Fifth Third Reports First Quarter 2023 Diluted Earnings Per Share of $0.78

Rhea-AI Summary

Fifth Third Bank (NASDAQ: FITB) reported a net income of $558 million or $0.78 per diluted share for 1Q23, reflecting a 13% increase year-over-year but a 24% decline from the previous quarter. Total deposits remained flat compared to the prior quarter, while net interest income decreased 4% sequentially, primarily due to a more defensive balance sheet strategy. The bank's credit quality remains strong with a net charge-off ratio of 0.26%. Key highlights include an 18% increase in revenue and a 34% rise in pre-provision net revenue year-over-year. The bank also announced its acquisition of Big Data Healthcare to enhance its digital offerings. Despite the positive growth indicators, efficiency ratio worsened to 60.0%.

Positive

• Revenue increased 18% year-over-year.
• Pre-provision net revenue (PPNR) rose 34% year-over-year.
• Net income available to common shareholders increased 13% year-over-year.
• Announced acquisition of Big Data Healthcare to enhance digital services.

Negative

• Net income decreased 24% from the previous quarter.
• Total deposits were flat compared to the prior quarter.
• Net interest income decreased 4% sequentially.
• Efficiency ratio worsened to 60.0%.

Average and period-end total deposits were flat compared to the prior quarter

Credit quality remains strong with net charge-off ratio of 0.26% and early stage delinquencies of 0.26%

Reported results included a negative $0.05 impact from certain items on page 2 of the earnings release

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

	Key Financial Data							Key Highlights
	$ millions for all balance sheet and income statement items
		1Q23		4Q22		1Q22		Stability: Period-end and average total deposits were flat compared to 4Q22; average core deposits decreased 1% as expected Strong credit quality; net charge-off ratio of 0.26%, 30-89 day early stage delinquencies of 0.26%, and NPA ratio of 0.51% ACL of 1.99%, an increase of 1 bp from 4Q22, including the (4) bps impact of ASU 2022-02   Profitability:      Compared to 1Q22 Revenue increased 18%, PPNR(a) increased 34% (adjusted PPNR(a) increased 39%), and net income increased 13% Efficiency ratio(a) improved approximately 5 points, adjusted efficiency(a) of 58.6% improved approximately 6 points Tangible book value per share ex. AOCI(a) increased 7%   Growth: Generated consumer household growth of 3% compared to 1Q22 Continued to add new quality commercial relationships Announced the acquisition of Big Data Healthcare, furthering peer-leading digital payments and managed services offerings
	Income Statement Data
	Net income available to common shareholders	$535		$699		$474
	Net interest income (U.S. GAAP)	1,517		1,577		1,195
	Net interest income (FTE)(a)	1,522		1,582		1,198
	Noninterest income	696		735		684
	Noninterest expense	1,331		1,218		1,222
	Per Share Data
	Earnings per share, basic	$0.78		$1.01		$0.69
	Earnings per share, diluted	0.78		1.01		0.68
	Book value per share	23.87		22.26		26.33
	Tangible book value per share(a)	16.41		14.83		19.54
	Balance Sheet & Credit Quality
	Average portfolio loans and leases	$122,812		$121,371		$113,467
	Average deposits	160,645		161,061		168,662
	Accumulated other comprehensive loss	(4,245	)	(5,110	)	(1,096	)
	Net charge-off ratio(b)	0.26	%	0.22	%	0.12	%
	Nonperforming asset ratio(c)	0.51		0.44		0.49
	Financial Ratios
	Return on average assets	1.10	%	1.42	%	0.96	%
	Return on average common equity	13.7		18.8		10.0
	Return on average tangible common equity(a)	20.5		29.2		13.4
	CET1 capital(d)(e)	9.25		9.28		9.31
	Net interest margin(a)	3.29		3.35		2.59
	Efficiency(a)	60.0		52.6		64.9
	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.

CEO Commentary

Fifth Third delivered strong financial results in the first quarter of 2023. We have continued to navigate the uncertain economic environment well, including delivering solid deposit outcomes throughout the first quarter. Our results reflect the strength and resiliency of our balance sheet, disciplined credit risk management, and strong and diversified revenue streams.

We generated approximately nine points of year-over-year positive operating leverage in the quarter. We also extended our track record of strong organic growth, adding net new households in consumer and new quality relationships in commercial. Furthermore, we announced the acquisition of Big Data Healthcare, which will continue to accelerate our peer-leading digital payments and managed services offerings.

While the economic environment remains uncertain, Fifth Third has spent nearly a decade focused on positioning the bank to generate sustainable financial results. As we navigate the environment, we will follow our guiding principles of stability, profitability, and growth – in that order.

Lastly, we were honored to be named one of the World’s Most Ethical Companies by Ethisphere for the fourth time. We were one of only two banks in the U.S. to receive this award, reflecting our focus on positively impacting customers, communities, and employees, while also delivering strong and sustainable financial results for our shareholders.

-Tim Spence, President and CEO

	Income Statement Highlights
	($ in millions, except per share data)	For the Three Months Ended						% Change
		March		December		March
		2023		2022		2022		Seq			Yr/Yr
	Condensed Statements of Income
	Net interest income (NII)(a)	$1,522		$1,582		$1,198		(4	)%		27	%
	Provision for credit losses	164		180		45		(9	)%		264	%
	Noninterest income	696		735		684		(5	)%		2	%
	Noninterest expense	1,331		1,218		1,222		9	%		9	%
	Income before income taxes(a)	$723		$919		$615		(21	)%		18	%
	Taxable equivalent adjustment	$5		$5		$3		—			67	%
	Applicable income tax expense	160		177		118		(10	)%		36	%
	Net income	$558		$737		$494		(24	)%		13	%
	Dividends on preferred stock	23		38		20		(39	)%		15	%
	Net income available to common shareholders	$535		$699		$474		(23	)%		13	%
	Earnings per share, diluted	$0.78		$1.01		$0.68		(23	)%		15	%

Fifth Third Bancorp (NASDAQ^®: FITB) today reported first quarter 2023 net income of $558 million compared to net income of $737 million in the prior quarter and $494 million in the year-ago quarter. Net income available to common shareholders in the current quarter was $535 million, or $0.78 per diluted share, compared to $699 million, or $1.01 per diluted share, in the prior quarter and $474 million, or $0.68 per diluted share, in the year-ago quarter.

		Diluted earnings per share impact of certain item(s) - 1Q23
		(after-tax impact(f); $ in millions, except per share data)
		Valuation of Visa total return swap (noninterest income)	$(24	)
		Restructuring severance expense	(9	)
		After-tax impact(f) of certain items	$(33	)
		Diluted earnings per share impact of certain item(s)1	$(0.05	)
		Totals may not foot due to rounding; 1Diluted earnings per share impact reflects 689.566 million average diluted shares outstanding

	Net Interest Income
	(FTE; $ in millions)(a)	For the Three Months Ended									% Change
		March			December			March
		2023			2022			2022			Seq			Yr/Yr
	Interest Income
	Interest income	$2,218			$2,080			$1,292			7	%		72	%
	Interest expense	696			498			94			40	%		640	%
	Net interest income (NII)	$1,522			$1,582			$1,198			(4	)%		27	%
	Average Yield/Rate Analysis										bps Change
	Yield on interest-earning assets	4.80	%		4.40	%		2.79	%		40			201
	Rate paid on interest-bearing liabilities	2.18	%		1.56	%		0.33	%		62			185
	Ratios
	Net interest rate spread	2.62	%		2.84	%		2.46	%		(22	)		16
	Net interest margin (NIM)	3.29	%		3.35	%		2.59	%		(6	)		70

Compared to the prior quarter, NII decreased $60 million, or 4%, primarily reflecting a shift to a more defensive balance sheet position in light of the environment, the impact of lower day count, and seasonally strong investment portfolio income in the prior quarter, partially offset by improved loan yields from higher market rates and the repricing benefits on fixed-rate consumer loans, as well as commercial and consumer loan growth. Defensive actions undertaken during the quarter include carrying higher levels of cash and other short-term investments, not reinvesting securities portfolio cash flows, extending terms on FHLB advances and jumbo CDs, and raising deposit rates, which resulted in minimizing the use of overnight borrowings in the short-term wholesale funding portfolio and increasing the deposit mix shift from demand to interest-bearing accounts.

Compared to the prior quarter, NIM decreased 6 bps, primarily reflecting the aforementioned deposit dynamics, partially offset by higher loan yields and the impact of lower day count. NIM results were also impacted by the decision to carry elevated liquidity given the environment, with the combination of cash and due from banks and other short term investments reaching $13 billion by quarter-end, which was an increase of 6% compared to the prior quarter and an increase of 30% compared to the third quarter of 2022.

Compared to the year-ago quarter, NII increased $324 million, or 27%, reflecting the net benefit of higher market rates, as well as growth in C&I loan balances and investment portfolio balances, partially offset by the deposit mix shift from demand to interest-bearing accounts and continued deposit repricing dynamics. Compared to the year-ago quarter, NIM increased 70 bps, reflecting the net benefit of higher market rates, growth in C&I loan balances and investment portfolio balances, and a decline in excess cash, partially offset by the aforementioned deposit dynamics and an increase in wholesale funding.

	Noninterest Income
	($ in millions)	For the Three Months Ended							% Change
		March		December		March
		2023		2022		2022			Seq			Yr/Yr
	Noninterest Income
	Service charges on deposits	$137		$140		$152			(2	)%		(10	)%
	Commercial banking revenue	161		158		135			2	%		19	%
	Mortgage banking net revenue	69		63		52			10	%		33	%
	Wealth and asset management revenue	146		139		149			5	%		(2	)%
	Card and processing revenue	100		103		97			(3	)%		3	%
	Leasing business revenue	57		58		62			(2	)%		(8	)%
	Other noninterest income	22		72		52			(69	)%		(58	)%
	Securities gains (losses), net	4		2		(14	)		100	%		NM
	Securities losses, net - non-qualifying hedges on mortgage servicing rights	—		—		(1	)		NM			(100	)%
	Total noninterest income	$696		$735		$684			(5	)%		2	%

Reported noninterest income decreased $39 million, or 5%, from the prior quarter, and increased $12 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
		2023			2022			2022		Seq			Yr/Yr
	Noninterest Income excluding certain items
	Noninterest income (U.S. GAAP)	$696			$735			$684
	Valuation of Visa total return swap	31			38			11
	Branch impairment charges	—			6			—
	Securities (gains)/losses, net	(4	)		(2	)		14
	Noninterest income excluding certain items(a)	$723			$777			$709		(7	) %		2	%

Compared to the prior quarter, noninterest income excluding certain items decreased $54 million, or 7%. Compared to the year-ago quarter, noninterest income excluding certain items increased $14 million, or 2%.

Compared to the prior quarter, service charges on deposits decreased $3 million, or 2%, primarily reflecting the market interest rate related impact of higher earnings credits. Commercial banking revenue increased $3 million, or 2%, primarily reflecting higher loan syndication revenue and corporate bond fees, partially offset by lower M&A advisory revenue and client financial risk management revenue. Mortgage banking net revenue increased $6 million, or 10%, primarily reflecting an increase in mortgage servicing revenue and a decrease in MSR asset decay. Wealth and asset management revenue increased $7 million, or 5%, primarily driven by seasonally strong tax-related private client service revenue combined with continued asset inflows. Card and processing revenue decreased $3 million, or 3%, driven by seasonally lower interchange revenue. The decline in other noninterest income was primarily driven by the recognition of tax receivable agreement revenue of $46 million in the prior quarter.

Compared to the year-ago quarter, service charges on deposits decreased $15 million, or 10%, primarily reflecting the market related impact of higher earnings credits and the elimination of consumer non-sufficient funds fees in July 2022. Commercial banking revenue increased $26 million, or 19%, primarily driven by increased loan syndication revenue, fixed income sales and trading revenue, and M&A advisory revenue, partially offset by a decrease in corporate bond fees. Mortgage banking net revenue increased $17 million, or 33%, reflecting a decrease in MSR asset decay and an increase in mortgage servicing revenue, partially offset by a decrease from MSR net valuation adjustments and lower gains on loan sales. Wealth and asset management revenue decreased $3 million, or 2%, primarily reflecting lower personal asset management revenue impacted by market valuations. Card and processing revenue increased $3 million, or 3%, driven by higher interchange revenue partially offset by higher rewards. Leasing business revenue decreased $5 million, or 8%, reflecting the disposition of LaSalle Solutions in April 2022.

	Noninterest Expense
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2023		2022		2022		Seq			Yr/Yr
	Noninterest Expense
	Compensation and benefits	$757		$655		$711		16	%		6	%
	Net occupancy expense	81		82		77		(1	)%		5	%
	Technology and communications	118		111		101		6	%		17	%
	Equipment expense	37		37		36		—			3	%
	Card and processing expense	22		21		19		5	%		16	%
	Leasing business expense	34		36		32		(6	)%		6	%
	Marketing expense	29		31		24		(6	)%		21	%
	Other noninterest expense	253		245		222		3	%		14	%
	Total noninterest expense	$1,331		$1,218		$1,222		9	%		9	%

Reported noninterest expense increased $113 million, or 9%, from the prior quarter, and increased $109, or 9%, from the year-ago quarter. The reported results reflect the impact of certain items in the table below, including restructuring severance expense reflecting proactive actions taken to reduce ongoing expenses given the operating environment.

	Noninterest Expense excluding certain item(s)
	($ in millions)	For the Three Months Ended							% Change
		March			December		March
		2023			2022		2022		Seq			Yr/Yr
	Noninterest Expense excluding certain item(s)
	Noninterest expense (U.S. GAAP)	$1,331			$1,218		$1,222
	Restructuring severance expense	(12	)		—		—
	Noninterest expense excluding certain item(s)(a)	$1,319			$1,218		$1,222		8	%		8	%

Compared to the prior quarter, noninterest expense excluding certain items increased $101 million, or 8%, primarily reflecting a seasonal increase in compensation and benefits expense, the impact of the FDIC assessment to increase the deposit insurance fund, and technology and communications expenses related to continued modernization investments. Noninterest expense in the current quarter included a $12 million expense related to the impact of non-qualified deferred compensation mark-to-market compared to a $6 million expense in the prior quarter (which were largely offset in net securities gains through noninterest income).

Compared to the year-ago quarter, noninterest expense excluding certain items increased $97 million, or 8%, primarily reflecting higher technology and communications expense related to continued modernization investments, the aforementioned impact of the FDIC assessment, and expenses associated with Dividend Finance and Provide. The year-ago quarter included a $12 million benefit to noninterest expense related to non-qualified deferred compensation mark-to-market (which was largely offset in net securities losses through noninterest income).

	Average Interest-Earning Assets
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2023		2022		2022		Seq			Yr/Yr
	Average Portfolio Loans and Leases
	Commercial loans and leases:
	Commercial and industrial loans	$58,149		$57,646		$52,554		1	%		11	%
	Commercial mortgage loans	11,121		10,898		10,521		2	%		6	%
	Commercial construction loans	5,507		5,544		5,371		(1	)%		3	%
	Commercial leases	2,662		2,736		2,942		(3	)%		(10	)%
	Total commercial loans and leases	$77,439		$76,824		$71,388		1	%		8	%
	Consumer loans:
	Residential mortgage loans	$17,581		$17,577		$16,501		—			7	%
	Home equity	4,005		4,024		4,009		—			—
	Indirect secured consumer loans	16,598		16,536		17,136		—			(3	)%
	Credit card	1,780		1,795		1,691		(1	)%		5	%
	Other consumer loans	5,409		4,615		2,742		17	%		97	%
	Total consumer loans	$45,373		$44,547		$42,079		2	%		8	%
	Total average portfolio loans and leases	$122,812		$121,371		$113,467		1	%		8	%
	Memo:
	Average PPP loans	$66		$158		$1,012		(58	)%		(93	)%
	Average portfolio commercial and industrial loans - excl. PPP loans	$58,083		$57,488		$51,542		1	%		13	%
	Average Loans and Leases Held for Sale
	Commercial loans and leases held for sale	$56		$84		$18		(33	)%		211	%
	Consumer loans held for sale	747		1,411		3,677		(47	)%		(80	)%
	Total average loans and leases held for sale	$803		$1,495		$3,695		(46	)%		(78	)%
	Total average loans and leases	$123,615		$122,866		$117,162		1	%		6	%
	Securities (taxable and tax-exempt)	$58,514		$58,489		$42,422		—			38	%
	Other short-term investments	5,278		6,285		28,310		(16	)%		(81	)%
	Total average interest-earning assets	$187,407		$187,640		$187,894		—			—

Compared to the prior quarter, total average portfolio loans and leases increased 1%, reflecting an increase in both commercial and consumer portfolios. Average commercial portfolio loans and leases increased 1%, reflecting an increase in commercial and industrial (C&I) loan and commercial mortgage loan balances. Average consumer portfolio loans increased 2%, reflecting an increase in other consumer loan balances (primarily Dividend Finance).

Compared to the year-ago quarter, total average portfolio loans and leases increased 8%, reflecting an increase in both commercial and consumer portfolios. Average commercial portfolio loans and leases increased 8%, primarily reflecting an increase in C&I loan and commercial mortgage loan balances, partially offset by a decrease in commercial lease balances. Average consumer portfolio loans increased 8%, as increases in balances of both other consumer loans (primarily Dividend Finance) and residential mortgage loans were partially offset by a decrease in indirect secured consumer loan balances.

Average loans and leases held for sale were $0.8 billion in the current quarter compared to $1.5 billion in the prior quarter and $3.7 billion in the year-ago quarter. Current quarter average loans and leases held for sale were impacted by a decline in residential mortgage balances.

Average securities (taxable and tax-exempt; amortized cost) of $59 billion in the current quarter were flat compared to the prior quarter and increased $16 billion, or 38%, compared to the year-ago quarter. Average other short-term investments (including interest-bearing cash) of $5 billion in the current quarter decreased $1 billion, or 16%, compared to the prior quarter and decreased $23 billion, or 81%, compared to the year-ago quarter.

Total period-end commercial portfolio loans and leases of $77 billion increased 1% compared to the prior quarter, primarily reflecting increases in C&I loan and commercial mortgage loan balances. Compared to the year-ago quarter, total period-end commercial portfolio loans increased 6%, primarily reflecting increases in C&I loan and commercial mortgage loan balances, partially offset by a decrease in commercial lease balances. Period-end commercial revolving line utilization was 37%, compared to 37% in the prior quarter and 36% in the year-ago quarter.

Period-end consumer portfolio loans of $46 billion increased 1% compared to the prior quarter, reflecting an increase in other consumer loan balances (primarily Dividend Finance), partially offset by a decrease in credit card balances. Compared to the year-ago quarter, total period-end consumer portfolio loans increased 6%, reflecting increases in other consumer loan balances (primarily Dividend Finance) and residential mortgage loan balances, partially offset by a decrease in indirect secured consumer loans.

Total period-end securities (taxable and tax-exempt; amortized cost) of $58 billion in the current quarter were stable compared to the prior quarter and increased $7 billion, or 14%, compared to the year-ago quarter. Period-end other short-term investments of $10 billion increased $1 billion, or 17%, compared to the prior quarter and decreased $11 billion, or 52%, compared to the year-ago quarter.

Average Deposits
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2023		2022		2022		Seq			Yr/Yr
	Average Deposits
	Demand	$50,737		$54,550		$64,212		(7	)%		(21	)%
	Interest checking	48,717		47,801		48,659		2	%		—
	Savings	23,107		23,474		22,772		(2	)%		1	%
	Money market	28,420		28,713		30,263		(1	)%		(6	)%
	Foreign office(g)	143		209		126		(32	)%		13	%
	Total transaction deposits	$151,124		$154,747		$166,032		(2	)%		(9	)%
	CDs $250,000 or less	5,173		2,748		2,376		88	%		118	%
	Total core deposits	$156,297		$157,495		$168,408		(1	)%		(7	)%
	CDs over $250,000	4,348		3,566		254		22	%		NM
	Total average deposits	$160,645		$161,061		$168,662		—			(5	)%

Compared to the prior quarter, total average deposits were flat, as increases in certificates of deposit and interest checking balances were offset by a decline in demand deposit account balances. Average demand deposits represented 32% of total core deposits in the current quarter, compared to 35% in the prior quarter. Average consumer segment deposits were flat compared to the prior quarter, average commercial segment deposits decreased 2% due primarily to seasonality, and average wealth & asset management segment deposits increased 4% compared to the prior quarter. Period-end total deposits were flat compared to the prior quarter.

Compared to the year-ago quarter, total average deposits decreased 5%, reflecting the deliberate commercial deposit runoff in mid-2022. Period-end total deposits decreased 4% compared to the year-ago quarter.

The period end portfolio loan-to-core deposit ratio was 78% in the current quarter, compared to 76% in the prior quarter and 68% in the year-ago quarter. Estimated uninsured deposits were approximately $64.6 billion, or 40% of total deposits, as of quarter end.

Average Wholesale Funding
	($ in millions)	For the Three Months Ended						% Change
		March		December		March
		2023		2022		2022		Seq			Yr/Yr
	Average Wholesale Funding
	CDs over $250,000	$4,348		$3,566		$254		22	%		NM
	Federal funds purchased	487		264		259		84	%		88	%
	Securities sold under repurchase agreements	327		476		491		(31	)%		(33	)%
	FHLB advances	4,803		5,489		—		(12	)%		NM
	Derivative collateral and other secured borrowings	245		225		399		9	%		(39	)%
	Long-term debt	13,510		13,425		11,165		1	%		21	%
	Total average wholesale funding	$23,720		$23,445		$12,568		1	%		89	%

Compared to the prior quarter, average wholesale funding increased 1%, primarily reflecting an increase in jumbo CD balances, partially offset by lower FHLB advances.

Compared to the year-ago quarter, average wholesale funding increased 89%, as earning assets were stable and core deposits declined (predominantly due to the deliberate commercial deposit runoff in mid-2022). The growth in wholesale funding was primarily attributed to increases in FHLB advances and jumbo CD balances, as well as long-term debt issuances throughout 2022.

Credit Quality Summary
($ in millions)	As of and For the Three Months Ended
	March			December			September			June			March
	2023			2022			2022			2022			2022
Total nonaccrual portfolio loans and leases (NPLs)	$593			$515			$522			$539			$534
Repossessed property	8			6			6			6			5
OREO	22			18			18			14			27
Total nonperforming portfolio loans and leases and OREO (NPAs)	$623			$539			$546			$559			$566
NPL ratio(h)	0.48	%		0.42	%		0.44	%		0.45	%		0.46	%
NPA ratio(c)	0.51	%		0.44	%		0.46	%		0.47	%		0.49	%
Portfolio loans and leases 30-89 days past due (accrual)	$317			$364			$335			$294			$288
Portfolio loans and leases 90 days past due (accrual)	46			40			59			39			50
30-89 days past due as a % of portfolio loans and leases	0.26	%		0.30	%		0.28	%		0.25	%		0.25	%
90 days past due as a % of portfolio loans and leases	0.04	%		0.03	%		0.05	%		0.03	%		0.04	%
Allowance for loan and lease losses (ALLL), beginning	$2,194			$2,099			$2,014			$1,908			$1,892
Impact of adoption of ASU 2022-02	(49	)		—			—			—			—
Total net losses charged-off	(78	)		(68	)		(62	)		(62	)		(34	)
Provision for loan and lease losses	148			163			147			168			50
ALLL, ending	$2,215			$2,194			$2,099			$2,014			$1,908
Reserve for unfunded commitments, beginning	$216			$199			$188			$177			$182
Provision for (benefit from) the reserve for unfunded commitments	16			17			11			11			(5	)
Reserve for unfunded commitments, ending	$232			$216			$199			$188			$177
Total allowance for credit losses (ACL)	$2,447			$2,410			$2,298			$2,202			$2,085
ACL ratios:
As a % of portfolio loans and leases	1.99	%		1.98	%		1.91	%		1.85	%		1.80	%
As a % of nonperforming portfolio loans and leases	413	%		468	%		440	%		408	%		391	%
As a % of nonperforming portfolio assets	393	%		447	%		420	%		394	%		369	%
ALLL as a % of portfolio loans and leases	1.80	%		1.81	%		1.75	%		1.70	%		1.65	%
Total losses charged-off	$(110	)		$(103	)		$(104	)		$(90	)		$(64	)
Total recoveries of losses previously charged-off	32			35			42			28			30
Total net losses charged-off	$(78	)		$(68	)		$(62	)		$(62	)		$(34	)
Net charge-off ratio (NCO ratio)(b)	0.26	%		0.22	%		0.21	%		0.21	%		0.12	%
Commercial NCO ratio	0.17	%		0.13	%		0.17	%		0.19	%		0.05	%
Consumer NCO ratio	0.42	%		0.38	%		0.28	%		0.24	%		0.25	%

Nonperforming portfolio loans and leases were $593 million in the current quarter, with the resulting NPL ratio of 0.48%. Compared to the prior quarter, NPLs increased $78 million with the NPL ratio increasing 6 bps. Compared to the year-ago quarter, NPLs increased $59 million with the NPL ratio increasing 2 bps.

Nonperforming portfolio assets were $623 million in the current quarter, with the resulting NPA ratio of 0.51%. Compared to the prior quarter, NPAs increased $84 million with the NPA ratio increasing 7 bps. Compared to the year-ago quarter, NPAs increased $57 million with the NPA ratio increasing 2 bps.

The provision for credit losses totaled $164 million in the current quarter. The allowance for credit loss ratio represented 1.99% of total portfolio loans and leases at quarter end, compared with 1.98% for the prior quarter end and 1.80% for the year-ago quarter end. In the current quarter, the allowance for credit losses represented 413% of nonperforming portfolio loans and leases and 393% of nonperforming portfolio assets. The allowance for credit losses decreased by $49 million as a result of the adoption of ASU 2022-02, which changed the guidance for measuring expected credit losses on restructured loans. This adjustment to the ACL was applied through a cumulative effect adjustment to retained earnings.

Net charge-offs were $78 million in the current quarter, resulting in an NCO ratio of 0.26%. Compared to the prior quarter, net charge-offs increased $10 million and the NCO ratio increased 4 bps. Compared to the year-ago quarter, net charge-offs increased $44 million and the NCO ratio increased 14 bps, reflecting a normalization from near-historically low net charge-offs in the year-ago quarter.

	Capital Position
			As of and For the Three Months Ended
			March			December			September			June			March
			2023			2022			2022			2022			2022
	Capital Position
	Average total Bancorp shareholders' equity as a % of average assets		8.77	%		8.18	%		9.13	%		9.35	%		10.23	%
	Tangible equity(a)		8.39	%		8.31	%		8.18	%		8.05	%		7.98	%
	Tangible common equity (excluding AOCI)(a)		7.38	%		7.30	%		7.16	%		7.01	%		6.96	%
	Tangible common equity (including AOCI)(a)		5.49	%		5.00	%		4.75	%		5.82	%		6.48	%
	Regulatory Capital Ratios(d)(e)
	CET1 capital		9.25	%		9.28	%		9.14	%		8.95	%		9.31	%
	Tier 1 risk-based capital		10.49	%		10.53	%		10.40	%		10.23	%		10.63	%
	Total risk-based capital		12.60	%		12.79	%		12.64	%		12.47	%		12.93	%
	Leverage		8.67	%		8.56	%		8.44	%		8.30	%		8.32	%

The CET1 capital ratio was 9.25%, the Tangible common equity to tangible assets ratio was 7.38% excluding AOCI, and 5.49% including AOCI. The Tier 1 risk-based capital ratio was 10.49%, the Total risk-based capital ratio was 12.60%, and the Leverage ratio was 8.67%.

During the first quarter of 2023, Fifth Third repurchased approximately $200 million of its outstanding stock, which reduced common shares by approximately 5.6 million at quarter end.

Tax Rate
The effective tax rate for the quarter was 22.3% compared with 19.4% in the prior quarter and 19.2% 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) effects of the global COVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft, misappropriation or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Third’s capital plan; (21) regulation of Fifth Third’s derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates and the effects of inflation; (28) changes and trends in capital markets; (29) fluctuation of Fifth Third’s stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (35) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (36) potential dilution from future acquisitions; (37) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (38) results of investments or acquired entities; (39) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (40) inaccuracies or other failures from the use of models; (41) effects of critical accounting policies and judgments or the use of inaccurate estimates; (42) weather-related events, other natural disasters, or health emergencies (including pandemics); (43) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity; (44) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases; and (45) 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230419006034/en/

Ed Loyd

edgar.loyd@53.com

(513)534-6397

Source: Fifth Third Bancorp

FAQ

What were Fifth Third Bank's earnings for 1Q23?

Fifth Third Bank reported earnings of $558 million, or $0.78 per diluted share for 1Q23.

How did Fifth Third Bank perform compared to the previous quarter?

Compared to the previous quarter, Fifth Third Bank's net income decreased by 24%.

What is Fifth Third Bank's net charge-off ratio?

The net charge-off ratio for Fifth Third Bank is 0.26%.

What were the revenue growth figures for Fifth Third Bank?

Fifth Third Bank's revenue increased by 18% year-over-year.

What strategic acquisition did Fifth Third Bank announce?

Fifth Third Bank announced the acquisition of Big Data Healthcare.