Fifth Third(FITB) - 2025 Q2 - Quarterly Report

Part I. Financial Information Glossary of Abbreviations and Acronyms 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][11] Management's Discussion and Analysis of Financial Condition and Results of Operations (Item 2) This section analyzes Fifth Third Bancorp's financial condition, operations, and risk management, including non-GAAP measures and accounting policies 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] - On January 28, 2025, the Bank issued $700 million in fixed/floating-rate senior notes and $300 million in floating-rate senior notes, both due January 28, 2028[21][22] - The 'One Big Beautiful Bill Act,' enacted July 4, 2025, significantly changed the U.S. tax code, and the Bancorp is evaluating its impact on tax rates and deferred tax assets/liabilities, with effects to be reflected in Q3 2025[24] Key Performance Indicators (June 30, 2025 vs. 2024) | Indicator | Q2 2025 | Q2 2024 | % Change (QoQ) | H1 2025 | H1 2024 | % Change (YoY) | | :--------------------------------------- | :------ | :------ | :-------------- | :------ | :------ | :-------------- | | Net income available to common shareholders ($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 | $2,562 | —% | | Return on average assets | 1.20% | 1.14% | 5% | 1.09% | 1.06% | 3% | | Return on average common equity | 12.8% | 13.6% | (6)% | 11.8% | 12.6% | (6)% | | CET1 Capital Ratio | 10.58% | N/A | N/A | N/A | N/A | N/A | | Nonperforming Portfolio Assets Ratio | 0.72% | N/A | N/A | N/A | N/A | N/A | | Net Charge-off Ratio | 0.45% | 0.49% | (8)% | 0.45% | 0.44% | 2% | Non-GAAP Financial Measures This section reconciles non-GAAP financial measures to U.S. GAAP, offering insights into the Bancorp's financial performance and capital adequacy for industry comparison - Non-GAAP measures such as Net Interest Income (FTE) and Efficiency Ratio (FTE) are presented to adjust for tax-favored income and provide relevant comparisons[38][39] Non-GAAP Financial Measures (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Net interest income (U.S. GAAP) ($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 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] - 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] Critical Accounting Policies 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] - No material changes to valuation techniques or models occurred during the six months ended June 30, 2025[46] Statements of Income Analysis 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][49] - Q2 2025 net interest margin included a $14 million benefit from a commercial loan payoff, with future margin expected to remain stable or modestly increase due to loan growth and liability management[51] Provision for Credit Losses (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | H1 2025 ($M) | H1 2024 ($M) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Provision for credit losses | $173 | $97 | 78% | $347 | $191 | 82% | | Net losses charged-off as % of avg. portfolio loans and leases | 0.45% | 0.49% | (8)% | 0.45% | 0.44% | 2% | | Nonperforming portfolio assets as % of portfolio loans and leases and OREO | 0.72% (June 30, 2025) | 0.71% (Dec 31, 2024) | 1% | N/A | N/A | N/A | - The provision for credit losses increased due to deteriorating economic forecasts for ACL calculation, higher loan balances, and increased specific reserves on commercial and industrial loans[32][64] Noninterest Income Components (Q2 2025 vs. Q2 2024) | Component | Q2 2025 ($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 | $13 | (46)% | - Noninterest income increased in Q2 2025 due to higher wealth and asset management, consumer banking, mortgage banking, and other income, with similar drivers for H1 2025, partially offset by lower capital markets and commercial banking fees[33][34][67] Noninterest Expense Components (Q2 2025 vs. Q2 2024) | Component | Q2 2025 ($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 | $507 | (14)% | | Efficiency ratio on an FTE basis | 56.2% | 58.5% | (4)% | 58.6% | 61.2% | (4)% | - Noninterest expense rose in Q2 2025 due to increased compensation, technology, and marketing costs, partially offset by lower other noninterest expenses, with a minimal increase for H1 2025[35][84] Applicable Income Taxes (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($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] Balance Sheet Analysis 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 ($3.1 billion)[99] - Average commercial loan growth was primarily in commercial and industrial, commercial mortgage, and commercial leases, driven by increased originations and strategic shifts[100] - Average consumer loan growth was primarily in indirect secured, residential mortgage, home equity, and solar energy loans, partially offset by other consumer loan paydowns[101] Investment Securities (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($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][113] - Other short-term investments decreased by $4.1 billion to $13.0 billion at June 30, 2025, due to deploying excess liquidity for loan growth and proactive liability management[122][312] Deposits (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($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 $3.1 billion (2%) from December 31, 2024, mainly due to lower interest checking and savings deposits, partially offset by increased demand deposits[125] - Average core deposits decreased by 1% in Q2 2025 due to lower transaction deposits and smaller CDs, while larger CDs decreased by 54% due to maturities[128][129] Borrowings (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($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] - Average borrowings increased by $790 million (4%) in Q2 2025, driven by higher short-term borrowings to fund loan growth and offset decreased core deposits, partially offset by lower long-term debt[134] Business Segment Review The Bancorp operates through Commercial, Consumer and Small Business, and Wealth and Asset Management segments, with a January 2025 realignment and central interest rate risk management via Funds Transfer Pricing (FTP) - In January 2025, the Bancorp realigned its reporting, moving certain business banking relationships from Commercial to Consumer and Small Business Banking, applied retrospectively[139] - The Bancorp uses a Funds Transfer Pricing (FTP) methodology to centrally manage interest rate risk, insulating segments from benchmark volatility and enabling focus on customer service[136] Income (Loss) Before Income Taxes (FTE) by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 ($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] - 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] - 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] - 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] Risk Management—Overview 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] - Effective risk management relies on identification, measurement, monitoring, control, and reporting to ensure financial performance and capital strength[16] Credit Risk Management 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] - 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] - 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][182] 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 | $456 | - The Bancorp manages consumer portfolio credit risk through concentration limits, focusing on FICO scores, LTVs, and geographic concentrations[196] - Approximately 28% of residential mortgage ARM loans resetting in the next 12 months are expected to see a 2.6% average rate increase, resulting in a 34% average increase in monthly payments[200] Residential Mortgage Portfolio Loans by LTV at Origination (June 30, 2025) | LTV at Origination | Outstanding ($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] - 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] - 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][247] Interest Rate and Price Risk Management 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] - The Bancorp uses NII simulation and EVE analysis to manage interest rate risk, incorporating assumptions on prepayment rates, deposit attrition, and repricing sensitivity[256][261][267] 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] 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][273] 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] Liquidity Risk Management 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] - Primary funding sources include noninterest income, loan and lease payments, securities sales, loan securitizations, core deposits, and wholesale borrowings[286] - 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][292] - The Bank had approximately $71.3 billion in borrowing capacity available through secured sources like FRB and FHLB as of June 30, 2025[291] - 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] 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 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][304] 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] - In H1 2025, the Bancorp completed a $225 million accelerated share repurchase, and on June 13, 2025, authorized a new program to purchase 100 million common shares[19][305][307] Quantitative and Qualitative Disclosures about Market Risk (Item 3) This section incorporates by reference detailed information on interest rate and price risk management from the MD&A, highlighting the forward-looking nature of these disclosures and inherent uncertainties - Market risk disclosures are incorporated by reference from the 'Interest Rate and Price Risk Management' subsection of the MD&A[308] - These disclosures contain forward-looking statements, which are subject to inherent risks and uncertainties[308] Controls and Procedures (Item 4) The Bancorp's management concluded that its disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the period - As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective in all material respects[309] - No material changes to the Bancorp's internal control over financial reporting occurred during the reporting period[310] Condensed Consolidated Financial Statements and Notes (Item 1) This section presents the unaudited condensed consolidated financial statements of Fifth Third Bancorp, including Balance Sheets, Statements of Income, Comprehensive Income, Changes in Equity, and Cash Flows, providing a snapshot of financial position and performance Balance Sheets (unaudited) The Condensed Consolidated Balance Sheets summarize Fifth Third Bancorp's financial position as of June 30, 2025, showing a slight decrease in total assets and liabilities, leading to an increase in total equity Condensed Consolidated Balance Sheets (June 30, 2025 vs. Dec 31, 2024) | Asset/Liability/Equity | June 30, 2025 ($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 | $19,645 | 7.5% | Statements of Income (unaudited) The Condensed Consolidated Statements of Income show Fifth Third Bancorp's financial performance for Q2 and H1 2025, with net income available to common shareholders increasing due to higher net interest and noninterest income, despite a significant rise in provision for credit losses Condensed Consolidated Statements of Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($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 | $1.51 | 5% | Statements of Comprehensive Income (unaudited) The Condensed Consolidated Statements of Comprehensive Income present Fifth Third Bancorp's net income and other comprehensive income (loss) for Q2 and H1 2025, with comprehensive income significantly increasing due to net unrealized gains on available-for-sale debt securities and cash flow hedge derivatives Condensed Consolidated Statements of Comprehensive Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($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] Statements of Changes in Equity (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 | $19,226 | Statements of Cash Flows (unaudited) The Condensed Consolidated Statements of Cash Flows outline Fifth Third Bancorp's cash activities for H1 2025, showing a significant increase in net cash provided by operating and investing activities, but a larger increase in net cash used in financing activities, resulting in a net decrease in cash Condensed Consolidated Statements of Cash Flows (H1 2025 vs. H1 2024) | Activity | H1 2025 ($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 | $2,837 | 5% | - Net cash provided by operating activities significantly increased in H1 2025 due to higher net income, provision for credit losses, and positive changes in other assets[322] - Net cash used in financing activities increased due to a net decrease in deposits and higher treasury stock repurchases, partially offset by long-term debt issuances[322] Notes to Condensed Consolidated Financial Statements (unaudited) These notes provide detailed context for the Condensed Consolidated Financial Statements, covering basis of presentation, cash flow information, accounting standards, investment securities, loans, credit quality, and various risk management and capital aspects Note 1. Basis of Presentation The Condensed Consolidated Financial Statements, prepared in accordance with U.S. GAAP and SEC rules, consolidate Fifth Third Bancorp and its majority-owned subsidiaries and VIEs, requiring management estimates and assumptions - The financial statements consolidate majority-owned subsidiaries and VIEs where the Bancorp is the primary beneficiary, with other entities accounted for using the equity method or fair value[323] - Statements are unaudited, include normal recurring accruals, and conform to U.S. GAAP and SEC rules for interim financial information[324] - Preparation requires management estimates and assumptions, and actual results may differ[325] Note 2. Supplemental Cash Flow Information This note provides supplemental cash flow details for H1 2025 and 2024, including cash payments for interest and income taxes, non-cash investing and financing activities, and lease-related cash flows Supplemental Cash Flow Information (H1 2025 vs. H1 2024) | Metric | H1 2025 ($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 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] - 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] Note 4. Investment Securities 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 $994 million in unrealized losses amortized into income[337] Net Securities Gains (Losses) (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($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] - 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] 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 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] - The Bancorp had $15.0 billion in loans pledged to the FHLB and $59.6 billion pledged to the FRB as of June 30, 2025[347] Net Charge-offs by Loan Category (H1 2025 vs. H1 2024) | Category | H1 2025 ($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 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 $526 million were modified for borrowers experiencing financial difficulty during the six months ended June 30, 2025, representing 0.43% of total portfolio loans and leases[382] Commercial Portfolio Loan Modifications (H1 2025 vs. H1 2024) | Type of Modification | H1 2025 ($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 | $21 | Note 7. Variable Interest Entities This note discusses Fifth Third Bancorp's involvement with VIEs, consolidating those where it is the primary beneficiary (e.g., loan securitizations) and limiting exposure for non-consolidated VIEs (e.g., CDC investments, private equity funds) to invested capital and unfunded commitments - The Bancorp consolidates VIEs related to an automobile loan securitization and a solar loan securitization, where it is determined to be the primary beneficiary due to retained residual interests and servicing rights[398][399] Consolidated VIEs Assets and Liabilities (June 30, 2025 vs. Dec 31, 2024) | Category | June 30, 2025 ($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][403] 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][404][405] - Private equity investments are accounted for under the equity method or measurement alternative, with unfunded commitments of $238 million at June 30, 2025[408][409] - 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][411] Note 8. Sales of Receivables and Servicing Rights 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][419][420] 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 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 $2.266 billion at June 30, 2025 - The Bancorp uses derivative instruments to mitigate interest rate, prepayment, and foreign currency risks, and for customer accommodation, avoiding unhedged speculative positions[423][427] Derivative Instruments Notional Amounts and Fair Values (June 30, 2025) | Category | Notional Amount ($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][426] - For cash flow hedges, $271 million in net deferred losses (net of tax) were recorded in AOCI at June 30, 2025, with $108 million expected to be reclassified into earnings within 12 months[437] Net Gains (Losses) from Free-Standing Derivatives – Risk Management (H1 2025 vs. H1 2024) | Category | H1 2025 ($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 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