Part I. Financial Information 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) 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 million19 - 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 notes2021 Statements of Income Analysis 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 balances44 - 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 forecasts56 - 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 plans3159 - Noninterest expense decreased by $38 million YoY, mainly due to a $33 million charge related to an FDIC special assessment in Q1 2024 that did not recur in 20253274 Balance Sheet Analysis Total assets remained stable, with loan growth funded by increased borrowings and a slight decrease in deposits Key Balance Sheet Components (QoQ Change) | As of ($ 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 utilization86 - The decrease in core deposits was driven by a $733 million decline in transaction deposits, primarily from lower commercial interest checking balances due to seasonal impacts113 Business Segment Review Most segments experienced a decline in pre-tax income, while the General Corporate and Other segment's loss significantly narrowed Income Before Income Taxes (FTE) by Segment (YoY) | ($ 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 income133134136 - 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 loans143144 - 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 adjusted129 Risk Management 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, 202430209 - 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 2024218 - The Allowance for Credit Losses (ACL) increased by $38 million from year-end 2024 to $2.52 billion, driven by higher loan balances and a deteriorating economic forecast227 - The Bancorp's NII is estimated to decrease by 3.54% over the next 12 months in a +200 bps ramped interest rate scenario, indicating liability-sensitive positioning247248 - The CET1 capital ratio stood at 10.43% as of March 31, 2025, comfortably exceeding the 4.50% minimum regulatory requirement34285 Condensed Consolidated Financial Statements and Notes This section provides unaudited interim financial statements and detailed notes on accounting policies, financial instruments, and risk exposures Condensed Consolidated Balance Sheets Total assets slightly decreased, while total liabilities declined and total equity increased due to comprehensive income Condensed Consolidated Balance Sheet Highlights | ($ 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 | $19,645 | Condensed Consolidated Statements of Income Net income slightly decreased due to higher credit loss provisions and lower noninterest income, despite growth in net interest income Condensed Consolidated Statement of Income Highlights | For the three months ended March 31, ($ 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 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-end334359 - 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 accommodation409 - 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 accrued468 - 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 restated509 Part II. Other Information Covers legal proceedings, risk factors, and details on equity security sales and use of proceeds Legal Proceedings (Item 1) 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, 2025462 - 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, 2024463 - 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, LLC466 - 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 accrued468 Risk Factors (Item 1A) 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-K519 Unregistered Sales of Equity Securities and Use of Proceeds (Item 2) 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&A520
Fifth Third(FITB) - 2025 Q1 - Quarterly Report