Fifth Third Bancorp Reports First Quarter 2024 Diluted Earnings Per Share of $0.70

Rhea-AI Summary

Fifth Third Bancorp reported first quarter 2024 diluted earnings per share of $0.70, showcasing stability in deposits, profitability through fee performance growth, disciplined expense management, and strong growth in key areas. The bank saw a decrease in net income compared to the prior quarter and year-ago quarter, impacted by certain items, resulting in a diluted earnings per share of $0.70 with a negative $0.06 impact from these items. Key financial data revealed a 5% increase in average deposits year-over-year, a loan-to-core deposit ratio of 71%, and a CET1 capital increase of 15 bps sequentially to 10.44%. Fifth Third Wealth Advisors surpassed $1 billion in assets under management, and the bank demonstrated stability, profitability, and growth in its financial performance.

Positive

• Stability in deposits with a 5% increase year-over-year
• Profitability driven by fee performance growth and disciplined expense management
• Diluted earnings per share of $0.70 with a negative $0.06 impact from certain items
• Loan-to-core deposit ratio of 71% and CET1 capital increase of 15 bps sequentially to 10.44%
• Fifth Third Wealth Advisors surpassed $1 billion in assets under management

Negative

• Net income decrease compared to the prior quarter and year-ago quarter
• Negative $0.06 impact from certain items on diluted earnings per share
• 5% decrease in noninterest income excluding certain items compared to the prior quarter
• 8% increase in noninterest expense excluding certain items compared to the year-ago quarter

Insights

Financial Analyst

The latest earnings report by Fifth Third Bancorp displays a mixed financial landscape. The diluted earnings per share (EPS) of $0.70, though a decline from both the previous quarter and year-over-year, must be contextualized within a broader economic scenario that has seen various industries grappling with increased interest rates and inflationary pressures. From an investor's perspective, the modest uptick in average deposits (+5% year-over-year) and the loan-to-core deposit ratio sitting at a stable 71% are reassuring indicators of liquidity and capital strength. Nevertheless, expenses have also risen, albeit by a modest 1% compared to Q1 2023, suggesting controlled operational costs. What demands closer attention are the net charge-offs and nonperforming asset ratios which, despite being below historical levels, have shown a sequential increase, hinting at potentially emerging credit concerns. Retail investors should monitor these credit quality metrics closely, as they can be leading indicators of future financial health.

Market Research Analyst

Examining Fifth Third Bancorp's strategic growth areas, such as wealth and asset management and treasury management fees, reveals a bank that's leveraging fee-based services to diversify its revenue streams. This is a prudent strategy, particularly in a volatile interest rate environment and it has resulted in a 10% growth in wealth and asset management revenue year-over-year. Consumer household growth reported at 3% is also a positive indicator of the bank's retail footprint expansion. For the retail investor, these growth metrics suggest that Fifth Third is making inroads in services that can generate stable fee income, which is beneficial in counteracting interest income pressures. However, the noted impact of current economic and regulatory uncertainties on the bank's future performance underscores the importance for investors to factor in systemic risks when evaluating the stock.

Risk Management Analyst

The increase in the provision for credit losses (+71% compared to the previous quarter) and the rise in net charge-off ratio to 0.38% require a careful risk assessment. Fifth Third's capital position, with a CET1 ratio of 10.44%, indicates a buffer above the regulatory minimum, which is a strong defense against potential credit losses. Yet, the uptick in nonperforming loans (NPLs) and assets (NPAs) could suggest a turning point in the credit cycle, implying that the bank is potentially bracing for a more challenging credit environment. Investors should appreciate that the bank's capital and liquidity ratios are fundamental layers of risk mitigation, but ongoing vigilance over credit quality trends will be essential in the coming quarters.

Grew deposits year-over-year and further strengthened liquidity and capital positions

Reported results included a negative $0.06 impact from certain items on page 2 of the earnings release

CINCINNATI--(BUSINESS WIRE)-- Fifth Third Bancorp (NASDAQ: FITB):

	Key Financial Data									Key Highlights
	$ in millions for all balance sheet and income statement items
			1Q24		4Q23		1Q23			Stability: Average deposits increased 5% compared to 1Q23 Net charge-offs, NPAs, and delinquencies remain below historical levels; zero CRE net charge-offs during the quarter Loan-to-core deposit ratio of 71% CET1 capital increased 15 bps sequentially to 10.44% reflecting consistent and strong earnings power   Profitability: Strong fee performance driven by 10% growth in wealth and asset management revenue and 11% in treasury management fees compared to 1Q23 Interest-bearing deposit costs stabilized; increased only 1 bp compared to 4Q23 Disciplined expense management; expenses increased 1%; adjusted expenses(a) decreased 1% compared to 1Q23   Growth: Generated consumer household growth of 3% compared to 1Q23 Fifth Third Wealth Advisors surpassed $1 billion in assets under management
	Income Statement Data
	Net income available to common shareholders		$480		$492		$535
	Net interest income (U.S. GAAP)		1,384		1,416		1,517
	Net interest income (FTE)(a)		1,390		1,423		1,522
	Noninterest income		710		744		696
	Noninterest expense		1,342		1,455		1,331
	Per Share Data
	Earnings per share, basic		$0.70		$0.72		$0.78
	Earnings per share, diluted		0.70		0.72		0.78
	Book value per share		24.72		25.04		23.87
	Tangible book value per share(a)		17.35		17.64		16.41
	Balance Sheet & Credit Quality
	Average portfolio loans and leases		$117,334		$118,858		$122,812
	Average deposits		168,122		169,447		160,645
	Accumulated other comprehensive loss		(4,888)		(4,487)		(4,245)
	Net charge-off ratio(b)		0.38	%	0.32	%	0.26	%
	Nonperforming asset ratio(c)		0.64		0.59		0.51
	Financial Ratios
	Return on average assets		0.98	%	0.98	%	1.10	%
	Return on average common equity		11.6		12.9		13.7
	Return on average tangible common equity(a)		17.0		19.8		20.5
	CET1 capital(d)(e)		10.44		10.29		9.28
	Net interest margin(a)		2.86		2.85		3.29
	Efficiency(a)		63.9		67.2		60.0
	Other than the Quarterly Financial Review tables beginning on page 14 of the earnings release, commentary is on a fully taxable-equivalent (FTE) basis unless otherwise noted. Consistent with SEC guidance in Regulation S-K that contemplates the calculation of tax-exempt income on a taxable-equivalent basis, net interest income, net interest margin, net interest rate spread, total revenue and the efficiency ratio are provided on an FTE basis.

From Tim Spence, Fifth Third Chairman, CEO and President:

Fifth Third’s financial results once again reflected balance sheet strength, well-managed deposit costs, disciplined credit risk management, and diversified revenue streams. Expenses remain well-controlled and were down slightly year-over-year when excluding certain items.

Our balance sheet positioning and deposit performance provide flexibility in managing through a range of uncertain economic and regulatory environments. Our credit metrics remain below historical levels, with net charge-offs for the quarter in line with our expectations.

We continue to prudently invest in our strategic priorities as highlighted by strong growth in our treasury management fees and wealth and asset management revenue. We also extended our track record of strong organic growth, adding net new households in consumer and new quality relationships in commercial.

While the economic and regulatory environments remain uncertain, we remain well positioned to respond to a range of potential outcomes. We will continue to follow our guiding principles of stability, profitability, and growth – in that order.

	Income Statement Highlights
	($ in millions, except per share data)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Condensed Statements of Income
	Net interest income (NII)(a)	$1,390		$1,423		$1,522		(2)%		(9)%
	Provision for credit losses	94		55		164		71%		(43)%
	Noninterest income	710		744		696		(5)%		2%
	Noninterest expense	1,342		1,455		1,331		(8)%		1%
	Income before income taxes(a)	$664		$657		$723		1%		(8)%
	Taxable equivalent adjustment	$6		$7		$5		(14)%		20%
	Applicable income tax expense	138		120		160		15%		(14)%
	Net income	$520		$530		$558		(2)%		(7)%
	Dividends on preferred stock	40		38		23		5%		74%
	Net income available to common shareholders	$480		$492		$535		(2)%		(10)%
	Earnings per share, diluted	$0.70		$0.72		$0.78		(3)%		(10)%

Fifth Third Bancorp (NASDAQ^®: FITB) today reported first quarter 2024 net income of $520 million compared to net income of $530 million in the prior quarter and $558 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $480 million, or $0.70 per diluted share, compared to $492 million, or $0.72 per diluted share, in the prior quarter and $535 million, or $0.78 per diluted share, in the year-ago quarter.

		Diluted earnings per share impact of certain item(s) - 1Q24
		(after-tax impact(f); $ in millions, except per share data)
		Update to the FDIC special assessment (noninterest expense)	$(25)
		Interchange litigation matters
		Valuation of Visa total return swap (noninterest income)	(13)
		Mastercard litigation (noninterest expense)	(4)
		subtotal	(17)
		After-tax impact(f) of certain items	$(42)
		Diluted earnings per share impact of certain item(s)1	$(0.06)
		Totals may not foot due to rounding; 1Diluted earnings per share impact reflects 690.634 million average diluted shares outstanding

	Net Interest Income
	(FTE; $ in millions)(a)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Interest Income
	Interest income	$2,614		$2,655		$2,218		(2)%		18%
	Interest expense	1,224		1,232		696		(1)%		76%
	Net interest income (NII)	$1,390		$1,423		$1,522		(2)%		(9)%
	Average Yield/Rate Analysis							bps Change
	Yield on interest-earning assets	5.38%		5.31%		4.80%		7		58
	Rate paid on interest-bearing liabilities	3.36%		3.34%		2.18%		2		118
	Ratios
	Net interest rate spread	2.02%		1.97%		2.62%		5		(60)
	Net interest margin (NIM)	2.86%		2.85%		3.29%		1		(43)

Compared to the prior quarter, NII decreased $33 million, or 2%, primarily reflecting lower average commercial loans, the continued impact of the deposit mix shift from demand to interest-bearing accounts, and the impact of lower day count, partially offset by the increased yields on new production of fixed rate consumer loans. Compared to the prior quarter, NIM increased 1 bp, primarily reflecting higher loan yields and the impact of day count, partially offset by the deposit mix shift. NIM results continue to be impacted by the decision to carry elevated liquidity given the environment, with the combination of cash and other short term investments exceeding $25 billion at quarter-end.

Compared to the year-ago quarter, NII decreased $132 million, or 9%, reflecting the impact of higher funding costs and deposit mix shift from demand to interest-bearing accounts, partially offset by higher loan yields. Compared to the year-ago quarter, NIM decreased 43 bps, reflecting the impact of higher market rates and their effects on deposit pricing and the decision to carry additional cash, partially offset by higher loan yields.

	Noninterest Income
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Noninterest Income
	Service charges on deposits	$151		$146		$137		3%		10%
	Commercial banking revenue	143		163		161		(12)%		(11)%
	Mortgage banking net revenue	54		66		69		(18)%		(22)%
	Wealth and asset management revenue	161		147		146		10%		10%
	Card and processing revenue	102		106		100		(4)%		2%
	Leasing business revenue	39		46		57		(15)%		(32)%
	Other noninterest income	50		54		22		(7)%		127%
	Securities gains, net	10		15		4		(33)%		150%
	Securities gains, net - non-qualifying hedges
	on mortgage servicing rights	—		1		—		(100)%		NM
	Total noninterest income	$710		$744		$696		(5)%		2%

Reported noninterest income decreased $34 million, or 5%, from the prior quarter, and increased $14 million, or 2%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below, including securities gains/losses which incorporate mark-to-market impacts from securities associated with non-qualified deferred compensation plans.

	Noninterest Income excluding certain items
	($ in millions)	For the Three Months Ended
		March		December		March		% Change
		2024		2023		2023		Seq		Yr/Yr
	Noninterest Income excluding certain items
	Noninterest income (U.S. GAAP)	$710		$744		$696
	Valuation of Visa total return swap	17		22		31
	Securities (gains) losses, net	(10)		(15)		(4)
	Noninterest income excluding certain items(a)	$717		$751		$723		(5)%		(1)%

Noninterest income excluding certain items decreased $34 million, or 5%, from the prior quarter, and decreased $6 million, or 1%, from the year-ago quarter.

Compared to the prior quarter, service charges on deposits increased $5 million, or 3%, primarily reflecting an increase in commercial treasury management fees as well as consumer deposit fees. Commercial banking revenue decreased $20 million, or 12%, primarily reflecting decreases in institutional brokerage revenue and client financial risk management revenue, partially offset by an increase in loan syndication revenue and corporate bond fees. Mortgage banking net revenue decreased $12 million, or 18%, primarily reflecting decreases in MSR net valuation adjustments and origination fees and gains on loan sales, partially offset by a decrease in MSR asset decay. Wealth and asset management revenue increased $14 million, or 10%, primarily driven by seasonally strong tax-related private client service revenue and an increase in personal asset management revenue. Card and processing revenue decreased $4 million, or 4%, driven by a decrease in interchange revenue. Leasing business revenue decreased $7 million, or 15%, primarily reflecting lower lease remarketing revenue.

Compared to the year-ago quarter, service charges on deposits increased $14 million, or 10%, primarily reflecting an increase in commercial treasury management fees. Commercial banking revenue decreased $18 million, or 11%, primarily reflecting decreases in client financial risk management revenue, M&A advisory revenue, and loan syndication revenue, partially offset by an increase in corporate bond fees. Mortgage banking net revenue decreased $15 million, or 22%, primarily reflecting decreases in MSR net valuation adjustments and origination fees and gains on loan sales. Wealth and asset management revenue increased $15 million, or 10%, primarily reflecting increases in personal asset management revenue and brokerage fees. Card and processing revenue increased $2 million, or 2%, driven by higher interchange revenue. Leasing business revenue decreased $18 million, or 32%, reflecting decreases in operating lease revenue and lease remarketing revenue.

	Noninterest Expense
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Noninterest Expense
	Compensation and benefits	$753		$659		$757		14%		(1)%
	Net occupancy expense	87		83		81		5%		7%
	Technology and communications	117		117		118		—		(1)%
	Equipment expense	37		37		37		—		—
	Card and processing expense	20		21		22		(5)%		(9)%
	Leasing business expense	25		27		34		(7)%		(26)%
	Marketing expense	32		30		29		7%		10%
	Other noninterest expense	271		481		253		(44)%		7%
	Total noninterest expense	$1,342		$1,455		$1,331		(8)%		1%

Reported noninterest expense decreased $113 million, or 8%, from the prior quarter, and increased $11 million, or 1%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below.

	Noninterest Expense excluding certain item(s)
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Noninterest Expense excluding certain item(s)
	Noninterest expense (U.S. GAAP)	$1,342		$1,455		$1,331
	FDIC special assessment	(33)		(224)		—
	Mastercard litigation	(5)		—		—
	Fifth Third Foundation contribution	—		(15)		—
	Restructuring severance expense	—		(5)		(12)
	Noninterest expense excluding certain item(s)(a)	$1,304		$1,211		$1,319		8%		(1)%

Compared to the prior quarter, noninterest expense excluding certain items increased $93 million, or 8%, primarily reflecting a seasonal increase in compensation and benefits expense. Noninterest expense in the current quarter included a $15 million expense related to the impact of non-qualified deferred compensation mark-to-market compared to a $17 million expense in the prior quarter, both of which were largely offset in net securities gains through noninterest income.

Compared to the year-ago quarter, noninterest expense excluding certain items decreased $15 million, or 1%, primarily reflecting decreases in leasing business expense and other noninterest expense (excluding the aforementioned certain items), offset by increases in net occupancy expense and marketing expense. The year-ago quarter included a $12 million expense to noninterest expense related to non-qualified deferred compensation mark-to-market (which was largely offset in net securities gains through noninterest income).

	Average Interest-Earning Assets
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Average Portfolio Loans and Leases
	Commercial loans and leases:
	Commercial and industrial loans	$53,183		$54,633		$58,149		(3)%		(9)%
	Commercial mortgage loans	11,339		11,338		11,121		—		2%
	Commercial construction loans	5,732		5,727		5,507		—		4%
	Commercial leases	2,542		2,535		2,662		—		(5)%
	Total commercial loans and leases	$72,796		$74,233		$77,439		(2)%		(6)%
	Consumer loans:
	Residential mortgage loans	$16,977		$17,129		$17,581		(1)%		(3)%
	Home equity	3,933		3,905		4,005		1%		(2)%
	Indirect secured consumer loans	15,172		15,129		16,598		—		(9)%
	Credit card	1,773		1,829		1,780		(3)%		—
	Solar energy installation loans	3,794		3,630		2,169		5%		75%
	Other consumer loans	2,889		3,003		3,240		(4)%		(11)%
	Total consumer loans	$44,538		$44,625		$45,373		—		(2)%
	Total average portfolio loans and leases	$117,334		$118,858		$122,812		(1)%		(4)%
	Average Loans and Leases Held for Sale
	Commercial loans and leases held for sale	$74		$72		$56		3%		32%
	Consumer loans held for sale	291		379		747		(23)%		(61)%
	Total average loans and leases held for sale	$365		$451		$803		(19)%		(55)%
	Total average loans and leases	$117,699		$119,309		$123,615		(1)%		(5)%
	Securities (taxable and tax-exempt)	$56,456		$57,351		$58,514		(2)%		(4)%
	Other short-term investments	21,194		21,506		5,278		(1)%		302%
	Total average interest-earning assets	$195,349		$198,166		$187,407		(1)%		4%

Compared to the prior quarter, total average portfolio loans and leases decreased 1%, primarily reflecting a decrease in commercial and industrial (C&I) balances driven by lower demand from corporate borrowers, partially offset by an increase in solar energy installation loans. Average commercial portfolio loans and leases decreased 2%, reflecting a decrease in C&I loan balances. Average consumer portfolio loans were flat, primarily reflecting an increase in solar energy installation loan balances, offset by a decrease in residential mortgage loan balances.

Compared to the year-ago quarter, total average portfolio loans and leases decreased 4%, reflecting decreases in both the commercial and consumer portfolios. Average commercial portfolio loans and leases decreased 6%, primarily reflecting a decrease in C&I loan balances, partially offset by increases in commercial construction loan balances and commercial mortgage loan balances. Average consumer portfolio loans decreased 2%, primarily reflecting decreases in indirect secured consumer loan balances and residential mortgage loan balances, partially offset by an increase in solar energy installation loan balances.

Average securities (taxable and tax-exempt; amortized cost) of $56 billion in the current quarter decreased 2% compared to the prior quarter and decreased 4% compared to the year-ago quarter. Average other short-term investments (including interest-bearing cash) of $21 billion in the current quarter decreased 1% compared to the prior quarter and increased 302% compared to the year-ago quarter.

On January 3, 2024, Fifth Third transferred $12.6 billion (amortized cost) of securities, with an unrealized loss of $994 million, from available-for-sale to held-to-maturity. This transfer was in response to Fifth Third's decision to hold these securities to maturity in order to reduce potential capital volatility associated with investment security market price fluctuations.

Total period-end commercial portfolio loans and leases of $72 billion decreased 1% compared to the prior quarter, primarily reflecting a decrease in C&I loan balances, partially offset by an increase in commercial construction loan balances. Compared to the year-ago quarter, total period-end commercial portfolio loans decreased 7%, primarily reflecting a decrease in C&I loan balances, partially offset by an increase in commercial construction loan balances. Period-end commercial revolving line utilization was 36%, compared to 35% in the prior quarter and 37% in the year-ago quarter.

Period-end consumer portfolio loans of $45 billion were flat compared to the prior quarter, reflecting increases in indirect secured consumer loan balances and solar energy installation loan balances, partially offset by decreases in other consumer loan balances and credit card balances. Compared to the year-ago quarter, total period-end consumer portfolio loans decreased 2%, reflecting decreases in indirect secured consumer loan balances and other loan balances, partially offset by an increase in solar energy installation loan balances.

Total period-end securities (taxable and tax-exempt; amortized cost) of $56 billion in the current quarter decreased 2% compared to the prior quarter and decreased 2% compared to the year-ago quarter. Period-end other short-term investments of approximately $23 billion increased 3% compared to the prior quarter, and increased 133% compared to the year-ago quarter.

Average Deposits
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Average Deposits
	Demand	$40,839		$43,396		$50,737		(6)%		(20)%
	Interest checking	58,677		57,114		48,717		3%		20%
	Savings	18,107		18,252		23,107		(1)%		(22)%
	Money market	34,589		34,292		28,420		1%		22%
	Foreign office(g)	145		178		143		(19)%		1%
	Total transaction deposits	$152,357		$153,232		$151,124		(1)%		1%
	CDs $250,000 or less	10,244		10,556		5,173		(3)%		98%
	Total core deposits	$162,601		$163,788		$156,297		(1)%		4%
	CDs over $250,000	5,521		5,659		4,348		(2)%		27%
	Total average deposits	$168,122		$169,447		$160,645		(1)%		5%
	CDs over $250,000 includes $4.7BN, $4.8BN, and $4.1BN of retail brokered certificates of deposit which are fully covered by FDIC insurance for the three months ended 3/31/24, 12/31/23, and 3/31/23, respectively.

Compared to the prior quarter, total average deposits decreased 1%, primarily driven by a decline in demand account balances from commercial customer seasonal impacts, partially offset by increases in interest checking and money market balances. Average demand deposits represented 25% of total core deposits in the current quarter, compared to 26% in the prior quarter. Compared to the prior quarter, average consumer segment deposits decreased 1%, average commercial segment deposits were flat, and average wealth & asset management segment deposits were flat. Period-end total deposits were flat compared to the prior quarter.

Compared to the year-ago quarter, total average deposits increased 5%, primarily reflecting increases in interest checking and money market balances, partially offset by decreases in demand account balances and savings balances. Period-end total deposits increased 4% compared to the year-ago quarter.

The period-end portfolio loan-to-core deposit ratio was 71% in the current quarter, compared to 72% in the prior quarter and 78% in the year-ago quarter. Estimated uninsured deposits were approximately $70 billion, or 41% of total deposits, as of quarter end.

Average Wholesale Funding
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2024		2023		2023		Seq		Yr/Yr
	Average Wholesale Funding
	CDs over $250,000	$5,521		$5,659		$4,348		(2)%		27%
	Federal funds purchased	201		191		487		5%		(59)%
	Securities sold under repurchase agreements	366		350		327		5%		12%
	FHLB advances	3,111		3,293		4,803		(6)%		(35)%
	Derivative collateral and other secured borrowings	57		34		245		68%		(77)%
	Long-term debt	15,515		16,588		13,510		(6)%		15%
	Total average wholesale funding	$24,771		$26,115		$23,720		(5)%		4%
	CDs over $250,000 includes $4.7BN, $4.8BN, and $4.1BN of retail brokered certificates of deposit which are fully covered by FDIC insurance for the three months ended 3/31/24, 12/31/23, and 3/31/23, respectively.

Compared to the prior quarter, average wholesale funding decreased 5%, primarily reflecting decreases in long-term debt and FHLB advances. Compared to the year-ago quarter, average wholesale funding increased 4%, primarily reflecting an increase in long-term debt and CDs over $250,000, partially offset by a decrease in FHLB advances.

Credit Quality Summary
($ in millions)	As of and For the Three Months Ended
	March		December		September		June		March
	2024		2023		2023		2023		2023
Total nonaccrual portfolio loans and leases (NPLs)	$708		$649		$570		$629		$593
Repossessed property	8		10		11		8		8
OREO	27		29		31		24		22
Total nonperforming portfolio loans and leases and OREO (NPAs)	$743		$688		$612		$661		$623
NPL ratio(h)	0.61%		0.55%		0.47%		0.52%		0.48%
NPA ratio(c)	0.64%		0.59%		0.51%		0.54%		0.51%
Portfolio loans and leases 30-89 days past due (accrual)	$342		$359		$316		$339		$317
Portfolio loans and leases 90 days past due (accrual)	35		36		29		51		46
30-89 days past due as a % of portfolio loans and leases	0.29%		0.31%		0.26%		0.28%		0.26%
90 days past due as a % of portfolio loans and leases	0.03%		0.03%		0.02%		0.04%		0.04%
Allowance for loan and lease losses (ALLL), beginning	$2,322		$2,340		$2,327		$2,215		$2,194
Impact of adoption of ASU 2022-02	—		—		—		—		(49)
Total net losses charged-off	(110)		(96)		(124)		(90)		(78)
Provision for loan and lease losses	106		78		137		202		148
ALLL, ending	$2,318		$2,322		$2,340		$2,327		$2,215
Reserve for unfunded commitments, beginning	$166		$189		$207		$232		$216
(Benefit from) provision for the reserve for unfunded commitments	(12)		(23)		(18)		(25)		16
Reserve for unfunded commitments, ending	$154		$166		$189		$207		$232
Total allowance for credit losses (ACL)	$2,472		$2,488		$2,529		$2,534		$2,447
ACL ratios:
As a % of portfolio loans and leases	2.12%		2.12%		2.11%		2.08%		1.99%
As a % of nonperforming portfolio loans and leases	349%		383%		443%		403%		413%
As a % of nonperforming portfolio assets	333%		362%		413%		383%		393%
ALLL as a % of portfolio loans and leases	1.99%		1.98%		1.95%		1.91%		1.80%
Total losses charged-off	$(146)		$(133)		$(158)		$(121)		$(110)
Total recoveries of losses previously charged-off	36		37		34		31		32
Total net losses charged-off	$(110)		$(96)		$(124)		$(90)		$(78)
Net charge-off ratio (NCO ratio)(b)	0.38%		0.32%		0.41%		0.29%		0.26%
Commercial NCO ratio	0.19%		0.13%		0.34%		0.16%		0.17%
Consumer NCO ratio	0.67%		0.64%		0.53%		0.50%		0.42%

Nonperforming portfolio loans and leases were $708 million in the current quarter, with the resulting NPL ratio of 0.61%. Compared to the prior quarter, NPLs increased $59 million with the NPL ratio increasing 6 bps. Compared to the year-ago quarter, NPLs increased $115 million with the NPL ratio increasing 13 bps.

Nonperforming portfolio assets were $743 million in the current quarter, with the resulting NPA ratio of 0.64%. Compared to the prior quarter, NPAs increased $55 million with the NPA ratio increasing 5 bps. Compared to the year-ago quarter, NPAs increased $120 million with the NPA ratio increasing 13 bps.

The provision for credit losses totaled $94 million in the current quarter. The allowance for credit loss ratio represented 2.12% of total portfolio loans and leases at quarter end, compared with 2.12% for the prior quarter end and 1.99% for the year-ago quarter end. In the current quarter, the allowance for credit losses represented 349% of nonperforming portfolio loans and leases and 333% of nonperforming portfolio assets.

Net charge-offs were $110 million in the current quarter, resulting in an NCO ratio of 0.38%. Compared to the prior quarter, net charge-offs increased $14 million and the NCO ratio increased 6 bps. Commercial net charge-offs were $35 million, resulting in a commercial NCO ratio of 0.19%, which increased 6 bps compared to the prior quarter. Consumer net charge-offs were $75 million, resulting in a consumer NCO ratio of 0.67%, which increased 3 bps compared to the prior quarter.

Compared to the year-ago quarter, net charge-offs increased $32 million and the NCO ratio increased 12 bps, reflecting a continued normalization from near-historically low net charge-offs in the year-ago quarter. The commercial NCO ratio increased 2 bps compared to the prior year, and the consumer NCO ratio increased 25 bps compared to the prior year.

	Capital Position
			As of and For the Three Months Ended
			March		December		September		June		March
			2024		2023		2023		2023		2023
	Capital Position
	Average total Bancorp shareholders' equity as a % of average assets		8.78%		8.04%		8.30%		8.90%		8.77%
	Tangible equity(a)		8.75%		8.65%		8.46%		8.58%		8.39%
	Tangible common equity (excluding AOCI)(a)		7.77%		7.67%		7.49%		7.57%		7.38%
	Tangible common equity (including AOCI)(a)		5.67%		5.73%		4.51%		5.26%		5.49%
	Regulatory Capital Ratios(d)(e)
	CET1 capital		10.44%		10.29%		9.80%		9.49%		9.28%
	Tier 1 risk-based capital		11.75%		11.59%		11.06%		10.73%		10.53%
	Total risk-based capital		13.78%		13.72%		13.13%		12.83%		12.64%
	Leverage		8.94%		8.73%		8.85%		8.81%		8.67%

The CET1 capital ratio was 10.44%, the Tangible common equity to tangible assets ratio was 7.77% excluding AOCI, and 5.67% including AOCI. The Tier 1 risk-based capital ratio was 11.75%, the Total risk-based capital ratio was 13.78%, and the Leverage ratio was 8.94%. Fifth Third did not execute share repurchases in the first quarter of 2024.

Tax Rate

The effective tax rate for the quarter was 21.1% compared with 18.4% in the prior quarter and 22.3% in the year-ago quarter.

Conference Call

Fifth Third will host a conference call to discuss these financial results at 9:00 a.m. (Eastern Time) today. This conference call will be webcast live and may be accessed through the Fifth Third Investor Relations website at www.53.com (click on “About Us” then “Investor Relations”). Those unable to listen to the live webcast may access a webcast replay through the Fifth Third Investor Relations website at the same web address, which will be available for 30 days.

Corporate Profile

Fifth Third is a bank that’s as long on innovation as it is on history. Since 1858, we’ve been helping individuals, families, businesses and communities grow through smart financial services that improve lives. Our list of firsts is extensive, and it’s one that continues to expand as we explore the intersection of tech-driven innovation, dedicated people, and focused community impact. Fifth Third is one of the few U.S.-based banks to have been named among Ethisphere's World’s Most Ethical Companies® for several years. With a commitment to taking care of our customers, employees, communities and shareholders, our goal is not only to be the nation’s highest performing regional bank, but to be the bank people most value and trust.

Fifth Third Bank, National Association is a federally chartered institution. Fifth Third Bancorp is the indirect parent company of Fifth Third Bank and its common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.” Investor information and press releases can be viewed at www.53.com.

Earnings Release End Notes

(a)	Non-GAAP measure; see discussion of non-GAAP reconciliation beginning on page 26 of the earnings release.
(b)	Net losses charged-off as a percent of average portfolio loans and leases presented on an annualized basis.
(c)	Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO.
(d)	Regulatory capital ratios are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital after its adoption on January 1, 2020.
(e)	Current period regulatory capital ratios are estimated.
(f)	Assumes a 23% tax rate.
(g)	Includes commercial customer Eurodollar sweep balances for which the Bank pays rates comparable to other commercial deposit accounts.
(h)	Nonperforming portfolio loans and leases as a percent of portfolio loans and leases.

FORWARD-LOOKING STATEMENTS

This release 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 historical fact are forward-looking statements. These statements relate to our financial condition, results of operations, plans, objectives, future performance, capital actions or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “potential,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K as updated by our filings with the U.S. Securities and Exchange Commission (“SEC”).

There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) deteriorating credit quality; (2) loan concentration by location or industry of borrowers or collateral; (3) problems encountered by other financial institutions; (4) inadequate sources of funding or liquidity; (5) unfavorable actions of rating agencies; (6) inability to maintain or grow deposits; (7) limitations on the ability to receive dividends from subsidiaries; (8) cyber-security risks; (9) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (10) failures by third-party service providers; (11) inability to manage strategic initiatives and/or organizational changes; (12) inability to implement technology system enhancements; (13) failure of internal controls and other risk management programs; (14) losses related to fraud, theft, misappropriation or violence; (15) inability to attract and retain skilled personnel; (16) adverse impacts of government regulation; (17) governmental or regulatory changes or other actions; (18) failures to meet applicable capital requirements; (19) regulatory objections to Fifth Third’s capital plan; (20) regulation of Fifth Third’s derivatives activities; (21) deposit insurance premiums; (22) assessments for the orderly liquidation fund; (23) weakness in the national or local economies; (24) global political and economic uncertainty or negative actions; (25) changes in interest rates and the effects of inflation; (26) changes and trends in capital markets; (27) fluctuation of Fifth Third’s stock price; (28) volatility in mortgage banking revenue; (29) litigation, investigations, and enforcement proceedings by governmental authorities; (30) breaches of contractual covenants, representations and warranties; (31) competition and changes in the financial services industry; (32) potential impacts of the adoption of real-time payment networks; (33) changing retail distribution strategies, customer preferences and behavior; (34) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (35) potential dilution from future acquisitions; (36) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (37) results of investments or acquired entities; (38) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (39) inaccuracies or other failures from the use of models; (40) effects of critical accounting policies and judgments or the use of inaccurate estimates; (41) weather-related events, other natural disasters, or health emergencies (including pandemics); (42) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity; (43) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases; and (44) Fifth Third's ability to meet its environmental and/or social targets, goals and commitments.

You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further information on other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as may be required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The information contained herein is intended to be reviewed in its totality, and any stipulations, conditions or provisos that apply to a given piece of information in one part of this press release should be read as applying mutatis mutandis to every other instance of such information appearing herein.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20240419302365/en/

Investor contact: Matt Curoe (513) 534-2345

Media contact: Jennifer Hendricks Sullivan (614) 744-7693

Source: Fifth Third Bancorp

FAQ

What was Fifth Third Bancorp's diluted earnings per share in the first quarter of 2024?

Fifth Third Bancorp reported diluted earnings per share of $0.70 in the first quarter of 2024.

How did Fifth Third Bancorp's deposits perform year-over-year?

Fifth Third Bancorp's deposits grew by 5% year-over-year.

What was the loan-to-core deposit ratio for Fifth Third Bancorp in the first quarter of 2024?

Fifth Third Bancorp had a loan-to-core deposit ratio of 71% in the first quarter of 2024.

What is the CET1 capital ratio for Fifth Third Bancorp in the first quarter of 2024?

Fifth Third Bancorp's CET1 capital ratio increased to 10.44% in the first quarter of 2024.

How did Fifth Third Wealth Advisors perform in the first quarter of 2024?

Fifth Third Wealth Advisors surpassed $1 billion in assets under management in the first quarter of 2024.