Summary of Fifth Third Bancorp Conference Call (November 07, 2025) Company Overview - **Company**: Fifth Third Bancorp (NasdaqGS:FITB) - **Headquarters**: Cincinnati, Ohio - **Assets**: Approximately $200 billion - **Segments**: - Commercial Banking - Consumer and Small Business - Wealth and Asset Management - **Profitability Metrics**: - ROTCE: ~18% - ROA: ~1.25% - **Deposits**: Non-interest bearing deposits constitute 25% of total deposits - **Valuation**: 10.5 times next year's earnings [1][1][1] Acquisition of Comerica - **Strategic Rationale**: - Fifth Third has historically focused on organic growth but sees the acquisition of Comerica as a strategic opportunity to enhance its retail and middle market banking capabilities [4][5][6] - The acquisition aims to leverage Fifth Third's strengths in branch building and deposit growth to enhance Comerica's platform for future growth, particularly in the Texas market [6][6][6] - **Cultural Alignment**: Emphasis on ensuring cultural alignment between Fifth Third and Comerica to facilitate integration and customer service [5][5][5] - **Growth Potential**: The acquisition is expected to create a pathway for growth over the next five to ten years, shifting the growth profile from a Midwest focus to include Texas [6][6][6] Integration Lessons from Previous Acquisitions - **MBFI Transaction Insights**: - Successful early appointment of regional leadership was crucial for retention and integration [9][9][9] - The importance of a longer integration window was highlighted, with plans for a seven-month window for the Comerica integration compared to a tighter timeline in the MBFI deal [10][10][10] - Emphasis on careful management of customer data and fraud controls during integration [12][12][12] Market Expansion Plans - **Texas Market**: - Plans to invest in 150 new branches in Texas by 2029, with a focus on Dallas and Houston [22][22][22] - The goal is to achieve a top five market share in key Texas cities [23][23][23] - **Southeast Expansion**: - Continuing to open new branches in the Southeast, with 50 planned for 2026 and a total of 200 by the end of 2028 [25][25][25] - The Southeast program has shown strong performance, with new branches exceeding deposit goals [26][26][26] Financial Strategy and Capital Management - **Balance Sheet Composition**: - Fifth Third aims to maintain a balance of retail deposits, targeting around 60% of funding from insured retail deposits [19][19][19] - The acquisition of Comerica is expected to help achieve a more balanced funding mix [20][20][20] - **Capital Plans**: - No material impact on capital plans from the acquisition; share repurchases are expected to resume shortly after the deal closes [33][33][33] - Targeting a CET1 ratio of 10.5% and maintaining a marked capital ratio above 9% [34][34][34] Regulatory Environment and Innovation - **Regulatory Changes**: - The current regulatory environment is seen as more conducive to facilitating acquisitions and innovation in the banking sector [46][46][46] - Fifth Third is positioned to leverage partnerships with innovative companies in the payments space [47][47][47] Direct Express Program - **Growth Opportunities**: - The acquisition will allow Fifth Third to own the BINs for the Direct Express program, simplifying conversion for participants [49][49][49] - The program is expected to benefit from the government's push towards digital payments, creating long-term growth opportunities [50][50][50] NDFI Lending Exposure - **Portfolio Overview**: - Fifth Third's NDFI portfolio is valued at $10.2 billion, with a focus on warehouse-related facilities and traditional corporate credit [54][54][54] - The bank has maintained a strong credit performance in its primary portfolios, with no credit losses in over a decade [56][56][56] - **Cautious Approach**: - The bank remains cautious about expanding into newer asset classes within NDFI lending, focusing on established partnerships [57][57][57] Conclusion - Fifth Third Bancorp is strategically positioned for growth through the acquisition of Comerica, with a focus on enhancing its retail and middle market banking capabilities while maintaining a strong emphasis on cultural alignment and integration. The company is also well-prepared to navigate regulatory changes and leverage innovation in the financial sector.

Core Viewpoint - Fifth Third Bancorp's acquisition of Comerica for $10.9 billion marks a significant shift in the regional banking landscape, driven by favorable conditions for bank mergers and acquisitions under the Trump administration [1][8]. Group 1: Acquisition Details - The acquisition will create the ninth-largest bank in the U.S., with total assets of $288 billion [2]. - Fifth Third will gain the No. 1 retail-deposit franchise in Michigan and expand its presence in rapidly growing markets like Texas [2]. - Post-acquisition, the combined bank will have over two-thirds of its loan portfolio in commercial real estate and commercial and industrial loans, along with strong fee-based businesses in commercial payments and asset management [3]. Group 2: Financial Implications - Fifth Third asserts that the acquisition will not dilute its tangible book value or net worth, which is a positive indicator for investors [6][8]. - The bank plans to reduce approximately 35% of Comerica's expenses, a common strategy in bank acquisitions [6]. - The deal is projected to be 9% accretive to earnings by 2027 and yield a 22% internal rate of return, assuming no revenue synergies [6]. Group 3: Management Expectations - Management anticipates that the acquisition will enhance Fifth Third's return profile, increasing return on assets to between 1.3% and 1.4%, and return on tangible common equity (ROTCE) to 19% or higher [7].

Core Insights - The Consumer Financial Protection Bureau (CFPB) is proposing to reduce oversight of auto lenders, particularly those serving subprime borrowers, amidst rising auto loan delinquencies [1][9] - The proposed rule change would limit CFPB supervision to auto finance companies that originate over 1 million loans annually, reducing the number of supervised companies from 63 to just 5 [2][9] - Subprime auto loan delinquency rates have reached record highs, with 6.1% of such loans being 60 days or more past due in September, the highest since 1994 [3][9] Regulatory Changes - Acting CFPB Director Russ Vought's proposal aims to amend the definition of "larger participants" in the auto financing market, which could eliminate oversight of many subprime lenders [2][7] - The CFPB's current supervisory process is viewed as essential for preventing wrongdoing in the auto finance sector, and reducing oversight may hinder the bureau's ability to address market failures [4][10] Industry Reactions - Auto finance companies are advocating for the elimination of CFPB oversight, arguing that existing enforcement by the Federal Trade Commission (FTC) and state authorities is sufficient [5][13] - There is significant opposition from bank trade groups and consumer advocates, who argue that the Dodd-Frank Act mandates CFPB supervision of nonbanks to protect consumers [6][9] Case Study: Tricolor Holdings - The proposal comes in the wake of the bankruptcy of Tricolor Holdings, a subprime auto lender accused of fraud, which highlights the risks in the subprime auto loan market [7][10] - Critics argue that the CFPB's failure to supervise Tricolor effectively raises concerns about the bureau's overall oversight capabilities [8][10] Broader Economic Implications - The surge in auto loan delinquencies is seen as a potential indicator of broader economic issues and consumer weakness [11][12] - Federal Reserve Chairman Jerome Powell has acknowledged the significant losses in subprime auto credit institutions and is monitoring the situation closely [12]

Core Insights - Comerica has decided to merge with Fifth Third Bancorp, marking a significant move in the banking sector with a deal valued at nearly $11 billion, the largest bank acquisition announcement of the year [1][9] - The merger was initiated by a phone call from Comerica CEO Curt Farmer to Fifth Third CEO Tim Spence on September 18, 2023, indicating Comerica's interest in selling [2][3] - The deal is expected to close in the first quarter of next year, pending regulatory approval and a review by the U.S. Department of Justice's antitrust division [4] Company Details - Fifth Third Bancorp aims to expand its presence in high-growth markets like Texas through this acquisition, while Comerica seeks to address funding pressures and balance sheet challenges [5] - Comerica's CEO, Curt Farmer, will transition to the role of vice chair at Fifth Third, with an annual compensation of $8.75 million and deferred compensation of $10.63 million [6][7] - Fifth Third has agreed to retain Peter Sefzik, Comerica's chief banking officer, as its head of wealth and asset management, although no other compensation agreements have been established with Comerica executives [8]

Cincinnati, Ohio-based Fifth Third Bancorp (FITB) operates as the bank holding company, providing a wide range of financial products and services. Valued at $27.5 billion by market cap, the firm operates through Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management segments. The banking major has notably underperformed the broader market over the past year. FITB stock has dipped 31 bps on a YTD basis and declined 1.6% over the past 52 weeks, notably underperforming the S ...

Financial Overview - As of September 30, 2025, Fifth Third Bancorp had $213 billion in assets and operated 1,102 full-service banking centers and 2,184 ATMs across twelve states[13]. - Total assets were reported at $212,903 million as of September 30, 2025, slightly down from $212,927 million at December 31, 2024[50]. - Total Bancorp Shareholders' Equity increased to $21,107 million as of September 30, 2025, up from $19,645 million at December 31, 2024[50]. - The carrying value of total investment securities was $49.5 billion at September 30, 2025, down from $52.4 billion at December 31, 2024[108]. - Other short-term investments increased by $95 million to $17.2 billion as of September 30, 2025, driven by proactive price and liquidity risk management[126]. Revenue and Income - For the three months ended September 30, 2025, net interest income accounted for 66% of total revenue, while noninterest income contributed 34%[16]. - Net income available to common shareholders for Q3 2025 was $608 million, or $0.91 per diluted share, a 14% increase from $532 million, or $0.78 per diluted share, in Q3 2024[36]. - Noninterest income increased by $70 million for Q3 2025, totaling $781 million, and by $107 million for the nine months ended September 30, 2025, totaling $2.224 billion[40]. - Wealth and asset management revenue rose to $181 million for the three months ended September 30, 2025, an increase of 11% from $163 million in the same period in 2024[74]. - Noninterest income in the Wealth and Asset Management segment increased by $10 million to $107 million for the three months ended September 30, 2025, and by $18 million to $312 million for the nine months ended September 30, 2025[172]. Expenses and Efficiency - Noninterest expense rose by $23 million for Q3 2025, totaling $1.267 billion, and by $28 million for the nine months ended September 30, 2025, totaling $3.835 billion[41]. - The Bancorp's efficiency ratio, a non-GAAP measure, is calculated as noninterest expense divided by the sum of net interest income on an FTE basis and noninterest income[30]. - Noninterest expense rose by $39 million to $232 million for the three months ended September 30, 2025, and by $46 million to $697 million for the nine months ended September 30, 2025, primarily due to increases in compensation and benefits[166]. Capital and Ratios - The CET1 risk-based Capital Ratio is a key performance indicator used to assess the Bancorp's capital strength[30]. - The CET1 risk-based capital ratio as of September 30, 2025, was 10.57%, with a total risk-based capital ratio of 13.54%[43]. - The Bancorp issued $700 million of fixed-rate/floating-rate senior notes on January 28, 2025, with an interest rate of 4.967% per annum[25]. Loans and Credit Quality - Total loans and leases amounted to $123,147 million for the nine months ended September 30, 2025, with a yield of 6.09%, compared to $117,466 million and a yield of 6.43% for the same period in 2024[66]. - The allowance for loan and lease losses (ALLL) decreased to $2.3 billion at September 30, 2025, from $2.4 billion at December 31, 2024, representing a decrease of $87 million[71]. - The net charge-off ratio was 1.09% for Q3 2025, compared to 0.48% in Q3 2024, reflecting an increase in credit losses[39]. - Provision for credit losses was $197 million for Q3 2025, a 23% increase from $160 million in Q3 2024, and $544 million for the nine months ended September 30, 2025, up 55% from $351 million in the same period last year[38]. Deposits and Funding - Total deposits decreased from $167.252 billion on December 31, 2024, to $166.569 billion as of September 30, 2025[128]. - Core deposits decreased by $300 million from December 31, 2024, primarily due to decreases in transaction deposits and CDs of $250,000 or less[130]. - Average core deposits represented 77% of average total assets for both the three months ended September 30, 2025 and 2024[127]. Mergers and Acquisitions - The Bancorp entered into a merger agreement with Comerica Incorporated, with a transaction value of $10.9 billion, expected to close at the end of Q1 2026[19]. Tax and Legislation - Recent legislation introduced significant changes to the U.S. tax code, which were reflected in the Bancorp's financial statements but did not have a material impact[28]. - The effective tax rate increased to 22.6% for the three months ended September 30, 2025, compared to 21.3% for the same period in the prior year[98].

Core Viewpoint - The proposed sale of Comerica Incorporated to Fifth Third Bancorp is under investigation to assess whether the transaction adequately values Comerica and the process leading to this valuation is appropriate [1]. Summary by Relevant Sections - **Transaction Details** - Shareholders of Comerica will receive 1.8663 shares of Fifth Third for each share of Comerica they own [1]. - **Legal Investigation** - Kahn Swick & Foti, LLC, led by former Louisiana Attorney General Charles C. Foti, Jr., is investigating the proposed sale to determine if the consideration is sufficient or if it undervalues Comerica [1][2].

Core Insights - The top three mortgage lenders with the best rates are Navy Federal Credit Union, Citi Mortgage, and PenFed Credit Union, with a slight change in ranking this week [1] - The consistency in rankings among the top lenders indicates a stable competitive landscape in the mortgage lending market [3] Lender Rankings - The top five lenders with the lowest mortgage rates include a mix of large national banks and credit unions, with Citi, Chase, Navy Federal, and PenFed consistently appearing [3] - Truist has moved into the fifth position, replacing Better this week [3] Rate Differences - There is a significant 1.185 percentage point difference in APR between the top lender, Navy Federal, and the lowest lender, Third Federal, highlighting the importance of comparing rates [4] Survey Details - A total of 16 lenders were surveyed, with several notable banks like Wells Fargo and Rocket Mortgage not making the top 10 based on APR [4] - Citizens Bank improved its position significantly, moving from near the bottom to the top 10 [4] Shopping for Rates - Borrowers can potentially save up to $44,000 over the life of a 30-year loan by shopping around for mortgage rates [7] - The trend of promotional rates is growing, with lenders like Chase Home Lending offering limited-time rate reductions [8] Importance of APR - The APR is emphasized as the most critical figure for borrowers, as it encompasses both the interest rate and lender fees, providing a clearer picture of borrowing costs [10] Discount Points - Lenders may offer discount points to lower interest rates, which are optional upfront fees that can reduce the interest rate by approximately 0.25% per point [11][12] - Borrowers can request quotes without discount points for a more straightforward comparison of rates and fees [13]

Key insight: Columbia Banking System announced the latest move on its capital strategy just days after an activist investor published a related ultimatum.What's at stake: HoldCo Asset Management has staged public campaigns against four banks this year, as it pushes the companies to pursue strategies ranging from buybacks to being acquired.Supporting data: Columbia said it will repurchase up to $700 million of its own shares over the next 12 months. It had earlier said that it would probably steer away from ...

Core Insights - Fifth Third Bank's acquisition of Comerica highlights its focus on enhancing mobile banking features, aiming to improve customer experience and innovation perception [1][2] Group 1: Mobile Banking Enhancements - Fifth Third is implementing several updates to its mobile app, focusing on financial wellness and simplifying tasks for customers, with changes expected in the coming months [2] - The bank is replacing the "Goals" section of its app with a new financial hub called "Plan," which aims to provide a more streamlined user experience [3] - The "Plan" feature will visualize recurring spending, manage cash flow, and offer insights on subscriptions, enhancing overall financial management for users [4][5] Group 2: Strategic Direction - The shift from "personal financial management" to a broader concept of "holistic financial wellness solutions" reflects the bank's strategy to modernize its offerings [5] - The launch of a new mobile app in 2022 has facilitated quicker updates and feature releases, indicating a commitment to leveraging technology partnerships effectively [6]