FIFTH THIRD BANC(US:FITBO)2025-08-05 20:36Financial Performance - For the second quarter of 2025, net interest income was $1,495 million, an 8% increase from $1,387 million in the same quarter of 2024[28]. - Noninterest income for the second quarter of 2025 was $750 million, up 8% from $695 million in the second quarter of 2024[28]. - Net income available to common shareholders for the second quarter of 2025 was $591 million, or $0.88 per diluted share, a 5% increase from $561 million, or $0.81 per diluted share, in the second quarter of 2024[30]. - The efficiency ratio for the second quarter of 2025 was 56.2%, reflecting a slight improvement from 56.5% in the same quarter of 2024[28]. - Noninterest income increased by $55 million and $38 million for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024[67]. - Total noninterest income for the six months ended June 30, 2025, was $1,444 million, reflecting a 3% increase from $1,406 million in 2024[68]. Credit Losses and Provisions - The provision for credit losses increased by 78% to $173 million in the second quarter of 2025, compared to $97 million in the same quarter of 2024[28]. - The provision for credit losses was $173 million and $347 million for the three and six months ended June 30, 2025, respectively, compared to $97 million and $191 million during the same periods in the prior year[32]. - The allowance for loan and lease losses (ALLL) increased by $60 million to $2.4 billion at June 30, 2025, with the ALLL as a percentage of portfolio loans and leases at 1.97%[65]. - Provision for credit losses increased by $14 million for both the three and six months ended June 30, 2025, primarily due to increases in net charge-offs on average commercial and industrial loans, with annualized net charge-offs rising to 64 bps and 67 bps for the respective periods[156]. Capital and Ratios - The CET1 Capital Ratio was reported at 10.5%, indicating strong capital adequacy under Basel III standards[27]. - CET1 capital ratio was 10.58%, Tier 1 risk-based capital ratio was 11.85%, and total risk-based capital ratio was 13.77% as of June 30, 2025[37]. - The Bancorp authorized a share repurchase of up to 100 million shares, superseding the previous authorization from June 2019[19]. Loans and Leases - Total loans and leases increased to $123.657 billion for the three months ended June 30, 2025, with a net interest income (FTE) of $1.500 billion[57]. - Average loans and leases increased by $6.4 billion, or 5%, to $123.657 billion for the three months ended June 30, 2025, compared to the same period in the prior year[99]. - Commercial and industrial loans increased by $1.1 billion, or 2%, from December 31, 2024, due to loan originations exceeding payoffs[95]. - Indirect secured consumer loans rose by $1.3 billion, or 8%, from December 31, 2024, driven by higher loan production[96]. Interest Income and Expenses - Interest income from loans and leases increased by $9 million during the three months ended June 30, 2025, primarily due to higher average balances and yields on consumer loans[52]. - Interest expense on average core deposits decreased by $187 million for the three months ended June 30, 2025, with the cost of average interest-bearing core deposits dropping to 236 bps from 295 bps in the prior year[54]. - Interest expense on average wholesale funding decreased by $57 million for the three months ended June 30, 2025, primarily due to lower rates paid on average wholesale funding[55]. Deposits and Borrowings - Total deposits as of June 30, 2025, were $164.207 billion, a decrease of $3.045 billion, or 2%, from $167.252 billion as of December 31, 2024[124]. - Core deposits decreased by $3.1 billion, or 2%, primarily due to a decrease in transaction deposits, which fell by $3.2 billion, or 2%[125]. - Total borrowings decreased by $928 million, or 5%, from December 31, 2024, primarily due to a decrease in other short-term borrowings[133]. Investment Securities - Total investment securities decreased from $52.4 billion at December 31, 2024, to $51.6 billion at June 30, 2025[103]. - The Bancorp transferred $12.6 billion of investment securities from available-for-sale to held-to-maturity to reduce capital volatility associated with market price fluctuations[110]. - Total net unrealized losses on the available-for-sale debt and other securities portfolio were $3.5 billion at June 30, 2025, down from $4.3 billion at December 31, 2024[117]. Tax and Legislative Changes - Recent legislative changes may impact the Bancorp's effective tax rate and are being evaluated for their financial implications[24]. - The effective tax rate increased to 22.2% for the three months ended June 30, 2025, compared to 21.3% for the same period in the prior year, primarily due to an increase in state tax expense[92]. Risk Management - The Bancorp's credit risk management strategy emphasizes diversification across geographic, industry, product, and customer levels, with specific concentration limits established for commercial loans[184]. - The Bancorp utilizes a dual risk rating system with thirteen categories for estimating probabilities of default and eleven categories for estimating losses given default[179]. - The expected credit loss models for the commercial portfolio segment are primarily based on macroeconomic conditions and historical default rates, with collateral type and coverage levels influencing loss severity estimates[181].