Core Viewpoint - Fifth Third Bancorp (FITB) is expected to report fourth-quarter 2024 results on January 21, with anticipated revenue growth but a decline in earnings year-over-year [1][17]. Financial Performance - In the last reported quarter, FITB's earnings exceeded the Zacks Consensus Estimate, driven by increased loan balances and strong capital ratios, although net interest income (NII), fee income, and higher expenses negatively impacted results [2]. - The bank has a history of earnings surprises, beating estimates in the last four quarters with an average surprise of 5.77% [2]. Loans and Net Interest Income - The Federal Reserve's interest rate cut of 50 basis points to 4.25-4.5% in the fourth quarter is expected to stabilize funding costs and improve lending conditions [3]. - Lending activities remained strong, supporting average interest-earning assets estimated at $197 billion, with a projected increase to $198 billion [4]. - FITB anticipates total average loans and leases to be flat to up 1% from the previous quarter's $117.4 billion, estimating $118.6 billion [5]. - Adjusted NII is expected to rise 1% from $1.43 billion in the third quarter, with the Zacks Consensus Estimate at $1.44 billion [5]. Non-Interest Revenues - Service charges on deposits are likely to benefit from stabilizing deposit balances, with a consensus estimate of $163.8 million, indicating a 1.8% sequential increase [6]. - Commercial banking revenues are projected at $165.5 million, reflecting a 1.5% sequential increase, while the estimate is $170.9 million [8]. - Mortgage banking income is expected to rise, with a consensus estimate of $52.71 million, suggesting a 5.4% increase from the prior quarter [10]. - Wealth and asset management revenues are projected to increase to $169.4 million, a 4% rise from the previous quarter [11]. - Card and processing revenues are estimated at $109.6 million, indicating a 3.4% rise from the prior quarter [12]. - Non-interest income is expected to rise 3-4% from $748 million in the third quarter, with a consensus estimate of $770.3 million, indicating an 8.3% rise [13]. Expenses and Asset Quality - FITB's expenses are anticipated to increase due to investments in technology and marketing, with adjusted non-interest expenses expected to remain flat at $1.2 billion, while total expenses may rise 6.5% to $1.3 billion [14]. - The bank is likely to set aside significant provisions for potential bad loans, with non-performing assets estimated at $776.9 million, a 5.9% rise from the previous quarter [15]. Earnings Expectations - The Zacks Consensus Estimate for FITB's fourth-quarter earnings is 87 cents per share, reflecting a 12.1% decline year-over-year, with revenues estimated at $2.2 billion, a 2.4% increase from the previous year [17]. - The Earnings ESP for FITB is -0.08%, indicating low chances of beating the consensus estimate [16].

Group 1 - The regional banking sector faced a crisis in 2023, leading to a generally bearish outlook on small bank stocks [1] - Concerns about the solvency of many small banks contribute to the negative sentiment towards their stocks [1] - The analyst has over a decade of market experience and a background in financial econometrics and economic forecasting, which informs their perspective [1]

Financial Overview - As of September 30, 2024, Fifth Third Bancorp had $214 billion in assets and operated 1,072 full-service banking centers and 2,060 ATMs across eleven states[11]. - The Bancorp's revenues are primarily derived from U.S. customers, with foreign revenue being immaterial for the reporting period[14]. - The Bancorp's financial performance is affected by changes in interest rates, credit quality, and economic trends[14]. - The total assets of the company reached $213,838 million, up from $208,385 million, indicating a growth of 2.2%[56]. - The total equity rose to $19.232 billion, up from $17.873 billion at December 31, 2023[57]. Revenue Composition - For the three and nine months ended September 30, 2024, net interest income accounted for 67% of total revenue, while noninterest income contributed 33%[14]. - Noninterest income sources include wealth management, service charges, and mortgage banking, contributing to overall revenue diversification[16]. - Noninterest income for Q3 2024 was $711 million, slightly down from $715 million in Q3 2023[43]. - Noninterest income decreased by $4 million for the three months ended September 30, 2024, primarily due to declines in leasing business revenue and mortgage banking net revenue[34]. Net Income and Earnings - The Bancorp's net income available to common shareholders for the third quarter of 2024 was $532 million, or $0.78 per diluted share, down from $623 million, or $0.91 per diluted share in the third quarter of 2023[30]. - Net income for the three and nine months ended September 30, 2024, was $573 million and $1.694 billion, respectively, compared to $660 million and $1.819 billion for the same periods in 2023, reflecting a decrease of 13.2% and 6.9%[126]. Interest Income and Expenses - For the three months ended September 30, 2024, net interest income was $1.438 billion, a decrease of 1% compared to the same period in 2023[29]. - Interest income on an FTE basis increased by $140 million to $2.675 billion for Q3 2024, driven by higher yields on loans and leases[51]. - Interest expense on average core deposits rose by $153 million for Q3 2024, reflecting increased competition for deposits[52]. - Net interest margin on an FTE basis was 2.90% for Q3 2024, down from 2.98% in Q3 2023[50]. Credit Losses and Provisions - The provision for credit losses was $160 million for the three months ended September 30, 2024, compared to $119 million in the same period in 2023, reflecting an increase of 34%[33]. - Provision for credit losses increased by $76 million and $247 million for the three and nine months ended September 30, 2024, respectively, driven by increases in allocated provisions related to commercial criticized assets[131]. - The allowance for loan and lease losses (ALLL) decreased by $17 million from December 31, 2023, to $2.3 billion at September 30, 2024[60]. Noninterest Expenses - Noninterest expense increased by $56 million for the three months ended September 30, 2024, primarily due to higher compensation and benefits expenses[35]. - Total noninterest expense increased by $56 million (5%) and $57 million (2%) for the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year[76]. - Compensation and benefits expense increased by $61 million (10%) and $63 million (3%) for the three and nine months ended September 30, 2024, respectively, primarily driven by increases in performance-based compensation and employee benefits[76]. Capital and Ratios - The CET1 capital ratio as of September 30, 2024, was 10.75%, indicating the capital strength of the Bancorp[37]. - Tangible common equity as a percentage of tangible assets was 8.00% as of September 30, 2024, up from 7.67% at the end of 2023[43]. Loans and Leases - Total loans and leases decreased to $117,415 million, down from $122,266 million, reflecting a decline of 4.4% year-over-year[56]. - Average loans and leases decreased by $4.9 billion, or 4%, for the three months ended September 30, 2024, compared to the same period in the prior year[89]. - Commercial loans and leases decreased by $1.6 billion, or 2%, from December 31, 2023, primarily due to a decrease in commercial and industrial loans[86]. Securities and Investments - Total investment securities were $53.4 billion at September 30, 2024, compared to $51.9 billion at December 31, 2023[93]. - The Bancorp transferred $12.6 billion of securities from available-for-sale to held-to-maturity in January 2024 to reduce potential capital volatility[97]. - The Bancorp recognized impairment losses on available-for-sale debt and other securities of $11 million and $21 million for the three and nine months ended September 30, 2024, compared to $1 million and $5 million for the same periods in 2023[96]. Consumer and Commercial Banking - Net income for the Consumer and Small Business Banking segment was $497 million for the three months ended September 30, 2024, compared to $739 million for the same period in 2023, a decrease of 32.8%[138]. - Net interest income for the Commercial Banking segment was $673 million for the three months ended September 30, 2024, down from $1.012 billion in 2023, reflecting a decrease of 33.5%[129]. Risk Management - The Bancorp's risk management strategy includes monitoring interest rate risk and managing the composition of its assets and liabilities[15]. - The Bancorp actively manages credit risk through concentration limits and adjusts underwriting guidelines based on economic conditions[179].

Financial Data and Key Metrics Changes - The company reported earnings per share of $0.78, or $0.85 excluding certain items, exceeding previous guidance [3] - Return on equity was 12.8%, the best among peers, with an adjusted efficiency ratio improving to 56.1% [3][4] - Net interest income (NII) for the quarter was over $1.4 billion, increasing 2% sequentially, while net interest margin improved by 2 basis points [12][14] - The common dividend was increased by 6% to $0.37 per share, and $200 million in share repurchases were executed [8][11] Business Line Data and Key Metrics Changes - In the consumer bank, consumer households grew by 2.7% year-over-year, with a notable 6% growth in the Southeast [5] - The commercial bank saw a 20% sequential increase in middle market loan production, with a year-over-year increase of over 30% [7] - Wealth and asset management achieved record quarterly revenues, growing by 12% year-over-year, with total assets under management increasing by $12 billion to $69 billion [8][16] Market Data and Key Metrics Changes - Retail deposits grew nearly 16% year-over-year, gaining market share in 14 of 15 focused MSAs in the Southeast [6] - The company maintained its number two position in Midwest markets and number six in Southeast markets [6] - Average core deposits were up 1% sequentially, driven by higher money market balances [14] Company Strategy and Development Direction - The company focuses on stability, profitability, and growth, aiming to deliver strong and predictable results despite economic uncertainties [3][9] - Strategic growth investments are expected to provide long-term organic growth that is not dependent on macroeconomic conditions [5] - Plans to open 19 new branch locations in the fourth quarter and accelerate openings through 2028, particularly in the Southeast [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the near-term economic outlook but acknowledged potential challenges such as interest rate volatility and geopolitical uncertainty [9] - The company expects to deliver NII, fees, expenses, and credit costs within full-year guidance ranges provided earlier in the year [4] - Management remains confident in the ability to manage deposit costs and drive NII performance in the upcoming quarters [14][21] Other Important Information - The company experienced a 200 basis point pickup on front book, back book repricing in the consumer portfolio [13] - Non-performing assets (NPAs) increased by $82 million during the quarter, but the NPA ratio remains below peer median levels [18] - The company is actively managing credit risks and does not expect significant impacts from recent hurricanes on losses [19] Q&A Session Summary Question: Discussion on fourth quarter NII guidance and deposit betas - Management remains optimistic about NII trajectory and deposit performance, noting that broker deposits and wholesale funding are expected to decrease [25][27] Question: Expectations for loan growth and NII in 2025 - Management indicated that while loan growth is desired, record NII can be achieved without significant loan growth, with positive signs in consumer lending [28][29] Question: Impact of potential Fed rate cuts on NII growth - A steeper yield curve would benefit NII, with expectations for cost reductions on the liability side of the balance sheet [31][32] Question: Capital allocation strategy regarding buybacks and excess capital - The company aims for a dividend payout ratio of 35% to 45% and will manage buybacks based on organic growth opportunities [35][36] Question: Loan production and growth expectations - Elevated paydowns and decreased revolver utilization impacted loan growth, but management expects stabilization and normalization in the coming quarters [38][39] Question: Competition from non-bank lenders - Management acknowledged increased competition from private credit but emphasized Fifth Third's conservative lending practices [46][47] Question: Credit quality and normalization - Delinquencies remain low, and while some softness is noted in specific consumer portfolios, overall credit quality is stable [63][64]

Core Viewpoint - Fifth Third Bancorp (FITB) reported third-quarter 2024 adjusted earnings per share (EPS) of 85 cents, exceeding the Zacks Consensus Estimate of 82 cents, but down from 92 cents in the prior-year quarter [1] - The results were supported by an increase in loan balances and strong capital ratios, although net interest income (NII), fee income, and higher expenses negatively impacted performance [1] Financial Performance - Total revenues for the quarter were $2.14 billion, a decrease of 1% year over year, and fell short of the Zacks Consensus Estimate of $2.16 billion [2] - NII (on a fully taxable equivalent basis) was $1.43 billion, down 1.2% year over year, with a net interest margin shrinking to 2.9% from 2.98% [2] - Non-interest income slightly declined to $711 million, primarily due to reduced revenues from mortgage banking and leasing [2] Expense Analysis - Non-interest expenses rose by 4.7% year over year to $1.24 billion, driven by increases in compensation, technology, and other non-interest expenses [3] Loan and Deposit Trends - As of September 30, 2024, average loans and leases increased marginally to $117.4 billion, while average deposits remained stable at $167.2 billion [4] Credit Quality Assessment - The provision for credit losses was $160 million, up 34.5% year over year, with total non-performing loans and leases increasing to $725 million, an 18.5% rise [5] - Net charge-offs rose to $142 million, or 0.48% of average loans and leases, compared to 0.41% in the prior-year quarter [5] - The total allowance for credit losses decreased by 3.2% to $2.44 billion year over year [5] Capital Position - The Tier 1 risk-based capital ratio improved to 12.07% from 11.06% year over year, and the CET1 capital ratio increased to 10.75% from 9.8% [6] Capital Distribution Activities - In the reported quarter, FITB repurchased $200 million of its common shares and increased its quarterly cash dividend by 6% to 37 cents per share [7] Market Outlook - The company's strong capital position is expected to support future capital distribution activities, while the recent dividend increase may enhance investor confidence [8] - However, lower NII and fee income may pressure top-line growth moving forward [8]

Key Financial Data Key Highlights (a) (a) (a) (a) (b) (c) (a) (d)(e) (a) (a) Fifth Third Bancorp Reports Third Quarter 2024 Diluted Earnings Per Share of $0.78 Fee income growth and resilient balance sheet leads to another quarter of strong returns Reported results included a negative $0.07 impact from certain items on page 2 $ in millions for all balance sheet and income statement items 3Q24 2Q24 3Q23 Stability: • Sequential growth in net interest income and net interest margin driven by the repricing bene ...

Fifth Third Bancorp (FITB) is scheduled to report third-quarter 2024 results on Oct. 18 before the opening bell. Quarterly revenues are expected to have registered growth in the to-be-reported quarter, while earnings are likely to have declined on a year-over-year basis. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar. In the last reported quarter, the bank's earnings surpassed the Zacks Consensus Estimate. Results benefited from a fall in expenses and provisions for credit losses, ...

Fifth Third Bancorp (FITB) shares touched a 52-week high of $43.85 on Thursday following the Federal Reserve's announcement of a 50-basis points interest rate cut. The FITB stock closed slightly lower at $43.64, gaining nearly 18% over the past six months. It has outperformed its industry, the S&P 500 Index and its close peers like Comerica Incorporated (CMA) and Bank of America Corporation (BAC) in the same time frame. Six-Month Price Performance Image Source: Zacks Investment Research Key Drivers Behind F ...

At the Barclays Global Financial Services Conference, Fifth Third Bancorp (FITB) provided an update on its third-quarter 2024 outlook. Fifth Third stated that total revenues are expected to rise 2-3% sequentially in the third quarter from its baseline of $2.2 billion compared with the previous guidance of 1-2% increase. Also, management updated its noninterest income, now expecting a 3-4% increase from its baseline of $717 million, up from the earlier projection of a 1-2% rise. Average loans and leases are ...

Fifth Third Bancorp (FITB) is benefiting from robust revenue growth and solid liquidity. Strategic acquisitions diversified Fifth Third's revenue sources, supporting its top-line growth. Hence, it seems to be a wise idea to add the FITB stock to your portfolio now, given its solid fundamentals and decent growth prospects. The Zacks Consensus Estimate for FITB's earnings has been revised to 3.3% and 2.3% north for 2023 and 2024, respectively, in the past month. This shows that analysts are optimistic regardi ...