a mid-single-digit pace annually [22] - Analyst sentiment is firming, with a consensus forecast predicting a 10% upside for the stock [23]

Company Overview - Fifth Third Bancorp (FITB) is expected to report a year-over-year increase in earnings, with a projected EPS of $0.87, reflecting a +1.2% change, and revenues anticipated at $2.21 billion, up 6.3% from the previous year [3][12] Earnings Expectations - The earnings report is scheduled for July 17, and the stock may rise if the actual results exceed expectations, while a miss could lead to a decline [2][12] - The consensus EPS estimate has been revised 0.43% higher in the last 30 days, indicating a slight positive sentiment among analysts [4] Earnings Surprise Prediction - The Zacks Earnings ESP model shows a negative Earnings ESP of -0.59% for Fifth Third Bancorp, suggesting analysts have become bearish on the company's earnings prospects [12] - Despite the negative Earnings ESP, the company holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [12] Historical Performance - In the last reported quarter, Fifth Third Bancorp had an EPS of $0.73, surpassing the expected $0.70, resulting in a surprise of +4.29% [13] - Over the past four quarters, the company has consistently beaten consensus EPS estimates [14] Industry Comparison - M&T Bank Corporation (MTB), a peer in the Zacks Banks - Major Regional industry, is expected to post earnings of $4.03 per share, indicating a +6.3% year-over-year change, with revenues projected at $2.39 billion, up 3.6% [18][19] - M&T Bank has an Earnings ESP of +0.12% and a Zacks Rank of 3, suggesting a likelihood of beating the consensus EPS estimate [20]

Industry Overview - A number of regional banks have announced significant new share buyback authorizations, indicating a level of industry-wide confidence and suggesting these firms are well-capitalized to return excess funds to shareholders [1][17]. Fifth Third Bancorp (FITB) - Fifth Third Bancorp has initiated a buyback program allowing for the repurchase of up to 100 million shares, representing approximately 15% of its outstanding shares as of June 20 [2]. - The bank's Common Equity Tier 1 (CET1) ratio is nearly 10.5%, exceeding the regulatory requirement of approximately 7.7%, which supports its ability to buy back shares [5][6]. - The firm generates around $1 billion in cash flow per quarter from its bond portfolio, further bolstering its confidence in executing buybacks [7]. Citizens Financial Group (CFG) - Citizens Financial Group has increased its share buyback authorization to $1.5 billion, which is about 8.3% of its market capitalization [9]. - The company's CET1 ratio stands at 10.6%, reflecting strong financial performance and confidence in its capital return strategy [9]. Cathay General Bancorp (CATY) - Cathay General Bancorp announced a $150 million share repurchase program, equating to around 5% of its $3 billion market cap [11]. - The bank's CET1 ratio is nearly 13.6%, indicating strong capital strength to support ongoing shareholder returns [12]. Third Coast Bancshares (TCBX) - Third Coast Bancshares announced a $30 million buyback authorization, which is approximately 7.1% of its $424 million market cap [14]. - The company's CET1 ratio has improved to 8.7%, up from 8% a year ago, indicating enhanced financial stability [15]. RBB Bancorp (RBB) - RBB Bancorp announced an $18 million buyback program, equal to around 6.2% of its $291 million market cap [16]. - The company's CET1 ratio is approximately 17.9%, showcasing strong capital adequacy [16].

Core Viewpoint - Fifth Third Bancorp (FITB) has approved a new share repurchase authorization of up to 100 million shares, replacing the previous authorization of 11.8 million shares, providing flexibility for stock buybacks without a set expiration or price limit [1][2][7] Group 1: Share Repurchase Program - The new repurchase authorization allows for buybacks through open-market transactions or privately negotiated transactions, including Rule 10b5-1 programs [2] - The repurchase program can be modified, suspended, or discontinued based on market conditions and legal requirements [2] Group 2: Dividend Actions - In September 2024, FITB announced a 5.7% increase in its quarterly dividend to 37 cents per share, marking the fourth increase in the last five years [3] - The company has a payout ratio of 44%, and with a closing price of $38.32, the annualized dividend yield stands at 3.86% [3] Group 3: Financial Position - As of March 31, 2025, FITB had cash and due from banks totaling $17.9 billion, with total debt at $19.9 billion and short-term borrowings of $5.5 billion [4] - The common equity tier (CET) 1 ratio was reported at 10.45%, indicating room for enhancing capital distribution plans [4][5] Group 4: Market Performance - Over the past year, FITB shares have gained 6.2%, while the industry has seen a growth of 17.8% [6] - Currently, FITB holds a Zacks Rank of 3 (Hold) [8]

Group 1: Industry Sentiment on Stablecoins - Senior executives from Bank of America, Fifth Third Bancorp, and U.S. Bancorp expressed openness to adopting stablecoins due to anticipated favorable regulations [1] - The current U.S. administration is viewed as the most crypto-friendly in 16 years, contributing to optimism about stablecoin adoption [6] - Executives are engaging in discussions about potential joint stablecoin initiatives, indicating a shift in sentiment towards crypto [7] Group 2: Regulatory Developments - U.S. regulators are advancing efforts to regulate payment stablecoins, with two major bipartisan bills introduced: the GENIUS Act and the STABLE Act [2] - The GENIUS Act defines payment stablecoins, mandates one-to-one reserves, and prohibits algorithmic stablecoins, with federal oversight for issuers over $10 billion in assets [3] - The STABLE Act proposes a centralized regulatory structure, similar reserve requirements, and a two-year moratorium on algorithmic stablecoins [4] Group 3: Benefits and Opportunities - Executives highlighted transaction speed, deposit retention, and payment efficiency as key benefits of stablecoins [8] - Stablecoins are seen as a means to facilitate instantaneous international payments and collateral movement, creating efficiencies in commerce [8] - Large global banks are expected to benefit from stablecoin adoption due to their solid liquidity positions, while smaller regional banks may face challenges [10]

Summary of the Conference Call Company Overview - The conference featured Fifth Third Bank, represented by Chief Financial Officer Brian Preston, discussing their strategies and performance in the financial sector, particularly focusing on their expansion in the Southeast region and various banking services. Key Points Southeast Expansion Strategy - Fifth Third Bank has accelerated its branch openings in the Southeast from 25 to 50 branches per year, with 140 branches already opened and 150 locations under contract for future openings [5][6] - The bank emphasizes maintaining discipline in branch location selection and has a strong focus on consumer deposits, boasting one of the highest concentrations of consumer-oriented deposits among peers [7][8] Competitive Landscape - The banking market in the Southeast is highly competitive, but Fifth Third Bank feels confident in its ability to navigate this competition due to investments in analytics, marketing, and personnel [10][11] - The bank has not yet seen significant increased competition in retail banking, as new entrants are still in the process of opening branches [12][13] Market Strategy - Fifth Third Bank aims for a market share of 7% to 8% in new markets to ensure they are part of the consumer's consideration set when choosing a bank [14][15] - The bank coordinates its marketing and analytics efforts to effectively attract customers and increase market share [16][17] Crypto Strategy - The bank is exploring opportunities in the crypto space, particularly with stablecoins, to enhance efficiencies in international payments and collateral optimization [21][22] - Fifth Third Bank is not currently engaged in significant crypto activities but is building relationships with infrastructure providers in the crypto space [23][24] Economic Environment and Loan Growth - The bank has observed increased confidence among clients regarding future investments, despite initial caution due to tariff concerns [27][28] - Loan utilization rates have increased from 35.5% to 37.5%, indicating a positive trend in borrowing activity [29][30] - The bank is optimistic about loan growth for the remainder of the year, supported by favorable tax policies and economic conditions [36][39] Consumer Lending Performance - The consumer portfolio is performing well, with strong growth in auto loans and home equity lending [45][46] - The bank has minimal exposure to subprime lending, focusing instead on prime and super-prime borrowers [47] Private Credit and Deposits - Fifth Third Bank is evaluating its role in the private credit market, recognizing its potential for leverage in transactions [48][49] - The bank has successfully reduced brokered CDs by $4 billion, allowing for reinvestment in core deposits [54][55] Deposit Pricing Strategy - The bank adjusts deposit pricing based on regional competition, leveraging its multi-region footprint to optimize strategies [57][58] - The bank has seen strong retention rates for deposits even after repricing, indicating effective management of deposit costs [62] Net Interest Income (NII) and Fee Growth - NII growth is expected to be driven equally by loan growth and fixed-rate asset repricing, with a significant impact from the yield curve [64][65] - The bank is focusing on enhancing fee income through innovative treasury management solutions and growth in its wealth management business [66][70] Expense Management and Credit Quality - Fifth Third Bank anticipates 2% to 3% expense growth in 2025, with ongoing investments in retail branches and technology [74][75] - Credit quality remains strong, with improving asset quality trends and a focus on managing non-performing assets [78][79] Capital Management - The bank targets a capital ratio of 10.5% and is comfortable with its current capital levels despite market volatility [84][85] Additional Insights - The bank's approach to integrating technology and analytics into its operations is seen as a key driver for future growth and efficiency [75][76] - The focus on community engagement and relationship banking is highlighted as a strategic advantage in building customer loyalty [19][20]

Morgan Stanley US Financials Conference Bryan Preston Chief Financial Officer June 10, 2025 © Fifth Third Bancorp | All Rights Reserved Cautionary Statement This presentation contains statements that we believe are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. All statements other than statements of historic ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) Provides a comprehensive overview of Fifth Third Bancorp's financial performance, condition, and risk management [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=6&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28Item%202%29) Fifth Third Bancorp's Q1 2025 net income slightly decreased despite higher NII, impacted by increased credit loss provisions and a non-recurring FDIC assessment Q1 2025 Earnings Summary | ($ in millions, except per share data) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net interest income (FTE)** | $1,442 | $1,390 | 4% | | **Noninterest income** | $694 | $710 | (2%) | | **Total revenue (FTE)** | $2,136 | $2,100 | 2% | | **Provision for credit losses** | $174 | $94 | 85% | | **Noninterest expense** | $1,304 | $1,342 | (3%) | | **Net income** | $515 | $520 | (1%) | | **Net income available to common shareholders** | $478 | $480 | — | | **Earnings per share - diluted** | $0.71 | $0.70 | 1% | | **Return on average assets** | 0.99% | 0.98% | 1% | | **CET1 capital ratio** | 10.43% | N/A | N/A | - During Q1 2025, the Bancorp entered into and settled an accelerated share repurchase transaction amounting to **$225 million**[19](index=19&type=chunk) - On January 28, 2025, the Bank issued a total of **$1 billion** in senior notes, consisting of **$700 million** in fixed-rate/floating-rate notes and **$300 million** in floating-rate notes[20](index=20&type=chunk)[21](index=21&type=chunk) [Statements of Income Analysis](index=13&type=section&id=Statements%20of%20Income%20Analysis) Q1 2025 saw increased net interest income and credit loss provisions, while noninterest income and expenses decreased - Net interest income on an FTE basis (non-GAAP) was **$1.4 billion**, an increase of **$52 million** YoY, positively impacted by lower rates paid on average interest-bearing liabilities and higher average loan balances[44](index=44&type=chunk) - The provision for credit losses was **$174 million**, an **85%** increase from **$94 million** in Q1 2024, affected by higher loan balances and deterioration in economic forecasts[56](index=56&type=chunk) - Noninterest income decreased by **$16 million** YoY, primarily due to a **$19 million** decrease in net securities gains/losses, which was driven by mark-to-market impacts of non-qualified deferred compensation plans[31](index=31&type=chunk)[59](index=59&type=chunk) - Noninterest expense decreased by **$38 million** YoY, mainly due to a **$33 million** charge related to an FDIC special assessment in Q1 2024 that did not recur in 2025[32](index=32&type=chunk)[74](index=74&type=chunk) [Balance Sheet Analysis](index=25&type=section&id=Balance%20Sheet%20Analysis) Total assets remained stable, with loan growth funded by increased borrowings and a slight decrease in deposits Key Balance Sheet Components (QoQ Change) | As of ($ in millions) | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total loans and leases** | $122,664 | $120,431 | $2,233 | 1.9% | | Commercial loans and leases | $75,165 | $73,359 | $1,806 | 2.5% | | Consumer loans | $47,499 | $47,072 | $427 | 0.9% | | **Total deposits** | $165,505 | $167,252 | ($1,747) | (1.0%) | | Core deposits | $163,611 | $164,894 | ($1,283) | (0.8%) | | **Total borrowings** | $20,223 | $18,991 | $1,232 | 6.5% | - The increase in commercial loans was primarily due to a **$1.4 billion (3%)** rise in commercial and industrial loans from loan originations exceeding payoffs and increased line utilization[86](index=86&type=chunk) - The decrease in core deposits was driven by a **$733 million** decline in transaction deposits, primarily from lower commercial interest checking balances due to seasonal impacts[113](index=113&type=chunk) [Business Segment Review](index=35&type=section&id=Business%20Segment%20Review) Most segments experienced a decline in pre-tax income, while the General Corporate and Other segment's loss significantly narrowed Income Before Income Taxes (FTE) by Segment (YoY) | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Commercial Banking** | $262 | $427 | | **Consumer and Small Business Banking** | $522 | $685 | | **Wealth and Asset Management** | $52 | $58 | | **General Corporate and Other** | ($178) | ($506) | | **Total** | $658 | $664 | - Commercial Banking's pre-tax income decrease was driven by a **$111 million** drop in NII (FTE) and a **$24 million** decline in noninterest income[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) - Consumer and Small Business Banking's pre-tax income decrease was primarily driven by a **$177 million** drop in NII, resulting from lower FTP credits on deposits and higher FTP charges on loans[143](index=143&type=chunk)[144](index=144&type=chunk) - In January 2025, the Bancorp realigned its reporting structure, moving certain business banking relationships from the Commercial Banking segment to the Consumer and Small Business Banking segment. Prior periods were retrospectively adjusted[129](index=129&type=chunk) [Risk Management](index=42&type=section&id=Risk%20Management%E2%80%94Overview) The Bancorp manages credit, interest rate, liquidity, and capital risks, showing increased nonperforming assets but strong capital and liquidity - Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO increased to **0.81%** at March 31, 2025, from **0.71%** at December 31, 2024[30](index=30&type=chunk)[209](index=209&type=chunk) - Net charge-offs as a percentage of average portfolio loans and leases increased to **0.46%** for Q1 2025, compared to **0.38%** for Q1 2024[218](index=218&type=chunk) - The Allowance for Credit Losses (ACL) increased by **$38 million** from year-end 2024 to **$2.52 billion**, driven by higher loan balances and a deteriorating economic forecast[227](index=227&type=chunk) - The Bancorp's NII is estimated to decrease by **3.54%** over the next 12 months in a +200 bps ramped interest rate scenario, indicating liability-sensitive positioning[247](index=247&type=chunk)[248](index=248&type=chunk) - The CET1 capital ratio stood at **10.43%** as of March 31, 2025, comfortably exceeding the **4.50%** minimum regulatory requirement[34](index=34&type=chunk)[285](index=285&type=chunk) [Condensed Consolidated Financial Statements and Notes](index=57&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20and%20Notes%20%28Item%201%29) This section provides unaudited interim financial statements and detailed notes on accounting policies, financial instruments, and risk exposures [Condensed Consolidated Balance Sheets](index=57&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28unaudited%29) Total assets slightly decreased, while total liabilities declined and total equity increased due to comprehensive income Condensed Consolidated Balance Sheet Highlights | ($ in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$212,669** | **$212,927** | | Portfolio loans and leases, net | $119,807 | $117,439 | | Total investment securities (AFS, HTM, Trading) | $52,590 | $52,351 | | **Total Liabilities** | **$192,266** | **$193,282** | | Total deposits | $165,505 | $167,252 | | Long-term debt | $14,539 | $14,337 | | **Total Equity** | **$20,403** | **$19,645** | [Condensed Consolidated Statements of Income](index=58&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28unaudited%29) Net income slightly decreased due to higher credit loss provisions and lower noninterest income, despite growth in net interest income Condensed Consolidated Statement of Income Highlights | For the three months ended March 31, ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net Interest Income | $1,437 | $1,384 | | Provision for credit losses | $174 | $94 | | **Net Interest Income After Provision** | **$1,263** | **$1,290** | | Total noninterest income | $694 | $710 | | Total noninterest expense | $1,304 | $1,342 | | **Net Income** | **$515** | **$520** | | **Net Income Available to Common Shareholders** | **$478** | **$480** | [Notes to Condensed Consolidated Financial Statements](index=62&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) Notes detail accounting policies, financial instruments, credit quality, derivatives, and segment reporting, crucial for understanding financial health - Note 6 (Credit Quality): Details the increase in the Allowance for Loan and Lease Losses (ALLL) to **$2.384 billion**, driven by a **$151 million** provision for the commercial segment. It also shows nonaccrual loans increased to **$966 million** from **$823 million** at year-end[334](index=334&type=chunk)[359](index=359&type=chunk) - Note 9 (Derivatives): The total notional amount of derivatives was approximately **$158 billion**. The fair value of derivative assets was **$2.2 billion** and liabilities was **$2.5 billion**. The majority are free-standing derivatives for customer accommodation[409](index=409&type=chunk) - Note 14 (Legal Proceedings): The Bancorp estimates a reasonably possible loss related to legal and regulatory proceedings up to approximately **$74 million** in excess of amounts already accrued[468](index=468&type=chunk) - Note 19 (Business Segments): In January 2025, the Bancorp realigned its reporting structure, moving certain business banking customers from the Commercial segment to the Consumer and Small Business segment, with prior periods restated[509](index=509&type=chunk) [Part II. Other Information](index=111&type=section&id=Part%20II.%20Other%20Information) Covers legal proceedings, risk factors, and details on equity security sales and use of proceeds [Legal Proceedings (Item 1)](index=111&type=section&id=Legal%20Proceedings%20%28Item%201%29) The company faces ongoing legal proceedings, including merchant interchange litigation and solar lending investigations, with potential losses up to $74 million - In the Visa/MasterCard litigation, a trial for several remaining opt-out cases is scheduled to begin on **October 20, 2025**[462](index=462&type=chunk) - In the Klopfenstein v. Fifth Third Bank case, a jury found in favor of the Bank, but the plaintiffs filed a notice of appeal on **October 30, 2024**[463](index=463&type=chunk) - The Bancorp is cooperating with investigations by state attorneys general regarding the residential solar installation industry and lending practices of its subsidiary, Dividend Solar Finance, LLC[466](index=466&type=chunk) - The Bancorp estimates that it is reasonably possible it could incur losses related to legal and regulatory proceedings up to an aggregate of approximately **$74 million** in excess of amounts already accrued[468](index=468&type=chunk) [Risk Factors (Item 1A)](index=111&type=section&id=Risk%20Factors%20%28Item%201A%29) No material changes occurred to the risk factors previously disclosed in the 2024 Form 10-K - No material changes were made during the first quarter of 2025 to the risk factors disclosed in the 2024 Form 10-K[519](index=519&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds (Item 2)](index=111&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20%28Item%202%29) Information on unregistered equity sales and use of proceeds is detailed in the MD&A's Capital Management section - Information regarding equity security sales and repurchases is located in the 'Capital Management' section of the MD&A[520](index=520&type=chunk)