Fifth Third Bancorp(FITBI) - 2025 Q2 - Quarterly Report

Part I. Financial Information Glossary of Abbreviations and Acronyms This section defines abbreviations and acronyms used in the financial statements and MD&A, serving as a reference tool for readers - The glossary defines key financial and regulatory terms such as ACL, FTE, NII, and CET1 to aid in understanding the report[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 and operations, covering overview, non-GAAP measures, accounting standards, policies, income, balance sheet, segments, and risk management Overview Fifth Third Bancorp, with $210 billion in assets, is a diversified financial services company whose revenue is primarily driven by 67% net interest income and 33% noninterest income, influenced by market conditions and strategic share repurchases 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% | - The Bancorp settled a $225 million accelerated share repurchase in Q1 2025 and authorized the purchase of 100 million additional common shares on June 13, 2025[19] - On January 28, 2025, the Bank issued $700 million in fixed/floating-rate senior notes and $300 million in floating-rate senior notes, both due January 28, 2028[21][22] - The 'One Big Beautiful Bill Act,' enacted July 4, 2025, introduced significant U.S. tax code changes, with the Bancorp evaluating its impact on the effective tax rate and deferred tax assets/liabilities, to be reflected in Q3 2025 financial statements[24] Key Performance Indicators (June 30, 2025 vs. 2024) | Indicator | Q2 2025 | Q2 2024 | % Change (QoQ) | H1 2025 | H1 2024 | % Change (YoY) | | :--------------------------------------- | :------ | :------ | :-------------- | :------ | :------ | :-------------- | | Net income available to common shareholders ($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 | $2,562 | —% | | Return on average assets | 1.20% | 1.14% | 5% | 1.09% | 1.06% | 3% | | Return on average common equity | 12.8% | 13.6% | (6)% | 11.8% | 12.6% | (6)% | | CET1 Capital Ratio | 10.58% | N/A | N/A | N/A | N/A | N/A | | Nonperforming Portfolio Assets Ratio | 0.72% | N/A | N/A | N/A | N/A | N/A | | Net Charge-off Ratio | 0.45% | 0.49% | (8)% | 0.45% | 0.44% | 2% | Non-GAAP Financial Measures This section reconciles non-GAAP financial measures, including net interest income (FTE), return on average tangible common equity, and tangible capital ratios, to U.S. GAAP for industry comparative analysis and additional performance insights - Non-GAAP measures such as Net Interest Income (FTE), Net Interest Margin (FTE), and Efficiency Ratio (FTE) are presented for tax-favored income adjustments and industry comparisons[38][39] Non-GAAP Financial Measures (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Net interest income (U.S. GAAP) ($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 disaggregating income statement expenses - ASU 2023-09, adopted January 1, 2025, mandates new disclosures for effective tax rate reconciliation and income taxes paid, while discontinuing certain other requirements[328] - ASU 2024-03, effective in 2027, introduces new requirements for disaggregating income statement expenses, including compensation and depreciation, with the Bancorp currently evaluating its impact[329] Critical Accounting Policies The Bancorp's critical accounting policies, including ALLL, reserve for unfunded commitments, and fair value measurements, involve significant judgment, with no material changes to valuation techniques during H1 2025 - Key critical accounting policies include ALLL, reserve for unfunded commitments, valuation of servicing rights, 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 $1.1 billion in H1 2025, driven by higher net interest and noninterest income, despite increased provision for credit losses and noninterest expenses Net Income Available to Common Shareholders (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (QoQ) | | :--------------------------------------- | :----------- | :----------- | :-------------- | | Net income available to common shareholders | $591 | $561 | 5% | | Diluted EPS | $0.88