Core Insights - Fifth Third Bancorp (FITB) is expanding its retail banking presence in the Southeast by launching its first financial center in Alabama, marking a significant milestone in its multi-year growth strategy [1][9] - The bank plans to open 200 new retail branches by 2028, with approximately 50% of its locations expected to be in the Southeast region by the end of the rollout [1][7] Expansion Details - FITB has opened its first Alabama financial center in Huntsville and plans to establish 15 financial centers across the state over the next three years, including 10 in Huntsville and five in Birmingham [2][9] - The expansion aims to build a strong market presence and establish a top-tier deposit share in both cities [2] Customer Experience and Technology - The bank's retail footprint is designed to provide a complementary digital and in-person customer experience, utilizing data and analytics for personalized interactions [3] - The Momentum Banking app offers features such as Early Pay, SmartShield security, free overdraft protection, and estate planning to meet various financial needs [3] Progress and Performance - Since announcing its Southeast-focused expansion strategy in late 2024, FITB has secured approximately 80% of its targeted sites and accelerated its expansion pace [4] - In 2023, FITB opened 37 new branches in high-growth Southeast regions, followed by 31 branches in 2024, contributing to a five-year CAGR of 11% in total deposits as of 2024 [5][6] Future Growth Expectations - The bank anticipates its Southeast expansion will contribute between $15 billion and $20 billion in deposit growth over the next seven years, reinforcing its position as a leading retail bank in the region [7] - New branches opened between 2022 and 2024 have each generated over $25 million in deposits within their first 12 months, exceeding initial projections [6] Market Performance - Over the past year, FITB's shares have risen 6.4%, compared to 19.9% growth for the industry [8]

Part I. Financial Information [Glossary of Abbreviations and Acronyms](index=5&type=section&id=Glossary%20of%20Abbreviations%20and%20Acronyms) This section defines key abbreviations and acronyms used in the financial statements and accompanying notes - The glossary defines key financial and regulatory terms like **ACL**, **FTE**, **NII**, and **CET1** to aid report understanding[10](index=10&type=chunk)[11](index=11&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (Item 2)](index=6&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(Item%202)) This section analyzes Fifth Third Bancorp's financial condition, operations, and risk management, including non-GAAP measures and accounting policies [Overview](index=6&type=section&id=Overview) Fifth Third Bancorp, a diversified financial services company with **$210 billion** in assets, primarily generates revenue from net interest income (**67%**) and noninterest income (**33%**) Fifth Third Bancorp Key Information (June 30, 2025) | Metric | Value | | :-------------------------------- | :------------------- | | Total Assets | $210 billion | | Banking Centers | 1,089 | | Branded ATMs | 2,170 | | Revenue Composition (FTE) | | | - Net Interest Income | 67% | | - Noninterest Income | 33% | - During Q1 2025, the Bancorp settled a **$225 million** accelerated share repurchase, and on June 13, 2025, authorized purchasing **100 million** additional common shares[19](index=19&type=chunk) - On January 28, 2025, the Bank issued **$700 million** in fixed/floating-rate senior notes and **$300 million** in floating-rate senior notes, both due January 28, 2028[21](index=21&type=chunk)[22](index=22&type=chunk) - The 'One Big Beautiful Bill Act,' enacted July 4, 2025, significantly changed the U.S. tax code, and the Bancorp is evaluating its impact on tax rates and deferred tax assets/liabilities, with effects to be reflected in Q3 2025[24](index=24&type=chunk) Key Performance Indicators (June 30, 2025 vs. 2024) | Indicator | Q2 2025 | Q2 2024 | % Change (QoQ) | H1 2025 | H1 2024 | % Change (YoY) | | :--------------------------------------- | :------ | :------ | :-------------- | :------ | :------ | :-------------- | | Net income available to common shareholders ($M) | $591 | $561 | 5% | $1,069 | $1,041 | 3% | | Diluted EPS | $0.88 | $0.81 | 9% | $1.58 | $1.51 | 5% | | Net interest income (FTE) ($M) | $1,500 | $1,393 | 8% | $2,942 | $2,783 | 6% | | Noninterest income ($M) | $750 | $695 | 8% | $1,444 | $1,406 | 3% | | Total revenue (FTE) ($M) | $2,250 | $2,088 | 8% | $4,386 | $4,189 | 5% | | Provision for credit losses ($M) | $173 | $97 | 78% | $347 | $191 | 82% | | Noninterest expense ($M) | $1,264 | $1,221 | 4% | $2,568 | $2,562 | —% | | Return on average assets | 1.20% | 1.14% | 5% | 1.09% | 1.06% | 3% | | Return on average common equity | 12.8% | 13.6% | (6)% | 11.8% | 12.6% | (6)% | | CET1 Capital Ratio | 10.58% | N/A | N/A | N/A | N/A | N/A | | Nonperforming Portfolio Assets Ratio | 0.72% | N/A | N/A | N/A | N/A | N/A | | Net Charge-off Ratio | 0.45% | 0.49% | (8)% | 0.45% | 0.44% | 2% | [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP financial measures to U.S. GAAP, offering insights into the Bancorp's financial performance and capital adequacy for industry comparison - Non-GAAP measures such as **Net Interest Income (FTE)** and **Efficiency Ratio (FTE)** are presented to adjust for tax-favored income and provide relevant comparisons[38](index=38&type=chunk)[39](index=39&type=chunk) Non-GAAP Financial Measures (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Net interest income (U.S. GAAP) ($M) | $1,495 | $1,387 | $2,932 | $2,771 | | FTE adjustment ($M) | $5 | $6 | $10 | $12 | | Net interest income on an FTE basis ($M) | $1,500 | $1,393 | $2,942 | $2,783 | | Net interest margin on an FTE basis | 3.12% | 2.88% | 3.08% | 2.87% | | Net interest rate spread on an FTE basis | 2.40% | 2.04% | 2.36% | 2.04% | | Efficiency ratio on an FTE basis | 56.2% | 58.5% | 58.6% | 61.2% | Return on Average Tangible Common Equity (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Tangible net income available to common shareholders ($M) | $596 | $568 | $1,080 | $1,055 | | Average tangible common equity ($M) | $13,557 | $11,562 | $13,220 | $11,567 | | Return on average tangible common equity | 17.6% | 19.8% | 16.5% | 18.3% | Non-GAAP Capital Ratios (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | | :--------------------------------------- | :------------ | :----------- | | Tangible equity as a percentage of tangible assets | 9.39% | 9.02% | | Tangible common equity as a percentage of tangible assets | 8.38% | 8.03% | [Recent Accounting Standards](index=13&type=section&id=Recent%20Accounting%20Standards) The Bancorp adopted **ASU 2023-09** on January 1, 2025, amending income tax disclosures, and is evaluating **ASU 2024-03**, effective in 2027, for expense disaggregation - **ASU 2023-09**, adopted January 1, 2025, mandates new disclosures for effective tax rate reconciliation, income taxes paid, and disaggregation of income and tax expense by jurisdiction[328](index=328&type=chunk) - **ASU 2024-03**, effective in 2027, introduces new requirements for disaggregating income statement expenses, including compensation and depreciation, with the Bancorp evaluating its impact[329](index=329&type=chunk) [Critical Accounting Policies](index=13&type=section&id=Critical%20Accounting%20Policies) The Bancorp's critical accounting policies, including **ALLL** and fair value measurements, involve significant judgment, with no material changes to valuation techniques during H1 2025 - Key critical accounting policies encompass **ALLL**, reserve for unfunded commitments, servicing rights valuation, goodwill, legal contingencies, and fair value measurements[46](index=46&type=chunk) - No material changes to valuation techniques or models occurred during the six months ended June 30, 2025[46](index=46&type=chunk) [Statements of Income Analysis](index=13&type=section&id=Statements%20of%20Income%20Analysis) Net income available to common shareholders increased by **5%** to **$591 million** in Q2 2025 and **3%** to **$1.1 billion** in H1 2025, driven by higher net interest and noninterest income, despite increased credit loss provisions Net Income Available to Common Shareholders (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Net income available to common shareholders | $591 | $561 | 5% | | Diluted EPS | $0.88 | $0.81 | 9% | | Preferred stock dividends | $37 | $40 | (8)% | | Metric | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Net income available to common shareholders | $1,069 | $1,041 | 3% | | Diluted EPS | $1.58 | $1.51 | 5% | | Preferred stock dividends | $73 | $81 | (10)% | Net Interest Income (FTE) and Margin (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change ($M) | H1 2025 | H1 2024 | Change ($M) | | :--------------------------------------- | :------ | :------ | :---------- | :------ | :------ | :---------- | | Net interest income (FTE) | $1,500M | $1,393M | $107M | $2,942M | $2,783M | $159M | | Net interest margin (FTE) | 3.12% | 2.88% | 0.24% | 3.08% | 2.87% | 0.21% | | Net interest rate spread (FTE) | 2.40% | 2.04% | 0.36% | 2.36% | 2.04% | 0.32% | - **Net interest income (FTE)** was positively impacted by lower liability rates, higher loan balances, and increased consumer loan yields, partially offset by lower short-term investment balances and commercial loan yields[31](index=31&type=chunk)[49](index=49&type=chunk) - Q2 2025 net interest margin included a **$14 million** benefit from a commercial loan payoff, with future margin expected to remain stable or modestly increase due to loan growth and liability management[51](index=51&type=chunk) Provision for Credit Losses (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Provision for credit losses | $173 | $97 | 78% | $347 | $191 | 82% | | Net losses charged-off as % of avg. portfolio loans and leases | 0.45% | 0.49% | (8)% | 0.45% | 0.44% | 2% | | Nonperforming portfolio assets as % of portfolio loans and leases and OREO | 0.72% (June 30, 2025) | 0.71% (Dec 31, 2024) | 1% | N/A | N/A | N/A | - The provision for credit losses increased due to deteriorating economic forecasts for **ACL** calculation, higher loan balances, and increased specific reserves on commercial and industrial loans[32](index=32&type=chunk)[64](index=64&type=chunk) Noninterest Income Components (Q2 2025 vs. Q2 2024) | Component | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Total noninterest income | $750 | $695 | 8% | $1,444 | $1,406 | 3% | | Wealth and asset management revenue | $166 | $159 | 4% | $338 | $320 | 6% | | Commercial payments revenue | $152 | $154 | (1)% | $305 | $298 | 2% | | Consumer banking revenue | $147 | $139 | 6% | $284 | $275 | 3% | | Capital markets fees | $90 | $93 | (3)% | $179 | $190 | (6)% | | Commercial banking revenue | $79 | $90 | (12)% | $160 | $174 | (8)% | | Mortgage banking net revenue | $56 | $50 | 12% | $113 | $104 | 9% | | Other noninterest income | $44 | $7 | 529% | $58 | $32 | 81% | | Securities gains, net | $16 | $3 | 433% | $7 | $13 | (46)% | - Noninterest income increased in Q2 2025 due to higher wealth and asset management, consumer banking, mortgage banking, and other income, with similar drivers for H1 2025, partially offset by lower capital markets and commercial banking fees[33](index=33&type=chunk)[34](index=34&type=chunk)[67](index=67&type=chunk) Noninterest Expense Components (Q2 2025 vs. Q2 2024) | Component | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Total noninterest expense | $1,264 | $1,221 | 4% | $2,568 | $2,562 | —% | | Compensation and benefits | $698 | $656 | 6% | $1,447 | $1,409 | 3% | | Technology and communications | $126 | $114 | 11% | $250 | $231 | 8% | | Marketing expense | $43 | $34 | 26% | $71 | $66 | 8% | | Other noninterest expense | $215 | $242 | (11)% | $438 | $507 | (14)% | | Efficiency ratio on an FTE basis | 56.2% | 58.5% | (4)% | 58.6% | 61.2% | (4)% | - Noninterest expense rose in Q2 2025 due to increased compensation, technology, and marketing costs, partially offset by lower other noninterest expenses, with a minimal increase for H1 2025[35](index=35&type=chunk)[84](index=84&type=chunk) Applicable Income Taxes (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Income before income taxes | $808 | $764 | $1,461 | $1,424 | | Applicable income tax expense | $180 | $163 | $319 | $302 | | Effective tax rate | 22.2% | 21.3% | 21.8% | 21.2% | - The effective tax rate increased in Q2 and H1 2025 due to higher state tax expense, partially offset by increased excess tax benefits from share-based compensation[92](index=92&type=chunk) [Balance Sheet Analysis](index=25&type=section&id=Balance%20Sheet%20Analysis) The Bancorp's total assets decreased to **$209.99 billion** at June 30, 2025, while total loans and leases increased by **2%** to **$123.04 billion**, and core deposits decreased by **2%** to **$161.78 billion** Total Assets (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total Assets | $209,991 | $212,927 | (1)% | Loans and Leases (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total loans and leases (incl. held for sale) | $123,042 | $120,431 | 2% | | Commercial loans and leases | $74,226 | $73,359 | 1% | | Consumer loans | $48,816 | $47,072 | 4% | | - Indirect secured consumer loans | $17,591 | $16,313 | 8% | | - Home equity | $4,485 | $4,188 | 7% | - Average loans and leases increased by **5%** in Q2 2025, driven by **4%** growth in commercial loans (**$3.2 billion**) and **7%** growth in consumer loans (**$3.1 billion**)[99](index=99&type=chunk) - Average commercial loan growth was primarily in commercial and industrial, commercial mortgage, and commercial leases, driven by increased originations and strategic shifts[100](index=100&type=chunk) - Average consumer loan growth was primarily in indirect secured, residential mortgage, home equity, and solar energy loans, partially offset by other consumer loan paydowns[101](index=101&type=chunk) Investment Securities (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total investment securities | $51,628 | $52,349 | (1)% | | Available-for-sale debt and other securities (amortized cost) | $41,731 | $43,878 | (5)% | | Held-to-maturity securities (amortized cost) | $11,630 | $11,278 | 3% | | Total net unrealized losses on AFS debt and other securities | $3,546 | $4,636 | (23)% | - In January 2024, **$12.6 billion** of available-for-sale securities were transferred to held-to-maturity to reduce capital volatility, with **$994 million** in pre-tax unrealized losses amortized into income[110](index=110&type=chunk)[113](index=113&type=chunk) - Other short-term investments decreased by **$4.1 billion** to **$13.0 billion** at June 30, 2025, due to deploying excess liquidity for loan growth and proactive liability management[122](index=122&type=chunk)[312](index=312&type=chunk) Deposits (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total deposits | $164,207 | $167,252 | (2)% | | Total core deposits | $161,781 | $164,894 | (2)% | | - Transaction deposits | $150,898 | $154,096 | (2)% | | - Demand deposits | $42,174 | $41,038 | 3% | | - Interest checking deposits | $55,524 | $59,306 | (6)% | | - Savings deposits | $16,614 | $17,147 | (3)% | | - Money market deposits | $36,586 | $36,605 | —% | | CDs $250,000 or less | $10,883 | $10,798 | 1% | | CDs over $250,000 | $2,426 | $2,358 | 3% | - Core deposits decreased by **$3.1 billion (2%)** from December 31, 2024, mainly due to lower interest checking and savings deposits, partially offset by increased demand deposits[125](index=125&type=chunk) - Average core deposits decreased by **1%** in Q2 2025 due to lower transaction deposits and smaller CDs, while larger CDs decreased by **54%** due to maturities[128](index=128&type=chunk)[129](index=129&type=chunk) Borrowings (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total borrowings | $18,063 | $18,991 | (5)% | | Other short-term borrowings | $3,393 | $4,450 | (24)% | | Long-term debt | $14,492 | $14,337 | 1% | - Total borrowings decreased by **$928 million (5%)** from December 31, 2024, primarily due to a **$1.1 billion** reduction in other short-term borrowings from proactive liability management[133](index=133&type=chunk) - Average borrowings increased by **$790 million (4%)** in Q2 2025, driven by higher short-term borrowings to fund loan growth and offset decreased core deposits, partially offset by lower long-term debt[134](index=134&type=chunk) [Business Segment Review](index=36&type=section&id=Business%20Segment%20Review) The Bancorp operates through Commercial, Consumer and Small Business, and Wealth and Asset Management segments, with a January 2025 realignment and central interest rate risk management via Funds Transfer Pricing (FTP) - In January 2025, the Bancorp realigned its reporting, moving certain business banking relationships from Commercial to Consumer and Small Business Banking, applied retrospectively[139](index=139&type=chunk) - The Bancorp uses a **Funds Transfer Pricing (FTP)** methodology to centrally manage interest rate risk, insulating segments from benchmark volatility and enabling focus on customer service[136](index=136&type=chunk) Income (Loss) Before Income Taxes (FTE) by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 ($M) | Q2 2024 ($M) | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Commercial Banking | $384 | $372 | $646 | $796 | | Consumer and Small Business Banking | $648 | $648 | $1,170 | $1,335 | | Wealth and Asset Management | $65 | $59 | $116 | $117 | | General Corporate and Other | $(284) | $(309) | $(461) | $(812) | - Commercial Banking income before taxes (FTE) increased in Q2 2025 due to lower credit loss provision, offset by lower net interest income and higher noninterest expense, while H1 2025 saw a decrease due to similar factors[144](index=144&type=chunk) - Consumer and Small Business Banking income before taxes was flat in Q2 2025, as increased income was offset by higher credit loss provision and noninterest expense, while H1 2025 saw a decrease due to similar factors[154](index=154&type=chunk) - Wealth and Asset Management income before taxes increased in Q2 2025 due to higher net interest and noninterest income, offset by increased noninterest expense, while H1 2025 saw a decrease due to similar factors[163](index=163&type=chunk) - General Corporate and Other's net interest income (FTE) significantly increased in Q2 and H1 2025, driven by lower **FTP** credits on deposits and reduced interest expense, partially offset by lower short-term investment income[171](index=171&type=chunk) [Risk Management—Overview](index=45&type=section&id=Risk%20Management%E2%80%94Overview) This section outlines Fifth Third Bancorp's Enterprise Risk Management Framework and Three Lines of Defense, covering key risks like credit, liquidity, and interest rate, emphasizing identification and control for financial strength - The Bancorp's Enterprise Risk Management Framework addresses key risks including credit, liquidity, interest rate, price, legal and regulatory compliance, operational, reputation, and strategic risks through its Three Lines of Defense structure[176](index=176&type=chunk) - Effective risk management relies on identification, measurement, monitoring, control, and reporting to ensure financial performance and capital strength[16](index=16&type=chunk) [Credit Risk Management](index=45&type=section&id=Credit%20Risk%20Management) Fifth Third Bancorp's credit risk management focuses on conservatism, diversification, and monitoring, with the **Allowance for Credit Losses (ACL)** increasing by **$72 million** due to deteriorating economic forecasts and higher loan balances - The Bancorp's credit risk management strategy emphasizes conservatism, diversification, and continuous monitoring through risk-based limits and portfolio reviews[178](index=178&type=chunk) - Internally developed models estimate expected credit losses for loans and leases, forecasting losses based on default probability, expected balance at default, and expected loss percentage[180](index=180&type=chunk) - Commercial portfolio default probabilities are based on dual risk rating systems and macroeconomic conditions, while consumer and residential mortgage portfolios consider **FICO** scores, delinquency history, and macroeconomic factors[181](index=181&type=chunk)[182](index=182&type=chunk) Commercial Loan and Lease Portfolio by Industry (June 30, 2025 vs. Dec 31, 2024) | Industry | Outstanding (June 30, 2025, $M) | Nonaccrual (June 30, 2025, $M) | Outstanding (Dec 31, 2024, $M) | Nonaccrual (Dec 31, 2024, $M) | | :--------------------------------------- | :------------------------------ | :----------------------------- | :------------------------------ | :----------------------------- | | Real estate | $14,754 | $9 | $14,375 | $6 | | Manufacturing | $9,010 | $83 | $8,850 | $68 | | Retail trade | $3,610 | $150 | $3,495 | $45 | | Business services | $5,597 | $91 | $5,596 | $113 | | Total | $74,152 | $508 | $73,293 | $456 | - The Bancorp manages consumer portfolio credit risk through concentration limits, focusing on **FICO** scores, **LTVs**, and geographic concentrations[196](index=196&type=chunk) - Approximately **28%** of residential mortgage **ARM** loans resetting in the next 12 months are expected to see a **2.6%** average rate increase, resulting in a **34%** average increase in monthly payments[200](index=200&type=chunk) Residential Mortgage Portfolio Loans by LTV at Origination (June 30, 2025) | LTV at Origination | Outstanding ($M) | Weighted Average LTV | | :--------------------------------------- | :--------------- | :------------------- | | LTV ≤ 80% | $11,764 | 63.9% | | LTV > 80%, with mortgage insurance | $3,242 | 95.4% | | LTV > 80%, no mortgage insurance | $2,675 | 91.2% | | Total | $17,681 | 74.1% | Home Equity Portfolio Loans Outstanding by Refreshed FICO Score (June 30, 2025) | FICO Score | Outstanding ($M) | % of Total | | :--------------------------------------- | :--------------- | :--------- | | FICO ≤ 659 | $371 | 8% | | FICO 660-719 | $695 | 15% | | FICO ≥ 720 | $3,419 | 77% | | Total | $4,485 | 100% | Indirect Secured Consumer Portfolio Loans by FICO Score at Origination (June 30, 2025) | FICO Score | Outstanding ($M) | % of Total | | :--------------------------------------- | :--------------- | :--------- | | FICO ≤ 659 | $179 | 1% | | FICO 660-719 | $3,145 | 18% | | FICO ≥ 720 | $14,267 | 81% | | Total | $17,591 | 100% | Nonperforming Assets (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total nonperforming assets | $913 | $860 | 6% | | Nonaccrual portfolio loans and leases | $853 | $823 | 4% | | OREO and other repossessed property | $33 | $30 | 10% | | Nonperforming portfolio assets as % of portfolio loans and leases and OREO | 0.72% | 0.71% | 1% | | ACL as % of nonperforming portfolio loans and leases | 300% | 302% | (1)% | Net Losses Charged-off as a Percent of Average Portfolio Loans and Leases (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Total net losses charged-off as % of average portfolio loans and leases | 0.45% | 0.49% | 0.45% | 0.44% | | Commercial loans and leases | 0.38% | 0.45% | 0.37% | 0.32% | | Consumer loans | 0.56% | 0.57% | 0.59% | 0.62% | Allowance for Credit Losses (ACL) (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | Total ALLL | $2,412 | $2,352 | 3% | | Reserve for unfunded commitments | $146 | $134 | 9% | | Total ACL | $2,558 | $2,486 | 3% | | Total ALLL as % of portfolio loans and leases | 1.97% | 1.96% | 1% | | Total ACL as % of portfolio loans and leases | 2.09% | 2.08% | 0.5% | - The **ACL** increased by **$72 million** from December 31, 2024, due to deteriorating economic forecasts, increased specific reserves on commercial and industrial loans, and higher loan balances[242](index=242&type=chunk) - The Bancorp assigned **80%** probability to the Baseline economic scenario for **ACL** calculation, assuming **3.7%** peak inflation in Q2 2026, **1.5%** real **GDP** growth, and **4.2%** average unemployment in 2025[243](index=243&type=chunk) - Qualitative adjustments led to a net increase in **ACL**, mainly for nonowner-occupied commercial loans secured by office buildings, reflecting uncaptured commercial real estate market challenges[246](index=246&type=chunk)[247](index=247&type=chunk) [Interest Rate and Price Risk Management](index=65&type=section&id=Interest%20Rate%20and%20Price%20Risk%20Management) Fifth Third Bancorp actively manages interest rate risk using **NII** simulation and **EVE** analysis, employing derivatives to hedge exposures, with **NII** sensitivity negative in rising-rate scenarios and **EVE** sensitivity negative in rising-rate and slightly negative in a **-200 bps** falling-rate scenario - Interest rate risk significantly impacts net interest income, interest-sensitive fees, loan and deposit demand, credit losses, and mortgage origination volumes[252](index=252&type=chunk) - The Bancorp uses **NII** simulation and **EVE** analysis to manage interest rate risk, incorporating assumptions on prepayment rates, deposit attrition, and repricing sensitivity[256](index=256&type=chunk)[261](index=261&type=chunk)[267](index=267&type=chunk) Estimated NII Sensitivity Profile and Policy Limits (June 30, 2025 vs. June 30, 2024) | Change in Interest Rates (bps) | % Change in NII (FTE) 12 Months (June 30, 2025) | % Change in NII (FTE) 13-24 Months (June 30, 2025) | Policy Limit 12 Months | Policy Limit 13-24 Months | | :--------------------------------------- | :--------------------------------------------- | :----------------------------------------------- | :--------------------- | :------------------------ | | +200 Ramp over 12 months | (3.51)% | (4.48)% | (6.00)% | (7.00)% | | +100 Ramp over 12 months | (1.71)% | (2.03)% | N/A | N/A | | -100 Ramp over 12 months | 0.88% | 0.65% | N/A | N/A | | -200 Ramp over 12 months | 1.29% | (0.21)% | (6.00)% | (7.00)% | - **NII** sensitivity is negative in rising-rate scenarios due to higher interest expense, while in falling-rate scenarios, **NII** is projected to increase in year one but decrease in year two as deposit rates floor[263](index=263&type=chunk) Estimated EVE Sensitivity Profile (June 30, 2025 vs. June 30, 2024) | Change in Interest Rates (bps) | % Change in EVE (June 30, 2025) | Policy Limit | % Change in EVE (June 30, 2024) | Policy Limit | | :--------------------------------------- | :------------------------------ | :----------- | :------------------------------ | :----------- | | +200 Shock | (5.85)% | (12.00)% | (5.35)% | (12.00)% | | +100 Shock | (2.48)% | N/A | (2.25)% | N/A | | -100 Shock | 0.95% | N/A | 1.52% | N/A | | -200 Shock | (0.38)% | (12.00)% | 1.50% | (12.00)% | - The Bancorp uses derivative instruments, like interest rate swaps, to manage interest rate risk by converting fixed-rate funding to floating-rate or hedging fair value and cash flow exposures[272](index=272&type=chunk)[273](index=273&type=chunk) Summary of Qualifying Hedging Instruments (June 30, 2025) | Instrument Type | Notional Amount ($M) | Fair Value ($M) | Weighted-Average Remaining Term (years) | Weighted-Average Fixed Rate | | :--------------------------------------- | :------------------- | :-------------- | :-------------------------------------- | :-------------------------- | | Interest rate swaps related to C&I loans – cash flow – receive-fixed | $11,000 | $(2) | 5.8 | 3.05% | | Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed | $4,000 | $(28) | 6.6 | 3.50% | | Interest rate swaps related to long-term debt – fair value – receive-fixed | $4,955 | $(6) | 4.2 | 5.04% | | Total interest rate swaps | $19,955 | $(36) | N/A | N/A | - The residential Mortgage Servicing Rights (**MSR**) portfolio's fair value was **$1.6 billion** at June 30, 2025, down from **$1.7 billion**, and the Bancorp uses a non-qualifying hedging strategy to manage **MSR** valuation risk[279](index=279&type=chunk) [Liquidity Risk Management](index=71&type=section&id=Liquidity%20Risk%20Management) Fifth Third Bancorp manages liquidity risk by maintaining sufficient funds through a granular core deposit base and stable long-term funding, supported by a contingency plan and stress testing, with over **$100 billion** in readily available liquidity as of June 30, 2025 - Liquidity risk is managed by maintaining adequate funds through a granular core deposit base and stable long-term funding, supported by a contingency funding plan and liquidity stress testing[283](index=283&type=chunk) - Primary funding sources include noninterest income, loan and lease payments, securities sales, loan securitizations, core deposits, and wholesale borrowings[286](index=286&type=chunk) - As of June 30, 2025, the Bancorp had over **$100 billion** in readily available liquidity, with **$8.1 billion** in principal and interest payments expected from investment securities within 12 months[287](index=287&type=chunk)[292](index=292&type=chunk) - The Bank had approximately **$71.3 billion** in borrowing capacity available through secured sources like **FRB** and **FHLB** as of June 30, 2025[291](index=291&type=chunk) - As of June 30, 2025, the parent company had sufficient liquidity for **30 months** of obligations and dividends without external capital market access or subsidiary dividends[293](index=293&type=chunk) Credit Ratings (as of August 5, 2025) | Agency | Moody's | Standard and Poor's | Fitch | DBRS Morningstar | | :--------------------------------------- | :------ | :------------------ | :---- | :--------------- | | Fifth Third Bancorp: | | | | | | - Senior debt | Baa1 | BBB+ | A- | A | | Fifth Third Bank, National Association: | | | | | | - Long-term deposit | A1 | No rating | A | AH | | - Senior debt | A3 | A- | A- | AH | | Rating Agency Outlook | Stable | Stable | Stable | Positive | [Capital Management](index=73&type=section&id=Capital%20Management) Fifth Third Bancorp maintains robust capital levels through comprehensive planning, adhering to Basel III and **FRB** requirements, with a **CET1** capital ratio of **10.58%** at June 30, 2025, and authorized a **100 million** share repurchase program in June 2025 - The Bancorp's annual capital plan, approved by the Board, considers macroeconomic and regulatory environments, aligning with **FRB** requirements and stress capital buffer[299](index=299&type=chunk)[304](index=304&type=chunk) Regulatory Capital Ratios (June 30, 2025 vs. Dec 31, 2024) | Metric | Minimum Requirement | Well-Capitalized Requirement | June 30, 2025 Ratio | Dec 31, 2024 Ratio | | :--------------------------------------- | :------------------ | :--------------------------- | :------------------ | :----------------- | | Fifth Third Bancorp: | | | | | | - CET1 capital ratio | 4.50% | N/A | 10.58% | 10.57% | | - Tier 1 risk-based capital ratio | 6.00% | 6.00% | 11.85% | 11.86% | | - Total risk-based capital ratio | 8.00% | 10.00% | 13.77% | 13.86% | | - Leverage ratio | 4.00% | N/A | 9.42% | 9.22% | | Fifth Third Bank, National Association: | | | | | | - CET1 capital ratio | 4.50% | 6.50% | 12.87% | 12.86% | | - Tier 1 risk-based capital ratio | 6.00% | 8.00% | 12.87% | 12.86% | | - Total risk-based capital ratio | 8.00% | 10.00% | 14.12% | 14.19% | | - Leverage ratio | 4.00% | 5.00% | 10.25% | 10.02% | - The Bancorp declared common stock dividends of **$0.37** per share for Q2 2025 and **$0.74** per share for H1 2025, a **6%** increase year-over-year[305](index=305&type=chunk) - In H1 2025, the Bancorp completed a **$225 million** accelerated share repurchase, and on June 13, 2025, authorized a new program to purchase **100 million** common shares[19](index=19&type=chunk)[305](index=305&type=chunk)[307](index=307&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk (Item 3)](index=75&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk%20(Item%203)) This section incorporates by reference detailed information on interest rate and price risk management from the **MD&A**, highlighting the forward-looking nature of these disclosures and inherent uncertainties - Market risk disclosures are incorporated by reference from the 'Interest Rate and Price Risk Management' subsection of the **MD&A**[308](index=308&type=chunk) - These disclosures contain forward-looking statements, which are subject to inherent risks and uncertainties[308](index=308&type=chunk) [Controls and Procedures (Item 4)](index=75&type=section&id=Controls%20and%20Procedures%20(Item%204)) The Bancorp's management concluded that its disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the period - As of June 30, 2025, the **CEO** and **CFO** concluded that disclosure controls and procedures were effective in all material respects[309](index=309&type=chunk) - No material changes to the Bancorp's internal control over financial reporting occurred during the reporting period[310](index=310&type=chunk) [Condensed Consolidated Financial Statements and Notes (Item 1)](index=76&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20and%20Notes%20(Item%201)) This section presents the unaudited condensed consolidated financial statements of Fifth Third Bancorp, including Balance Sheets, Statements of Income, Comprehensive Income, Changes in Equity, and Cash Flows, providing a snapshot of financial position and performance [Balance Sheets (unaudited)](index=76&type=section&id=Balance%20Sheets%20(unaudited)) The Condensed Consolidated Balance Sheets summarize Fifth Third Bancorp's financial position as of June 30, 2025, showing a slight decrease in total assets and liabilities, leading to an increase in total equity Condensed Consolidated Balance Sheets (June 30, 2025 vs. Dec 31, 2024) | Asset/Liability/Equity | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | **Assets:** | | | | | Cash and due from banks | $2,972 | $3,014 | (1)% | | Other short-term investments | $13,043 | $17,120 | (24)% | | Available-for-sale debt and other securities | $38,270 | $39,547 | (3)% | | Held-to-maturity securities | $11,630 | $11,278 | 3% | | Trading debt securities | $1,324 | $1,185 | 12% | | Equity securities | $404 | $341 | 18% | | Loans and leases held for sale | $646 | $640 | 1% | | Portfolio loans and leases, net | $119,984 | $117,439 | 2% | | Total Assets | $209,991 | $212,927 | (1)% | | **Liabilities:** | | | | | Total deposits | $164,207 | $167,252 | (2)% | | Federal funds purchased | $178 | $204 | (13)% | | Other short-term borrowings | $3,393 | $4,450 | (24)% | | Long-term debt | $14,492 | $14,337 | 1% | | Total Liabilities | $188,867 | $193,282 | (2)% | | **Equity:** | | | | | Total Equity | $21,124 | $19,645 | 7.5% | [Statements of Income (unaudited)](index=77&type=section&id=Statements%20of%20Income%20(unaudited)) The Condensed Consolidated Statements of Income show Fifth Third Bancorp's financial performance for Q2 and H1 2025, with net income available to common shareholders increasing due to higher net interest and noninterest income, despite a significant rise in provision for credit losses Condensed Consolidated Statements of Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Total interest income | $2,484 | $2,620 | (5)% | | Total interest expense | $989 | $1,233 | (20)% | | Net Interest Income | $1,495 | $1,387 | 8% | | Provision for credit losses | $173 | $97 | 78% | | Total noninterest income | $750 | $695 | 8% | | Total noninterest expense | $1,264 | $1,221 | 4% | | Net Income | $628 | $601 | 4% | | Net Income Available to Common Shareholders | $591 | $561 | 5% | | Diluted EPS | $0.88 | $0.81 | 9% | | Metric | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Total interest income | $4,917 | $5,228 | (6)% | | Total interest expense | $1,985 | $2,457 | (19)% | | Net Interest Income | $2,932 | $2,771 | 6% | | Provision for credit losses | $347 | $191 | 82% | | Total noninterest income | $1,444 | $1,406 | 3% | | Total noninterest expense | $2,568 | $2,562 | —% | | Net Income | $1,142 | $1,122 | 2% | | Net Income Available to Common Shareholders | $1,069 | $1,041 | 3% | | Diluted EPS | $1.58 | $1.51 | 5% | [Statements of Comprehensive Income (unaudited)](index=78&type=section&id=Statements%20of%20Comprehensive%20Income%20(unaudited)) The Condensed Consolidated Statements of Comprehensive Income present Fifth Third Bancorp's net income and other comprehensive income (loss) for Q2 and H1 2025, with comprehensive income significantly increasing due to net unrealized gains on available-for-sale debt securities and cash flow hedge derivatives Condensed Consolidated Statements of Comprehensive Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Net Income | $628 | $601 | 4% | | Other Comprehensive Income (Loss), Net of Tax | $349 | $(13) | N/A | | Comprehensive Income | $977 | $588 | 66% | | Metric | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Net Income | $1,142 | $1,122 | 2% | | Other Comprehensive Income (Loss), Net of Tax | $1,090 | $(414) | N/A | | Comprehensive Income | $2,232 | $708 | 215% | - Other comprehensive income (loss) for Q2 2025 was positively impacted by net unrealized gains on available-for-sale debt securities (**$179M**) and cash flow hedge derivatives (**$148M**)[317](index=317&type=chunk) [Statements of Changes in Equity (unaudited)](index=79&type=section&id=Statements%20of%20Changes%20in%20Equity%20(unaudited)) The Condensed Consolidated Statements of Changes in Equity detail movements in Fifth Third Bancorp's equity for Q2 and H1 2025, with total equity increasing to **$21.12 billion** at June 30, 2025, driven by net income and other comprehensive income Condensed Consolidated Statements of Changes in Equity (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | | :--------------------------------------- | :----------------- | :----------------- | | Balance at March 31 | $20,403 | $19,018 | | Net income | $628 | $601 | | Other comprehensive income (loss), net of tax | $349 | $(13) | | Common stock dividends declared | $(250) | $(243) | | Preferred stock dividends declared | $(37) | $(40) | | Shares acquired for treasury | $0 | $(125) | | Total Equity at June 30 | $21,124 | $19,226 | Condensed Consolidated Statements of Changes in Equity (H1 2025 vs. H1 2024) | Metric | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Balance at Dec 31 | $19,645 | $19,172 | | Net income | $1,142 | $1,122 | | Other comprehensive income (loss), net of tax | $1,090 | $(414) | | Common stock dividends declared | $(501) | $(486) | | Preferred stock dividends declared | $(73) | $(81) | | Shares acquired for treasury | $(226) | $(125) | | Total Equity at June 30 | $21,124 | $19,226 | [Statements of Cash Flows (unaudited)](index=82&type=section&id=Statements%20of%20Cash%20Flows%20(unaudited)) The Condensed Consolidated Statements of Cash Flows outline Fifth Third Bancorp's cash activities for H1 2025, showing a significant increase in net cash provided by operating and investing activities, but a larger increase in net cash used in financing activities, resulting in a net decrease in cash Condensed Consolidated Statements of Cash Flows (H1 2025 vs. H1 2024) | Activity | H1 2025 ($M) | H1 2024 ($M) | % Change | | :--------------------------------------- | :----------- | :----------- | :------- | | Net Cash Provided by Operating Activities | $2,539 | $1,065 | 138% | | Net Cash Provided by Investing Activities | $2,375 | $1,051 | 126% | | Net Cash Used in Financing Activities | $(4,956) | $(2,421) | 105% | | Decrease in Cash and Due from Banks | $(42) | $(305) | (86)% | | Cash and Due from Banks at End of Period | $2,972 | $2,837 | 5% | - Net cash provided by operating activities significantly increased in H1 2025 due to higher net income, provision for credit losses, and positive changes in other assets[322](index=322&type=chunk) - Net cash used in financing activities increased due to a net decrease in deposits and higher treasury stock repurchases, partially offset by long-term debt issuances[322](index=322&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=83&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes provide detailed context for the Condensed Consolidated Financial Statements, covering basis of presentation, cash flow information, accounting standards, investment securities, loans, credit quality, and various risk management and capital aspects [Note 1. Basis of Presentation](index=83&type=section&id=Note%201.%20Basis%20of%20Presentation) The Condensed Consolidated Financial Statements, prepared in accordance with U.S. GAAP and SEC rules, consolidate Fifth Third Bancorp and its majority-owned subsidiaries and **VIEs**, requiring management estimates and assumptions - The financial statements consolidate majority-owned subsidiaries and **VIEs** where the Bancorp is the primary beneficiary, with other entities accounted for using the equity method or fair value[323](index=323&type=chunk) - Statements are unaudited, include normal recurring accruals, and conform to U.S. GAAP and **SEC** rules for interim financial information[324](index=324&type=chunk) - Preparation requires management estimates and assumptions, and actual results may differ[325](index=325&type=chunk) [Note 2. Supplemental Cash Flow Information](index=83&type=section&id=Note%202.%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental cash flow details for H1 2025 and 2024, including cash payments for interest and income taxes, non-cash investing and financing activities, and lease-related cash flows Supplemental Cash Flow Information (H1 2025 vs. H1 2024) | Metric | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Cash Payments: | | | | - Interest | $2,017 | $2,492 | | - Income taxes | $18 | $79 | | Transfers: | | | | - Portfolio loans and leases to loans and leases held for sale | $138 | $135 | | - Portfolio loans and leases to OREO | $11 | $9 | | - Available-for-sale debt securities to held-to-maturity securities | $0 | $11,593 | | Supplemental Disclosures: | | | | - Net additions to lease liabilities under operating leases | $100 | $41 | | - Lease payments received for operating lease equipment | $41 | $54 | [Note 3. Accounting and Reporting Developments](index=84&type=section&id=Note%203.%20Accounting%20and%20Reporting%20Developments) The Bancorp adopted **ASU 2023-09** on January 1, 2025, amending income tax disclosures, and is evaluating **ASU 2024-03**, effective in 2027, for expense disaggregation - **ASU 2023-09**, adopted January 1, 2025, mandates new disclosures for effective tax rate reconciliation, income taxes paid, and disaggregation of income and tax expense by jurisdiction[328](index=328&type=chunk) - **ASU 2024-03**, effective in 2027, introduces new requirements for disaggregating income statement expenses, including compensation and depreciation, with the Bancorp evaluating its impact[329](index=329&type=chunk) [Note 4. Investment Securities](index=85&type=section&id=Note%204.%20Investment%20Securities) This note details Fifth Third Bancorp's investment securities portfolio, including **AFS** and **HTM** debt securities, used for risk management and liquidity, with total investment securities decreasing slightly to **$51.6 billion** at June 30, 2025, following a **$12.6 billion** transfer to **HTM** in January 2024 Investment Securities Portfolio (June 30, 2025 vs. Dec 31, 2024) | Category | Amortized Cost (June 30, 2025, $M) | Fair Value (June 30, 2025, $M) | Amortized Cost (Dec 31, 2024, $M) | Fair Value (Dec 31, 2024, $M) | | :--------------------------------------- | :--------------------------------- | :----------------------------- | :--------------------------------- | :----------------------------- | | Available-for-sale debt and other securities | $41,731 | $38,270 | $43,878 | $39,547 | | Held-to-maturity securities | $11,630 | $11,547 | $11,278 | $10,965 | | Trading debt securities | N/A | $1,324 | N/A | $1,185 | | Equity securities | N/A | $404 | N/A | $341 | | Total investment securities (Fair Value) | N/A | $51,545 | N/A | $52,038 | - In January 2024, **$12.6 billion** (amortized cost) of **AFS** securities were transferred to **HTM** to reduce capital volatility, with **$994 million** in unrealized losses amortized into income[337](index=337&type=chunk) Net Securities Gains (Losses) (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Net losses on available-for-sale debt and other securities | $0 | $(4) | $0 | $(7) | | Net equity securities gains | $16 | $7 | $7 | $20 | | Total gains recognized in income | $16 | $3 | $7 | $13 | - The Bancorp recognized immaterial impairment losses on **AFS** debt and other securities in Q2 and H1 2025, compared to **$5 million** and **$10 million** in Q2 and H1 2024, respectively[339](index=339&type=chunk) - Investment securities with a fair value of **$28.8 billion** at June 30, 2025, were pledged to secure borrowing capacity, public deposits, trust funds, and derivative contracts[341](index=341&type=chunk) Available-for-Sale Debt and Other Securities Unrealized Losses (June 30, 2025 vs. Dec 31, 2024) | Category | Fair Value (June 30, 2025, $M) | Unrealized Losses (June 30, 2025, $M) | Fair Value (Dec 31, 2024, $M) | Unrealized Losses (Dec 31, 2024, $M) | | :--------------------------------------- | :----------------------------- | :---------------------------- | :----------------------------- | :---------------------------- | | Agency residential mortgage-backed securities | $5,908 | $(632) | $5,627 | $(779) | | Agency commercial mortgage-backed securities | $20,746 | $(2,443) | $20,693 | $(3,022) | | Non-agency commercial mortgage-backed securities | $3,212 | $(254) | $4,167 | $(338) | | Asset-backed securities and other debt securities | $2,676 | $(144) | $3,440 | $(198) | | Total | $32,542 | $(3,473) | $34,496 | $(4,337) | [Note 5. Loans and Leases](index=89&type=section&id=Note%205.%20Loans%20and%20Leases) This note summarizes Fifth Third Bancorp's loan and lease portfolio, disaggregated by purpose and collateral, with total portfolio loans and leases increasing to **$122.4 billion** at June 30, 2025, and detailing net charge-offs and lease income Loans and Leases Portfolio (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | **Loans and leases held for sale:** | | | | | Commercial and industrial loans | $42 | $15 | 180% | | Residential mortgage loans | $572 | $574 | (0.3)% | | Total loans and leases held for sale | $646 | $640 | 1% | | **Portfolio loans and leases:** | | | | | Commercial and industrial loans | $53,312 | $52,271 | 2% | | Commercial mortgage loans | $12,112 | $12,246 | (1)% | | Commercial construction loans | $5,551 | $5,588 | (1)% | | Commercial leases | $3,177 | $3,188 | (0.3)% | | Total commercial loans and leases | $74,152 | $73,293 | 1% | | Residential mortgage loans | $17,681 | $17,543 | 1% | | Home equity | $4,485 | $4,188 | 7% | | Indirect secured consumer loans | $17,591 | $16,313 | 8% | | Credit card | $1,707 | $1,734 | (1.6)% | | Solar energy installation loans | $4,316 | $4,202 | 3% | | Other consumer loans | $2,464 | $2,518 | (2)% | | Total consumer loans | $48,244 | $46,498 | 4% | | Total portfolio loans and leases | $122,396 | $119,791 | 2% | - Portfolio loans and leases are recorded net of unearned income (**$383 million** at June 30, 2025) and net discount (**$234 million** at June 30, 2025), with **$893 million** of the net discount related to solar energy installation loans[346](index=346&type=chunk) - The Bancorp had **$15.0 billion** in loans pledged to the **FHLB** and **$59.6 billion** pledged to the **FRB** as of June 30, 2025[347](index=347&type=chunk) Net Charge-offs by Loan Category (H1 2025 vs. H1 2024) | Category | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Commercial and industrial loans | $121 | $115 | | Commercial mortgage loans | $14 | $0 | | Indirect secured consumer loans | $38 | $42 | | Credit card | $32 | $36 | | Solar energy installation loans | $38 | $24 | | Other consumer loans | $32 | $38 | | Total net charge-offs | $276 | $254 | Income from Leases (Q2 2025 vs. Q2 2024) | Lease Type | Q2 2025 ($M) | Q2 2024 ($M) | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Direct financing leases | $10 | $9 | $19 | $19 | | Sales-type leases | $27 | $19 | $53 | $37 | | Operating leases | $20 | $26 | $41 | $54 | [Note 6. Credit Quality and the Allowance for Loan and Lease Losses](index=91&type=section&id=Note%206.%20Credit%20Quality%20and%20the%20Allowance%20for%20Loan%20and%20Lease%20Losses) This note details Fifth Third Bancorp's credit quality and **ALLL**, which increased to **$2.41 billion** at June 30, 2025, due to deteriorating economic forecasts and higher loan balances, with nonperforming assets also increasing and **$526 million** in loan modifications during H1 2025 Allowance for Loan and Lease Losses (ALLL) Rollforward (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Balance, beginning of period | $2,384 | $2,318 | | Losses charged-off | $(194) | $(182) | | Recoveries of losses previously charged-off | $55 | $38 | | Provision for loan and lease losses | $167 | $114 | | Balance, end of period | $2,412 | $2,288 | ALLL and Related Loans and Leases by Portfolio Segment (June 30, 2025 vs. Dec 31, 2024) | Segment | ALLL (June 30, 2025, $M) | Portfolio Loans and Leases (June 30, 2025, $M) | ALLL (Dec 31, 2024, $M) | Portfolio Loans and Leases (Dec 31, 2024, $M) | | :--------------------------------------- | :------------------------- | :--------------------------------------------- | :------------------------- | :--------------------------------------------- | | Commercial | $1,293 | $74,152 | $1,154 | $73,293 | | Residential Mortgage | $134 | $17,574 | $146 | $17,435 | | Consumer | $985 | $30,563 | $1,052 | $28,955 | | Total ALLL | $2,412 | $122,289 | $2,352 | $119,683 | Commercial Portfolio Loans and Leases by Credit Risk Rating (June 30, 2025) | Credit Risk Rating | Commercial and Industrial Loans ($M) | Commercial Mortgage Owner-Occupied Loans ($M) | Commercial Mortgage Nonowner-Occupied Loans ($M) | Commercial Construction Loans ($M) | Commercial Leases ($M) | Total Commercial Loans and Leases ($M) | | :--------------------------------------- | :----------------------------------- | :-------------------------------------------- | :----------------------------------------------- | :----------------------------------- | :--------------------- | :------------------------------------- | | Pass | $49,914 | $5,383 | $5,785 | $4,708 | $3,127 | $68,917 | | Special mention | $1,142 | $106 | $94 | $594 | $13 | $1,949 | | Substandard | $2,066 | $411 | $333 | $249 | $37 | $3,096 | | Doubtful | $190 | $0 | $0 | $0 | $0 | $190 | | Total | $53,312 | $5,900 | $6,212 | $5,551 | $3,177 | $74,152 | Age Analysis of Past Due Commercial Loans and Leases (June 30, 2025) | Category | Current Loans and Leases ($M) | 30-89 Days Past Due ($M) | 90 Days or More Past Due ($M) | Total Past Due ($M) | Total Loans and Leases ($M) | 90 Days Past Due and Still Accruing ($M) | | :--------------------------------------- | :---------------------------- | :------------------------- | :---------------------------- | :------------------ | :-------------------------- | :----------------------------------------- | | Commercial and industrial loans | $53,086 | $73 | $153 | $226 | $53,312 | $5 | | Commercial mortgage owner-occupied loans | $5,883 | $6 | $11 | $17 | $5,900 | $0 | | Commercial mortgage nonowner-occupied loans | $6,202 | $1 | $9 | $10 | $6,212 | $3 | | Commercial construction loans | $5,550 | $1 | $0 | $1 | $5,551 | $0 | | Commercial leases | $3,163 | $14 | $0 | $14 | $3,177 | $0 | | Total portfolio commercial loans and leases | $73,884 | $95 | $173 | $268 | $74,152 | $8 | Nonaccrual Loans and Leases by Class (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | | :--------------------------------------- | :----------------- | :---------------- | | Commercial and industrial loans | $460 | $374 | | Commercial mortgage owner-occupied loans | $40 | $75 | | Commercial mortgage nonowner-occupied loans | $8 | $4 | | Residential mortgage loans | $143 | $137 | | Home equity | $75 | $70 | | Indirect secured consumer loans | $65 | $55 | | Credit card | $29 | $32 | | Solar energy installation loans | $26 | $64 | | Other consumer loans | $7 | $9 | | Total nonaccrual portfolio loans and leases | $853 | $823 | - Portfolio loans with an amortized cost basis of **$526 million** were modified for borrowers experiencing financial difficulty during the six months ended June 30, 2025, representing **0.43%** of total portfolio loans and leases[382](index=382&type=chunk) Commercial Portfolio Loan Modifications (H1 2025 vs. H1 2024) | Type of Modification | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Term Extension | $221 | $191 | | Term and Payment Extension Delay | $27 | $18 | | Payment Delay | $207 | $17 | | Total commercial portfolio loans modified | $455 | $226 | Residential Mortgage Portfolio Loan Modifications (H1 2025 vs. H1 2024) | Type of Modification | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Term extension and payment delay | $38 | $45 | | Term extension, interest rate reduction and payment delay | $13 | $3 | | Total residential mortgage portfolio loans modified | $51 | $53 | Consumer Portfolio Loan Modifications (H1 2025 vs. H1 2024) | Type of Modification | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Interest Rate Reduction | $11 | $13 | | Payment Delay | $3 | $2 | | Term Extension and Payment Delay | $1 | $1 | | Term Extension, Interest Rate Reduction and Payment Delay | $5 | $5 | | Total consumer portfolio loans modified | $20 | $21 | [Note 7. Variable Interest Entities](index=111&type=section&id=Note%207.%20Variable%20Interest%20Entities) This note discusses Fifth Third Bancorp's involvement with **VIEs**, consolidating those where it is the primary beneficiary (e.g., loan securitizations) and limiting exposure for non-consolidated **VIEs** (e.g., **CDC** investments, private equity funds) to invested capital and unfunded commitments - The Bancorp consolidates **VIEs** related to an automobile loan securitization and a solar loan securitization, where it is determined to be the primary beneficiary due to retained residual interests and servicing rights[398](index=398&type=chunk)[399](index=399&type=chunk) Consolidated VIEs Assets and Liabilities (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | | :--------------------------------------- | :----------------- | :---------------- | | **Assets:** | | | | Other short-term investments | $43 | $51 | | Indirect secured consumer loans | $727 | $967 | | Solar energy installation loans | $30 | $33 | | ALLL | $(14) | $(19) | | Total assets | $792 | $1,037 | | **Liabilities:** | | | | Other liabilities | $11 | $12 | | Long-term debt | $664 | $889 | | Total liabilities | $675 | $901 | - For non-consolidated **VIEs**, the Bancorp holds interests but is not the primary beneficiary, with maximum exposure to loss limited to carrying amounts of investments and unfunded commitments[401](index=401&type=chunk)[403](index=403&type=chunk) Non-Consolidated VIEs Assets and Maximum Exposure (June 30, 2025 vs. Dec 31, 2024) | Category | Total Assets (June 30, 2025, $M) | Maximum Exposure (June 30, 2025, $M) | Total Assets (Dec 31, 2024, $M) | Maximum Exposure (Dec 31, 2024, $M) | | :--------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | CDC investments | $2,282 | $2,335 | $2,179 | $2,224 | | Private equity investments | $298 | $536 | $268 | $487 | | Loans provided to VIEs | $4,666 | $8,126 | $4,711 | $7,529 | | Lease pool entities | $25 | $25 | $30 | $30 | | Solar loan securitizations | $7 | $7 | $8 | $8 | - **CDC** investments, primarily in affordable housing, are accounted for under the proportional amortization method, with unfunded commitments totaling **$757 million** at June 30, 2025[402](index=402&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk) - Private equity investments are accounted for under the equity method or measurement alternative, with unfunded commitments of **$238 million** at June 30, 2025[408](index=408&type=chunk)[409](index=409&type=chunk) - Loans provided to **VIEs**, primarily for financing third-party originated consumer and business loans, had unfunded commitments of **$3.5 billion** at June 30, 2025[410](index=410&type=chunk)[411](index=411&type=chunk) [Note 8. Sales of Receivables and Servicing Rights](index=115&type=section&id=Note%208.%20Sales%20of%20Receivables%20and%20Servicing%20Rights) This note details Fifth Third Bancorp's residential mortgage loan sales, totaling **$2.17 billion** in H1 2025, and the accounting for **MSRs**, which are measured at fair value (**$1.63 billion** at June 30, 2025), with a non-qualifying hedging strategy to manage valuation risk Residential Mortgage Loan Sales and Mortgage Banking Activity (H1 2025 vs. H1 2024) | Metric | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Residential mortgage loan sales (UPB) | $2,174 | $1,474 | | Origination fees and gains on loan sales | $34 | $33 | | Gross mortgage servicing fees | $147 | $155 | Changes in Servicing Rights (H1 2025 vs. H1 2024) | Metric | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Balance, beginning of period | $1,704 | $1,737 | | Servicing rights originated | $25 | $21 | | Servicing rights sold | $0 | $(5) | | Changes in fair value: | | | | - Due to changes in inputs or assumptions | $(25) | $51 | | - Other changes in fair value | $(75) | $(73) | | Balance, end of period | $1,629 | $1,731 | - The **MSR** portfolio's fair value was **$1.63 billion** at June 30, 2025, subject to credit, prepayment, and interest rate risks, managed by a non-qualifying hedging strategy[417](index=417&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk) MSR Sensitivity to Adverse Changes (June 30, 2025) | Assumption | Impact of Adverse Change on Fair Value (10% change, $M) | | :--------------------------------------- | :------------------------------------------------------ | | Prepayment Speed | $(39) | | OAS | $(33) | [Note 9. Derivative Financial Instruments](index=116&type=section&id=Note%209.%20Derivative%20Financial%20Instruments) This note details Fifth Third Bancorp's use of derivative instruments for risk management (interest rate, prepayment, foreign currency) and customer accommodation, including qualifying hedging instruments and free-standing derivatives, with total derivative assets of **$1.997 billion** and liabilities of **$2.266 billion** at June 30, 2025 - The Bancorp uses derivative instruments to mitigate interest rate, prepayment, and foreign currency risks, and for customer accommodation, avoiding unhedged speculative positions[423](index=423&type=chunk)[427](index=427&type=chunk) Derivative Instruments Notional Amounts and Fair Values (June 30, 2025) | Category | Notional Amount ($M) | Derivative Assets ($M) | Derivative Liabilities ($M) | | :--------------------------------------- | :------------------- | :--------------------- | :---------------------- | | **Derivatives Designated as Qualifying Hedging Instruments:** | | | | | Fair value hedges (Interest rate swaps related to long-term debt) | $4,955 | $1 | $7 | | Cash flow hedges (Interest rate swaps related to C&I loans) | $11,000 | $0 | $2 | | Cash flow hedges (Interest rate swaps related to commercial mortgage and construction loans) | $4,000 | $0 | $28 | | Total qualifying hedging instruments | N/A | $1 | $37 | | **Derivatives Not Designated as Qualifying Hedging Instruments:** | | | | | Free-standing derivatives – risk management and other business purposes | N/A | $11 | $155 | | Free-standing derivatives – customer accommodation | N/A | $1,985 | $2,074 | | Total derivatives not designated as qualifying hedging instruments | N/A | $1,996 | $2,229 | | **Total Derivatives** | N/A | $1,997 | $2,266 | - As of June 30, 2025, the Bancorp held **$421 million** in collateral for derivative assets and posted **$1.2 billion** for derivative liabilities[425](index=425&type=chunk)[426](index=426&type=chunk) - For cash flow hedges, **$271 million** in net deferred losses (net of tax) were recorded in **AOCI** at June 30, 2025, with **$108 million** expected to be reclassified into earnings within 12 months[437](index=437&type=chunk) Net Gains (Losses) from Free-Standing Derivatives – Risk Management (H1 2025 vs. H1 2024) | Category | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Interest rate contracts related to MSR portfolio | $32 | $(62) | | Forward contracts related to residential mortgage loans | $(12) | $6 | | Foreign exchange contracts for risk management | $(5) | $7 | | Swap associated with the sale of Visa, Inc. Class B Shares | $(19) | $(40) | Net Gains (Losses) from Free-Standing Derivatives – Customer Accommodation (H1 2025 vs. H1 2024) | Category | H1 2025 ($M) | H1 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Interest rate contracts for customers (contract revenue) | $15 | $11 | | Interest rate lock commitments | $26 | $20 | | Commodity contracts for customers (contract revenue) | $10 | $8 | | Foreign exchange contracts for customers (contract revenue) | $38 | $40 | [Note 10. Other Short-Term Borrowings](index=121&type=section&id=Note%2010.%20Other%20Short-Term%20Borrowings) This note summarizes Fifth Third Bancorp's other short-term borrowings, obligations with original maturities of one year or less, totaling **$3.39 billion** at June 30, 2025, primarily consisting of **FHLB** advances and securities sold under repurchase agreements Other Short-Term Borrowings (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($M) | Dec 31, 2024 ($M) | % Change | | :--------------------------------------- | :----------------- | :---------------- | :------- | | FHLB advances | $3,000 | $4,100 | (27)% | | Securities sold under repurchase agreements | $325 | $273 | 19% | | Derivative collateral | $0 | $19 | (100)% | | Other borrowed money | $68 | $58 | 17% | | Total other short-term borrowings | $3,393 | $4,450 | (24)% | - Securities sold under repurchase agreements are collateralized by agency mortgage-backed securit

Core Viewpoint - The signing of the GENIUS Act by President Trump is paving the way for the issuance and regulation of stablecoins in the U.S., which may disrupt traditional banking systems in the next 2 to 3 years [1][2]. Legislative Developments - The GENIUS Act establishes a preliminary framework for stablecoin issuance and regulation, while the CLARITY Act aims to clarify the jurisdiction of the SEC and CFTC over the crypto market [1]. - These legislative advancements signify a shift in focus from policy debates to the actual construction of infrastructure in the digital asset market [2]. Market Growth Projections - The stablecoin market is expected to see moderate growth of approximately $25 billion to $75 billion in the short term, which will likely increase demand for U.S. Treasury securities, particularly short-term bills [2]. Banking Sector Response - U.S. banks are preparing for the stablecoin era, with management expressing readiness to offer stablecoin solutions, although there are concerns regarding specific use cases, especially in domestic payment scenarios [3]. - Major banks like JPMorgan and Citigroup are exploring stablecoin capabilities, with JPMorgan launching its deposit token (JPMD) and Citigroup investing in digital asset services [6][7]. Cross-Border Payment Opportunities - Despite skepticism about domestic applications, bank executives see viable use cases for stablecoins in cross-border payments, with some banks viewing this as a "greenfield" market [4]. Short-Term Impact on Domestic Payments - Most banks anticipate minimal short-term impact on their core domestic payment businesses from stablecoins, although competition in cash management services may intensify [5]. Bank Comments on Stablecoins - JPMorgan is actively entering the stablecoin and digital asset space, while Bank of America acknowledges small cross-border payments as a realistic application [6]. - Citigroup is focusing on tokenized services, despite high transaction costs for converting between fiat and stablecoins [6][7]. Digital Asset Applications - Banks are exploring four main application scenarios for digital assets: reserve management and custody services for stablecoins, transaction services, issuing their own stablecoins, and tokenized deposits [7][8]. Future Outlook - Various banks, including PNC and M&T, are developing digital asset services and assessing the feasibility of stablecoins as payment mechanisms, indicating a growing interest in the sector [9].

一纸法案的签署，正在为美国数字资产市场开启新的篇章，并可能重塑传统银行业的未来格局。 据追风交易台消息，美银美林的一份最新研究报告显示，随着美国为稳定币发行铺平监管道路，这一数字资产将在未来2至3年内，对传统银行的存款基础 和支付体系构成清晰可见的颠覆性影响。 最新的进展是，美国总统特朗普已正式签署《GENIUS法案》，为稳定币的发行和监管设定了初步框架。与此同时，旨在划分美国证券交易委员会 （SEC）和商品期货交易委员会（CFTC）对加密市场管辖权的《CLARITY法案》也已在众议院获得通过，目前这两项法案均已移交参议院审议。 这一系列立法进展标志着监管的破冰，市场焦点正迅速从政策博弈转向基础设施的实际建设。据美银全球研究利率策略团队预测，短期内稳定币市场将迎 来约250亿至750亿美元的温和增长，这一增量资金预计将提振对美国国债的需求，尤其是短期国库券。 报告强调，真正的变革将在中期显现。随着稳定币的整合与普及，其对现有金融体系的冲击将愈发明显，届时银行将直面来自数字货币的竞争压力。而随 着美国稳定币监管框架初步落地，银行业正处于积极布局与谨慎观望的十字路口。 银行积极布局，但对用例仍存疑虑 美国银行业已 ...

Core Insights - Fifth Third Bancorp (FITB) reported second-quarter 2025 adjusted earnings per share (EPS) of 9 cents, which was below the Zacks Consensus Estimate of 87 cents and down from 86 cents in the prior-year quarter [1][2][8] - The results were positively impacted by an increase in net interest income (NII), fee income, and loan balances, but faced challenges from higher expenses and deteriorating asset quality [1][8] Financial Performance - Total quarterly revenues reached $2.25 billion, marking a 7.7% year-over-year increase and surpassing the Zacks Consensus Estimate by 1.8% [3] - NII (on a fully taxable equivalent basis) was $1.5 billion, up 7.6% year over year, exceeding the estimate of $1.48 billion [3] - The net interest margin (on an FTE basis) improved to 3.12% from 2.88% year over year, surpassing the estimate of 3.05% [3] - Non-interest income rose 7.9% year over year to $750 million, driven by increases in wealth and asset management revenues and consumer banking fees, exceeding the estimate of $721.6 million [4] - Non-interest expenses increased 3.5% year over year to $1.26 billion, primarily due to rising costs across all components except occupancy and other non-interest income, slightly below the estimate of $1.27 billion [4] Credit Quality - The provision for credit losses was reported at $173 million, a significant increase of 78% from the previous year, exceeding the estimate of $149.1 million [5] - Total non-performing portfolio loans and leases rose to $886 million, up 37.8% year over year [5] - Net charge-offs increased to $139 million or 0.45% of average loans and leases on an annualized basis, down from $144 million or 0.49% in the prior-year quarter, slightly below the estimate of $145.3 million [6] - The total allowance for credit losses increased by 5.5% to $2.56 billion year over year, surpassing the estimate of $2.53 billion [6] Capital Position - The Tier 1 risk-based capital ratio was reported at 11.83%, down from 11.93% in the prior-year quarter [7] - The CET1 capital ratio decreased to 10.56% from 10.62% year over year [7] - The leverage ratio improved to 9.42% compared to 9.07% in the year-ago quarter [7] Strategic Outlook - The rise in NII, driven by loan growth, deposit rate management, and fixed-rate asset repricing, supported top-line growth [9] - Strategic acquisitions have diversified Fifth Third's revenue sources, which is expected to aid future top-line growth [9] - However, higher expenses and weak asset quality remain concerns in the near term [9]

Core Insights - The article discusses the background and expertise of a financial analyst named Harrison, who has been active on Seeking Alpha since 2018 and has over a decade of market experience [1]. Group 1: Analyst Background - Harrison has professional experience in private equity, real estate, and economic research [1]. - He possesses an academic background in financial econometrics, economic forecasting, and global monetary economics [1].

Core Insights - Fifth Third Bancorp's investments in tech-enabled products have yielded positive results, with significant revenue growth and increased commercial deposits [1][2] - The company has experienced a shift from legacy ACH to modern instant payment systems, enhancing its service offerings [3] - Loan growth has been robust, reaching its highest level in over two years despite a challenging market environment [4] Financial Performance - The Newline by Fifth Third embedded finance platform for enterprises achieved a 30% year-over-year revenue growth and added over $1 billion in commercial deposits [2] - Average loan growth across diversified origination platforms was reported at 5% year-over-year, with overall loan growth at its highest in two years [4] Digital Services and Innovations - Fifth Third has partnered with Trust & Will to provide free wills to customers, addressing a significant market need [5] - The bank plans to integrate AI-enabled features into its mobile app, aiming to enhance user experience and reduce costs [6] - The share of new consumer deposit accounts with digital originations increased from 22% to 28% over the past year [7] User Engagement - Average active digital users rose from 3.07 million to 3.17 million, while average active mobile users increased from 2.32 million to 2.43 million from Q2 2024 to Q2 2025 [6] - The percentage of mortgage applications that were digitally assisted slightly decreased from 98% to 97% [7]

Financial Data and Key Metrics Changes - The company reported earnings per share of $0.88, or $0.90 excluding certain items, exceeding consensus estimates [5] - Adjusted revenues grew by 6% year over year, with net interest income (NII) increasing by 7% [6][19] - Adjusted pre-provision net revenue (PPNR) increased by 10%, with a positive operating leverage of 250 basis points [6][18] - Adjusted return on assets was 1.2%, and return on tangible common equity was 18% [7] - Tangible book value per share increased by 18% year over year and by 5% sequentially [9][18] Business Line Data and Key Metrics Changes - The company achieved average loan growth of 5% year over year across diversified loan origination platforms [9] - Commercial relationship manager headcount increased by 11% year over year, contributing to record production in the Provide platform [10] - Wealth Management in Southeast markets grew assets under management by 16% year over year [12] - Embedded Payments business, New Line, saw fees increase by 30% compared to last year [27] Market Data and Key Metrics Changes - The Southeast regions contributed significantly to middle market loan growth, with North Carolina, South Carolina, Georgia, and Alabama showing the strongest results [11] - The consumer bank grew net new households by 6% year over year in the Southeast [10] - Average cost of consumer and small business deposits in the Southeast was 191 basis points, a 250 basis points spread to Fed funds [11] Company Strategy and Development Direction - The company emphasizes organic growth as its primary capital allocation priority, with a focus on stability, profitability, and growth [14][15] - The company plans to continue expanding its branch network in the Southeast, with 50 branches expected to open this year [25][36] - The company is raising its full-year guidance on NII, expecting record NII in 2025 even without rate cuts [14][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertain economic conditions, highlighting strong profitability and credit trends [5][14] - The company anticipates continued improvement in unrealized losses in its securities portfolio [32] - Management expects full-year adjusted noninterest income to increase by 1% to 2% despite muted capital market trends [33] Other Important Information - The company plans to resume share repurchases in the third quarter [14] - The net charge-off ratio was 45 basis points, at the lower end of expectations, with commercial charge-offs at 38 basis points [29] - The CET1 ratio ended the quarter at 10.6%, consistent with near-term targets [31] Q&A Session Summary Question: Capital allocation and potential M&A - Management emphasized organic growth as the priority, with M&A being a means to achieve strategic outcomes rather than a standalone strategy [44][46] Question: Impact of tax bill on solar residential solar panel industry - Management noted that existing solar portfolios are unaffected, and expects net solar charge-offs to decrease in the coming quarters [51][53] Question: Margin improvement and competitive dynamics - Management highlighted strong DDA performance as a key driver of margin improvement and noted rational competition in both loan and deposit sides [62][65] Question: Expectations for loan growth - Management expressed confidence in consumer loan growth and noted that commercial clients are beginning to make larger investment decisions [71][75] Question: Thoughts on stablecoins and regulatory relief - Management is optimistic about stablecoins' potential use cases, particularly in cross-border payments, and expects regulatory relief to benefit regional banks [83][90]

Financial Data and Key Metrics Changes - The company reported earnings per share of $0.88, or $0.90 excluding certain items, exceeding consensus estimates [3][4] - Adjusted revenues grew by 6% year over year, with net interest income (NII) increasing by 7% [4][16] - Adjusted pre-provision net revenue (PPNR) increased by 10%, with a positive operating leverage of 250 basis points [4][14] - Tangible book value per share increased by 18% year over year and by 5% sequentially [5][15] - The adjusted return on assets was 1.2%, and the adjusted return on tangible common equity was 18% [4][5] Business Line Data and Key Metrics Changes - The company achieved average loan growth of 5% year over year across various segments, including commercial and industrial (C&I), commercial real estate (CRE), leasing, mortgage, home equity, and auto [6][7] - The Home Equity business ranked second in market share within its footprint, with production growth being the third best in the country [7] - The Southeast markets saw a 16% year-over-year growth in assets under management in Wealth Management, reaching nearly $16 billion [9] Market Data and Key Metrics Changes - The Southeast regions contributed significantly to total middle market loan growth, with North Carolina, South Carolina, Georgia, and Alabama showing the strongest results [8] - Average cost of consumer and small business deposits in the Southeast was 191 basis points, providing a 250 basis points spread to Fed funds [8] Company Strategy and Development Direction - The company emphasized organic growth as its primary capital allocation priority, followed by dividends and share repurchases [12][35] - The focus remains on building density in branch locations to drive organic growth, particularly in the Southeast [46][77] - The company plans to continue investing in technology and sales personnel to support growth initiatives [26][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record NII for 2025, even without rate cuts for the remainder of the year [12][30] - The company is positioned to perform well in various economic environments, with a resilient business mix and defensively positioned balance sheet [11][30] - Management noted that while economic uncertainty exists, there are positive indicators for loan growth, particularly in consumer lending [71][96] Other Important Information - The company plans to resume share repurchases in the third quarter [12] - The net charge-off ratio was at the lower end of expectations, with a decrease in nonperforming assets (NPAs) [27][28] - The CET1 ratio was reported at 10.6%, consistent with near-term targets [29] Q&A Session Summary Question: Capital allocation and potential M&A - Management emphasized organic growth as the priority, with M&A being a means to achieve strategic outcomes rather than a standalone strategy [40][42] Question: Impact of tax bill on solar industry exposure - Management indicated that existing solar portfolios are unaffected, and net solar charge-offs are expected to decrease in the coming quarters [49][50] Question: Margin improvement and competitive dynamics - Management noted strong performance in demand deposits and expects continued NIM improvement driven by fixed-rate asset repricing [60][65] Question: Expectations for loan growth - Management expressed confidence in balanced growth across consumer and commercial loans, supported by diverse origination platforms [71][96] Question: Thoughts on stablecoins and regulatory relief - Management is optimistic about stablecoins' potential in cross-border payments and anticipates benefits from expected regulatory relief for regional banks [82][90]

Financial Performance - Fifth Third Bancorp's adjusted PPNR achieved its highest growth rate in 2 years[8] - The adjusted efficiency ratio improved by 130 bps[8] to 55.5%[9, 21] - Adjusted EPS was $0.90[9, 175] - Return on average tangible common equity was 18%[9] - Net interest income increased to $1.5 billion[13] Loan and Deposit Trends - Average consumer loans increased by 7% compared to 2Q24[10] - Average commercial loans increased by 4% compared to 2Q24[10] - Consumer household growth was 2% compared to 2Q24, with 6% growth in the southeast[10] - Non-interest bearing deposits represent 25.3% of total deposits[35] Credit Quality - Non-performing assets decreased by 11% sequentially[8] - Commercial non-performing assets declined by 18%[8] - Net charge-off ratio was 0.45%[37] Outlook - Average loans & leases are expected to increase by approximately 5% for FY2025 compared to FY2024[54] - Net interest income is projected to increase by 5.5% - 6.5% for FY2025 compared to FY2024[54]