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

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

Core Viewpoint - The financial services companies reported positive results despite economic uncertainties, highlighting customer resilience and strong balance sheets [1][12]. Group 1: Deposit Growth and Credit Quality - Deposit bases expanded or remained stable in a competitive rate environment, with KeyCorp showing mid-single-digit growth year over year and Truist increasing balances while reducing deposit costs by 10 basis points [2] - Credit quality remained robust, with KeyCorp's nonperforming assets decreasing nearly 10% from the prior quarter and Truist's provision for credit losses declining sequentially [3] Group 2: Consumer Spending Trends - American Express reported a 6% year-over-year increase in card member spending, with significant growth among Gen Z and millennials, indicating a focus on experiences [4] - Truist's mobile app saw a 31% increase in consumer loans, with Gen Z volumes rising by 47%, reflecting strong demand among younger consumers [5] Group 3: Investment and Capital Plans - Management teams are pursuing capital plans despite macroeconomic uncertainties, with Truist launching real-time payments and achieving double-digit growth in treasury-management revenue [7] - KeyCorp is actively reviewing clients for tariff exposure while maintaining existing capital expenditure projects, and Fifth Third is investing in Southeast branches and national loan-origination platforms [8] Group 4: Contingency Planning - Each institution has contingency plans in place, with KeyCorp setting aside an additional $8 million in loan-loss reserves and Truist trimming certain expenses while continuing to invest in risk management and digital initiatives [9][10] - The common strategy includes maintaining liquidity, tight credit underwriting, and targeted technology investments to either cut costs or expand fee income [10] Group 5: Market Confidence and Preparedness - Confidence among these institutions is bolstered by low unemployment and stable delinquency metrics, alongside a shift towards higher-quality borrowers and fee-based products [11] - American Express noted that 70% of new accounts carry annual fees, while KeyCorp and Truist emphasized the growth of wealth management and treasury businesses [12] Group 6: Overall Sentiment - Despite acknowledging geopolitical and policy risks, the companies expressed optimism about their preparedness and ability to navigate economic uncertainties [12][13]

Core Viewpoint - Fifth Third Bancorp reported first-quarter 2025 adjusted earnings per share (EPS) of 73 cents, exceeding the Zacks Consensus Estimate of 70 cents, but down from 76 cents in the prior-year quarter [1][2] Financial Performance - Total quarterly revenues were $2.13 billion, a slight year-over-year increase, but missed the Zacks Consensus Estimate by 0.3% [3] - Net interest income (NII) was $1.44 billion, up 4% year over year, while the net interest margin increased to 3.03% from 2.86% [3] - Non-interest income declined 2% year over year to $694 million, primarily due to decreased revenues from commercial banking and capital markets fees [4] - Non-interest expenses decreased 3% year over year to $1.3 billion, attributed to lower marketing and other non-interest expenses [4] Loan and Deposit Trends - Average loans and leases rose 3% to $121.7 billion, while average deposits declined 2% to $164.1 billion [5] Credit Quality - Provision for credit losses was $174 million, up 85% from the year-ago quarter, with total non-performing portfolio loans and leases increasing 34.1% year over year to $996 million [6] - Net charge-offs increased to $136 million, or 0.46% of average loans and leases, compared to 0.38% in the prior-year quarter [7] - Total allowance for credit losses rose 2.1% to $2.52 billion year over year [7] Capital Position - Tier 1 risk-based capital ratio was 11.73%, slightly down from 11.77% in the prior-year quarter, while the CET1 capital ratio decreased to 10.45% from 10.47% [8] - The leverage ratio improved to 9.19% from 8.94% year over year [8] Capital Distribution - The company repurchased $225 million of its common outstanding shares during the reported quarter [9] Strategic Outlook - The rise in NII, driven by loan growth and expense discipline, supports top-line growth, while weak asset quality remains a near-term concern [10]

Financial Data and Key Metrics Changes - The company reported earnings per share of 71 cents, or 73 cents excluding certain items, exceeding consensus estimates [7] - Pre-provisioned net revenue (PPNR) grew by 5% year-over-year, with an adjusted return on equity of 11.2% [7] - Tangible book value per share increased by 15% over the prior year, despite the 10-year treasury rate remaining unchanged [8] - Net interest income (NII) grew by 4% year-over-year, with net interest margins expanding for the fifth consecutive quarter [10] Business Line Data and Key Metrics Changes - Total loans grew by 3% year-over-year, driven by strong middle market commercial and industrial (C&I) production and balanced growth across consumer-secured lending categories [9] - Commercial payments revenue increased by 6%, while wealth and asset management revenue grew by 7%, supported by a 10% growth in assets under management (AUM) [10] - Adjusted non-interest income increased by 1% compared to the prior year, driven by growth in wealth and commercial payments [30] Market Data and Key Metrics Changes - Core deposits remained stable, with total household growth of 2% and 5% growth in the Southeast [9] - Average core deposits decreased by 2% sequentially, primarily due to normal seasonality and commercial factors [26] - The loan-to-core deposit ratio was 75%, up 2% from the prior quarter, indicating strong liquidity management [28] Company Strategy and Development Direction - The company aims to achieve record NII within existing guidance, even without rate cuts or further loan growth [16] - Focus on maintaining a resilient business mix and managing the balance sheet defensively to adapt to changing conditions [12] - Continued investments in Southeast branches and growth in commercial payments are expected to enhance operational deposit funding [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering stability, profitability, and growth amid uncertain economic conditions [7] - The company is preparing for potential economic slowdowns by maintaining a diversified loan origination platform and proactive credit management [12][13] - Management anticipates that inflation may rise while growth could slow down, but unemployment may remain stable [63] Other Important Information - The company has a high allowance for credit losses (ACL) coverage ratio of 2.07%, among the highest in its peer group [38] - The CET1 ratio was maintained at 10.5%, exceeding the minimum buffer requirement [39] - The company plans to repurchase $400 million to $500 million of stock in the second half of 2025, depending on loan growth [50] Q&A Session Summary Question: Can you share insights on interactions with commercial customers amid economic uncertainty? - Management noted that commercial customers are concerned about tariffs and are likely to push prices to cover costs, with no indications of layoffs among clients [56][62] Question: What areas aside from credit is the company focusing on to navigate a potential slowdown? - Management emphasized the importance of deposit funding and disciplined expense management as key focus areas [68][69] Question: Can you provide details on the increase in non-performing loans (NPLs)? - The increase was primarily due to two ABL loans, but management remains confident in the overall health of the portfolio [75][80] Question: How is the company managing costs without impairing growth plans? - Management indicated that cost reductions would come from variable compensation adjustments and operational efficiencies, while continuing to invest in growth areas [95] Question: What is the outlook for the U.S. consumer and associated risks? - Management highlighted that lower-income consumers are under stress, while higher-income individuals are likely to reduce spending, but the middle class remains stable as long as unemployment does not rise significantly [125][132]

Financial Data and Key Metrics Changes - The company reported earnings per share of 71 cents, or 73 cents excluding certain items, exceeding consensus estimates [7] - Pre-provision net revenue (PPNR) grew by 5% year-over-year, with an adjusted return on equity of 11.2% [7] - Tangible book value per share increased by 15% over the prior year, despite the 10-year treasury rate remaining unchanged [8] - Net interest income (NII) grew by 4% year-over-year, with net interest margins expanding for the fifth consecutive quarter [10] Business Line Data and Key Metrics Changes - Total loans grew by 3% year-over-year, driven by strong middle market commercial and industrial (C&I) production and balanced growth across consumer-secured lending categories [9] - Commercial payments revenue increased by 6%, while wealth and asset management revenue grew by 7%, supported by a 10% growth in assets under management (AUM) [10] - Adjusted non-interest income increased by 1% compared to the prior year, driven by growth in wealth and commercial payments [30] Market Data and Key Metrics Changes - Core deposits remained stable, with total household growth of 2% and 5% growth in the southeast [9] - Average core deposits decreased by 2% sequentially, primarily due to normal seasonality and commercial factors [26] - The loan-to-core deposit ratio was 75%, up 2% from the prior quarter [28] Company Strategy and Development Direction - The company aims to achieve record NII within existing guidance, even without rate cuts or further loan growth [16] - Focus on maintaining a resilient business mix and managing the balance sheet defensively to react quickly to changing conditions [12] - Continued investments in southeast branches and growth in commercial payments are expected to enhance operational deposit funding [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering stability, profitability, and growth amid uncertain economic conditions [7] - The company anticipates inflation to rise and growth to slow down, but expects unemployment to remain stable [63] - Management highlighted the importance of maintaining a strong liquidity profile and managing funding costs prudently [28] Other Important Information - The company has a high allowance for credit losses (ACL) coverage ratio of 2.07%, among the highest in its peer group [38] - The CET1 ratio was maintained at 10.5%, exceeding the buffered minimum of 7.7% [39] - The company plans to repurchase $400 million to $500 million of stock during the remainder of 2025, depending on realized loan growth [50] Q&A Session Summary Question: Can you share insights on interactions with commercial customers amid economic uncertainty? - Management noted that clients are generally nervous about tariffs and are planning to push prices to cover costs, with no indications of layoffs among clients [56][62] Question: What areas aside from credit is the company focusing on to navigate a potential slowdown? - Management emphasized the importance of deposit funding and disciplined expense management as key focus areas [68][69] Question: Can you provide details on the increase in non-performing loans (NPLs)? - The increase was primarily due to two ABL loans, but management expressed confidence in the overall health of the portfolio and does not foresee significant increases in NPLs [75][80] Question: How is the company managing costs without impairing growth plans? - Management indicated that cost reductions would come from variable compensation linked to revenue production and disciplined spending on operational activities [95] Question: What is the outlook for the U.S. consumer and associated risks? - Management highlighted that lower-income consumers are under stress, while higher-income individuals are likely to reduce spending, but the middle-income segment remains stable as long as unemployment does not rise significantly [125][132]

Fifth Third Bancorp 1Q25 Earnings Presentation April 17, 2025 Refer to earnings release dated April 17, 2025 for further information. © Fifth Third Bancorp | All Rights Reserved Cautionary statement This presentation contains statements that we believe are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. All st ...

Financial Performance - Fifth Third Bancorp reported net income available to common shareholders of $478 million, or $0.71 per diluted share, a decrease of 18% from the prior quarter and stable compared to the year-ago quarter [6]. - Net interest income (NII) for Q1 2025 was $1,442 million, reflecting a 4% increase year-over-year, while the net interest margin (NIM) expanded to 3.03%, up 17 basis points from the previous year [7][8]. - Noninterest income decreased by 5% sequentially to $694 million, with notable declines in capital markets fees and commercial banking revenue, down 27% each compared to the prior quarter [9][11]. - Noninterest expense increased by 6% sequentially to $1,304 million, but decreased by 3% year-over-year, reflecting disciplined expense management [13][14]. - The return on average common equity was 10.8%, down from 13.0% in the previous quarter, indicating a need for improved profitability measures [1]. - Net income available to common shareholders fell by 18% to $478 million compared to the previous quarter [42]. - Earnings per share (diluted) decreased by 16% to $0.71, while basic earnings per share increased by 1% to $0.71 year-over-year [42]. - Total revenue (FTE) for Q1 2025 was $2,136 million, a decrease of 1.8% sequentially and an increase of 1.7% year-over-year [46]. - Income before income taxes (FTE) for Q1 2025 was $658 million, a decrease from $770 million in Q4 2024, showing a decline in profitability [72]. Loan and Lease Growth - The average portfolio loans and leases rose to $121,272 million, a 3% increase sequentially and year-over-year, driven by growth in both commercial and consumer lending [1]. - Total average portfolio loans and leases increased 3% compared to the prior quarter, with commercial loans and leases up 4% and consumer loans up 2% [16]. - Period-end commercial portfolio loans and leases reached $75 billion, a 3% increase from the prior quarter and a 4% increase year-over-year [19]. - Period-end consumer portfolio loans totaled $47 billion, increasing 1% from the prior quarter and 6% year-over-year [20]. - Total loans and leases increased to $121.764 billion in March 2025, up from $118.492 billion in December 2024, representing a growth of 1.92% [53]. Credit Quality - The provision for credit losses totaled $174 million in the current quarter, with an allowance for credit losses (ACL) ratio of 2.07% of total portfolio loans and leases [26]. - Nonperforming portfolio loans and leases (NPLs) increased to $966 million, resulting in an NPL ratio of 0.79%, up 10 basis points from the prior quarter [60]. - Total net charge-offs were $136 million, with a net charge-off (NCO) ratio of 0.46%, unchanged from the prior quarter [27]. - The allowance for loan and lease losses increased to $2,384 million, a 3% increase from $2,318 million in March 2024 [50]. - Total nonperforming assets rose to $1,017 million in March 2025, compared to $860 million in December 2024 [60]. Capital and Equity - CET1 capital ratio decreased by 12 basis points to 10.45% due to loan growth increasing risk-weighted assets [31]. - Average total Bancorp shareholders' equity as a percentage of average assets increased to 9.50% from 9.40% in the previous quarter [31]. - Fifth Third repurchased $225 million of its common stock, reducing shares outstanding by approximately 5.2 million [31]. - Total equity rose to $20,403 million, a 7% increase compared to $19,018 million in March 2024 [50]. - The Tier 1 risk-based capital ratio was 11.73% in March 2025, down from 11.86% in December 2024 [56]. Market and Operational Efficiency - The effective tax rate for the quarter was 21.2%, up from 18.8% in the prior quarter [32]. - The efficiency ratio (FTE) improved to 61.0% in Q1 2025 compared to 56.4% in Q4 2024, indicating increased operational efficiency [70]. - The company plans to continue focusing on stability, profitability, and growth as its operating principles amid economic uncertainty [4]. - The company has been recognized among Ethisphere's World's Most Ethical Companies® for several years [34]. - Fifth Third aims to be the highest performing regional bank in the U.S. while maintaining a strong commitment to community impact [34].

Core Viewpoint - Fifth Third Bancorp (FITB) is expected to report first-quarter 2025 results on April 17, with anticipated revenue growth but a decline in earnings year-over-year [1][14]. Group 1: Earnings and Revenue Expectations - The Zacks Consensus Estimate for FITB's first-quarter earnings is 70 cents per share, reflecting a 7.9% decrease from the previous year [14]. - The consensus estimate for revenues is $2.14 billion, indicating a 1.8% increase compared to the year-ago figure [14]. - The company has a history of earnings surprises, beating estimates in the last four quarters with an average surprise of 4.13% [2]. Group 2: Net Interest Income and Loan Performance - The adjusted net interest income (NII) is expected to align with the $1.44 billion reported in the fourth quarter of 2024, with a marginal sequential rise anticipated [4]. - Total average loans and leases are projected to increase by 2% from the fourth quarter, estimated at $120.9 billion, supporting average interest-earning assets [5]. Group 3: Non-Interest Revenues and Market Conditions - Non-interest revenues are expected to decline by 7-8% compared to the previous quarter, with the Zacks Consensus Estimate for non-interest income at $708.9 million, a 3.2% drop from the prior quarter [9][10]. - The commercial banking revenues are estimated at $103.9 million, reflecting a 4.7% sequential decline due to decreased M&A activity amid market uncertainties [7][6]. Group 4: Expenses and Asset Quality - Total expenses are anticipated to rise by 9.1% sequentially to $1.4 billion, driven by investments in technology and marketing [10]. - The Zacks Consensus Estimate for non-performing assets is $870.1 million, indicating a 1.2% increase from the prior quarter [12].

Workforce and Employee Engagement - As of December 31, 2024, the Bancorp had 18,616 full-time equivalent employees, a decrease from 18,724 in 2023, indicating a reduction in workforce[15] - Full year turnover improved from 16.9% in 2023 to 16.2% in 2024, reflecting enhanced employee retention strategies[21] - The Bancorp engaged employees in over 255,000 hours of discretionary learning in 2024, emphasizing its commitment to employee development[17] - The Bancorp's human capital strategy aims to attract and retain talent, ensuring alignment with business needs and organizational values[15] Growth Strategy and Market Position - The Bancorp's strategy for growth includes expanding its presence in high-growth markets and broadening product offerings, with potential acquisitions being evaluated[23] - The Bancorp's competitive environment is influenced by changes in regulation, technology, and consolidation among financial service providers, which are expected to continue[14] Regulatory Environment and Compliance - The Bancorp is subject to extensive regulation and supervision, impacting its operational strategies and capital distribution capabilities[24] - The EGRRCPA raised asset thresholds for enhanced prudential standards, affecting the Bancorp's regulatory requirements[25] - The Bancorp is subject to enhanced prudential standards due to its size, including liquidity and capital requirements, stress testing, and risk management standards[61] - The Bancorp's ability to declare dividends is limited by federal banking laws and regulatory capital requirements, impacting its capital distribution strategy[36] - The Bancorp's compensation programs are designed to align with regulatory expectations while rewarding performance, focusing on long-term shareholder value[19] - The Bancorp's most recent supervisory stress test was completed in 2024, assessing the impact of adverse economic conditions on its capital[59] - The Bancorp is subject to federal laws aimed at countering money laundering and terrorist financing, requiring robust compliance programs to avoid significant penalties[69] - The Bancorp's Board has approved policies to comply with anti-money laundering laws, which are critical for bank mergers and acquisitions[70] - The impact of future legislative or regulatory changes on the Bancorp's business and financial condition cannot be predicted, but such changes could be significant[79] Financial Performance and Capital Ratios - The Bancorp's Common Equity Tier 1 (CET1) capital ratio was 10.57% as of December 31, 2024, exceeding the minimum regulatory requirement of 4.50%[53] - The Bancorp's Tier 1 risk-based capital ratio was 11.86% as of December 31, 2024, surpassing the minimum requirement of 6.00%[53] - The Bancorp's total risk-based capital ratio was 13.86% as of December 31, 2024, exceeding the minimum requirement of 8.00%[53] - The Bancorp's leverage ratio was 9.22% as of December 31, 2024, well above the minimum requirement of 4.00%[53] - The Bancorp's stress capital buffer was 3.2% as of December 31, 2024, indicating compliance with the stress capital buffer requirement[60] Risk Management and Operational Challenges - The bank's operations are increasingly reliant on digital technology, exposing it to cybersecurity risks that could disrupt services and harm customer relationships[102] - The use of third-party service providers increases operational risks, particularly in the context of data security and service reliability[105] - Fifth Third is facing challenges in managing organizational changes and implementing key initiatives due to competing priorities, which could adversely affect its business and financial condition[114] - The company invests significant resources in information technology system enhancements, but may struggle to implement these successfully, potentially impacting profitability and compliance with regulatory requirements[115] - The effectiveness of Fifth Third's risk management framework is critical, as failures could significantly impact earnings and stakeholder perception[178] - Fifth Third's risk management framework may be less effective than anticipated, potentially leading to unexpected losses and negative consequences[179] Market and Economic Factors - Fifth Third's income and cash flows are highly sensitive to changes in interest rates, with the Federal Reserve raising the federal funds rate to between 5.25% and 5.5% in 2022 and 2023[152] - Changes in monetary policy, including interest rate fluctuations, could adversely affect Fifth Third's loan origination volume and profitability[152] - Global and domestic political, social, and economic uncertainties may adversely affect Fifth Third, impacting its ability to raise liquidity and affecting its business operations[151] - The Bancorp's estimate for the special deposit insurance assessment was $252 million, with recorded expenses of $28 million and $224 million for the years ended December 31, 2024 and 2023, respectively[42] Technology and Innovation - Rapid technological advancements in the financial services industry require Fifth Third to effectively address customer needs and implement new technology-driven products, or risk losing market share[116] - The adoption of real-time payments networks may require Fifth Third to hold more liquidity reserves, impacting profitability and increasing fraud risks[161] Acquisitions and Growth Risks - Future acquisitions could dilute current shareholders' ownership and increase susceptibility to economic downturns[166] - The company may face challenges in integrating acquired entities, which could prevent it from achieving expected benefits[164] Environmental and Social Risks - Environmental, social, and governance risks could adversely affect Fifth Third's reputation and stock price, impacting its ability to attract customers and investors[171] - Societal responses to climate change may adversely affect Fifth Third's business, leading to cost increases and demand drops in certain sectors[181] Financial Reporting and Accounting - Changes in accounting standards could materially impact Fifth Third's reported earnings and financial condition[175] - The preparation of financial statements requires significant estimates that could materially impact results, with potential changes to previously announced financial results[180]